AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 18, 1996
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------
KEEBLER CORPORATION, ISSUER
KEEBLER BISCUIT COMPANY
SHAFFER, CLARKE & CO., INC.
JOHNSTON'S READY-CRUST COMPANY
EMERALD INDUSTRIES, INC.
ATHENS PACKAGING, INC.
KEEBLER LEASING CORP.
BAKE-LINE PRODUCTS, INC.
SUNSHINE BISCUITS, INC.
STEAMBOAT CORPORATION
ILLINOIS BAKING CORPORATION
KEEBLER COOKIE AND CRACKER COMPANY
HOLLOW TREE COMPANY
KEEBLER COMPANY/PUERTO RICO, INC.
KEEBLER H.C., INC.
KEEBLER-GEORGIA, INC., GUARANTORS
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 2052 36-3839556
DELAWARE (Primary Standard Industrial 36-1894790
DELAWARE Classification Code Number) 13-2948476
DELAWARE 36-3110530
DELAWARE 62-1350629
GEORGIA 36-3840961
DELAWARE 13-3869240
ILLINOIS 36-2318208
DELAWARE 11-2111159
GEORGIA 36-2801224
DELAWARE 36-2589168
NEVADA 36-2590868
DELAWARE 36-3027531
DELAWARE 36-2689289
ILLINOIS 36-3756201
GEORGIA 35-2781281
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
-------------------
ONE HOLLOW TREE LANE
ELMHURST, ILLINOIS 60126
(708) 833-2900
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
-------------------
SAM K. REED
CHIEF EXECUTIVE OFFICER
KEEBLER CORPORATION
ONE HOLLOW TREE LANE
ELMHURST, ILLINOIS 60126
(708) 833-2900
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
-------------------
COPIES TO:
JOHN B. TEHAN
SIMPSON THACHER & BARTLETT
425 LEXINGTON AVENUE
NEW YORK, NY 10017
(212) 455-2000
-------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after the effective date of this Registration
Statement.
If any of the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction 6, check the following box. / /
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CALCULATION OF REGISTRATION FEE
[CAPTION]
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<S> <C> <C> <C> <C>
TITLE OF EACH PROPOSED PROPOSED
CLASS OF SECURITIES TO AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
BE REGISTERED BE REGISTERED PER NOTE(1) OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
10 3/4% Senior Subordinated Notes due
2006.................................. $125,000,000 100% $125,000,000 $43,104.00
</TABLE>
(1) Estimated solely for the purposes of calculating the registration fee
pursuant to Rule 457.
-------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
KEEBLER CORPORATION
CROSS REFERENCE SHEET
PURSUANT TO RULE 404(A) AND ITEM 501(B) OF REGULATION S-K
SHOWING LOCATION IN PROSPECTUS OF THE INFORMATION
REQUIRED BY PART I OF FORM S-4
<TABLE>
<CAPTION>
1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus..... Outside Front Cover Page; Cross Reference
Sheet; Inside Front Cover Page
<C> <S> <C>
2. Inside Front and Outside Back Cover Pages
of Prospectus............................. Inside Front Cover Page; Outside Back Cover
Page
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information............. Prospectus Summary; Risk Factors; Selected
Historical Consolidated Financial Data
4. Terms of the Transaction................... The Exchange Offer; Certain United States
Federal Income Tax Consequences;
Description of Exchange Notes
5. Pro Forma Financial Information............ Prospectus Summary; Pro Forma Consolidated
Financial Statements
6. Material Contracts with the Company Being
Acquired.................................. Not Applicable
7. Additional Information Required for
Reoffering by Persons and Parties Deemed
to be Underwriters....................... Not Applicable
8. Interest of Named Experts and Counsel...... Not Applicable
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities.............................. Not Applicable
10. Information with Respect to S-3
Registrants................................ Not Applicable
11. Incorporation of Certain Information by
Reference................................. Not Applicable
12. Information with Respect to S-2 or S-3
Registrants................................ Not Applicable
13. Incorporation of Certain Information by
Reference................................. Not Applicable
14. Information with Respect to Registrants
Other Than S-3 or S-2 Registrants......... Prospectus Summary; The Acquisitions;
Capitalization; Selected Consolidated
Historical Financial Data; Management's
Discussion and Analysis of Financial
Condition and Results of Operations;
Business; Management; Principal
Stockholders; Certain Related
Transactions; Description of Senior
Credit Facility and the UB Note;
Description of Exchange Notes; Book
Entry; Delivery and Form; Plan of
Distribution; Exchange and Registration
Rights Agreement; Legal Matters; Experts;
Available Information; Glossary;
Consolidated Financial Statements.
15. Information with Respect to S-3
Companies................................. Not Applicable
16. Information with Respect to S-2 or S-3
Companies................................. Not Applicable
17. Information with Respect to Companies Other
than S-2 or S-3 Companies................. Not Applicable
18. Information if Proxies, Consents or
Authorizations are to be Solicited........ Not Applicable
19. Information if Proxies, Consents or
Authorizations are not to be Solicited or
in an Exchange Offer..................... Management; The Exchange Offer; Certain
Related Transactions
</TABLE>
<PAGE>
SUBJECT TO COMPLETION, DATED JULY 18, 1996
PROSPECTUS
, 1996
[HOLLOW TREE
LOGO] [ERNIE]
KEEBLER CORPORATION
OFFER TO EXCHANGE
$125,000,000 OF ITS 10 3/4% SENIOR SUBORDINATED NOTES DUE 2006, WHICH HAVE BEEN
REGISTERED
UNDER THE SECURITIES ACT, FOR ITS OUTSTANDING 10 3/4% SENIOR SUBORDINATED NOTES
DUE 2006
-------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON ,
1996, UNLESS EXTENDED (THE "EXPIRATION DATE").
Keebler Corporation (the "Company") hereby offers to exchange (the "Exchange
Offer") up to $125,000,000 in aggregate principal amount of its new 10 3/4%
Senior Subordinated Notes due 2006 (the "Exchange Notes") for $125,000,000 in
aggregate principal amount of its outstanding 10 3/4% Senior Subordinated Notes
due 2006 (the "Notes").
The terms of the Exchange Notes are identical in all material respects
(including principal amount, interest rate and maturity) to the terms of the
Notes for which they may be exchanged pursuant to this offer, except that the
Exchange Notes will be freely transferable by holders thereof (other than as
provided below) and are issued free from any covenant regarding registration.
The Exchange Notes will evidence the same indebtedness as the Notes and contain
terms which are identical in all material respects to the terms of the Notes
that are to be exchanged therefor.
On January 26, 1996, the Company was acquired (the "Keebler Acquisition") by
INFLO Holdings Corporation, a corporation jointly controlled by Artal Luxembourg
S.A. ("Artal") and Flowers Industries, Inc. ("Flowers"). On June 4, 1996, the
Company purchased Sunshine Biscuits, Inc. (the "Sunshine Acquisition"; which
together with the Keebler Acquisition, are herein referred to as the
"Acquisitions"). The Notes were sold to refinance certain indebtedness incurred
in connection with the Keebler Acquisition. See "The Acquisitions" and "Use of
Proceeds."
Interest on the Exchange Notes will be payable semi-annually on January 1 and
July 1 of each year, commencing January 1, 1997, at the rate of 10 3/4% per
annum. The Exchange Notes will mature on July 1, 2006. The Exchange Notes will
be redeemable at the option of the Company, in whole or in part, on or after
July 1, 2001, at the redemption prices set forth herein, plus accrued and unpaid
interest thereon, if any, to the date of redemption. In addition, on or prior to
July 1, 1999, at the option of the Company, up to 35% of the aggregate original
principal amount of the Exchange Notes may be redeemed at the redemption prices
set forth herein, plus accrued and unpaid interest thereon, if any, to the date
of redemption, with the proceeds of one or more Public Equity Offerings (as
defined herein); provided, that at least 65% of the original aggregate principal
amount of the Exchange Notes remains outstanding following any such redemption.
See "Description of Exchange Notes--Optional Redemption." The Exchange Notes
will not be subject to any mandatory sinking fund. Upon the occurrence of a
Change of Control (as defined herein), holders of the Exchange Notes will have
the right to require the Company to repurchase their Exchange Notes, in whole or
in part, at a purchase price equal to 101% of the aggregate principal amount
thereof, plus accrued and unpaid interest thereon, if any, to the date of
repurchase. See "Description of Exchange Notes--Certain Covenants--Change of
Control."
The Exchange Notes will be general unsecured obligations of the Company and
will be subordinated in right of payment to all Senior Indebtedness (as defined
herein) of the Company (which includes all indebtedness under the Senior Credit
Facility (as defined herein)) and will rank senior in right of payment to all
future Subordinated Indebtedness (as defined herein) of the Company. The
Exchange Notes are guaranteed by all existing and future Restricted Subsidiaries
(as defined herein) of the Company, which guarantees are subordinate in right of
payment to all existing Senior Indebtedness of the Company and the Company's
Restricted Subsidiaries. As of April 20, 1996, after giving pro forma effect to
the Sunshine Acquisition and the related financing transactions and the
Offering, Senior Indebtedness of the Company would have been $335.1 million.
The Notes were issued and sold on June 25, 1996 in a transaction not
registered under the Securities Act of 1933, as amended (the "Securities Act"),
in reliance upon the exemption provided in Section 4(2) of the Securities Act.
Accordingly, the Notes may not be reoffered, resold or otherwise pledged,
hypothecated or transferred in the United States unless so registered or unless
an applicable exemption from the registration requirements of the Securities Act
is available. The Exchange Notes are being offered hereunder in order to satisfy
certain of the obligations of the Company and the Guarantors (as defined herein)
under a registration rights agreement relating to the Notes. See "The Exchange
Offer--Purpose of the Exchange Offer." The Company is making the Exchange Offer
in reliance upon an interpretation by the staff of the Securities and Exchange
Commission set forth in a series of no-action letters issued to third parties.
Based on such interpretation, the Company believes that Exchange Notes issued
pursuant to the Exchange Offer in exchange for Notes may be offered for resale,
resold and otherwise transferred by any holder thereof (other than any such
holder that is an "affiliate" of the Company within the meaning of Rule 405
under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such
Exchange Notes are acquired in the ordinary course of such holder's business and
such holder has no arrangement or understanding with any person to participate
in the distribution of such Exchange Notes and neither such holder nor any such
other person is engaging in or intends to engage in a distribution of such
Exchange Notes. However, the Company has not sought, and does not intend to
seek, its own no-action letter, and there can be no assurance that the staff of
the Securities and Exchange Commission would make a similar determination with
respect to the Exchange Offer. Each broker-dealer that receives Exchange Notes
for its own account pursuant to the Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Notes. The
Letter of Transmittal relating to the Exchange Offer states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of Exchange Notes received in
exchange for Notes where such Notes were acquired by such broker-dealer as a
result of market-making activities or other trading activities. The Company
will, for a period of 180 days after the Expiration Date (as defined herein),
make copies of this Prospectus available to any broker-dealer for use in
connection with any such resale. See "Plan of Distribution."
The Exchange Offer is not conditioned upon any minimum aggregate principal
amount of Notes being tendered for exchange. The date of acceptance and exchange
of the Notes (the "Exchange Date") will be the first business day following the
Expiration Date. Notes tendered pursuant to the Exchange Offer may be withdrawn
at any time prior to the Expiration Date. The Company will pay all expenses
incident to the Exchange Offer. The Company will not receive any proceeds from
the Exchange Offer.
-------------------
SEE "RISK FACTORS," BEGINNING ON PAGE 13, FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY INVESTORS IN CONNECTION WITH THE EXCHANGE OFFER AND
AN INVESTMENT IN THE EXCHANGE NOTES.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
, 1996
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
AVAILABLE INFORMATION
The Company and the Guarantors filed with the Securities and Exchange
Commission (the "Commission") a Registration Statement on Form S-4 (together
with all amendments, exhibits, schedules and supplements thereto, the
"Registration Statement") under the Securities Act with respect to the Exchange
Notes being offered hereby. This Prospectus, which forms a part of the
Registration Statement, does not contain all of the information set forth in the
Registration Statement. For further information with respect to the Company, the
Guarantors and the Exchange Notes, reference is made to the Registration
Statement. Statements contained in this Prospectus as to the contents of any
contract or other document are not necessarily complete, and, where such
contract or other document is an exhibit to the Registration Statement, each
such statement is qualified in all respects by the provisions in such exhibit,
to which reference is hereby made. Copies of the Registration Statement may be
examined without charge at the Public Reference Section of the Commission, 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and the Commission's
Regional Offices located at Seven World Trade Center, 13th Floor, New York, New
York 10048 and Citicorp Center, 500 West Madison Avenue, Suite 1400, Chicago,
Illinois 60661. Copies of all or any portion of the Registration Statement can
be obtained from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549, upon payment of certain fees prescribed by
the Commission.
The Company is not currently subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Upon
completion of the Exchange Offer, the Company will be subject to the
informational requirements of the Exchange Act, and, in accordance therewith,
will file periodic reports and other information with the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549. Copies of any material so filed can
be obtained from the Public Reference Section of the Commission, upon payment of
certain fees prescribed by the Commission. In addition, pursuant to the
Indenture covering the Notes and the Exchange Notes, the Company has agreed to
file with the Commission and provide to the Noteholders the annual reports and
the information, documents and other reports otherwise required pursuant to
Section 13 of the Exchange Act. Such requirements may be satisfied through the
filing and provision of such documents and reports which would otherwise be
required pursuant to Section 13 in respect of the Company.
UNTIL , 1996 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS),
ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. All
statements other than statements of historical facts included in this
Prospectus, including without limitation, the statements under "Summary--
Keebler Strategy," "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Business--Keebler Strategy--Cost Reductions,"
"--History of Sunshine," "-- Keebler's Acquisition of Sunshine,"
"--Environmental," and "--Litigation" and located elsewhere herein regarding the
Company's financial position, cost cutting plans and plans to take advantage of
synergies, are forward-looking statements. Although the Company believes that
the expectations reflected in such forward-looking statements are reasonable, it
can give no assurance that such expectations will prove to have been correct.
Important factors that could cause actual results to differ materially from the
Company's expectations ("Cautionary Statements") are disclosed in this
Prospectus, including without limitation in conjunction with the forward-looking
statements included in this Prospectus and under "Risk Factors". All subsequent
written and oral forward-looking statements attributable to the Company or
persons acting on its behalf are expressly qualified in their entirety by the
Cautionary Statements.
2
<PAGE>
SUMMARY
The following summary is qualified in its entirety, and should be read in
conjunction with, the more detailed financial and other information contained
elsewhere in this Prospectus. Noteholders are urged to read this Prospectus in
its entirety. All references to "Sunshine" shall mean Sunshine Biscuits, Inc.,
unless the context requires otherwise. All references to "Keebler" shall mean
the Keebler Corporation and its consolidated subsidiaries but shall exclude (i)
Sunshine and (ii) certain businesses of Keebler that were sold prior to the
Keebler Acquisition, unless the context requires otherwise. All references to
the "Company" shall mean Keebler Corporation and its consolidated subsidiaries
(including Sunshine but excluding certain businesses of Keebler that were sold
prior to the Keebler Acquisition), unless the context requires otherwise. Unless
otherwise noted, references to fiscal 1993, 1994 and 1995 or the 1993, 1994 and
1995 fiscal years of the Company or Keebler are to the fiscal years ended
January 1, 1994, December 31, 1994 and December 30, 1995, respectively.
Reference to Sunshine's 1994, 1995 and 1996 fiscal years or fiscal 1994, 1995
and 1996 of Sunshine are to Sunshine's fiscal years ended March 31, 1994, 1995
and 1996, respectively.
Unless stated otherwise, figures provided for market share percentages and
rank in any market are based on retail sales (measured by weight) in 1995, as
reported by Information Resources, Inc., a service which tracks retail sales
through scanner data in grocery stores with annual revenue greater than $2.0
million dollars ("IRI"). In those instances where market share data is stated to
be based on dollar sales, these dollar sales represent retail sales (measured in
dollars) in 1995 as reported by IRI. The IRI data exclude sales through other
channels in which the Company has a lesser position and, therefore, may
overstate the Company's share of the overall cookie and cracker market. See
"Business--Keebler Strategy--Targeted Marketing Strategy--Expand Non-supermarket
Business."
THE COMPANY
The Company is the second largest cookie and cracker manufacturer in the
United States with a 23.2% share of the retail cookie and cracker market
(including private label sales) for the year ended December 31, 1995. The
Company had approximately $2.1 billion in gross sales in fiscal 1995 on a pro
forma basis including the gross sales of Keebler and Sunshine. Keebler alone was
the second largest cookie and cracker manufacturer in the United States with a
16.4% share of the retail cookie and cracker market (including private label
sales) in 1995. Sunshine alone was the third largest cookie and cracker
manufacturer in the United States with a 6.8% market share in 1995. The Company
produces and markets nine of the top 25 selling cookies and ten of the top 25
selling crackers, based, in each case on dollar sales. In addition, the Company
is the leading manufacturer and marketer of cookies and crackers (combined) to
the foodservice market as reported by IFMATRAC (as defined herein).
The cookie and cracker market is stable in terms of its total sales volume
and has not experienced significant fluctuations in either total dollar or unit
sales over the past several years. In addition, the market shares of the leading
companies (including the Company) in the combined cookie and cracker industry
have not shifted materially over the past several years.
The Company's principal executive offices are located at One Hollow Tree
Lane, Elmhurst, Illinois 60126 (telephone number: (708) 833-2900).
KEEBLER
Keebler is the second largest cookie and cracker manufacturer in the United
States with a 16.4% share of the retail cookie and cracker market (including
private label sales) and approximately $1.5 billion in gross sales for fiscal
1995. Keebler manufactures and distributes branded and private label
3
<PAGE>
cookies, crackers, pie crusts and ice cream cones for the retail and foodservice
markets. In addition, Keebler produces custom products for other marketers of
branded food products.
Keebler has well recognized brands, as evidenced by its national brand
awareness rate of 97% based on data compiled by Luhrs Marketing Research
Corporation on behalf of Keebler in 1992. Keebler's major brands include Chips
Deluxe, Fudge Shoppe, Elfin Delights, Sandies, Wheatables, Munch'ems, Zesta,
Town House and Club, among others, and Keebler imports and distributes the
Carr's line of cookies and crackers, which is the top selling premium cracker
brand in the U.S. Keebler, with its Ready-Crust products, has over a 70% dollar
market share of the pre-formed retail pie crust market.
Keebler is the largest manufacturer of cookies for the private label market,
and Keebler on a stand alone basis was the second largest manufacturer of
cookies and crackers to the foodservice market as reported by IFMATRAC.
Keebler directly services more than 30,000 grocery accounts through its own
national direct store door sales and distribution system (a "DSD system").
Keebler's DSD system distributes Keebler's retail branded cookie and cracker
products directly to retail stores, where Keebler's own sales force then stocks
and arranges the products on the retailers' shelves and builds end-aisle and
free standing product displays within the stores. Keebler is one of only two
cookie and cracker companies with a national, wholly owned DSD system. Keebler's
DSD system gives it a number of distinct advantages over competitors that lack a
DSD system. Keebler's DSD system (i) enables Keebler to sell and promote a wide
variety of products and to introduce new products at a lower cost, because the
customer's own warehouse space, transportation and in-store labor are not
required, (ii) results in high display levels and well stocked displays during
major promotion periods through the efforts of Keebler's in-store sales force
and (iii) enables Keebler's products to be available in grocery stores
representing 99% of all commodity volume ("ACV;" i.e., the total annual dollar
sales of U.S. grocery stores with annual revenue in excess of $2.0 million) as
reported by IRI in 1995.
THE KEEBLER ACQUISITION
On January 26, 1996, INFLO Holdings Corporation ("INFLO") acquired all of
the shares of Keebler for an aggregate consideration of $454.9 million
(excluding related fees and expenses and after receipt of a $32.6 million cash
working capital adjustment). Prior to the Keebler Acquisition, Keebler was an
indirect wholly owned subsidiary of United Biscuits (Holdings) plc., a publicly
traded United Kingdom company ("United Biscuits"). Financing for the Keebler
Acquisition was comprised of (i) a $157.5 million capital contribution provided
by INFLO, (ii) a $200.0 million advance under Keebler's senior credit facility
(as described below, the "Senior Credit Facility"), (iii) the $125.0 million
Increasing Rate Notes (as defined herein), and (iv) the assumption of $20.3
million of senior indebtedness.
Immediately following the Keebler Acquisition, a new management team was
installed with the industry expertise necessary to implement a new strategic
plan at Keebler. This management team is led by Mr. Sam K. Reed who is the new
president and chief executive officer of Keebler. Mr. Reed had previously worked
with Artal as the president and chief executive officer of Mother's Cake and
Cookie Co. from 1990 to 1993. The members of the new senior management team have
an average of 20 years experience in the U.S. food industry (see "Management"
below) and have played an active part in designing and implementing similar
strategies at other baked goods companies, many of which were acquired through
leveraged buy-outs. Management currently owns 2.3% of the common stock, par
value $.01 per share, of INFLO (the "INFLO Common Stock") and will have the
right to purchase through options (two-thirds of which will vest upon the
attainment of certain performance criteria) additional shares, which together
with management's existing shares would represent 8.6% of the shares of INFLO
Common Stock on a fully diluted basis.
4
<PAGE>
KEEBLER STRATEGY
Since the Keebler Acquisition, management has been executing a strategic
plan to reduce inefficiencies and further capitalize on (i) the strength of
Keebler's DSD capabilities and (ii) the significant share positions of its
brands within the relatively stable cookie and cracker industry. The new
strategic plan is comprised of three key elements:
1. Cost reductions--immediately reduce costs, particularly in
manufacturing and corporate overhead.
2. Structural reorganization of sales and marketing--decentralize
management with regional teams led by regional vice presidents having
increased responsibility and accountability.
3. Targeted marketing--execute a new marketing strategy designed to
reflect Keebler's relative strengths in its differing product segments
and regions in a way that emphasizes profits rather than sales volume
alone.
RESULTS SINCE THE KEEBLER ACQUISITION
Actions completed since the Keebler Acquisition include (i) the elimination
of 201 corporate positions and 75 manufacturing positions, (ii) the closure of
Keebler's Atlanta plant, (iii) the regionalization of the sales and marketing
management structure, and (iv) the implementation of a focused marketing
strategy, which has resulted in the elimination of inefficient marketing
expenditures. These actions are expected to generate approximately $62 million
of annual cost savings, with a related one-time cost of approximately $35
million, which has been reserved for on Keebler's balance sheet. As of April 20,
1996, $14.2 million of such one-time cost had been paid from Keebler's available
cash.
SUNSHINE
At the time of its acquisition by the Company, Sunshine was the third
largest cookie and cracker manufacturer in the United States with a 6.8% market
share and approximately $607 million in gross sales on a pro forma basis for
fiscal 1996. Sunshine's products include such well known brands as Cheez-It, the
number one snack cracker, Vienna Fingers, the leading non-chocolate-based
sandwich cookie, Krispy saltine crackers and Hydrox chocolate sandwich cookies.
Sunshine sells its retail branded products throughout the United States
primarily through a customer warehouse sales and distribution system. This
system involves the delivery of products by Sunshine to its customers'
warehouses and not to their individual stores. In contrast to Keebler's DSD
sales and distribution system, Sunshine's customers must move purchased products
from their warehouses to their stores at their own expense, and their own
employees (rather than Sunshine's) stock Sunshine's products on the stores'
shelves. Only in Philadelphia, New York and New Jersey does Sunshine operate its
own DSD system. In those markets, Sunshine maintains a higher market share than
in most other areas of the country.
THE SUNSHINE ACQUISITION
On June 4, 1996, the Company acquired Sunshine from G.F. Industries, Inc.
("GFI") for an aggregate consideration of $171.6 million (excluding related fees
and expenses). The Sunshine Acquisition was funded by (i) $154.0 million in
cash, of which $40.0 million was provided by Keebler's existing cash resources
and $114.0 million (net of cash acquired of $1.8 million) was provided by
borrowings under the Senior Credit Facility, and (ii) the issuance to GFI of
approximately $23.6 million of INFLO common stock and warrants, which was
accounted for as a capital contribution. These shares and warrants and GFI's
rights, duties and obligations under the GFI Stockholder's Agreement were
5
<PAGE>
subsequently transferred to Bermore Ltd., a Bermuda limited company and the
parent of GFI ("Bermore"), and such shares and warrants represent 13.2% of
INFLO's Common Stock on a fully diluted basis.
In addition to the strategic value of combining Keebler and Sunshine,
management expects that this combination will provide economic efficiencies in
administration, purchasing, production, sales, distribution and marketing. In
particular, management's current plans include closing up to two manufacturing
plants, closing Sunshine's corporate headquarters, shifting the sales and
distribution of Sunshine's retail branded products to Keebler's DSD system and
reducing redundant sales and distribution infrastructure. Management believes
that Keebler's DSD system will provide a more effective vehicle for marketing
Sunshine branded retail products throughout the United States.
SPONSORS
Artal and Flowers each owns 45.2% (39.1% on a fully diluted basis) of the
outstanding INFLO Common Stock, and INFLO owns 100% of the outstanding common
stock of the Company.
Artal is a private Luxembourg investment company. The Invus Group Ltd.
("Invus"), Artal's U.S. investment advisor, has focused Artal's investments
within the U.S. food industry. Since 1985, with Invus' advice, Artal has
completed more than 25 acquisitions of food companies, including a number in the
baking industry.
Flowers is one of the country's largest manufacturers and marketers of baked
goods. Flowers is a New York Stock Exchange-listed company, operates in the
packaged foods industry and serves the grocery, deli/bakery, foodservice,
restaurant and fast food markets. In fiscal 1995, Flowers generated sales of
$1.1 billion. In terms of fresh retail branded bread and roll market shares as
reported by A.C. Nielsen in 1995, Flowers ranks number one in ten of its fifteen
major markets and number two in its remaining five major markets.
Both Invus and Flowers are working closely with management to execute the
Company's strategic plan.
THE EXCHANGE OFFER
<TABLE>
<S> <C>
THE EXCHANGE OFFER........... The Company is offering to exchange pursuant to the Exchange
Offer up to $125,000,000 aggregate principal amount of its
new 10 3/4% Senior Subordinated Notes due 2006 (the
"Exchange Notes") for $125,000,000 aggregate principal
amount of its outstanding 10 3/4% Senior Subordinated Notes
due 2006 (the "Notes"). The terms of the Exchange Notes are
identical in all material respects (including principal
amount, interest rate and maturity) to the terms of the
Notes for which they may be exchanged pursuant to the
Exchange Offer, except that the Exchange Notes are freely
transferable by holders thereof (other than as provided
herein), and are not subject to any covenant regarding
registration under the Securities Act. See "The Exchange
Offer--Terms of the Exchange" and "--Terms and Conditions of
the Letter of Transmittal" and "Description of Exchange
Notes."
INTEREST PAYMENTS............ Interest on the Exchange Notes shall accrue from the last
Interest Payment Date (January 1 or July 1) on which
interest was paid on the Notes so surrendered or, if no
interest has been paid on such Notes, from June 26, 1996.
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
MINIMUM CONDITION............ The Exchange Offer is not conditioned upon any minimum
aggregate principal amount of Notes being tendered for
exchange.
EXPIRATION DATE.............. The Exchange Offer will expire at 5:00 p.m. New York City
time, on , 1996, unless extended (the "Expiration Date").
Any Note not accepted for exchange for any reason will be
returned without expense to the tendering holder thereof as
promptly as practicable after the expiration or termination
of the Exchange Offer.
EXCHANGE DATE................ The date of acceptance for exchange of the Notes will be the
first business day following the Expiration Date.
CONDITIONS OF THE EXCHANGE
OFFER...................... The Company's obligation to consummate the Exchange Offer
will be subject to certain conditions. See "The Exchange
Offer-- Conditions to the Exchange Offer." The Company
reserves the right to terminate or amend the Exchange Offer
at any time prior to the Expiration Date upon the occurrence
of any such condition.
WITHDRAWAL RIGHTS............ The tender of Notes pursuant to the Exchange Offer may be
withdrawn at any time prior to the Expiration Date.
PROCEDURES FOR TENDERING
NOTES...................... See "The Exchange Offer--Tender Procedure."
FEDERAL INCOME TAX
CONSEQUENCES............... The exchange of Notes for Exchange Notes will not be a
taxable exchange for federal income tax purposes. See
"Certain United States Federal Income Tax Consequences."
EFFECT ON HOLDERS OF NOTES... As a result of the making of, and upon acceptance for
exchange of all validly tendered Notes pursuant to the terms
of, this Exchange Offer, the Company will have fulfilled a
covenant contained in the Exchange and Registration Rights
Agreement (the "Registration Rights Agreement") dated June
25, 1996 between the Company, the Guarantors and Nomura
Securities International, Inc. and Morgan Stanley & Co.
Incorporated (the "Initial Purchasers") and, accordingly,
there will be no increase in the interest rate on the Notes
pursuant to the terms of the Registration Rights Agreement,
and the holders of the Notes will have no further
registration or other rights under the Registration Rights
Agreement. Holders of the Notes who do not tender their
Notes in the Exchange Offer will continue to hold such Notes
and will be entitled to all the rights and subject to all
limitations applicable thereto under the Indenture dated as
of June 15, 1996 between the Company, the Guarantors and
United States Trust Company of New York relating to the
Notes and the Exchange Notes (the "Indenture"), except for
any such rights under the Registration Rights Agreement that
by their terms terminate or cease to have further
effectiveness as a result of the making of, and the
acceptance for exchange of all validly tendered Notes
pursuant to, the Exchange Offer. All untendered Notes will
continue to be subject to the restrictions on transfer
provided for in the Notes and in the Indenture. To the
extent that Notes are tendered and accepted in the Exchange
Offer, the trading market for untendered Notes could be
adversely affected.
USE OF PROCEEDS.............. There will be no cash proceeds to the Company from the
exchange pursuant to the Exchange Offer
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
EXCHANGE AGENT............... United States Trust Company of New York is serving as
Exchange Agent in connection with the Exchange Offer.
CONSEQUENCE OF FAILURE TO
EXCHANGE................... Holders of Notes who do not exchange their Notes for
Exchange Notes pursuant to the Exchange Offer will continue
to be subject to the restrictions on transfer of such Notes
as set forth in the legend thereon as a consequence of the
offer or sale of the Notes pursuant to an exemption from, or
in a transaction not subject to, the registration
requirements of the Securities Act and applicable state
securities laws. In general, the Notes may not be offered or
sold, unless registered under the Securities Act, except
pursuant to an exemption from, or in a transaction not
subject to, the Securities Act and applicable state
securities laws. The Company does not currently anticipate
that it will register the Notes under the Securities Act or
any state securities laws.
</TABLE>
TERMS OF THE EXCHANGE NOTES
<TABLE>
<S> <C>
ISSUER....................... Keebler Corporation.
SECURITIES OFFERED........... $125,000,000 aggregate principal amount of 10 3/4% Senior
Subordinated Notes due 2006 (the "Exchange Notes").
MATURITY DATE................ July 1, 2006.
INTEREST..................... Interest on the Exchange Notes will accrue from the date of
issuance at the rate of 10 3/4% per annum, and will be
payable in cash semi-annually in arrears on January 1 and
July 1 of each year, commencing on January 1, 1997, to the
holders of record at the close of business on the
immediately preceding December 15 or June 15.
MANDATORY REDEMPTION......... None.
OPTIONAL REDEMPTION.......... The Exchange Notes will be redeemable at the option of the
Company at any time on or after July 1, 2001, in whole or in
part, at the redemption prices set forth herein plus accrued
and unpaid interest, if any, to the date of redemption. In
addition, on or prior to July 1, 1999, the Company may
redeem up to 35% of the original aggregate principal amount
of the Exchange Notes with the proceeds of one or more
Public Equity Offerings at 110.0% of the principal amount
thereof, together with accrued and unpaid interest, if any,
to the date of redemption; provided that at least 65% of the
original aggregate principal amount of the Exchange Notes
remains outstanding immediately after any such redemption.
See "Description of Exchange Notes--Optional Redemption."
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
RANKING...................... The Exchange Notes will be general unsecured obligations of
the Company and will be subordinated in right of payment to
all Senior Indebtedness of the Company (which includes all
indebtedness under the Senior Credit Facility) and will rank
senior in right of payment to all future Subordinated
Indebtedness of the Company. As of April 20, 1996, after
giving pro forma effect to the Sunshine Acquisition, the
related financing transactions and the Offering, Senior
Indebtedness of the Company would have been $335.1 million.
In addition, as of April 20, 1996, the Company would have
had approximately $120 million of additional borrowing
availability (on a pro forma basis) under the Revolving
Credit Facility (as defined herein). See "Description of
Exchange Notes--Ranking."
GUARANTEES................... The Exchange Notes will be fully and unconditionally
guaranteed on a senior subordinated basis by each of the
Company's existing Restricted Subsidiaries (referred to
herein as the "Guarantors"). The guarantees (the
"Guarantees") will be unsecured, senior subordinated
obligations of the Guarantors and will rank junior in right
of payment to all existing and future Senior Indebtedness of
the Guarantors including their guarantees of the Company's
obligations under the Senior Credit Facility. As of April
20, 1996, the Guarantors would have had approximately $335.1
million of Senior Indebtedness, all of which would have
represented guarantees of Senior Indebtedness of the
Company. See "Description of Exchange Notes--Guarantees."
CERTAIN COVENANTS............ The Indenture limits (i) the incurrence of additional
indebtedness by the Company and its subsidiaries, (ii) the
payment of dividends on, and redemption of, capital stock of
the Company and the redemption of certain subordinated
obligations of the Company, (iii) investments, (iv) sales of
assets and subsidiary stock, (v) transactions with
affiliates and (vi) consolidations, mergers and transfers of
all or substantially all the assets of the Company. The
Indenture also prohibits certain restrictions on
distributions from subsidiaries. However, all of these
limitations and prohibitions are subject to a number of
important qualifications and exceptions. See "Description of
Exchange Notes--Certain Covenants."
CHANGE OF CONTROL............ In the event of a Change of Control, the Company will be
required, subject to certain conditions, to offer to
purchase all outstanding Exchange Notes at a price of 101%
of the principal amount thereof, plus interest accrued to
the date of purchase. See "Description of Exchange
Notes--Certain Covenants."
</TABLE>
RISK FACTORS
Noteholders should carefully consider the information set forth in this
Prospectus and, in particular, should evaluate the specific factors set forth
under "Risk Factors" before tendering Notes in exchange for Exchange Notes.
9
<PAGE>
SUMMARY FINANCIAL DATA
THE COMPANY
The following table sets forth certain unaudited pro forma consolidated
financial data of the Company after giving effect to the Sunshine Acquisition
and the financing thereof and the offering of the Notes (excluding related fees
and expenses). The unaudited pro forma consolidated financial data have been
derived from, and should be read in conjunction with, the historical and
unaudited pro forma consolidated financial data of Keebler and Sunshine,
included elsewhere herein.
<TABLE>
<CAPTION>
FIRST QUARTER
1995 1996(1)
COMPANY COMPANY
PRO FORMA PRO FORMA
--------- -------------
<S> <C> <C>
(DOLLARS IN MILLIONS)
OPERATING DATA:
Gross sales............................................................. $2,093.8 $ 495.1
Reclamations and discounts.............................................. 64.0 17.3
--------- -------------
Net sales............................................................... 2,029.8 477.8
Cost of sales........................................................... 984.5 232.6
--------- -------------
Gross profit............................................................ 1,045.3 245.2
Selling, marketing and administrative expenses.......................... 1,013.6 235.1
--------- -------------
Income from operations.................................................. 31.7 10.1
Interest expense........................................................ 43.4 10.5
--------- -------------
Loss before income taxes................................................ (11.7 ) (0.4)
Income tax expense (benefit)............................................ (1.7 ) 0.2
--------- -------------
Net income (loss)....................................................... $ (10.0 ) $ (0.6)
--------- -------------
--------- -------------
OTHER DATA:
EBITDA(2)............................................................... $ 95.8 $ 25.7
Depreciation, amortization and non-cash expenses relating to retirement
benefit programs........................................................ 64.1 15.6
Capital expenditures.................................................... $ 58.3 $ 4.0
Ratio of EBITDA to interest expense..................................... 2.2 x 2.4x
Ratio of earnings to fixed charges(3)................................... 0.8 x 1.0x
</TABLE>
<TABLE>
<CAPTION>
AS OF APRIL 20, 1996
-----------------------
COMPANY
PRO FORMA
-----------------------
<S> <C>
(DOLLARS IN MILLIONS)
BALANCE SHEET DATA:
Cash and cash equivalents................................................. $ 8.7
Total assets.............................................................. 1,187.1
Total debt................................................................ 460.1
Shareholder's equity...................................................... $ 174.6
</TABLE>
- ------------
(1) The Company's first quarter 1996 comprises the twelve weeks ended April 20,
1996 for Keebler and the thirteen weeks ended March 31, 1996 for Sunshine.
Keebler's fiscal year consists of thirteen four-week periods, with its first
quarter consisting of four four-week periods. The Keebler Acquisition closed
on the last day of the first four-week period of Keebler's fiscal 1996, and
therefore its first quarter 1996 consists of the three four-week periods
ended April 20, 1996.
(2) EBITDA is defined as earnings before interest, taxes, depreciation,
amortization, and non-cash expenses related to retirement benefit programs
and is presented because it is commonly used by certain investors and
analysts to analyze and compare companies on the basis of operating
performance and to determine a company's ability to service and incur debt.
EBITDA should not be considered in isolation from or as a substitute for net
income, cash flows from operating activities or other consolidated income or
cash flow statement data prepared in accordance with generally accepted
accounting principles or as a measure of profitability or liquidity.
(3) For purposes of computing the ratio of earnings to fixed charges, earnings
consist of income before income taxes and extraordinary items plus fixed
charges (excluding capitalized interest). Fixed charges consist of interest
(including capitalized interest) on all indebtedness, amortization of
deferred financing costs and that portion of rental expense that management
believes to be representative of interest.
10
<PAGE>
KEEBLER SUMMARY HISTORICAL AND UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
The following table sets forth certain summary historical consolidated
financial data of Keebler prior to the Keebler Acquisition and excludes
financial data with respect to certain businesses of Keebler sold prior to the
Keebler Acquisition. The historical financial data for fiscal 1993, 1994 and
1995 have been derived from, and should be read in conjunction with, the
historical consolidated financial statements of Keebler, including the
respective notes thereto, included elsewhere herein. The following summary
historical financial data as of April 20, 1996 and for the twelve weeks then
ended were derived from the unaudited financial statements of Keebler. The
following table also sets forth certain unaudited summary pro forma consolidated
financial data of Keebler. The unaudited summary pro forma operating data give
effect to the Keebler Acquisition as if the Keebler Acquisition had occurred as
of January 1, 1995. Keebler's fiscal year consists of thirteen four-week
periods, with its first quarter consisting of four four-week periods. The
Keebler Acquisition closed on the last day of the first four-week period of
fiscal 1996, and therefore its first quarter 1996 consists of the three
four-week periods ended April 20, 1996.
<TABLE>
<CAPTION>
FISCAL QUARTER
FISCAL YEAR ENDED YEAR ENDED ENDED
---------------------------------------- ------------ ---------
JANUARY 1, DECEMBER 31, DECEMBER 30, DECEMBER 30, APRIL 20,
1994 1994 1995 1995 1996
HISTORICAL HISTORICAL HISTORICAL PRO FORMA HISTORICAL
---------- ------------ ------------ ------------ ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Gross sales.............................. $1,453.8 $1,452.9 $1,486.8 $1,486.8 $ 345.6
Reclamations and discounts............... 41.9 40.4 43.9 43.9 10.3
---------- ------------ ------------ ------------ ---------
Net sales................................ 1,411.9 1,412.5 1,442.9 1,442.9 335.3
Cost of sales............................ 610.3 626.1 672.8 673.5 157.4
---------- ------------ ------------ ------------ ---------
Gross profit............................. 801.6 786.4 770.1 769.4 177.9
Selling, marketing and administrative
expenses................................ 662.5 675.0 738.9 745.1 166.6
---------- ------------ ------------ ------------ ---------
Income from operations before
restructuring charges................... 139.1 111.4 31.2 24.3 11.3
Restructuring charges.................... 102.9 -- -- -- --
---------- ------------ ------------ ------------ ---------
Income from operations................... 36.2 111.4 31.2 24.3 11.3
Interest expense......................... 81.5 74.5 28.2 32.1 7.7
---------- ------------ ------------ ------------ ---------
Income (loss) before income taxes and
cumulative effect of accounting
changes................................. (45.3) 36.9 3.0 (7.8) 3.6
Income tax expense....................... 14.0 10.6 -- -- 2.0
---------- ------------ ------------ ------------ ---------
Income (loss) before cumulative effect of
accounting changes....................... (59.3) 26.3 3.0 (7.8) 1.6
Cumulative effect of accounting
changes................................. 20.7 1.2 -- -- --
---------- ------------ ------------ ------------ ---------
Net income (loss)........................ $ (80.0) $ 25.1 $ 3.0 $ (7.8) $ 1.6
---------- ------------ ------------ ------------ ---------
---------- ------------ ------------ ------------ ---------
OTHER DATA:
EBITDA--before restructuring charges..... $ 167.6 $ 139.1 $ 71.1 $ 71.1 $ 22.7
Depreciation, amortization and non-cash
expenses relating to retirement benefit
programs................................ 28.5 27.7 39.9 46.8 11.4
Capital expenditures..................... $ 25.5 $ 48.3 $ 52.2 $ 52.2 $ 2.0
</TABLE>
<TABLE>
<CAPTION>
AS OF APRIL 20, 1996
--------------------
HISTORICAL
--------------------
(DOLLARS IN
MILLIONS)
<S> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................................. $ 46.9
Total assets.............................................................. 867.6
Total debt................................................................ 344.4
Shareholder's equity...................................................... $151.0
</TABLE>
11
<PAGE>
SUNSHINE SUMMARY HISTORICAL AND UNAUDITED PRO FORMA FINANCIAL DATA
The following table sets forth certain summary historical and unaudited pro
forma financial data of Sunshine prior to the Sunshine Acquisition. The
historical financial data for fiscal 1994, 1995 and 1996 have been derived from,
and should be read in conjunction with, the historical financial statements of
Sunshine, including the respective notes thereto, included elsewhere herein. The
following table also sets forth certain unaudited summary pro forma financial
data of Sunshine. The unaudited summary pro forma operating data give effect to
the Sunshine Acquisition as if the Sunshine Acquisition had occurred as of April
1, 1995. The unaudited summary pro forma balance sheet data give effect to the
Sunshine Acquisition as if the Sunshine Acquisition had occurred as of March 31,
1996.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED MARCH 31,
------------------------------------------------ QUARTER ENDED
1994 1995 1996 1996 MARCH 31, 1996
HISTORICAL HISTORICAL HISTORICAL PRO FORMA PRO FORMA
---------- ---------- ---------- --------- --------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Gross sales................................. $665.4 $654.4 $649.8 $ 607.0 $149.5
Reclamations and discounts.................. 22.2 24.6 21.5 20.1 7.0
---------- ---------- ---------- --------- ------
Net sales................................... 643.2 629.8 628.3 586.9 142.5
Cost of sales............................... 335.4 350.3 340.0 311.0 75.2
---------- ---------- ---------- --------- ------
Gross profit................................ 307.8 279.5 288.3 275.9 67.3
Selling, marketing and administrative
expenses................................... 292.4 300.7 281.4 268.5 68.5
---------- ---------- ---------- --------- ------
Income from operations before restructuring
charges (gains)............................ 15.4 (21.2) 6.9 7.4 (1.2)
Restructuring charges (gains)............... -- 21.9 (16.5) -- --
---------- ---------- ---------- --------- ------
Income (loss) from operations............... 15.4 (43.1) 23.4 7.4 (1.2)
Interest expense............................ 6.5 8.4 9.3 11.3 2.8
---------- ---------- ---------- --------- ------
Income (loss) before income taxes........... 8.9 (51.5) 14.1 (3.9) (4.0)
Income tax expense (benefit)................ 4.0 (18.9) 6.2 (1.7) (1.8)
---------- ---------- ---------- --------- ------
Income (loss) from continuing operations.... 4.9 (32.6) 7.9 (2.2) (2.2)
Loss from discontinued operations........... (2.6) -- -- -- --
---------- ---------- ---------- --------- ------
Income (loss) before extraordinary item..... 2.3 (32.6) 7.9 (2.2) (2.2)
Extraordinary item--loss on early
extinguishment of debt (net of income
tax)...................................... -- -- 2.8 -- --
---------- ---------- ---------- --------- ------
Net income (loss)........................... $ 2.3 $(32.6) $ 5.1 $ (2.2) $ (2.2)
---------- ---------- ---------- --------- ------
---------- ---------- ---------- --------- ------
OTHER DATA:
EBITDA--before restructuring charges
(gains)..................................... $ 25.3 $ (8.3) $ 19.3 $ 24.7 $ 3.0
Depreciation, amortization and non-cash
expenses relating to retirement benefit
programs.................................. 9.9 12.9 12.4 17.3 4.2
Capital expenditures........................ $ 10.9 $ 10.7 $ 6.1 $ 6.1 $ 2.0
</TABLE>
<TABLE>
<CAPTION>
AS OF MARCH 31, 1996
-----------------------
HISTORICAL PRO FORMA
---------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............................................... $ 1.8 $ (38.2)
Total assets............................................................ 212.7 319.5
Due to affiliate........................................................ 0.4 --
Total debt.............................................................. 86.7 115.7
Shareholder's equity.................................................... $ 22.7 $ 23.6
</TABLE>
12
<PAGE>
RISK FACTORS
In addition to the other information contained in this Prospectus,
Noteholders should carefully consider the following information in evaluating
the Company and its business before tendering Notes in exchange for the Exchange
Notes offered hereby. The risk factors set forth below are generally applicable
to the Notes as well as the Exchange Notes.
CONSEQUENCE OF FAILURE TO EXCHANGE
Holders of Notes who do not exchange their Notes for Exchange Notes pursuant
to the Exchange Offer will continue to be subject to the restrictions on
transfer of such Notes as set forth in the legend thereon as a consequence of
the offer or sale of the Notes pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act
and applicable state securities laws. In general, the Notes may not be offered
or sold, unless registered under the Securities Act, except pursuant to an
exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. The Company does not currently anticipate that
it will register the Notes under the Securities Act or any state securities
laws. Based on interpretations by the staff of the Commission, the Company
believes that Exchange Notes issued pursuant to the Exchange Offer in exchange
for Notes may be offered for resale, resold or otherwise transferred by holders
thereof (other than any such holder which is an "affiliate" of the Company
within the meaning of Rule 405 under the Securities Act) without compliance with
the registration and prospectus delivery provisions of the Securities Act,
provided that such Notes are acquired in the ordinary course of such holders'
business and such holders have no arrangement with any person to participate in
the distribution of such Exchange Notes. Each broker-dealer that receives
Exchange Notes for its own account in exchange for Notes, where such Notes were
acquired by such broker-dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes. See "Plan of Distribution."
SUBSTANTIAL LEVERAGE
At April 20, 1996, the Company's pro forma total debt after giving effect to
the Sunshine Acquisition and the related financing transactions and the offering
of the Notes (excluding related fees and expenses) would have been $460.1
million, and its pro forma total debt to total capitalization ratio would have
been 72.5%. In the ordinary course of business, the Company has incurred and,
subject to certain covenants and financial tests set out in the Senior Credit
Facility, will continue to incur additional indebtedness to fund seasonal
working capital requirements, capital expenditures and cash restructuring costs.
The degree to which the Company will be leveraged could have important
consequences to holders of the Exchange Notes, including: (i) the Company's
ability to obtain financing in the future for working capital, acquisitions,
capital expenditures or other purposes may be impaired; (ii) a substantial
portion of the Company's cash flow from operations will be required to be
dedicated to the payment of principal and interest on its indebtedness; and
(iii) the Company's high degree of leverage will make it more vulnerable to
economic downturns and may limit its ability to withstand competitive pressures.
The Company believes that, based upon current levels of operations and
availability under the Revolving Credit Facility, it will be able to meet its
principal and interest payment obligations. If, however, the Company cannot
generate sufficient cash flow from operations or borrow under the Revolving
Credit Facility to meet such obligations, then the Company may be required to
take certain actions including reducing capital expenditures, restructuring its
debt, selling assets or seeking additional equity in order to avoid an Event of
Default. There can be no assurance that such actions could be effected or would
be effective in allowing the Company to meet such obligations.
13
<PAGE>
HISTORY OF DECLINING EARNINGS
Keebler has experienced a decline in EBITDA during the past three years,
from $167.6 million (before restructuring charges of $102.9 million) in fiscal
1993 to $139.1 million in fiscal 1994 to $71.1 million in fiscal 1995.
Sunshine's EBITDA was $25.3 million in fiscal 1994, $(8.3) million (before
restructuring charges of $21.9 million) in fiscal 1995 and $19.3 million (or
$24.7 million on a pro forma basis) in fiscal 1996. The Company's business plan
contemplates, and its future success requires, among other things, that the
Company operate at costs significantly lower than the combined costs incurred by
Keebler (or allocated to Keebler while it was a subsidiary of United Biscuits)
and Sunshine (while it was a subsidiary of GFI). There can be no assurance that
the Company will be able to achieve or to operate at such lower costs.
RAW MATERIALS
The principal raw materials used by the Company in the manufacture of its
products are flour, sugar, chocolate, shortening and milk. The Company also uses
paper products, such as corrugated cardboard, and plastics to package its
products. The prices of these materials have been and are expected to continue
to be subject to significant volatility. There can be no assurance that the
Company will be able to pass the effects of raw material price increases on to
its customers for any extended period of time, if at all. Although both Keebler
and Sunshine have mitigated the effects of such price increases through their
respective hedging programs, both Keebler and Sunshine have been materially
affected by increases in flour prices over the past two years, which resulted
from a more than 100% increase in the cost of wheat (the major ingredient of
flour), and increases in prices for other raw materials.
COMPETITION
The Company operates in markets that are highly competitive. In certain of
the Company's product lines, there are competitors that are larger and/or have
greater financial resources than the Company, including the Company's primary
competitor, Nabisco. There can be no assurance that the Company will be able to
continue to compete successfully or that such competition will not have a
material adverse effect on the Company's business or financial results.
SUBORDINATION
The Exchange Notes and the Guarantees will be general unsecured obligations
of the Company and the Guarantors, respectively, and will be subordinated in
right of payment to all Senior Indebtedness of the Company (which includes all
indebtedness under the Senior Credit Facility and all indebtedness under the
Company's industrial revenue bonds) and will rank senior in right of payment to
all future Subordinated Indebtedness of the Company. On a pro forma basis, as of
April 20, 1996, Senior Indebtedness of the Company would have been $335.1
million, and the Company would have had borrowing availability of approximately
$120 million under the Revolving Credit Facility. The Senior Credit Facility
permits, and the Indenture will permit, the Company to incur additional Senior
Indebtedness in the future, subject to certain conditions. Moreover, the
Indenture will not limit the Company's ability to incur liens with respect to
Senior Indebtedness. In the event of the insolvency, liquidation,
reorganization, dissolution or other winding-up of the Company or upon a default
in payment with respect to, or the acceleration of, or if a judicial proceeding
is pending with respect to any default under, any Senior Indebtedness, the
lenders under the Senior Credit Facility (the "Lenders") and any other creditors
who are holders of Senior Indebtedness must be paid in full before a holder of
Notes may be paid. Accordingly, there may be insufficient assets remaining after
such payments to pay principal of or interest on the Exchange Notes. In
addition, the Company may not pay principal of, premium, if any, interest on or
any other amounts owing in respect of the Exchange Notes, or purchase, redeem or
otherwise retire the Exchange Notes, (i) if any amounts payable under any Senior
Indebtedness is not paid when due, or (ii) any other default on Senior
Indebtedness occurs and the
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<PAGE>
maturity of such indebtedness is accelerated in accordance with its terms
unless, in either case, such default has been cured or waived, and with respect
to clause (ii) above, such acceleration has been rescinded or such indebtedness
has been paid in full. In addition, under certain circumstances, if any
non-payment default exists with respect to Senior Indebtedness, the Company may
not make any payment on the Exchange Notes for a period of 180 days, unless such
default is cured or waived or such indebtedness has been repaid in full. See
"Description of Exchange Notes--Ranking."
The Company's obligations under the Senior Credit Facility are secured by
substantially all of the assets of the Company and its subsidiaries. If a
default occurs under the Senior Credit Facility and the Company is unable to
repay such borrowings, the Lenders would have the right to exercise the remedies
available to secured creditors under applicable law and pursuant to the Senior
Credit Facility. Accordingly, the Lenders would be entitled to payment in full
out of the assets securing such indebtedness prior to payment to holders of the
Exchange Notes. If the Lenders or the holders of any other secured indebtedness
were to foreclose on the collateral securing the Company's obligations to them,
it is possible that there would be insufficient assets remaining after
satisfaction in full of all such indebtedness to satisfy in full the claims of
holders of the Exchange Notes.
RESTRICTIONS IMPOSED BY SENIOR CREDIT FACILITY
The Senior Credit Facility contains a number of significant covenants that
will, among other things, restrict the ability of the Company to dispose of
assets, incur additional indebtedness, pay dividends, prepay subordinated
indebtedness, enter into sale and leaseback transactions, create liens, make
capital expenditures and make certain investments or acquisitions and otherwise
restrict corporate activities. In addition, under the Senior Credit Facility,
the Company will be required to satisfy specified financial covenants, including
cash flow to total debt, interest coverage, and consolidated net worth tests.
The ability of the Company to comply with such provisions may be affected by
events beyond the Company's control. In order to comply with certain of these
covenants, the Company will be required to achieve financial and operating
results that are significantly better than those achieved by Keebler in fiscal
1995 and Sunshine in fiscal 1996, and there can be no assurance that improved
results will be achieved. The breach of any of these covenants could result in a
default under the Senior Credit Facility. In the event of any such default,
depending upon the actions taken by the Lenders, the Company and the Guarantors
could be prohibited from making any payments of principal of or interest on the
Exchange Notes. See "Description of Exchange Notes--Ranking." In addition, the
Lenders could elect to declare all amounts borrowed under the Senior Credit
Facility, together with accrued interest, to be due and payable. These
restrictions, in combination with the Company's significant leverage, could
limit the Company's ability to respond to changing market and economic
conditions and to provide for capital expenditures. If the Company is unable to
generate sufficient cash flow from operations, it may be required to refinance
its outstanding debt or to obtain additional financing. There can be no
assurance that any such refinancing would be possible or that any additional
financing could be obtained on terms that would be favorable or acceptable to
the Company.
FRAUDULENT TRANSFER CONSIDERATIONS
Under applicable provisions of the United States Bankruptcy Code or
comparable provisions of state fraudulent transfer or conveyance law, if the
Company or any Guarantor, as the case may be, at the time it issued the Exchange
Notes or the Guarantees, as the case may be, (a) incurred such indebtedness with
the intent to hinder, delay or defraud creditors, or (b)(i) received less than
reasonably equivalent value or fair consideration and (ii)(A) was insolvent at
the time of such incurrence, (B) was rendered insolvent by reason of such
incurrence (and the application of the proceeds thereof), (C) was engaged or was
about to engage in a business or transaction for which the assets remaining with
the Company or such Guarantor, as the case may be, constituted unreasonably
small capital to carry on its business, or (D) intended to incur, or believed
that it would incur, debts beyond its ability to pay such
15
<PAGE>
debts as they mature, then, in each such case, a court of competent jurisdiction
could avoid, in whole or in part, the Exchange Notes or Guarantees, as the case
may be, or, in the alternative, subordinate the Exchange Notes or Guarantees, as
the case may be, to existing and future indebtedness of the Company or such
Guarantor, as the case may be. The measure of insolvency for purposes of the
foregoing would likely vary depending upon the law applied in such case.
Generally, however, the Company or a Guarantor would be considered insolvent if
the sum of its debts, including contingent liabilities, was greater than all of
its assets at a fair valuation, or if the present fair saleable value of its
assets was less than the amount that would be required to pay the probable
liabilities on its existing debts, including contingent liabilities, as such
debts become absolute and matured. The Company believes that, for purposes of
the United States Bankruptcy Code and state fraudulent transfer or conveyance
laws, the Exchange Notes and the Guarantees are being issued without the intent
to hinder, delay or defraud creditors and for proper purposes and in good faith,
and that the Company and the Guarantors will receive reasonably equivalent value
or fair consideration therefor, and that after the issuance of the Exchange
Notes and the application of the net proceeds therefrom, the Company and the
Guarantors will be solvent, will have sufficient capital for carrying on their
business and will be able to pay their debts as they mature. However, there can
be no assurance that a court passing on such issues would agree with the
determination of the Company.
ABSENCE OF PUBLIC MARKET FOR THE EXCHANGE NOTES
The Exchange Notes are being offered to the holders of the Notes. The Notes
were offered and sold in June 1996 to a small number of institutional investors
and are eligible for trading in the PORTAL Market.
The Company does not intend to apply for a listing of the Exchange Notes on
a securities exchange. There is currently no established market for the Exchange
Notes and there can be no assurance as to the liquidity of markets that may
develop for the Exchange Notes, the ability of the holders of the Exchange Notes
to sell their Exchange Notes or the price at which such holders would be able to
sell their Exchange Notes. If such markets were to exist, the Exchange Notes
could trade at prices that may be lower than the initial market values thereof
depending on many factors, including prevailing interest rates and the markets
for similar securities. Although there is currently no market for the Exchange
Notes, the Initial Purchasers have advised the Company that they currently
intend to make a market in the Exchange Notes. However, the Initial Purchasers
are not obligated to do so, and any market making with respect to the Exchange
Notes may be discontinued at any time without notice.
CONTROL BY ARTAL AND FLOWERS
Artal and Flowers each owns 45.2% (or 39.1% on a fully diluted basis) of the
outstanding INFLO Common Stock, which in turn owns 100% of the outstanding
common stock of the Company. Accordingly, Artal and Flowers control the Company
and have the power to elect all of its directors, appoint management and,
subject to Bermore's rights under the GFI Stockholder's Agreement (defined
below), approve any action requiring the approval of the Company's stockholders,
including adopting amendments to the Company's Certificate of Incorporation and
approving mergers or sales of substantially all of the Company's assets.
Pursuant to the Investor Stockholders' Agreement, each of Artal and Flowers has
the right to require the sale of INFLO after January 26, 1999, and both have
certain demand and other incidental registration rights. There can be no
assurance that the interests of Artal and Flowers will not conflict with the
interests of holders of the Notes. See "Sponsors," "Management," "Principal
Stockholders" and "Certain Related Transactions."
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<PAGE>
THE ACQUISITIONS
KEEBLER ACQUISITION
On January 26, 1996, INFLO, a newly formed Delaware corporation owned by
Artal, Flowers and certain members of Keebler's current management, acquired all
of the shares of Keebler for an aggregate consideration of $454.9 million
(excluding related fees and expenses and after receipt of $32.6 million cash as
a post-closing working capital adjustment) through Keebler Acquisition Corp., a
wholly owned subsidiary of INFLO. Immediately after the Keebler Acquisition,
Keebler Acquisition Corp. merged with and into Keebler with the surviving entity
later being named Keebler Corporation. Prior to the Keebler Acquisition, Keebler
was an indirect, wholly owned subsidiary of United Biscuits. For the fiscal
years ended January 1, 1994, December 31, 1994 and December 30, 1995, Keebler
had $1,453.8 million, $1,452.9 million and $1,486.8 million in gross sales,
respectively, and $167.6 million (before restructuring charges of $102.9
million), $139.1 million and $71.1 million in EBITDA, respectively.
Financing for the Keebler Acquisition was comprised of (i) a $157.5 million
capital contribution provided by INFLO, (ii) a $200.0 million advance under the
Senior Credit Facility, which is provided by Lenders for whom Scotiabank acts as
administrative agent, (iii) $125.0 million of proceeds from the sale of the 12%
Increasing Rate Extendable Senior Subordinated Notes (the "Increasing Rate
Notes") to an affiliate of Nomura Securities International, Inc. ("Nomura"), and
(iv) the assumption of $20.3 million of senior indebtedness. The Company
refinanced the Increasing Rate Notes with the proceeds of the issuance of the
Notes. See "Use of Proceeds."
The following table sets forth the sources and uses of funds for the Keebler
Acquisition but does not include the effect of the Offering and related
expenses.
(DOLLARS IN
MILLIONS)
SOURCES
Capital contribution from INFLO(1)......................... $ 157.5
Advances under the Senior Credit Facility.................. 200.0
Increasing Rate Notes...................................... 125.0
Assumed senior indebtedness................................ 20.3
-------
Total................................................ $ 502.8
-------
-------
USES
Purchase price(2).......................................... $ 487.5
Transaction fees and expenses(3)........................... 15.3
-------
Total................................................ $ 502.8
-------
-------
- ------------
(1) The source of the funds for the capital contribution by INFLO was provided
by the issuance by INFLO of a $32.5 million subordinated note to United
Biscuits (the "UB Note") and the sale by INFLO for $125.0 million of the
INFLO Common Stock to Artal, Flowers and members of the Company's management
team. The UB Note has been discounted in accordance with GAAP and was
recorded at $24.4 million on Keebler's consolidated balance sheet. See
"Description of the Senior Credit Facility and the UB Note--the UB Note."
(2) An affiliate of United Biscuits has paid a $32.6 million post-closing
working capital adjustment pursuant to the stock purchase agreement between
INFLO and such affiliate of United Biscuits, which is reflected on Keebler's
balance sheet but is not reflected in the purchase price set forth above.
(3) An additional $1.2 million of fees and expenses in connection with the
Keebler Acquisition were financed from Keebler's operating cash.
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<PAGE>
SUNSHINE ACQUISITION
On June 4, 1996, the Company acquired Sunshine for an aggregate
consideration of $171.6 million (excluding related fees and expenses). Prior to
the Sunshine Acquisition, Sunshine was a wholly owned subsidiary of GFI, a
privately held corporation headquartered in San Mateo, California. For the
fiscal years ended March 31, 1994, 1995 and 1996, respectively, Sunshine had
$665.4 million, $654.4 million and $649.8 million (or $607.0 million on a pro
forma basis) in gross sales, respectively, and $25.3 million, $(8.3) million
(before restructuring charges of $21.9 million) and $19.3 million (or $24.7
million on a pro forma basis) in EBITDA, respectively.
The Sunshine Acquisition was funded by (i) $154.0 million in cash, of which
$40.0 million was provided by Keebler's existing cash and $114.0 million (net of
cash acquired of $1.8 million) was provided by borrowings under the Senior
Credit Facility and (ii) the issuance to GFI of approximately $23.6 million of
INFLO Common Stock and warrants, which was accounted for as a capital
contribution.
The following table sets forth the sources and uses of funds for the
Sunshine Acquisition.
(DOLLARS IN
MILLIONS)
SOURCES
Available cash............................................. $ 40.0
Advances under the Senior Credit Facility.................. 114.0
Capital contribution from INFLO(1)......................... 23.6
-------
Total................................................ $ 177.6
-------
-------
USES
Purchase price............................................. $ 171.6
Transaction fees and expenses(2)........................... 6.0
-------
Total................................................ $ 177.6
-------
-------
- ------------
(1) The source of the capital contribution from INFLO was provided for by the
sale to GFI for $23.6 million of shares of INFLO Common Stock and warrants
to purchase additional shares of INFLO Common Stock.
(2) Estimated.
SPONSORS
Artal and Flowers each owns 45.2% (or 39.1% on a fully diluted basis) of the
outstanding INFLO Common Stock, and INFLO owns 100% of the outstanding common
stock of the Company. Bermore owns 7.3% of the outstanding INFLO Common Stock
and warrants to purchase additional shares, which together with Bermore's
existing shares would represent approximately 13.2% of the shares of INFLO
Common Stock on a fully diluted basis. Members of Keebler's management own the
remaining 2.3% of the outstanding INFLO Common Stock and will have the right to
purchase through options (two-thirds of which will vest upon the attainment of
certain performance criteria) an additional number of shares of INFLO Common
Stock, which together with management's existing shares would represent up to
approximately 8.6% of the shares of INFLO Common Stock on a fully diluted basis.
Both Artal and Flowers have extensive experience in the U.S. baking industry and
intend to work closely with management to execute the Company's strategic plan.
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<PAGE>
ARTAL
Artal is a private Luxembourg investment company, which is controlled by a
group of Belgian families who are the former owners of Raffinerie Tirlemontoise,
the leading Belgian sugar company. In 1985, Invus was independently formed in
New York and engaged by Artal to develop and implement an investment strategy
through acquisitions in the U.S. food industry on behalf of Artal.
Invus focuses Artal's investments within the U.S. food industry, often
through acquisitions of seemingly mature companies, where significant value can
be created by implementing a well defined business plan to leverage a strategic
opportunity that has been identified. Previous investments include taking
regional brands national (i.e., Polaner All-Fruit jams and jellies),
consolidating a fragmented industry (i.e., Stella Foods), integrating
quasi-competitors to rationalize costs and leverage management skills (i.e.,
Metz/Heileman), or adjusting a faulty corporate strategy to take advantage of a
fundamentally sound strategic position (i.e., Mother's). Based on Invus' advice,
Artal assembles experienced management teams, who generally co-invest along with
Artal, to help develop and implement its business plan.
A significant portion of Artal's investments in the U.S. has been made in
the baking industry. Based on Invus' advice, Artal formed the leading full-line
direct-store delivery baking company in the upper Mid-West region, through the
acquisition, merger and integration of Heileman Baking Company and Metz Baking
Company. Under the Metz management team, production was rationalized and the
logistics system streamlined. Separately, Artal, on Invus' advice, also acquired
Mother's in September 1990, working with Sam K. Reed as a management investor
and partner. Mother's produces and markets cookies in 13 western states through
a DSD sales and distribution system. Several key executives were recruited to
form a new senior management team along with executives retained from prior
management. Based on Invus' advice, Artal and the new management group developed
and implemented a new marketing strategy, which emphasized brand profitability
while reducing marketing expenses. Based on Invus' advice, Artal and the new
management controlled fixed costs and improved bakery efficiencies, which
combined with the new marketing strategy, improved operating earnings during the
first year under new ownership, which improvement continued each year through
Artal's sale of Mother's in August 1993.
By 1993, Artal, on Invus' advice, had acquired over 25 businesses, which
were grouped into eight core companies in sectors ranging from wholesale baking
and cookies and crackers to specialty cheeses and meats, with consolidated sales
of approximately $2.0 billion. During that year, Artal sold substantially all
the acquired businesses in two separate transactions.
FLOWERS
Flowers, a New York Stock Exchange-listed company, began business in 1919 as
Flowers Baking Company, Inc. in Thomasville, Georgia. Flowers operates in the
packaged foods industry and serves the grocery, deli/bakery, foodservice,
restaurant and fast food markets. In fiscal 1995, the company generated sales of
$1.1 billion. In terms of fresh branded retail bread and roll market shares as
reported by A.C. Nielsen in 1995, Flowers ranks number one in ten of its fifteen
major markets and number two in its remaining five major markets. In addition,
Flowers' Nature's Own brand is the number one brand of wheat/variety bread in
the United States based on 1995 supermarket sales as reported by IRI.
Today, Flowers is one of the country's largest manufacturers and marketers
of fresh and frozen baked goods. Flowers has attained this position through its
focus on five core strategies: (1) producing and marketing a wide variety of
consumer, value added, high quality products; (2) a continuing focus on lowering
production and distribution costs, through both cost reductions and capital
investment; (3) building an efficient product distribution network; (4)
acquiring and integrating fresh and frozen baked goods businesses; and (5)
developing a broad mix of sales channels, including grocery chains, wholesalers,
foodservice distributors and fast food chains.
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<PAGE>
Since 1967, Flowers has made over 75 acquisitions in the U.S. food industry
with an aggregate value of over $300 million. With most of these acquisitions,
Flowers has combined manufacturing, marketing, sales and distribution systems of
the acquired businesses with those of Flowers' existing businesses. The $61.1
million Flowers has invested in the Company is currently its single largest
investment in another company.
Among other projects, the Company is currently developing and taking
advantage of purchasing synergies with Flowers and exploring possible reciprocal
co-packaging and distribution arrangements with Flowers. However, there can be
no assurances that such synergies or arrangements will be realized. See
"Business--Company Strategy" and "--Raw Materials."
USE OF PROCEEDS
There will be no cash proceeds to the Company from the Exchange Offer.
The net proceeds from the offering of the Notes (the "Notes Offering"),
estimated to be approximately $120.25 million after deducting discounts,
commissions and estimated fees and expenses incurred in connection therewith,
were applied (together with cash and/or borrowings under the Revolving Credit
Facility) to repay approximately $125 million in indebtedness outstanding under
the Increasing Rate Notes (including accrued interest) incurred in connection
with the Keebler Acquisition, of which approximately $77.5 million were then
held by an affiliate of Nomura.
The Increasing Rate Notes would have matured on January 26, 1998, subject to
exchange at such time for additional notes of the Company. The Increasing Rate
Notes bore interest at 12% per annum at such time. The proceeds from the sale of
the Increasing Rate Notes were used to finance the Keebler Acquisition. See "The
Acquisitions" and "Plan of Distribution."
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
The Notes were originally issued and sold on June 25, 1996. The offer and
sale of the Notes was not required to be registered under the Securities Act in
reliance upon the exemption provided by Section 4(2) of the Securities Act. In
connection with the sale of the Notes, the Company and the Guarantors agreed to
file with the Commission a registration statement relating to an exchange offer
pursuant to which new senior subordinated notes of the Company covered by such
registration statement and containing terms identical in all material respects
to the terms of the Notes would be offered in exchange for Notes tendered at the
option of the holders thereof, or, if applicable interpretations of the staff of
the Commission did not permit the Company to effect such an exchange offer, the
Company and the Guarantors agreed to file a shelf registration statement
covering resales of the Notes (the "Shelf Registration Statement") and use their
best efforts to have such Shelf Registration Statement become effective under
the Securities Act on or prior to the later of (x) the 120th calendar day after
June 25, 1996 or (y) the 45th calendar day after the publication of the change
in law or interpretation and to keep effective the Shelf Registration Statement
until the earlier of three years from June 25, 1996 or such shorter period
ending when all Notes covered by the Shelf Registration Statement have been sold
in the manner set forth and as contemplated in the Shelf Registration Statement
or when the Notes become eligible for resale pursuant to Rule 144 under the
Securities Act without volume restrictions.
The purpose of the Exchange Offer is to fulfill certain of the Company's and
the Guarantors' obligations under the Registration Rights Agreement. This
Prospectus may not be used by any holder of the Notes or any holder of the
Exchange Notes to satisfy the registration and prospectus delivery requirements
under the Securities Act that may apply in connection with any resale of such
Notes or Exchange Notes. See "Terms of the Exchange" below.
20
<PAGE>
Each broker-dealer that receives Exchange Notes for its own account in
exchange for Notes, where such Notes were acquired by such broker-dealer as a
result of market-making activities or other trading activities, must acknowledge
that it will deliver a prospectus in connection with any resale of such Exchange
Notes. See "Plan of Distribution."
TERMS OF THE EXCHANGE
The Company hereby offers to exchange, subject to the conditions set forth
herein and in the Letter of Transmittal accompanying this Prospectus, $1,000 in
principal amount of Exchange Notes for each $1,000 in principal amount of Notes.
The terms of the Exchange Notes are identical in all material respects to the
terms of the Notes for which they may be exchanged pursuant to this Exchange
Offer, except that the Exchange Notes will generally be freely transferable by
holders thereof and will not be subject to any covenant regarding registration.
The Exchange Notes will evidence the same indebtedness as the Notes and will be
entitled to the benefits of the Indenture. See "Description of Exchange Notes."
The Exchange Offer is not conditioned upon any minimum aggregate principal
amount of Notes being tendered for exchange.
The Company has not requested, and does not intend to request, an
interpretation by the staff of the Commission with respect to whether the
Exchange Notes issued pursuant to the Exchange Offer in exchange for the Notes
may be offered for sale, resold or otherwise transferred by any holder without
compliance with the registration and prospectus delivery provisions of the
Securities Act. Instead, based on an interpretation by the staff of the
Commission set forth in a series of no-action letters issued to third parties,
the Company believes that Exchange Notes issued pursuant to the Exchange Offer
in exchange for Notes may be offered for resale, resold and otherwise
transferred by any holder of such Exchange Notes (other than any such holder
that is an "affiliate" or the Company within the meaning of Rule 405 under the
Securities Act) without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such Exchange Notes are acquired
in the ordinary course of such holder's business and such holder has no
arrangement or understanding with any person to participate in the distribution
of such Exchange Notes and neither such holder nor any other such person is
engaging in or intends to engage in the distribution of such Exchange Notes.
Since the Commission has not considered the Exchange Offer in the context of a
no-action letter, there can be no assurance that the staff of the Commission
would make a similar determination with respect to the Exchange Offer. Any
holder who is an affiliate of the Company or who tenders in the Exchange Offer
for the purpose of participating in a distribution of the Exchange Notes cannot
rely on such interpretation by the staff of the Commission and must comply with
the registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. Each holder must acknowledge that it has
no arrangement or understanding with any person to participate in the
distribution of Exchange Notes. Each broker-dealer that receives Exchange Notes
for its own account in exchange for Notes, where such Notes were acquired by
such broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes. See "--Terms and Conditions of the
Letter of Transmittal" and "Plan of Distribution."
Interest on the Exchange Notes shall accrue from the last Interest Payment
Date on which interest was paid on the Notes so surrendered or, if no interest
has been paid on such Notes, from June 25, 1996.
Tendering holders of the Notes shall not be required to pay brokerage
commissions or fees or, subject to the instructions in the Letter of
Transmittal, transfer taxes with respect to the exchange of the Notes pursuant
to the Exchange Offer.
21
<PAGE>
EXPIRATION DATE; EXTENSION; TERMINATION; AMENDMENTS
The Exchange Offer shall expire on the Expiration Date. The term "Expiration
Date" means 5:00 p.m., New York City time, on , 1996, unless the
Company in its sole discretion extends the period during which the Exchange
Offer is open, in which event the term "Expiration Date" shall mean the latest
time and date on which the Exchange Offer, as so extended by the Company, shall
expire. The Company reserves the right to extend the Exchange Offer at any time
and from time to time by giving oral or written notice to United States Trust
Company of New York (the "Exchange Agent) and by timely public announcement
communicated, unless otherwise required by applicable law or regulation, by
making a release to the Dow Jones News Service. During any extension of the
Exchange Offer, all Notes previously tendered and not withdrawn pursuant to the
Exchange Offer will remain subject to the Exchange Offer.
The term "Exchange Date" means the first business day following the
Expiration Date. The Company expressly reserves the right to (i) terminate the
Exchange Offer and not accept for exchange any Notes if any of the events set
forth below under "Conditions to the Exchange Offer" shall have occurred and
shall not have been waived by the Company and (ii) amend the terms of the
Exchange Offer in any manner which, in its good faith judgment, is advantageous
to the holders of the Notes, whether before or after any tender of the Notes.
Unless the Company terminates the Exchange Offer prior to 5:00 p.m., New York
City time, on the Expiration Date, the Company will exchange the Exchange Notes
for the Notes on the Exchange Date.
TENDER PROCEDURE
The tender to the Company of Notes by a holder thereof pursuant to one of
the procedures set forth below and the acceptance thereof by the Company will
constitute a binding agreement between such holder and the Company in accordance
with the terms and subject to the conditions set forth herein and in the Letter
of Transmittal. This Prospectus, together with the Letter of Transmittal, will
first be sent out on or about , 1996, to all holders of Notes known
to the Company and the Exchange Agent.
A holder of Notes may tender the same by (i) properly completing and signing
the Letter of Transmittal or a facsimile thereof (all references in this
Prospectus to the Letter of Transmittal shall be deemed to include a facsimile
thereof) and delivering the same, together with the certificate or certificates
representing the Notes being tendered and any required signature guarantees and
any other documents required by the Letter of Transmittal, to the Exchange Agent
at its address set forth on the Letter of Transmittal on or prior to the
Expiration Date (or complying with the procedure for book-entry transfer
described below) or (ii) complying with the guaranteed delivery procedures
described below.
If tendered Notes are registered in the name of the signer of the Letter of
Transmittal and the Exchange Notes to be issued in exchange therefor are to be
issued (and any untendered Notes are to be reissued) in the name of the
registered holder (which term, for the purposes described herein, shall include
any participant in The Depository Trust Company (also referred to as a
"book-entry transfer facility") whose name appears on a security listing as the
owner of Notes), the signature of such signer need not be guaranteed. In any
other case, the tendered Notes must be endorsed or accompanied by written
instruments of transfer in form satisfactory to the Company and duly executed by
the registered holder, and the signature on the endorsement or instrument of
transfer must be guaranteed by a commercial bank or trust company located or
having an office, branch, agency or correspondent in the United States, or by a
member firm of a registered national securities exchange or of the National
Association of Securities Dealers, Inc. (any of the foregoing hereinafter
referred to as an "Eligible Institution"). If the Exchange Notes and/or Notes
not exchanged are to be delivered to an address other than that of the
registered holder appearing on the note register for the Notes, the signature in
the Letter of Transmittal must be guaranteed by an Eligible Institution.
22
<PAGE>
THE METHOD OF DELIVERY OF NOTES AND ALL OTHER DOCUMENTS IS AT THE ELECTION
AND RISK OF THE HOLDER. IF SENT BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL,
RETURN RECEIPT REQUESTED, BE USED, PROPER INSURANCE OBTAINED, AND THE MAILING BE
MADE SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE TO PERMIT DELIVERY TO THE
EXCHANGE AGENT ON OR BEFORE THE EXPIRATION DATE. NO LETTERS OF TRANSMITTAL OR
NOTES SHOULD BE SENT TO THE COMPANY.
The Exchange Agent will make a request promptly after the date of this
Prospectus to establish accounts with respect to the Notes at the book-entry
transfer facility for the purpose of facilitating the Exchange Offer, and
subject to the establishment thereof, any financial institution that is a
participant in the book-entry transfer facility's system may make book-entry
delivery of Notes by causing such book-entry transfer facility to transfer such
Notes into the Exchange Agent's account with respect to the Notes in accordance
with the book-entry transfer facility's procedures for such transfer. Although
delivery of Notes may be effected through book-entry transfer into the Exchange
Agent's accounts at the book-entry transfer facility, an appropriate Letter of
Transmittal with any required signature guarantee and all other required
documents must in each case be transmitted to and received or confirmed by the
Exchange Agent at its address set forth on the Letter of Transmittal on or prior
to the Expiration Date, or, if the guaranteed delivery procedures described
below are complied with, within the time period provided under such procedures.
If a holder desires to accept the Exchange Offer and time will not permit a
Letter of Transmittal or Notes to reach the Exchange Agent before the Expiration
Date or the procedure for book-entry transfer cannot be completed on a timely
basis, a tender may be effected if the Exchange Agent has received at its office
listed on the Letter of Transmittal on or prior to the Expiration Date a letter,
telegram or facsimile transmission (receipt confirmed by telephone and an
original delivered by guaranteed overnight courier) from an Eligible Institution
setting forth the name and address of the tendering holder, the names in which
the Notes are registered and, if possible, the certificate numbers of the Notes
to be tendered, and stating that the tender is being made thereby and
guaranteeing that three New York Stock Exchange trading days after the date of
execution of such letter, telegram or facsimile transmission by the Eligible
Institution, the Notes, in proper form for transfer (or a confirmation of
book-entry transfer of such Notes into the Exchange Agent's account at the
book-entry facility), will be delivered by such Eligible Institution together
with a properly completed and duly executed Letter of Transmittal (and any other
required documents). Unless Notes being tendered by the above-described method
are deposited with the Exchange Agent within the time period set forth above
(accompanied or preceded by a properly completed Letter of Transmittal and any
other required documents), the Company may, at its option, reject the tender.
Copies of a notice of Guaranteed Delivery which may be used by Eligible
Institutions for the purposes described in this paragraph are available from the
Exchange Agent.
A tender will be deemed to have been received as of the date when (i) the
tendering holder's properly completed and duly signed Letter of Transmittal
accompanied by the Notes (or a confirmation of book-entry transfer of such Notes
into the Exchange Agent's account at the book-entry transfer facility) is
received by the Exchange Agent, or (ii) a Notice of Guaranteed Delivery or
letter, telegram or facsimile transmission to similar effect (as provided above)
from an Eligible Institution is received by the Exchange Agent. Issuances of
Exchange Notes in exchange for Notes tendered pursuant to a Notice of Guaranteed
Delivery or letter, telegram or facsimile transmission to similar effect (as
provided above) by an Eligible Institution will be made only against deposit of
the Letter of Transmittal (and any other required documents) and the tendered
Notes.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for exchange of any tender of Notes will be determined
by the Company, whose determination will be final and binding. The Company
reserves the absolute right to reject any Notes not properly tendered or the
acceptance for exchange of which may, in the opinion of the Company's counsel,
be unlawful. The Company also reserves the absolute right to waive any of the
conditions of the Exchange Offer or any defect or irregularity in the tender of
any Notes. Unless waived, any defects or irregularities in connection with
tenders of Notes for exchange must be cured within such reasonable period of
time as
23
<PAGE>
the Company shall determine. None of the Company, the Exchange Agent or any
other person will be under any duty to give notification of any defects or
irregularities in tenders or incur any liability for failure to give any such
notification.
Each broker-dealer that receives Exchange Notes for its own account in
exchange for Notes, where such Notes were acquired by such broker-dealer as a
result of market-making activities or other trading activities, must acknowledge
that it will deliver a prospectus in connection with any resale of such Exchange
Notes. See "Plan of Distribution."
TERMS AND CONDITIONS OF THE LETTER OF TRANSMITTAL
The Letter of Transmittal contains, among other things, the following terms
and conditions, which are part of the Exchange Offer.
The party tendering Notes for exchange (the "Transferor") exchanges, assigns
and transfers the Notes to the Company and irrevocably constitutes and appoints
the Exchange Agent as the Transferor's agent and attorney-in-fact to cause the
Notes to be assigned, transferred and exchanged. The Transferor represents and
warrants that it has full power and authority to tender, exchange, assign and
transfer the Notes and to acquire Exchange Notes issuable upon the exchange of
such tendered Notes, and that, when the same are accepted for exchange, the
Company will acquire good and unencumbered title to the tendered Notes, free and
clear of all liens, restrictions, charges and encumbrances and not subject to
any adverse claim. The Transferor also warrants that it will, upon request,
execute and deliver any additional documents deemed by the Exchange Agent or the
Company to be necessary or desirable to complete the exchange, assignment and
transfer of tendered Notes or transfer ownership of such Notes on the account
books maintained by a book-entry transfer facility. The Transferor further
agrees that acceptance of any tendered Notes by the Company and the issuance of
Exchange Notes in exchange therefor shall constitute performance in full by the
Company of certain of their obligations under the Registration Rights Agreement.
All authority conferred by the Transferor will survive the death or incapacity
of the Transferor and every obligation of the Transferor shall be binding upon
the heirs, legal representatives, successors, assigns, executors and
administrators of such Transferor.
By tendering, each holder of Notes will represent to the Company that, among
other things, (i) Exchange Notes to be acquired by such holder of Notes in
connection with the Exchange Offer are being acquired by such holder in the
ordinary course of business of such holder, (ii) such holder has no arrangement
or understanding with any person to participate in the distribution of the
Exchange Notes, (iii) such holder acknowledges and agrees that any person who is
a broker-dealer registered under the Exchange Act or is participating in the
Exchange Offer for the purposes of distributing the Exchange Notes must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with a secondary resale transaction of the Exchange Notes acquired
by such person and cannot rely on the position of the staff of the Commission
set forth in certain no-action letters, (iv) such holder understands that a
secondary resale transaction described in clause (iii) above and any resales of
Exchange Notes obtained by such holder in exchange for Notes acquired by such
holder directly from the Company should be covered by an effective registration
statement containing the selling securityholder information required by Item 507
or Item 508, as applicable, of Regulation S-K of the Commission and (v) such
holder is not an "affiliate," as defined in Rule 405 under the Securities Act,
of the Company. If the holder is a broker-dealer that will receive Exchange
Notes for such holder's own account in exchange for Notes that were acquired as
a result of market-making activities or other trading activities, such holder
will be required to acknowledge in the Letter of Transmittal that such holder
will deliver a prospectus in connection with any resale of such Exchange Notes;
however, by so acknowledging and by delivering a prospectus, such holder will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. See "Plan of Distribution." This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of Exchange Notes received in exchange for Notes where
such Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities. The Company will, for
24
<PAGE>
a period of 180 days after the Expiration Date, make copies of this Prospectus
available to any broker-dealer for use in connection with any such resale.
WITHDRAWAL RIGHTS
Tenders of Notes pursuant to the Exchange Offer may be withdrawn at any time
prior to the Expiration Date.
To be effective, a written, telegraphic, telex or facsimile transmission
notice of withdrawal must be timely received by the Exchange Agent at its
address set forth on the Letter of Transmittal, and with respect to a facsimile
transmission, must be confirmed by telephone and an original delivered by
guaranteed overnight delivery. Any such notice of withdrawal must specify the
person named in the Letter of Transmittal as having tendered Notes to be
withdrawn, the certificate numbers of Notes to be withdrawn, the principal
amount of Notes to be withdrawn, a statement that such holder is withdrawing his
election to have such Notes exchanged, and the name of the registered holder of
such Notes, and must be signed by the holder in the same manner as the original
signature on the Letter of Transmittal (including any required signature
guarantees) or be accompanied by evidence satisfactory to the Company that the
person withdrawing the tender has succeeded to the beneficial ownership of the
Notes being withdrawn. The Exchange Agent will return the properly withdrawn
Notes promptly following receipt of notice of withdrawal. If Notes have been
tendered pursuant to the procedure for book-entry transfer, any notice of
withdrawal must specify the name and number of the account at the book-entry
transfer facility to be credited with the withdrawn Notes or otherwise comply
with the book-entry transfer procedure. All questions as to the validity of
notices of withdrawals, including time of receipt, will be determined by the
Issuer, and such determination will be final and binding on all parties.
Any Notes so withdrawn will be deemed not to have been validly tendered for
exchange for purposes of the Exchange Offer. Any Notes which have been tendered
for exchange but which are not exchanged for any reason will be returned to the
holder thereof without cost to such holder (or, in the case of Notes tendered by
book-entry transfer into the Exchange Agent's account at the book-entry transfer
facility pursuant to the book-entry transfer procedures described above, such
Notes will be credited to an account with such book-entry transfer facility
specified by the holder) as soon as practicable after withdrawal, rejection of
tender or termination of the Exchange Offer. Properly withdrawn Notes may be
retendered by following one of the procedures described under "--Tender
Procedure" above, at any time on or prior to the Expiration Date.
ACCEPTANCE OF NOTES FOR EXCHANGE; DELIVERY OF EXCHANGE NOTES
Upon the satisfaction or waiver of all the terms and conditions of the
Exchange Offer, the acceptance for exchange of Notes validly tendered and not
withdrawn and issuance of the Exchange Notes will be made on the Exchange Date.
For the purposes of the Exchange Offer, the Company shall be deemed to have
accepted for exchange validly tendered Notes when, as and if the Company has
given oral or written notice thereof to the Exchange Agent.
The Exchange Agent will act as agent for the tendering holders of Notes for
the purposes of receiving Exchange Notes from the Company and causing the Notes
to be assigned, transferred and exchanged. Upon the terms and subject to the
conditions of the Exchange Offer, delivery of Exchange Notes to be issued in
exchange for accepted Notes will be made by the Exchange Agent promptly after
acceptance of the tendered Notes. Tendered Notes not accepted for exchange by
the Company will be returned without expense to the tendering holders promptly
following the Expiration Date or, if the Company terminated the Exchange Offer
prior to the Expiration Date, promptly after the Exchange Offer is so
terminated.
25
<PAGE>
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, or any extension
of the Exchange Offer, the Company will not be required to issue Exchange Notes
in respect of any properly tendered Notes not previously accepted and may
terminate the Exchange Offer (by oral or written notice to the Exchange Agent
and by timely public announcement communicated, unless otherwise required by
applicable law or regulation, by making a release to the Dow Jones News
Service), or, at its option, modify or otherwise amend the Exchange Offer, if
any of the following events occur:
(a) any law, rule or regulation or applicable interpretations of the
staff of the Commission which, in the good faith determination of the
Company, do not permit the Company to effect the Exchange Offer; or
(b) there shall occur a change in the current interpretation by the
staff of the Commission which permits the Exchange Notes issued pursuant to
the Exchange Offer in exchange for Notes to be offered for resale, resold
and otherwise transferred by holders thereof (other than any such holder
that is an "affiliate" of the Company within the meaning of Rule 405 under
the Securities Act) without compliance with the registration and prospectus
delivery provisions of the Securities Act provided that such Exchange Notes
are acquired in the ordinary course of such holders' business and such
holders have no arrangements with any person to participate in the
distribution of such Exchange Notes; or
(c) there shall have occurred (i) any general suspension of or general
limitation on prices for, or trading in, securities on any national
securities exchange or in the over-the-counter market, (ii) any limitation
by any governmental agency or authority which may adversely affect the
ability of the Issuer to complete the transactions contemplated by the
Exchange Offer, (iii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States or any
limitation by any governmental agency or authority which adversely affects
the extension of credit or (iv) a commencement of a war, armed hostilities
or other similar international calamity directly or indirectly involving the
United States, or, in the case of any of the foregoing existing at the time
of the commencement of the Exchange Offer, a material acceleration or
worsening thereof; or
(d) any change (or any development involving a prospective change) shall
have occurred or be threatened in the business, properties, assets,
liabilities, financial condition, operations, results of operations or
prospects of the Company that is or may be adverse to the Company, or the
Company shall have become aware of facts that have or may have adverse
significance with respect to the value of the Notes or the Exchange Notes;
which, in the reasonable judgment of the Company in any case, and regardless of
the circumstances (including any action by the Company) giving rise to any such
condition, makes it inadvisable to proceed with the Exchange Offer and/or with
such acceptance for exchange or with such exchange.
The Company expressly reserves the right to terminate the Exchange Offer and
not accept for exchange any Notes upon the occurrence of any of the foregoing
conditions (which represent all of the material conditions to the acceptance by
the Company of properly tendered Notes). In addition, the Company may amend the
Exchange Offer at any time prior to the Expiration Date if any of the conditions
set forth above occur. Moreover, regardless of whether any of such conditions
has occurred, the Company may amend the Exchange Offer in any manner which, in
its good faith judgment, is advantageous to holders of the Notes.
The foregoing conditions are for the sole benefit of the Company and may be
waived by the Company, in whole or in part, in the reasonable judgment of the
Company. Any determination made by the Company concerning an event, development
or circumstance described or referred to above will be final and binding on all
parties.
The Company is not aware of the existence of any of the foregoing events.
26
<PAGE>
EXCHANGE AGENT
United States Trust Company of New York has been appointed as the Exchange
Agent for the Exchange Offer, Letters of Transmittal must be addressed to the
Exchange Agent at its address set forth on the Letter of Transmittal. United
States Trust Company of New York also acts as Trustee and Registrar (the
"Registrar") under the Indenture.
DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ON THE LETTER OF TRANSMITTAL,
OR TRANSMISSIONS OF INSTRUCTIONS VIA A FACSIMILE OR TELEX NUMBER OTHER THAN THE
ONES SET FORTH ON THE LETTER OF TRANSMITTAL, WILL NOT CONSTITUTE A VALID
DELIVERY.
SOLICITATION OF TENDERS; EXPENSES
The Company has not retained any dealer-manager or similar agent in
connection with the Exchange Offer and will not make any payments to brokers,
dealers or others for soliciting acceptances of the Exchange Offer. The Company
will, however, pay the Exchange Agent reasonable and customary fees for its
services and will reimburse it for reasonable out-of-pocket expenses in
connection therewith. The Company will also pay brokerage houses and other
custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of this and related documents to the
beneficial owners of the Notes and in handling or forwarding tenders for their
customers.
No person has been authorized to give any information or to make any
representation in connection with the Exchange Offer other than those contained
in this Prospectus. If given or made, such information or representations should
not be relied upon as having been authorized by the Company. Neither the
delivery of this Prospectus nor any exchange made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Company since the respective dates as of which information is
given herein. The Exchange Offer is not being made to (nor will tenders be
accepted from or on behalf of) holders of Notes in any jurisdiction in which the
making of the Exchange Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction. However, the Company may, at its
discretion, take such action as it may deem necessary to make the Exchange Offer
in any such jurisdiction and extend the Exchange Offer to holder of Notes in
such jurisdiction. In any jurisdiction in which the securities laws or blue sky
laws of which require the Exchange Offer to be made by a licensed broker or
dealer, the Exchange Offer is being made on behalf of the Company by one or more
registered brokers or dealers which are licensed under the laws of such
jurisdiction.
TRANSFER TAXES
Holders who tender their Notes for exchange will not be obligated to pay any
transfer taxes in connection therewith, except that holders who instruct the
Company to register Exchange Notes in the name of, or request that Notes not
tendered or not accepted in the Exchange Offer be returned to, a person other
than the registered tendering holder will be responsible for the payment of any
applicable transfer tax thereon.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Notes who do not exchange their Notes for Exchange Notes pursuant
to the Exchange Offer will continue to be subject to the restrictions on
transfer of such Notes as set forth in the legend thereon as a consequence of
the offer or sale of the Notes pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act
and applicable state securities laws. In general, the Notes may not be offered
or sold, unless registered under the Securities Act, except pursuant to an
exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. The Company does not currently anticipate that
it will register the Exchange Notes under the Securities Act. Based on
interpretations by the staff of the Commission, the
27
<PAGE>
Company believes that Exchange Notes issued pursuant to the Exchange Offer in
exchange for Notes may be offered for resale, resold or otherwise transferred by
holders thereof (other than any such holder which is an "affiliate" of the
Company within the meaning of Rule 405 under the Securities Act) without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such Notes are acquired in the ordinary course of
such holders' business and such holders have no arrangement with any person to
participate in the distribution of such Exchange Notes, where such Notes were
acquired by such broker-dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes. See "Plan of Distribution."
OTHER
Participation in the Exchange Offer is voluntary, and holders of Notes
should carefully consider whether to participate. Holders of the Notes are urged
to consult their financial and tax advisors in making their own decisions on
which action to take.
As a result of the making of, and upon acceptance for exchange of all
validly tendered Notes pursuant to the terms of, this Exchange Offer, the
Company and the Guarantors will have fulfilled certain covenants contained in
the Registration Rights Agreement. Holders of Notes who do not tender their
Notes in the Exchange Offer will continue to hold such Notes and will be
entitled to all the rights, and limitations applicable thereto, under the
Indenture, except for such rights under the Registration Rights Agreement that
by their terms terminate or cease to have further effectiveness as a result of
the making of this Exchange Offer. See "Description of Exchange Notes." All
untendered Notes will continue to be subject to the restrictions on transfer set
forth in the Indenture. To the extent that Notes are tendered and accepted in
the Exchange Offer, the trading market for untendered Notes could be adversely
affected.
The Company may in the future seek to acquire untendered Notes in open
market or privately negotiated transactions, through subsequent exchange offers
or otherwise. The Company has no present plan to acquire any Notes which are not
tendered in the Exchange Offer.
28
<PAGE>
PRO FORMA CAPITALIZATION
The following table sets forth the unaudited pro forma consolidated
capitalization of the Company as of April 20, 1996 after giving effect to the
Sunshine Acquisition and the related transactions, and as adjusted to give
effect to the Notes Offering (excluding related fees and expenses) and the use
of the proceeds thereof as described under "Use of Proceeds", as if all such
transactions had occurred on April 20, 1996. The information contained in this
table should be read in conjunction with the financial data under "Selected
Unaudited Pro Forma Consolidated Financial Data," the financial data under
"Selected Historical Consolidated Financial Data" and the historical audited
consolidated financial statements of Keebler and Sunshine, each with the related
notes thereto and included elsewhere herein.
<TABLE>
<CAPTION>
AS OF APRIL 20, 1996
---------------------------------------
PRO FORMA
PRO FORMA ADJUSTMENTS AS ADJUSTED
--------- ----------- -----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Cash and cash equivalents.................................. $ 8.7 -- $ 8.7
--------- ----------- -----------
--------- ----------- -----------
Short-term debt and current maturities of long-term debt... $ 21.3 -- $ 21.3
Long-term debt:
Senior Credit Facility:
Revolving Credit Facility.............................. 20.8 -- 20.8
Term Loans............................................. 283.0 -- 283.0
Other long-term debt..................................... 10.0 -- 10.0
Increasing Rate Notes.................................... 125.0 $(125.0) --
Notes.................................................... -- 125.0 125.0
--------- ----------- -----------
Total debt (including current maturities).............. 460.1 -- 460.1
--------- ----------- -----------
Shareholder's equity:
Common Stock (1,000,000 shares outstanding,
$1.00 par value)....................................... 1.0 -- 1.0
Additional paid-in capital............................. 172.0 -- 172.0
Retained earnings...................................... 1.6 -- 1.6
--------- ----------- -----------
Total shareholder's equity............................. 174.6 -- 174.6
--------- ----------- -----------
TOTAL CAPITALIZATION....................................... $ 634.7 -- $ 634.7
--------- ----------- -----------
--------- ----------- -----------
</TABLE>
29
<PAGE>
SELECTED UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
COMPANY
The following unaudited pro forma consolidated financial data of the Company
have been derived by the application of pro forma adjustments to the unaudited
pro forma consolidated financial data of Keebler and Sunshine included elsewhere
herein. The unaudited pro forma operating data for the periods presented give
effect to the Sunshine Acquisition and the related financing transactions, as if
the transactions had occurred as of the beginning of the periods presented. The
unaudited pro forma balance sheet of the Company gives effect to the Sunshine
Acquisition and the related financing transactions and the Notes Offering
(excluding related fees and expenses) as if the transaction occurred as of the
date presented.
COMPANY UNAUDITED PRO FORMA OPERATING DATA
<TABLE>
<CAPTION>
FISCAL YEAR ENDED FIRST QUARTER ENDED
----------------------- ---------------------
DECEMBER 30, MARCH 31, APRIL 20, MARCH 31, FIRST QUARTER
1995 1996 1995 1996 1996 1996
KEEBLER SUNSHINE COMPANY KEEBLER(1) SUNSHINE(1) COMPANY(1)
PRO FORMA PRO FORMA PRO FORMA HISTORICAL PRO FORMA PRO FORMA
------------ --------- --------- ---------- --------- -------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Gross sales.............................. $1,486.8 $ 607.0 $2,093.8 $345.6 $ 149.5 $ 495.1
Reclamations and discounts............... 43.9 20.1 64.0 10.3 7.0 17.3
------------ --------- --------- ---------- --------- ------
Net sales................................ 1,442.9 586.9 2,029.8 335.3 142.5 477.8
Cost of sales............................ 673.5 311.0 984.5 157.4 75.2 232.6
------------ --------- --------- ---------- --------- ------
Gross profit............................. 769.4 275.9 1,045.3 177.9 67.3 245.2
Selling, marketing and administrative
expenses................................ 745.1 268.5 1,013.6 166.6 68.5 235.1
------------ --------- --------- ---------- --------- ------
Income (loss) from operations............ 24.3 7.4 31.7 11.3 (1.2) 10.1
Interest expense......................... 32.1 11.3 43.4 7.7 2.8 10.5
------------ --------- --------- ---------- --------- ------
Income (loss) before income taxes........ (7.8) (3.9) (11.7 ) 3.6 (4.0) (0.4)
Income tax expense (benefit)............. -- (1.7) (1.7 ) 2.0 (1.8) 0.2
------------ --------- --------- ---------- --------- ------
Net income (loss)........................ $ (7.8) $ (2.2) $ (10.0 ) $ 1.6 $ (2.2) $ (0.6)
------------ --------- --------- ---------- --------- ------
------------ --------- --------- ---------- --------- ------
OTHER DATA:
EBITDA................................... $ 71.1 $ 24.7 $ 95.8 $ 22.7 $ 3.0 $ 25.7
Depreciation, amortization and non-cash
expenses relating to retirement benefit
programs................................ 46.8 17.3 64.1 11.4 4.2 15.6
Capital expenditures..................... $ 52.2 $ 6.1 $ 58.3 $ 2.0 $ 2.0 $ 4.0
Ratio of EBITDA to interest expense...... 2.2 x 2.4x
Ratio of earnings to fixed charges(2).... 0.8 x 1.0x
</TABLE>
- ------------
(1) The Company's first quarter 1996 comprises the twelve weeks ended April 20,
1996 for Keebler and the thirteen weeks ended March 31, 1996 for Sunshine.
Keebler's fiscal year consists of thirteen four-week periods, with its first
quarter consisting of four four-week periods. The Keebler Acquisition closed
on the last day of the first four-week period of Keebler's fiscal 1996, and
therefore its first quarter 1996 consists of the three four-week periods
ending April 20, 1996.
(2) For purposes of computing the ratio of earnings to fixed charges, earnings
consist of income before income taxes and extraordinary items plus fixed
charges (excluding capitalized interest). Fixed charges consist of interest
(including capitalized interest) on all indebtedness, amortization of
deferred financing costs and that portion of rental expense that management
believes to be representative of interest.
30
<PAGE>
COMPANY PRO FORMA BALANCE SHEET
<TABLE>
<CAPTION>
AS OF AS OF AS OF
APRIL 20, 1996 MARCH 31, 1996 APRIL 20, 1996
KEEBLER SUNSHINE COMPANY
HISTORICAL PRO FORMA PRO FORMA
-------------- -------------- --------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................ $ 46.9 $(38.2) $ 8.7
Trade accounts and notes receivable.............. 88.0 42.4 130.4
Inventories...................................... 58.6 39.0 97.6
Deferred income taxes............................ 42.2 24.6 66.8
Other............................................ 17.1 5.4 22.5
------- ------- --------------
Total current assets......................... 252.8 73.2 326.0
Property, plant and equipment, net................. 409.9 118.2 528.1
Goodwill........................................... 138.2 122.9 261.1
Prepaid pension.................................... 44.5 -- 44.5
Other assets....................................... 22.2 5.2 27.4
------- ------- --------------
TOTAL ASSETS....................................... $867.6 $319.5 $1,187.1
------- ------- --------------
------- ------- --------------
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Short-term debt and current maturities of
long-term debt................................. $ 17.8 $ 3.5 $ 21.3
Trade accounts payable........................... 70.1 32.9 103.0
Other accrued liabilities........................ 132.0 29.4 161.4
Restructuring reserves........................... 40.0 38.8 78.8
------- ------- --------------
Total current liabilities.................... 259.9 104.6 364.5
Long-term debt..................................... 326.6 112.2 438.8
Deferred income taxes.............................. 62.8 -- 62.8
Pension liability.................................. -- 26.1 26.1
Postretirement and employment obligations.......... 27.2 29.9 57.1
Restructuring reserves............................. 9.0 23.0 32.0
Deferred compensation.............................. 16.9 -- 16.9
Other liabilities.................................. 14.2 0.1 14.3
------- ------- --------------
Total liabilities............................ 716.6 295.9 1,012.5
Shareholder's equity
Contributed capital.............................. 149.4 23.6 173.0
Retained earnings................................ 1.6 -- 1.6
------- ------- --------------
Total shareholder's equity................... 151.0 23.6 174.6
------- ------- --------------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY......... $867.6 $319.5 $1,187.1
------- ------- --------------
------- ------- --------------
</TABLE>
31
<PAGE>
KEEBLER
The following unaudited pro forma consolidated financial data of Keebler
have been derived by the application of pro forma adjustments to the historical
consolidated financial statements of Keebler included elsewhere herein. The
unaudited pro forma operating data for the periods presented give effect to the
Keebler Acquisition and the Notes Offering (excluding related fees and
expenses), as if all related transactions had occurred on January 1, 1995.
KEEBLER UNAUDITED PRO FORMA OPERATING DATA
<TABLE>
<CAPTION>
FOR THE QUARTER
FOR THE YEAR ENDED DECEMBER 30, 1995 ENDED
---------------------------------------- APRIL 20, 1996
PRO FORMA ---------------
HISTORICAL ADJUSTMENTS PRO FORMA HISTORICAL
---------- ----------- --------- ---------------
<S> <C> <C> <C> <C>
(DOLLARS IN MILLIONS)
<CAPTION>
OPERATING DATA:
<S> <C> <C> <C> <C>
Gross sales................................ $ 1,486.8 $-- $1,486.8 $ 345.6
Reclamations and discounts................. 43.9 -- 43.9 10.3
---------- ----------- --------- -------
Net sales.................................. 1,442.9 -- 1,442.9 335.3
Cost of sales.............................. 672.8 0.7(a) 673.5 157.4
---------- ----------- --------- -------
Gross profit............................... 770.1 (0.7) 769.4 177.9
Selling, marketing and administrative
expenses.................................. 738.9 6.2(b) 745.1 166.6
---------- ----------- --------- -------
Income from operations..................... 31.2 (6.9) 24.3 11.3
Interest expense........................... 28.2 3.9(c) 32.1 7.7
---------- ----------- --------- -------
Income (loss) before income taxes.......... 3.0 (10.8) (7.8 ) 3.6
Income tax expense......................... -- -- (d) -- 2.0
---------- ----------- --------- -------
Net income (loss).......................... $ 3.0 $ (10.8) $ (7.8 ) $ 1.6
---------- ----------- --------- -------
---------- ----------- --------- -------
OTHER DATA:
EBITDA..................................... $ 71.1 -- $ 71.1 $ 22.7
Depreciation, amortization and non-cash
expenses relating to retirement benefit
programs................................. 39.9 $ 6.9 46.8 11.4
Capital expenditures....................... $ 52.2 -- $ 52.2 $ 2.0
</TABLE>
- ------------
<TABLE>
<C> <S>
(a) Adjustments reflect increased depreciation of factory equipment due to preliminary fixed
assets revaluation ($0.7 per year).
(b) Adjustments reflect (i) the amortization of goodwill of $138.9 over a 40-year period
($3.5 per year, net of Keebler's historical goodwill amortization of $1.7 per year),
(ii) increased depreciation of buildings and delivery/administrative equipment due to
preliminary fixed asset revaluation ($3.3 per year) and (iii) amortization of
organizational expense of $5.5 over a 5-year period ($1.1 per year).
(c) The pro forma adjustment to net interest expense reflects the following:
</TABLE>
Borrowings under the Senior Credit Facility--$200.0 @ various
rates.......................................................... $ 16.5
Senior Subordinated Notes due 2006--$125.0 @ 10 3/4%............ 13.4
Industrial revenue bonds--$20.3 @ various rates................. 1.0
------
30.9
Elimination of historical net interest expense.................. (28.2)
Amortization of debt issuance costs............................. 1.2
------
$ 3.9
------
------
<TABLE>
<C> <S>
(d) No income tax benefit has been ascribed to the pro forma 1995 pretax loss because
Keebler had no available tax loss carryback.
</TABLE>
32
<PAGE>
SUNSHINE
The following unaudited pro forma financial data of Sunshine have been
derived by the application of pro forma adjustments to the historical financial
statements of Sunshine included elsewhere herein. The unaudited pro forma
operating data for the periods presented give effect to the Sunshine
Acquisition, the closing of Sunshine's Oakland bakery, the sale of Sunshine's
Salerno cookie and cracker division and the sale of Salerno's bakery near
Chicago, as if such transactions had occurred as of the beginning of the periods
presented. The unaudited pro forma balance sheet gives effect to the Sunshine
Acquisition and such other transactions, as if such transactions had occurred as
of the dates presented.
SUNSHINE UNAUDITED PRO FORMA OPERATING DATA
<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED MARCH 31, FOR THE QUARTER ENDED MARCH 31,
1996 1996
-------------------------------------- ------------------------------------
PRO FORMA PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- --------- ---------- ----------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Gross sales............................. $649.8 $ (42.8)(a) $ 607.0 $152.3 $ (2.8)(a) $ 149.5
Reclamations and discounts.............. 21.5 (1.4)(a) 20.1 7.2 (0.2)(a) 7.0
---------- ----- --------- ---------- ----- ---------
Net sales............................... 628.3 (41.4) 586.9 145.1 (2.6) 142.5
Cost of sales........................... 340.0 (29.0)(b) 311.0 75.9 (0.7)(b) 75.2
---------- ----- --------- ---------- ----- ---------
Gross profit............................ 288.3 (12.4) 275.9 69.2 (1.9) 67.3
Selling, marketing and administrative
expenses............................... 281.4 (12.9)(c) 268.5 69.3 (0.8)(c) 68.5
---------- ----- --------- ---------- ----- ---------
Income (loss) from operations before
restructuring (gains)................... 6.9 0.5 7.4 (0.1) (1.1) (1.2)
Restructuring (gains)................... (16.5) 16.5(d) -- (9.1) 9.1(d) --
---------- ----- --------- ---------- ----- ---------
Income (loss) from operations........... 23.4 (16.0) 7.4 9.0 (10.2) (1.2)
Interest expense........................ 9.3 2.0(e) 11.3 1.8 1.0(e) 2.8
---------- ----- --------- ---------- ----- ---------
Income (loss) before income taxes....... 14.1 (18.0) (3.9) 7.2 (11.2) (4.0)
Income tax expense (benefit)............ 6.2 (7.9)(f) (1.7) 3.3 (5.1)(f) (1.8)
---------- ----- --------- ---------- ----- ---------
Income (loss) before extraordinary
item.................................... 7.9 (10.1) (2.2) 3.9 (6.1) (2.2)
Extraordinary item--loss on early
extinguishment of debt (net of income
tax)................................... 2.8 (2.8)(g) -- 2.6 (2.6)(g) --
---------- ----- --------- ---------- ----- ---------
Net income (loss)....................... $ 5.1 $ (7.3) $ (2.2) $ 1.3 $ (3.5) $ (2.2)
---------- ----- --------- ---------- ----- ---------
---------- ----- --------- ---------- ----- ---------
OTHER DATA:
EBITDA--before restructuring (gains).... $ 19.3 $ 5.4 $ 24.7 $ 2.8 $ 0.2 $ 3.0
Depreciation, amortization and non-cash
expenses relating to retirement benefit
programs............................... 12.4 $ 4.9 17.3 2.9 $ 1.3 4.2
Capital expenditures.................... $ 6.1 -- $ 6.1 $ 2.0 -- $ 2.0
</TABLE>
- ------------
<TABLE>
<C> <S>
(a) The adjustment to gross sales, reclamations and discounts and net sales resulted from
the sale of Sunshine's Salerno cookie and cracker division prior to the Sunshine
Acquisition.
(b)
</TABLE>
<TABLE>
<CAPTION>
QUARTER ENDED
FISCAL YEAR ENDED MARCH 31,
MARCH 31, 1996 1996
----------------- -------------
<S> <C> <C>
<CAPTION>
Cost of sales of Salerno cookie and cracker
division and related bakery....................... $ (29.4) $(1.1)
Savings resulting from closing Oakland plant....... (1.5) --
Additional depreciation of stepped-up property,
plant and equipment (10 year composite life)...... 2.9 0.7
Amortization of postretirement benefit transition
obligation........................................ (1.0) (0.3)
----- ---
$ (29.0) $(0.7)
----- ---
----- ---
</TABLE>
(Notes continued on following page)
33
<PAGE>
<TABLE>
<CAPTION>
QUARTER ENDED
FISCAL YEAR ENDED MARCH 31,
MARCH 31, 1996 1996
----------------- -------------
<S> <C> <C>
Reduction in selling and administrative expenses as
a result of the sales of Sunshine's Salerno cookie
and cracker division and related bakery........... $ (15.4) $(2.1)
Elimination of historical goodwill amortization.... (0.7) (0.2)
Amortization of new goodwill (40 year amortization
period)........................................... 3.2 0.8
Other.............................................. -- 0.7
----- ---
$ (12.9) $(0.8)
----- ---
----- ---
(d)
Gains on the sales of the Salerno cookie and
cracker division and related bakery............... $ 13.6 $ 6.2
Gains from reducing restructuring cost, accrued in
fiscal 1995........................................ 2.9 2.9
----- ---
$ 16.5 $ 9.1
----- ---
----- ---
(e)
Borrowings under the Senior Credit Facility--$114.0
at various interest rates......................... $ 10.2 $ 2.6
Elimination of historical interest expense......... (9.3) (1.8)
Amortization of debt issuance costs and other...... 1.1 0.2
----- ---
$ 2.0 $ 1.0
----- ---
----- ---
</TABLE>
<TABLE>
<S> <C>
(f) The income tax effect of the pro forma adjustments on income (loss) before income taxes
is based on the effective tax rate for fiscal 1996 of 43.8% and the effective rate for
the quarter ended March 31, 1996 of 45.8%.
(g) The loss on early extinguishment of debt is considered non-recurring.
</TABLE>
34
<PAGE>
SUNSHINE UNAUDITED PRO FORMA BALANCE SHEET
<TABLE>
<CAPTION>
AS OF MARCH 31, 1996
--------------------------------------
SUNSHINE
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 1.8 $ (40.0)(a) $ (38.2)
Trade accounts and notes receivable....................... 42.4 -- 42.4
Receivables from affiliates............................... 3.4 (3.4)(b) --
Inventories............................................... 35.2 3.8(c) 39.0
Deferred income taxes..................................... 6.8 17.8(d) 24.6
Other..................................................... 5.4 -- 5.4
---------- ----------- ---------
Total current assets.................................. 95.0 (21.8) 73.2
Property, plant and equipment, net.......................... 88.8 29.4(e) 118.2
Goodwill and other intangibles.............................. 14.3 108.6(f) 122.9
Prepaid pension............................................. 10.6 (10.6)(g) --
Other assets................................................ 4.0 1.2(h) 5.2
---------- ----------- ---------
TOTAL ASSETS................................................ $212.7 $ 106.8 $ 319.5
---------- ----------- ---------
---------- ----------- ---------
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Short-term debt and current maturities of long-term
debt..................................................... $ 13.2 $ (9.7)(i) $ 3.5
Trade accounts payable.................................... 32.9 -- 32.9
Other accrued liabilities................................. 29.4 -- 29.4
Restructuring reserves.................................... -- 38.8(j) 38.8
Due to affiliated companies............................... 0.4 (0.4)(b) --
---------- ----------- ---------
Total current liabilities............................. 75.9 28.7 104.6
Long-term debt.............................................. 73.5 38.7(i) 112.2
Deferred income taxes....................................... 10.0 (10.0)(d) --
Pension liability........................................... 19.2 6.9(g) 26.1
Postretirement and employment obligations................... 11.3 18.6(g) 29.9
Restructuring reserves...................................... -- 23.0(j) 23.0
Other liabilities........................................... 0.1 -- 0.1
---------- ----------- ---------
Total liabilities..................................... 190.0 105.9 295.9
Shareholder's equity
Contributed capital....................................... 34.7 (11.1)(k) 23.6
Retained earnings (deficit)............................... (12.0) 12.0(k) --
---------- ----------- ---------
Total shareholder's equity.................................. 22.7 0.9 23.6
---------- ----------- ---------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY.................. $212.7 $ 106.8 $ 319.5
---------- ----------- ---------
---------- ----------- ---------
</TABLE>
- ------------
<TABLE>
<C> <S>
(a) Available cash to be provided by Keebler.
(b) Sunshine had certain receivables from and payables to affiliates which have been largely
eliminated as a result of the Sunshine Acquisition.
(c) The adjustment of inventory to its estimated fair market value represents the
elimination of the historical LIFO reserve.
(d) Reflects the recording of estimated opening deferred income taxes resulting from the
Sunshine Acquisition.
(e) Reflects the estimated step-up in property, plant and equipment to fair value.
</TABLE>
(Notes continued on following page)
35
<PAGE>
<TABLE>
<C> <S>
(f) The Sunshine Acquisition will be accounted for as a purchase. Under purchase accounting,
the total purchase price will be allocated to the tangible and intangible assets of the
Company. The final allocation of the purchase price could differ significantly from the
pro forma amounts included herein. Based on preliminary estimates, goodwill consists of
the following:
</TABLE>
Unallocated excess of purchase price over net
assets acquired............................... $ 122.9
Less historical goodwill...................... (14.3)
------
$ 108.6
------
------
(g) Reflects the following adjustments to pension and postretirement accounts:
Elimination of historical intangible pension
asset......................................... $ (10.6)
------
------
Required pension liability.................... $ 26.1
Historical pension liability.................. (19.2)
------
$ 6.9
------
------
Required postretirement liability............. $ 29.9
Historical postretirement liability........... (11.3)
------
$ 18.6
------
------
<TABLE>
<C> <S>
(h) Reflects the elimination of certain historical other non-current assets to conform to
Keebler's accounting policies and the capitalization of incremental deferred financing
fees resulting from the Sunshine Acquisition:
</TABLE>
Deferred plate charges........................ $ (0.9)
Deferred package design....................... (0.9)
Incremental deferred financing fees........... 3.0
------
$ 1.2
------
------
<TABLE>
<C> <S>
(i) Reflects the elimination of debt assumed by the seller and the recording of the new
financing:
</TABLE>
<TABLE>
<CAPTION>
NONCURRENT CURRENT
---------- -------
<S> <C> <C>
Elimination of historical current portion of long term
debt..................................................... -- $(13.2 )
Elimination of historical long term debt.................. $(73.5) --
Borrowings under the Senior Credit Facility............... 114.0 --
Other..................................................... 1.7 --
---------- -------
Net adjustment............................................ 42.2 (13.2 )
Less current portion of debt.............................. (3.5) 3.5
---------- -------
$ 38.7 $ (9.7 )
---------- -------
---------- -------
</TABLE>
<TABLE>
<C> <S>
(j) Reflects the recording of management's estimate of accruals for non-recurring expenses
following the consummation of the Sunshine Acquisition including (i) a $29.8 million
provision for integrating Sunshine's retail branded volume into Keebler's DSD system,
(ii) a $12.0 million provision for eliminating redundant corporate overhead functions,
(iii) a $1.0 million provision for eliminating bakery overhead functions, and (iv) a
$19.0 million provision for rationalizing manufacturing.
</TABLE>
<TABLE>
<C> <S>
(k) Reflects the elimination of historical equity and the recording of the new equity:
</TABLE>
Recording of new equity.......................... $ 23.6
Historical equity................................ (22.7)
-----
$ 0.9
-----
-----
36
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA
KEEBLER
The following selected historical financial data for fiscal 1993, 1994 and
1995 were derived from, and should be read in conjunction with, the historical
audited consolidated financial statements of Keebler, including the respective
notes thereto, included elsewhere herein. The selected historical financial data
as of January 26, 1996 and for the four weeks ended January 28, 1995 and January
26, 1996 were derived from the unaudited financial statements of Keebler. The
selected historical financial data as of April 22, 1995 and April 20, 1996 and
for the twelve weeks then ended were derived from the unaudited financial
statements of Keebler. The historical consolidated financial statements of
Keebler exclude financial data relating to certain businesses of Keebler that
were sold prior to the Keebler Acquisition.
<TABLE>
<CAPTION>
TWELVE
WEEKS
YEAR ENDED FOUR WEEKS ENDED ENDED
---------------------------------------- ------------------------- ---------
JANUARY 1, DECEMBER 31, DECEMBER 30, JANUARY 28, JANUARY 26, APRIL 22,
1994 1994 1995 1995 1996 1995
---------- ------------ ------------ ----------- ----------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Gross sales............................ $1,453.8 $1,452.9 $1,486.8 $ 93.1 $ 106.5 $ 337.5
Reclamations and discounts............. 41.9 40.4 43.9 3.1 4.9 9.3
---------- ------ ------ ----- ----- ---------
Net sales.............................. 1,411.9 1,412.5 1,442.9 90.0 101.6 328.2
Cost of sales.......................... 610.3 626.1 672.8 42.0 54.2 155.5
---------- ------ ------ ----- ----- ---------
Gross profit........................... 801.6 786.4 770.1 48.0 47.4 172.7
Selling, marketing and administrative
expenses.............................. 662.5 675.0 738.9 52.6 59.0 172.3
---------- ------ ------ ----- ----- ---------
Income (loss) from operations before
restructuring charges................. 139.1 111.4 31.2 (4.6) (11.6) 0.4
Restructuring charges.................. 102.9 -- -- -- -- --
---------- ------ ------ ----- ----- ---------
Income (loss) from operations.......... 36.2 111.4 31.2 (4.6) (11.6) 0.4
Interest expense....................... 81.5 74.5 28.2 2.2 1.9 6.7
---------- ------ ------ ----- ----- ---------
Income (loss) before income taxes and
cumulative effect of accounting
changes............................... (45.3) 36.9 3.0 (6.8) (13.5) (6.3)
Income tax expense..................... 14.0 10.6 -- -- -- --
---------- ------ ------ ----- ----- ---------
Income (loss) before cumulative effect
of accounting changes................. (59.3) 26.3 3.0 (6.8) (13.5) (6.3)
Cumulative effect of accounting
changes............................... 20.7 1.2 -- -- -- --
---------- ------ ------ ----- ----- ---------
Net income (loss)...................... $ (80.0) $ 25.1 $ 3.0 $ (6.8) $ (13.5) $ (6.3)
---------- ------ ------ ----- ----- ---------
---------- ------ ------ ----- ----- ---------
OTHER DATA:
EBITDA--before restructuring charges... $ 167.6 $ 139.1 $ 71.1 $ (1.5) $ (9.4) $ 9.9
Depreciation, amortization and non-cash
expenses relating to retirement
benefit programs...................... 28.5 27.7 39.9 3.1 2.2 9.5
Capital expenditures................... $ 25.5 $ 48.3 $ 52.2 $ 2.1 $ 3.2 $ 10.9
<CAPTION>
APRIL 20,
1996
---------
<S> <C>
OPERATING DATA:
Gross sales............................ $ 345.6
Reclamations and discounts............. 10.3
---------
Net sales.............................. 335.3
Cost of sales.......................... 157.4
---------
Gross profit........................... 177.9
Selling, marketing and administrative
expenses............................... 166.6
---------
Income (loss) from operations before
restructuring charges................. 11.3
Restructuring charges.................. --
---------
Income (loss) from operations.......... 11.3
Interest expense....................... 7.7
---------
Income (loss) before income taxes and
cumulative effect of accounting
changes................................ 3.6
Income tax expense..................... 2.0
---------
Income (loss) before cumulative effect
of accounting changes................. 1.6
Cumulative effect of accounting
changes................................ --
---------
Net income (loss)...................... $ 1.6
---------
---------
OTHER DATA:
EBITDA--before restructuring charges... $ 22.7
Depreciation, amortization and non-cash
expenses relating to retirement
benefit programs....................... 11.4
Capital expenditures................... $ 2.0
</TABLE>
<TABLE>
<CAPTION>
AS OF
--------------------------------------------------------------------------------
JANUARY 1, DECEMBER 31, DECEMBER 30, JANUARY 26, APRIL 22,
1994 1994 1995 1996 1995
---------- ------------ ------------ ----------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.............. $ 6.4 $ 12.5 $ 2.9 $ 5.3 $ 2.7
Total assets........................... 669.0 673.7 677.9 675.3 661.9
Due to affiliate....................... 850.0 525.0 105.0 105.0 105.0
Total debt............................. 135.5 205.1 312.0 249.6 245.1
Shareholder's equity (deficit)......... $ (700.2) $ (438.9) $ (70.7) $ (13.2) $ (23.4)
<CAPTION>
APRIL 20,
1996
---------
<S> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.............. $ 46.9
Total assets........................... 867.6
Due to affiliate....................... --
Total debt............................. 344.4
Shareholder's equity (deficit)......... $ 151.0
</TABLE>
37
<PAGE>
SUNSHINE
The following selected historical financial data were derived from, and
should be read in conjunction with, the historical audited financial statements
of Sunshine, including the respective notes thereto, included elsewhere herein.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED MARCH
31,
--------------------------
1994 1995 1996
------ ------ ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
OPERATING DATA:
Gross sales...................................................... $665.4 $654.4 $649.8
Reclamations and discounts....................................... 22.2 24.6 21.5
------ ------ ------
Net sales........................................................ 643.2 629.8 628.3
Cost of sales.................................................... 335.4 350.3 340.0
------ ------ ------
Gross profit..................................................... 307.8 279.5 288.3
Selling, marketing, administrative and other expenses............ 292.4 300.7 281.4
------ ------ ------
Income (loss) from operations before restructuring charges
(gains).......................................................... 15.4 (21.2) 6.9
Restructuring charges (gains).................................... -- 21.9 (16.5)
------ ------ ------
Income (loss) from operations.................................... 15.4 (43.1) 23.4
Interest expense................................................. 6.5 8.4 9.3
------ ------ ------
Income (loss) before income taxes, discontinued operations and
extraordinary item............................................... 8.9 (51.5) 14.1
Income tax expense (benefit)..................................... 4.0 (18.9) 6.2
------ ------ ------
Income (loss) before discontinued operation and extraordinary
item............................................................. 4.9 (32.6) 7.9
Loss from discontinued operations................................ (2.6) -- --
------ ------ ------
Income (loss) before extraordinary item.......................... 2.3 (32.6) 7.9
Extraordinary item--loss on early extinguishment of debt (net of
income tax)...................................................... -- -- 2.8
------ ------ ------
Net income (loss)................................................ $ 2.3 $(32.6) $ 5.1
------ ------ ------
------ ------ ------
OTHER DATA:
EBITDA--before restructuring charges (gains)..................... $ 25.3 $ (8.3) $ 19.3
Depreciation, amortization and non-cash expenses relating to
retirement benefit programs...................................... 9.9 12.9 12.4
Capital expenditures............................................. $ 10.9 $ 10.7 $ 6.1
</TABLE>
<TABLE>
<CAPTION>
AS OF MARCH 31,
-----------------
1995 1996
------ ------
(DOLLARS IN
MILLIONS)
<CAPTION>
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................................. $ 2.1 $ 1.8
Total assets.............................................................. 240.3 212.7
Due to affiliates......................................................... 2.8 0.4
Total debt................................................................ 93.8 86.7
Shareholder's equity...................................................... $ 17.6 $ 22.7
</TABLE>
38
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
KEEBLER
Set forth below is a discussion of the financial condition and results of
operations of Keebler for the fiscal years ended January 1, 1994, December 31,
1994 and December 30, 1995 and for the twelve weeks ended April 20, 1996 and
April 22, 1995. The financial results exclude the financial information relating
to the frozen food and salty snacks businesses, which were sold by Keebler prior
to the consummation of the Keebler Acquisition. The following discussion of
Keebler's results of operations and of its liquidity and capital resources
should be read in conjunction with the Selected Financial Data and the Financial
Statements of Keebler and related notes thereto appearing elsewhere in this
Prospectus. References herein to fiscal 1993, 1994 and 1995 refer to Keebler's
fiscal years ended January 1, 1994, December 31, 1994 and December 30, 1995,
respectively, unless the context otherwise requires.
RESULTS OF OPERATIONS OF KEEBLER
Keebler's results of operations expressed as a percentage of net sales for
fiscal 1993, 1994 and 1995 and for the twelve weeks (the "first quarter") ended
April 22, 1995 and April 20, 1996 are set forth below:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED QUARTER ENDED
---------------------------------------- ---------------------
JANUARY 1, DECEMBER 31, DECEMBER 30, APRIL 22, APRIL 20,
1994 1994 1995 1995 1996
---------- ------------ ------------ --------- ---------
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net sales.................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales................................ 43.2 44.3 46.6 47.4 46.9
----- ----- ----- --------- ---------
Gross profit................................. 56.8 55.7 53.4 52.6 53.1
Selling, marketing and admin. expenses....... 46.9 47.8 51.2 52.5 49.7
Restructuring charges........................ 7.3 -- -- -- --
----- ----- ----- --------- ---------
Income from operations....................... 2.6 7.9 2.2 0.1 3.4
Net interest expense......................... 5.8 5.3 2.0 2.0 2.3
----- ----- ----- --------- ---------
Income (loss) before income taxes and
cumulative effect of accounting changes.... (3.2) 2.6 0.2 (1.9) 1.1
Income tax expense........................... 1.0 0.7 -- -- 0.6
Cumulative effect of accounting changes...... 1.5 0.1 -- -- --
----- ----- ----- --------- ---------
Net income (loss)............................ (5.7)% 1.8% 0.2% (1.9)% 0.5%
----- ----- ----- --------- ---------
----- ----- ----- --------- ---------
</TABLE>
COMPARISON OF FIRST QUARTERS 1996 AND 1995
NET SALES. Net sales increased $7.1 million or 2.2% over net sales in first
quarter 1995. The increase was principally due to price increases in branded
cookies and crackers, and sales increases in private label products and custom
products. Sales of private label products increased significantly as a result of
new product lines and wider distribution of the private label cracker program
begun in late 1995. Increased sales of baked products custom manufactured
("custom products") for other marketers of branded food products benefited from
the increased demand of a major customer.
GROSS PROFIT. Gross profit as a percentage of sales for first quarter 1996
increased 0.5 percentage points to 53.1% versus 52.6% for first quarter 1995.
The increase, while small in absolute terms, was significant because it was
achieved despite higher raw material costs. The increase in gross profit as a
39
<PAGE>
percentage of sales was achieved through fixed-cost reductions and price
increases on certain Keebler products. In addition, these improvements more than
offset the impact of a sales mix shift to lower margin private label and custom
products, higher costs for certain major raw materials and inflation in labor
and overhead costs.
SELLING, MARKETING, AND ADMINISTRATIVE EXPENSES. Selling, marketing, and
administrative costs decreased by $5.7 million or 2.8% of net sales in first
quarter 1996 compared to first quarter 1995. The decrease was principally
accomplished through a targeted marketing strategy, which has decreased
inefficient consumer promotion and advertising spending. Administrative costs
decreased primarily due to reduced corporate overhead expenses. These cost
savings were achieved through a reduction in headcount and discretionary
spending.
INCOME FROM OPERATIONS. Income from operations was $11.3 million for first
quarter 1996, an improvement of $10.9 million over income from operations for
first quarter 1995. The increase resulted mainly from improved gross profit
margins, more effective and efficient marketing expenditures, and reduced
corporate overhead costs. Income from operations as a percentage of net sales
increased from 0.1% to 3.4%.
INTEREST EXPENSE. Net interest expense was $7.7 million for first quarter
1996 compared to $6.7 million for first quarter 1995. The increase was due to
increased borrowings to finance the Keebler Acquisition.
INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING
CHANGES. Income before income taxes and cumulative effect of accounting changes
was $3.6 million for first quarter 1996, compared to a loss of $6.3 million in
first quarter of 1995.
INCOME TAXES. Keebler's effective income tax rate was 55.6% for first
quarter 1996. The effective tax rate is higher than the statutory rate because
of nondeductible expenses (principally, goodwill). For first quarter 1995 there
was no provision for income taxes due to operating losses and no ability to
carryback the losses to recover taxes paid in prior years.
NET INCOME (LOSS). Net income was $1.6 million for the first quarter 1996,
up $7.9 million over the $6.3 million loss incurred in the first quarter 1995.
COMPARISON OF FISCAL 1995 AND 1994
NET SALES. Net sales in fiscal 1995 were $1.443 billion, which represented
an increase of 2.1% over net sales of $1.413 billion in fiscal 1994. This
increase resulted from increased private label sales, increased sales of custom
products and price increases on certain Keebler products. Despite more than 30
new product introductions and increased marketing support, combined branded
cookie and cracker sales were essentially unchanged from sales in fiscal 1994.
Sales of branded cookies increased 3.2%, benefiting from price increases for
certain products, new products and line extensions. Branded cracker sales
decreased 2.2% from fiscal 1994 because the restaging of box snack crackers and
graham crackers failed to stimulate sales gains. Private label cookie and
cracker sales increased 7.7% primarily due to increased account penetration and
expansion of the private label cracker program. Sales of custom products
increased as a result of increased demand by a major customer.
GROSS PROFIT. Gross profit decreased to $770.1 million (53.4% of net sales)
in fiscal 1995 from $786.4 million (55.7% of net sales) in fiscal 1994.
Increased raw and packaging material prices (particularly flour, shortening and
corrugated and carton materials) resulted in increased costs to Keebler of
approximately $17 million, or 1.2 percent of net sales, which were not fully
passed on to Keebler's customers. The restaging of box snack crackers and
cracker packs, which resulted in a net
40
<PAGE>
reduction in sales price and a shift to products with lower margins, such as
private label products and custom products, also reduced gross profit.
SELLING, MARKETING AND ADMINISTRATIVE EXPENSES. Selling, marketing and
administrative expenses were $738.9 million (51.2% of net sales) in fiscal 1995,
compared to $675.0 million (47.8% of net sales) in fiscal 1994. Marketing
spending increased $39.4 million over fiscal 1994 expenditures because Keebler
followed a marketing plan designed to increase sales through aggressive
advertising and consumer spending to support new product introductions and
through increased trade spending. Selling and distribution costs increased to
19.7% of net sales in fiscal 1995 from 19.1% in fiscal 1994, largely due to the
overcapacity of Keebler's DSD system. Total administrative spending was $58.0
million in fiscal 1995 compared to $52.0 million in fiscal 1994, principally due
to increases in spending on information systems.
INCOME FROM OPERATIONS. Income from operations was $31.2 million in fiscal
1995, compared to $111.4 million in fiscal 1994. This decrease primarily
resulted from the decline in gross profit and increased marketing and selling
distribution expenses. Income from operations as a percentage of net sales was
2.2% in fiscal 1995 and 7.9% in fiscal 1994.
INTEREST EXPENSE. Net interest expense in fiscal 1995 was $28.2 million,
compared to $74.5 million in fiscal 1994. This decrease was due to the full year
impact of the recapitalization of $300 million in intercompany debt in September
1994, as well as the recapitalization of an additional $445 million of
intercompany debt in February 1995. The benefit of these recapitalizations was
partially offset by increased borrowings to finance operations.
INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING
CHANGES. Income before income taxes and accounting changes was $3.0 million in
fiscal 1995, compared to $36.9 million in fiscal 1994.
INCOME TAXES. There was no income tax provision in fiscal 1995 because a net
operating loss could not be recovered through carryback to taxes previously
paid. In addition, net deferred tax assets had been previously fully reserved as
their realization was not considered likely. The effective tax rate in fiscal
1994 was 28.7% of income before income taxes and accounting changes. The tax
rate was less than the statutory rate due to a reduction in the required
deferred tax valuation allowance because previously fully reserved deferred tax
assets resulted in reductions in the 1994 current tax provision.
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES AND NET INCOME. Income
before cumulative effect of accounting changes in fiscal 1995 was $3.0 million
compared to $26.3 million in fiscal 1994. There were no accounting changes in
fiscal 1995. In fiscal 1994, the cumulative effect of accounting changes was a
net charge of $1.2 million. The net charge consisted of a $4.0 millon charge
upon the adoption of SFAS No. 112, "Employers' Accounting for Postemployment
Benefits," offset in part by a $2.8 million benefit for a change in the method
of accounting for spare machinery and equipment parts. After the cumulative
effect of accounting changes, net income was $3.0 million in fiscal 1995,
compared to $25.1 million in fiscal 1994.
COMPARISON OF FISCAL 1994 AND 1993
NET SALES. Net sales in fiscal 1994 were $1.413 billion, essentially
unchanged from $1.412 billion in fiscal 1993. An increase in sales of private
label products resulted in part from the introduction of a private label cracker
program and was offset by decreased sales of branded cookies and crackers and a
decrease in sales of custom products. Sales of branded cookies increased in the
second half of fiscal 1994 as a result of new product introductions and
promotions. Sales for the year decreased, however, due to low branded cookie
sales in the first half of fiscal 1994 and to a shift in the mix of branded
cookies sold to lower priced items. Branded cracker sales decreased due to lower
sales of box snack crackers, which
41
<PAGE>
were not offset by the increases in sales of certain of Keebler's other major
cracker brands. A change in product mix to lower priced items contributed to a
branded cracker sales decline. Sales of all branded products in fiscal 1994
benefited from new product introductions and expansion of "better-for-you,"
reduced-fat and reduced-sodium products. These better-for-you products accounted
for approximately $133 million of net sales. Sales of custom products declined
in fiscal 1994 because of decreased demand by a major customer.
GROSS PROFIT. Gross profit decreased to $786.4 million (55.7% of net sales)
in fiscal 1994, from $801.6 million (56.8% of net sales) in fiscal 1993. The
decrease in gross profit was due to a change in product mix to lower margin
items and higher raw material and packaging costs that were not passed on to
Keebler's customers, higher sales of private label products, which generally
have lower margins, and lower realized net prices for custom products. Raw
material costs increased approximately $11.3 million, or 0.8 percent of net
sales, primarily because of price increases for flour, shortening and corrugated
and carton materials. Higher new product start-up costs, particularly for
reduced-fat products, also contributed to decreased gross profit. Realized
manufacturing cost savings of $5.7 millon primarily related to labor reduction
programs partially offset the increased raw material costs and changes in
product mix.
SELLING, MARKETING AND ADMINISTRATIVE EXPENSES. Selling, marketing and
administrative expenses were $675.0 million (47.8% of net sales) in fiscal 1994,
compared to $662.5 million (46.9% of net sales) in fiscal 1993. Marketing
spending increased due to expanded use of promotional events such as a tie-in to
the movie "Miracle on 34th Street" and the sponsorship of country and western
music star Clint Black's tour. Total administrative spending was $52.0 million
in fiscal 1994, compared to $47.5 million in fiscal 1993. This increase resulted
from the start-up of human resource and information systems initiatives, and
favorable incentive adjustments recorded in fiscal year 1993.
INCOME FROM OPERATIONS. Income from operations in fiscal 1994 was $111.4
million, compared to $36.2 million in fiscal year 1993. The increase was
primarily due to restructuring charges of $102.9 million recorded in fiscal 1993
for the reorganization and streamlining of the selling and distribution network,
plant closing costs, and the write-down of certain fixed assets to net
realizable value. Excluding the impact of restructuring charges, operating
income in fiscal 1993 was $139.1 million. The decline in operating income before
restructuring charges was due to the decline in gross profit and the increase in
operating expenses discussed above.
INTEREST EXPENSE. Net interest expense in fiscal 1994 was $74.5 million,
compared to $81.5 million in fiscal 1993. The decline in net interest expense in
fiscal 1994 was due to the recapitalization of $300.0 million in intercompany
debt in September, 1994, offset partially by increased borrowings to finance
operations.
INCOME (LOSS) BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING
CHANGES. Income before income taxes and cumulative effect of accounting changes
was $36.9 million in fiscal 1994, compared to a loss of $45.3 million in fiscal
1993.
INCOME TAXES. The provision for income taxes in fiscal 1994 was 28.7% of
income before income taxes and accounting changes, compared to a provision of
$14.0 million on a loss of $45.3 million in fiscal 1993. The tax provision in
both years was affected by the valuation allowance for deferred tax assets. In
fiscal 1993, Keebler established a $26.6 million valuation allowance, primarily
as a result of deferred tax assets generated by restructuring charges. In fiscal
1994, the required valuation allowance was reduced, resulting in a reduction in
the effective tax rate.
INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES AND NET
INCOME. Income before cumulative effect of accounting changes was $26.3 million
in fiscal 1994, compared to a loss of $59.3 million in fiscal year 1993. In
fiscal 1994, the cumulative effect of accounting changes was a net charge
42
<PAGE>
of $1.2 million. The net charge consisted of a $4.0 million charge upon the
adoption of SFAS No. 112, "Employers' Accounting for Postemployment Benefits,"
which was offset in part by a $2.8 million benefit for a change in the method of
accounting for spare machinery and equipment parts. In fiscal 1993, the
cumulative effect of accounting changes was a charge of $20.7 million upon the
adoption of SFAS No. 106, "Employers' Accounting for Postretirement Benefits
Other than Pensions." After the cumulative effect of accounting changes, net
income was $25.1 million in fiscal 1994, compared to a loss of $80.0 million in
fiscal 1993.
LIQUIDITY AND CAPITAL RESOURCES OF KEEBLER
<TABLE>
<CAPTION>
YEAR ENDED TWELVE WEEKS ENDED
------------------------------------------ -------------------
JANUARY 1, DECEMBER 31, DECEMBER 30, APRIL 20,
1994 1994 1995 1996
---------- ------------ ------------ -------------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Cash provided by operating
activities............................. $108.5 $ 45.7 $ 12.9 $46.8
Cash used by investing activities...... (83.3) (45.4) (49.7) (1.2)
Cash provided from (used by) financing
activities............................. (36.8) 5.8 27.2 (0.8)
---------- ------ ------ -----
Increase (decrease) in cash
equivalents............................ $(11.6) $ 6.1 $ (9.6) $44.8
---------- ------ ------ -----
---------- ------ ------ -----
</TABLE>
The decline in cash provided from operations in fiscal 1995 to $12.9 million
from $45.7 million in fiscal 1994 was primarily due to the decrease in income
from operations, the receipt of $23.7 million in income and withholding tax
refunds in fiscal 1994 and spending on Keebler's restructuring initiatives in
fiscal 1995. These increased cash needs were partially offset by lower
intercompany interest expense, reduced working capital needs and the avoidance
of pension contributions in fiscal 1995. The decrease in cash provided from
operating activities in fiscal 1994 to $45.7 million, from $108.5 million in
fiscal 1993, was due to a decrease in operating income before restructuring
charges and a partial settlement of intercompany balances in fiscal 1993. This
decline in cash provided by operating activities was partially offset by lower
pension contributions, lower spending on divestiture accruals, and the
non-recurrence of the payment of certain deferred compensation agreements in
fiscal 1993. Included in cash provided by operating activities for the twelve
weeks ended April 20, 1996 is a $32.6 million working capital adjustment
provided by an affiliate of United Biscuits related to the Keebler Acquisition.
Cash used by investing activities increased in fiscal 1995 to $49.7 million
from $45.4 million in fiscal 1994. Capital expenditures increased $3.9 million
in fiscal 1995 to $52.2 million, which included $22.4 million for development of
a new technology platform and $8.7 million for a redesign of the selling and
distribution network. The decline in cash used by investing activities in fiscal
1994, from $83.3 million in fiscal year 1993, was due to the acquisition of
Bake-Line Products, Inc., a producer of private label cookies ("Bake-Line"), in
January 1993. Capital expenditures in fiscal 1994 were $48.3 million, an
increase of $22.8 million from fiscal 1993. Capital spending in fiscal 1994
included $12.1 million for the technology platform development and $4.7 million
for capacity increases at Keebler's Atlanta bakery. In fiscal 1993, capital
spending consisted primarily of ongoing and ordinary manufacturing and
distribution projects.
Cash flow provided by financing activities in fiscal 1995 was $27.2 million,
compared to cash provided of $5.8 million in fiscal 1994, and cash uses of $36.8
million in fiscal 1993. The primary source of financing liquidity in all years
was commercial paper and revolving credit facilities guaranteed by or made
available through United Biscuits. The primary uses of the cash generated from
financing activities was cash flow support for affiliated businesses excluded
from the Keebler financial statements, and the payment of long-term borrowings.
43
<PAGE>
Keebler's liquidity was provided primarily by a commercial paper program
that was supported by a line of credit agreement guaranteed by United Biscuits,
the ultimate parent of Keebler prior to the Keebler Acquisition. The line of
credit agreement in support of the commercial paper program totaled $100.0
million as of the end of 1994, and was expanded to $200.0 million in June 1995.
Borrowings under the commercial paper program were $184.0 million, $94.5 million
and $73.2 million at the end of fiscal 1995, 1994 and 1993, respectively. In
addition to the commercial paper program, Keebler, along with other affiliates
of United Biscuits, had access to a revolving credit agreement, which was also
guaranteed by United Biscuits. Maximum borrowings under the agreement were
$300.0 million as of the end of fiscal 1995 and 1994. Keebler had approximately
$100 million and $55 million of borrowings outstanding under this program as of
the end of fiscal 1995 and 1994, respectively. There were no borrowings
outstanding at the end of fiscal 1993. Both the commercial paper and revolving
credit agreements could be canceled at any time and were no longer available
after the Keebler Acquisition.
SEASONALITY
Keebler's net sales, net income, and cash flows are affected by the timing
of new product introductions, promotional activities, price increases, and a
seasonal sales bias toward the second half of the year. The seasonality of sales
is largely due to promotional activities surrounding second half of the year
events such as back-to-school, Halloween, Thanksgiving, and Christmas. The
relative mix between cookie and cracker sales varies throughout the year with
stronger cracker sales in the last quarter of the calendar year.
SUNSHINE
Set forth below is a discussion of the financial condition and results of
operations of Sunshine for the years ended March 31, 1994, 1995 and 1996,
respectively. The following discussion of Sunshine's historical results of
operations and of its liquidity and capital resources should be read in
conjunction with the Selected Financial Data and the Financial Statements of
Sunshine and related notes thereto appearing elsewhere in this Prospectus.
References herein to fiscal 1994, 1995, and 1996 refer to Sunshine's fiscal
years ended March 31, 1994, 1995 and 1996, respectively.
RESULTS OF OPERATIONS OF SUNSHINE
GENERAL. Sunshine's results of operations, expressed as a percentage of net
sales, for each of fiscal 1994, 1995 and 1996, are set forth below:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED MARCH 31
---------------------------
<S> <C> <C> <C>
1994 1995 1996
----- ----- -----
<CAPTION>
<S> <C> <C> <C>
Net sales...................................................... 100.0% 100.0% 100.0%
Cost of sales.................................................. 52.2 55.6 54.1
----- ----- -----
Gross profit................................................... 47.8 44.4 45.9
Selling and marketing.......................................... 41.6 43.3 41.1
General and administrative..................................... 3.7 3.7 3.6
Restructuring charges (gains) and other........................ 0.1 4.3 (2.5)
----- ----- -----
Income (loss) from operations.................................. 2.4 (6.9) 3.7
Interest expense............................................... 1.0 1.3 1.5
----- ----- -----
Income (loss) before income taxes, discontinued operations and
extraordinary item............................................. 1.4% (8.2)% 2.2%
----- ----- -----
----- ----- -----
</TABLE>
44
<PAGE>
COMPARISON OF FISCAL 1996 AND 1995
NET SALES. Consolidated net sales in fiscal 1996 were $628.3 million, a
decrease of 0.2% versus prior year. The sales decrease was attributable to price
competition from Sunshine's major competitors, lower reduced-fat and fat-free
product sales and the impact of Sunshine's product rationalization program,
partially offset by an increase in core brand sales.
Notwithstanding the aforementioned items, Sunshine experienced modest sales
growth through supermarket, mass merchandiser, warehouse, club store,
foodservice and vending distributor channels. The sale of Sunshine's regional
Salerno cookie and cracker division and Sunshine's product rationalization
program, however, had an unfavorable impact on revenues of $9.5 million and
$13.2 million, respectively, versus fiscal 1995. Sunshine experienced unit sales
increases from most of its core brands, including Cheez-it, Cheez-it Party Mix,
Krispy, Hi Ho deluxe crackers and Hydrox and Vienna Fingers sandwich cookies.
GROSS PROFIT. Gross profit increased to $288.3 million or by 3.1%, and the
gross profit was 45.9% of net sales compared to 44.4% in fiscal 1995 due to
Sunshine's emphasis on its more profitable core products, the elimination of 168
of its lower volume and lower profit products, and the closure of its Oakland
bakery. These various "rightsizing" initiatives were offset to a large degree by
significant price increases in flour and in corrugated packaging. Sunshine
incurred a $5.7 million increase in raw material and packaging costs over such
costs in fiscal 1995.
OPERATING EXPENSES. Excluding fiscal 1995 restructuring and other charges,
operating expenses decreased by 5.1% to $280.6 million, primarily as a result of
reductions in selling and marketing expenses and G&A expenses of $14.5 million
and $0.6 million, respectively. Total selling costs declined 8.3% to $101.2
million due to aggressive cost containment programs. Total marketing
expenditures declined $5.4 million (or 3.3%) to $156.8 million as a result of
Sunshine's decision to reduce consumer promotions, which were partially offset
by increases in trade-related marketing expenditures. Sunshine's incremental
trade spending was aimed at preserving unit sales in direct response to
competitive pricing in the marketplace by Nabisco and Keebler.
RESTRUCTURING CHARGES (GAINS) AND OTHER. Sunshine had a gain of $16.5
million in fiscal 1996, comprised of $13.6 million from the sales of the Salerno
cookie and cracker division and the related bakery, including related
post-retirement savings, and $2.9 million in reserve adjustments from the
Oakland bakery closure.
INCOME (LOSS) FROM OPERATIONS. Fiscal 1996 income from operations of $23.4
million represented an increase of $66.5 million as compared to the prior year.
Income from operations was driven by increases in unit sales of Sunshine's core
products, the Oakland bakery closure, the sales of the Salerno cookie and
cracker division and the related bakery and managed reductions in ongoing
operating expenses. In addition, gains between years in restructure-related
items had a significant impact.
PRO FORMA INCOME FROM OPERATIONS. Sunshine recast the annualized impact of
the elimination of the Oakland bakery, the Salerno bakery near Chicago, and the
Salerno cookie and cracker division, and made certain non-cash adjustments.
Fiscal 1996 pro forma income from operations was $7.4 million, excluding
restructuring gains of $16.5 million and incorporating the annualized impact of
related savings of $5.9 million ($1.5 million resulting from closing of the
Oakland bakery as if such closing had occurred at the beginning of fiscal 1996,
$3.4 million resulting from the sales of the Salerno cookie and cracker division
and related bakery as if such sales had occurred at the beginning of fiscal 1996
and $1.0 million resulting from eliminating the amortization of postretirement
benefit transition obligation related to the Sunshine Acquisition) less
incremental depreciation and amortization related to the Sunshine Acquisition of
$5.4 million.
45
<PAGE>
INTEREST EXPENSE. Interest expense of $9.3 million was 10.7% higher than
fiscal 1995 due to default interest paid. At the end of fiscal 1995 and through
January 31, 1996, Sunshine was in default of certain covenants prescribed in the
borrowing agreements with its lenders. As a result of its default status,
Sunshine was obligated to pay default interest. Sunshine refinanced its
operations at lower interest rates on February 1, 1996.
INCOME (LOSS) BEFORE INCOME TAXES, DISCONTINUED OPERATIONS AND EXTRAORDINARY
ITEM. Fiscal 1996 income before allocated income taxes was $14.1 million, as
compared to a loss of $(51.5) million in fiscal 1995.
COMPARISON OF FISCAL 1995 AND 1994
NET SALES. Net sales in fiscal 1995 declined to $629.8 million or by 2.1%
from $643.2 million in fiscal 1994 due to lower sales of Sunshine's core
products. The declines were primarily the result of Sunshine's attempt in
mid-fiscal 1995 to improve marketing efficiency by reducing deep trade
discounting. These reductions in trade expenditures were replaced with
aggressive consumer couponing but the coupons failed to maintain unit sales. In
addition, the success of Nabisco's SnackWell's(R) introductions adversely
affected consumer acceptance of Sunshine's reduced-fat products. In response,
Sunshine redesigned the packaging of certain of its reduced-fat products in
fiscal 1996. Net sales were further decreased by $2.6 million as a result of
repurchased and distressed product attributable to the discontinuance of
Sunshine's Classic Cookie line.
GROSS PROFIT. Fiscal 1995 gross profit declined by $28.3 million to $279.5
million from $307.8 million in fiscal 1994. Gross profit declined to 44.4% of
net sales from 47.8%. The decline in gross profit and margin resulted from
Sunshine's aggressive new product introductions and a significant increase in
costs of sales. During fiscal 1995, Sunshine launched 19 new products nationally
in the reduced-fat and single-serve categories to capitalize on industry and
consumer trends. These higher cost items competed to some degree against
Sunshine's established core products and depressed gross profit by approximately
$4.4 million. Decreases in unit sales of Sunshine's core products, related to
the unsuccessful mid-fiscal 1995 change in marketing strategies, price
competition and higher fixed plant absorption rates, reduced gross profit by
nearly $7.5 million. Cost of sales increased by approximately $13.8 million as a
result of commodity and packaging price increases, including a change to
metalized foil on Hydrox and Vienna Fingers cookies, increased freight and
shipping (primarily from new products), and charges from contract manufacturers
on certain Sunshine products (related to single-serve items).
OPERATING EXPENSES. Before restructuring and other charges, operating
expenses increased by $4.3 million or by 1.5% from fiscal 1994 amounts, to
$295.7 million in fiscal 1995. The increases were driven by consumer marketing
expense of $24.1 million in fiscal 1995 versus $16.1 million in fiscal 1994,
which were only partially offset by a $2.4 million reduction in fiscal 1995
trade-related spending of $138.1 million. Sunshine management effected the
mid-fiscal 1995 change in marketing strategy in an attempt to improve efficiency
of trade expenditures and enhance brand equity through couponing. The deep and
sudden reduction in trade rates, however, had a negative impact on unit sales,
which decreased operating profit. Selling expenses of $110.3 million in fiscal
1995 were 0.8% lower than fiscal 1994 expenditures of $111.2 million, and
general and administrative expenses decreased by 1.7% to $23.2 million in fiscal
1995. Both selling and general and administrative expenses were reduced through
cost containment programs.
RESTRUCTURING CHARGES (GAINS) AND OTHER. In December 1994, GFI and Sunshine
engaged outside consulting services to assist Sunshine in improving its cash
position and developing internal operating and management plans to restore
Sunshine's operating performance. As a result, Sunshine announced the closure of
the Oakland bakery, effective July 14, 1995, and absorbed related plant
restructuring
46
<PAGE>
charges and certain obsolete materials related to Sunshine's product line
rationalization program, together totaling $21.9 million.
Sunshine also accepted write-off amounts totaling $2.6 million from
affiliate companies related to the uncollectability of specified accounts
receivable and $1.7 million in guarantees from auto fleet and warehouse leases
as co-lessee for GFI snack companies on the west coast. These write-offs were
the result of GFI's decision to exit the salty snack food business.
INCOME (LOSS) FROM OPERATIONS. After restructuring and other costs,
Sunshine's income from operations declined to a loss of $43.1 million in fiscal
1995 from an income of $15.4 million in fiscal 1994.
INTEREST EXPENSE. Interest expense increased by $1.9 million to $8.4 million
in fiscal 1995 because of the increased levels of revolving credit borrowing and
interest rate changes.
INCOME (LOSS) BEFORE INCOME TAXES, DISCONTINUED OPERATIONS AND EXTRAORDINARY
ITEM. Fiscal 1994 pretax income of $8.9 million decreased to a loss of $51.5
million in fiscal 1995, driven by the decline in operating earnings, restructure
and other costs, and higher interest charges.
LIQUIDITY AND CAPITAL RESOURCES OF SUNSHINE
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31
-----------------------
1994 1995 1996
----- ----- -----
<S> <C> <C> <C>
(DOLLARS IN MILLIONS)
<CAPTION>
<S> <C> <C> <C>
Cash provided by (used in) operating activities....................... $ 4.9 $12.0 $(8.3)
Cash provided by (used in) investing activities....................... (10.9) (10.6) 17.2
Cash provided by (used in) financing activities....................... 5.8 (1.5) (9.2)
----- ----- -----
Decrease in cash equivalents.......................................... $(0.2) $(0.1) $(0.3)
----- ----- -----
----- ----- -----
</TABLE>
OPERATING ACTIVITIES. In fiscal 1995, cash provided by operations aggregated
$12.0 million versus $4.9 million in fiscal 1994. Fiscal 1994 cash from
operations was driven by positive net income of $2.3 million, depreciation of
$9.0 million, and changes in balance sheet items reducing cash by $9.0 million.
In addition, Sunshine transferred its salty snack food operations to GFI, which
resulted in a loss of $2.6 million and offset the changes in the balance sheet
items.
Fiscal 1995 cash provided by operations was primarily affected by favorable
changes in working capital of $29.6 million because of increased focus on cash
management, particularly related to accounts receivables, inventory and accounts
payables. Non-current assets and long-term liabilities together increased by
$3.3 million. These items, together with depreciation of $8.8 million offset the
net loss of $32.6 million. The non-cash impact of the restructuring accruals was
almost totally offset by the tax benefit.
Sunshine used $8.3 million in cash in fiscal 1996, resulting from
expenditures of $5.4 million related to the closure of the Oakland bakery and
reductions in other accrued liabilities of $12.6 million. Cash was generated by
managed decreases in inventories of $9.1 million. The remaining changes in
assets and liabilities offset Sunshine's net income of $5.1 million.
INVESTING ACTIVITIES. Sunshine used cash of $10.9 million and $10.7 million
for capital expenditures in fiscal 1994 and 1995, respectively. Capital
expenditures were reduced to $6.1 million in fiscal 1996 to accommodate the cash
requirements of the Oakland bakery closure and Sunshine's refinancing. The
fiscal 1996 capital expenditures, however, were favorably offset by the proceeds
of $22.0 million from the sales of the Salerno cookie and cracker division and
the related bakery.
47
<PAGE>
FINANCING ACTIVITIES. In fiscal 1994, Sunshine refinanced its debt facility
with Wells Fargo and entered into an agreement with senior secured noteholders.
The net proceeds from this transaction were $5.8 million. On February 1, 1996,
Sunshine again refinanced its total senior debt with BankAmerica Business
Credit, Inc., which resulted in reduced interest rates. Sunshine reduced its
total outstanding debt by $7.2 million upon the sales of the Salerno cookie and
cracker division and the related bakery and through other principal payments.
SEASONALITY
See "Keebler--Seasonality" above.
COMPANY
LIQUIDITY AND CAPITAL RESOURCES OF THE COMPANY
As of April 20, 1996, the Company's pro forma long-term debt after giving
effect to the Sunshine Acquisition and the related transactions and the Notes
Offering (excluding related fees and expenses) would have been $438.8 million,
and the Company's pro forma short-term debt and current maturities on long-term
debt would have totalled $21.3 million. The Company plans approximately $28
million in capital expenditures in fiscal 1996. As of April 20, 1996, the
Company would have had approximately $120 million in borrowing availability (on
a pro forma basis) under the Revolving Credit Facility, and $8.7 million in cash
and cash equivalents. The Company believes that, based upon current levels of
operations and availability under the Revolving Credit Facility, it can
adequately meet its present cash needs. If, however, the Company cannot generate
sufficient cash flow from operations or borrow under the Revolving Credit
Facility to meet its cash needs, then the Company may be required to take
certain actions including reducing capital expenditures, restructuring its debt,
selling assets or seeking additional equity. There can be no assurance that such
actions could be effected or would be effective in allowing the Company to meet
its cash needs.
48
<PAGE>
BUSINESS
Unless stated otherwise, figures provided for market share percentages and
rank in any market are based on retail sales (measured by weight) in 1995, as
reported by IRI (which tracks retail sales through scanner data in U.S. grocery
stores with annual revenue greater than $2.0 million dollars). In those
instances where market share data is stated to be based on dollar sales, these
dollar sales represent retail sales (measured in dollars) in 1995 as reported by
IRI. The IRI data excludes sales through other channels in which the Company has
a lesser position and, therefore, may overstate the Company's share of the
overall cookie and cracker market. See "--Keebler Strategy--Targeted Marketing
Strategy--Expand Non-supermarket Business."
OVERVIEW
The Company is the second largest cookie and cracker manufacturer in the
United States with a 23.2% share of the retail cookie and cracker market
(including private label sales) for the year ended December 31, 1995. The
Company had approximately $2.1 billion in gross sales in fiscal 1995 on a pro
forma basis including the gross sales of Keebler and Sunshine. Keebler alone was
the second largest cookie and cracker manufacturer in the United States with a
16.4% share of the retail cookie and cracker market (including private label
sales) in 1995. Sunshine alone was the third largest cookie and cracker
manufacturer in the United States with a 6.8% market share in 1995. The Company
produces and markets nine of the top 25 selling cookies and ten of the top 25
selling crackers based, in each case, on dollar sales. In addition, the Company
is the leading manufacturer and marketer of cookies and crackers (combined) to
the foodservice market based on 1995 sales as reported by IFMATRAC.
KEEBLER
Keebler on a stand alone basis had approximately $1.5 billion in gross sales
for the fiscal year ended December 30, 1995. The Keebler name, aided by its
popular brand imagery, which includes Ernie, the Keebler Elf, and Keebler's
Hollow Tree logo, has a national brand awareness rate of 97% based on data
compiled by Luhrs Marketing Research Corporation on behalf of Keebler in 1992.
IRI estimated that 70% of all U.S. households purchased at least one product
with the Keebler(R) brand name during the twelve months ended May 22, 1994.
Keebler manufactures and distributes branded and private label cookies,
crackers, pie crusts and ice cream cones for the retail and foodservice markets.
In addition, Keebler produces custom products for other marketers of branded
food products.
Keebler's gross sales of retail branded products were approximately $1.1
billion in 1995, accounting for approximately 74% of Keebler's total gross
sales. Keebler's major brands include Chips Deluxe, Fudge Shoppe, Elfin
Delights, Sandies, Wheatables, Munch'ems, Zesta, Town House and Club, among
others. Keebler is also the exclusive U.S. importer, distributor and licensee of
the Carr's line of cookies and crackers, which is the top selling premium
cracker brand in the U.S. Keebler, with its Ready-Crust products, has over a 70%
dollar share of the pre-formed retail pie crust market.
Keebler directly services more than 30,000 grocery accounts through its own
national DSD system that employs more than 3,400 persons. Keebler's DSD system
distributes its retail branded cookie and cracker products directly to the
retail location, where these products are then merchandised by Keebler's own
sales force.
Keebler's sales force visits such grocery outlets an average of 1.1 times
per week per store, meeting directly with and taking orders from store managers,
as well as arranging for extra in-store display space. Keebler's trucks then
deliver the orders directly to such grocery outlets, where Keebler's own sales
force then stocks and arranges its products on the retailers' shelves and builds
end-aisle and free standing displays within the stores. While strengthening
retailer relationships, the frequent store
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presence of Keebler's sales force also provides Keebler the ability to monitor
competitors' in-store product promotions. In addition, the sales force is able
to oversee and execute Keebler's in-store promotional programs.
Keebler's DSD system gives it a number of distinct advantages over
competitors that lack a DSD system. Keebler's DSD system (i) enables Keebler to
sell and promote a wide variety of products and to introduce new products at a
lower cost to the retail customer, because the customer's warehouse space,
transportation and in-store labor are not required, (ii) results in high display
levels of Keebler products and well stocked displays during major promotion
periods through the efforts of Keebler's in-store sales force and (iii) enables
Keebler's products to be available in supermarkets representing 99% of ACV.
Management believes that the critical success factors in the grocery store
cookie and cracker business are (1) a broad product line with well recognized
brand names and (2) high levels of in-store display activity. Purchases of
cookies and crackers are impulse driven, with over 25% of volume purchased in
connection with in-store displays in 1995 as reported by IRI. Keebler views its
DSD system as a principal factor in maintaining its number two share of the
cookie and cracker market.
Keebler and Nabisco are the only cookie and cracker producers that have
national wholly owned DSD sales and distribution systems, although Pepperidge
Farms operates a national DSD system through independent distributors. Keebler's
competitors who operate without a DSD system, including producers of private
label products, must rely on store employees to order, stock and display their
cookie and cracker products.
In addition to its retail branded products, Keebler also produces private
label cookies and crackers, products for the foodservice market and various
baked products for other branded food companies. Keebler's gross sales to
private label customers, the foodservice market, and other branded food
companies were approximately $389 million in fiscal year 1995, accounting for
approximately 26% of Keebler's total gross sales. Keebler is the leading
supplier of private label cookie products to supermarkets, with approximately a
30% share of the private label cookie market based on 1995 sales.
Keebler was the second leading supplier of cookies and crackers purchased by
the foodservice market based on 1995 sales as reported by the data tracking
system maintained by the International Foodservice Manufacturers Association
(such data tracking system being referred to herein as "IFMATRAC").
Keebler also manufactures a number of custom products for other marketers of
branded food products including Kellogg's, McDonald's, Oscar Mayer, Heinz and
Gerber.
In addition to Keebler's DSD system, Keebler uses a network of independent
distributors to sell and distribute its products through other major trade
channels, including convenience stores, some club stores, vending distributors,
some mass merchandisers, drug stores and foodservice companies. Finally, Keebler
uses a warehouse sales and distribution system to sell and distribute Ready
Crust pie crusts and private label cookies and crackers to its customers,
including grocery outlets otherwise served by Keebler's DSD system.
SUNSHINE
At the time of the Sunshine Acquisition, Sunshine was the third largest
cookie and cracker manufacturer in the United States with a 6.8% market share
and approximately $607 million in gross sales on a pro forma basis for fiscal
1996. Sunshine manufactures well known cookie and cracker brands such as
Cheez-It, the best-selling snack cracker; Cheez-It Party Mix, the second leading
party mix brand; Vienna Fingers, the leading non-chocolate sandwich cookie;
Hydrox, the original chocolate-based sandwich cookie; Sunshine Golden Fruit, a
fruit-filled bar; Hi Ho Deluxe, a traditional topping cracker; and Krispy
saltine crackers. Sunshine held the number three share position in the
foodservice market for 1995 based on sales as reported by IFMATRAC.
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Sunshine sells its retail branded products throughout the United States
primarily to grocery stores, mass merchandisers, membership clubs and drugstore
chains. Unlike Keebler's grocery customers, Sunshine's grocery customers are
largely served through a customer warehouse sales and distribution system. This
system involves the delivery of products by Sunshine to its customers'
warehouses, not to their individual stores. In contrast to Keebler's DSD system,
Sunshine's customers move purchased products from their warehouses to their
stores at their own expense, and their own employees (rather than Sunshine's)
stock Sunshine's products on the stores' shelves. Only in Philadelphia, New York
and New Jersey does Sunshine operate its own DSD sales and distribution system.
In those markets, Sunshine maintains a higher market share than in most other
areas of the country. Sunshine employs approximately 700 persons in its sales
and distribution system.
HISTORY OF KEEBLER, THE KEEBLER ACQUISITION AND NEW MANAGEMENT
Keebler was founded by Godfrey Keebler in 1853 as a small Philadelphia
bakery. In 1927, Keebler along with four other independent regional bakeries
formed United Biscuit Company of America, which functioned as a business
federation comprised of independent operators. In 1966, Keebler's predecessor
company changed its name to Keebler and began to market its products under the
Keebler name, creating a consistent, nationally-recognized brand name.
By 1974, having grown to $311.0 million in annual revenues, Keebler was
acquired by United Biscuits (unrelated to the former United Biscuit Company of
America), one of the largest food manufacturers in the United Kingdom. Under the
direction of United Biscuits, Keebler grew to over $1.3 billion in gross sales
in 1992. Keebler expanded its presence in the cookie and cracker market in 1993
by acquiring Bake-Line, the largest manufacturer of private label cookies in the
United States.
In the early 1980's, Keebler introduced salty snack products. Keebler's
salty snack products and existing cookie and cracker products shared Keebler's
DSD sales and distribution system and Keebler's R&D, sales and general
administrative resources. During the late 1980's and early 1990's, Keebler
expanded its sales, distribution and corporate infrastructure in anticipation of
future growth in sales of salty snacks products. The expansion included the
implementation of a separate DSD system dedicated primarily to selling salty
snacks and cookies and crackers to convenience stores, which are typically
served by third party distributors. However, after experiencing initial growth,
sales of Keebler's salty snack products began to decline in 1993. In response,
Keebler embarked on a strategy aimed at increasing its market shares for its
other products (i.e., cookies and crackers) through increased marketing
expenditures, price promotions, and new product introductions, which reached a
peak in 1995 with more than 30 new product introductions and record marketing
expenditures.
However, as a result of competitive responses to Keebler's actions, Keebler
did not increase its share of the cookie and cracker markets. Gross sales
(excluding sales of salty snacks) grew only marginally for the three years ended
December 30, 1995, and EBITDA declined substantially from $167.6 million (before
restructuring charges of $102.9 million) in 1993 to $139.1 million in 1994 to
$71.1 million in 1995. Prior to the Keebler Acquisition, Keebler disposed of its
salty snack business and closed its dedicated DSD system to convenience stores.
INFLO acquired Keebler on January 26, 1996. Immediately following the
Keebler Acquisition, a new management team was installed with the industry
expertise necessary to implement a new strategic plan at Keebler. This
management team is lead by Mr. Sam K. Reed who is the new president and chief
executive officer of Keebler. Mr. Reed had previously worked with Artal and
Invus as the president and chief executive officer of Mother's Cake and Cookie
Co. from 1990 to 1993. The members of the new senior management team have an
average of 20 years in the U.S. food industry (see "Management" below) and have
played an active part in designing and implementing similar strategies at other
baked goods companies, many of which were acquired through leveraged buy-outs.
In addition, Invus and Flowers, each with their own substantial experience in
the cookie and cracker and related industries,
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intend to work closely with management to execute Keebler's new strategic plan.
Management currently owns 2.3% of the INFLO Common Stock and will have the right
to purchase through options (two-thirds of which will vest upon the attainment
of certain performance criteria) an additional number of shares, which together
with management's existing shares would represent up to 8.6% of the shares of
INFLO Common Stock on a fully diluted basis.
KEEBLER STRATEGY
Since the Keebler Acquisition, management has been executing a strategic
plan to reduce inefficiencies and further capitalize on (i) the strength of
Keebler's DSD capabilities and (ii) the significant share positions of its
brands within the relatively stable cookie and cracker industry. The new
strategic plan is comprised of three key elements:
1. Cost reductions--immediately reduce costs, particularly in manufacturing
and corporate overhead.
2. Structural reorganization of sales and marketing--decentralize management
with regional teams led by regional vice presidents having increased
responsibility and accountability.
3. Targeted marketing--execute a new marketing strategy designed to
emphasize Keebler's relative strengths in its differing product segments
and regions in a way that emphasizes profits rather than sales volume
alone.
COST REDUCTIONS AT KEEBLER
The cost reductions described herein are based on management's budgets for
1996, 1997 and 1998. There can be no assurance that actual dollars spent will
not exceed management's budgets, that the budgets will not be revised or that
these cost savings will be realized at the times or in the amounts budgeted.
There can be no assurance that other costs and expenses of Keebler will not
increase, thereby lowering or offsetting management's projected cost savings.
Since the closing of the Keebler Acquisition, management accomplished a
series of fundamental structural changes in Keebler. These actions were designed
to immediately reduce fixed costs and establish new managerial and
organizational accountability. Actions already completed or announced are
expected to generate approximately $62 million of cost savings at an annual
rate, with a related one-time cost of approximately $35 million, which has been
reserved for on Keebler's balance sheet. As of April 20, 1996, $14.2 million of
such one-time costs had been paid from Keebler's available cash.
<TABLE>
<CAPTION>
PROJECTED
SAVINGS/(COSTS)
FOR THE PROJECTED
FISCAL YEAR ENDING ANNUALIZED
DECEMBER 28, 1996 SAVINGS/(COSTS)
------------------ ---------------
<S> <C> <C>
ACTIONS TAKEN IN 1996
Reduce corporate overhead..................................... $ 20.5 $22.3
Close the Atlanta plant and make other bakery staff
reductions.................................................... 5.9 13.7
Add regional general managers................................. (1.8) (2.0)
Reduce advertising and consumer promotion commitments......... 27.8 27.8
----- -----
Total(1)...................................................... $ 52.4 $61.8
----- -----
----- -----
</TABLE>
- ------------
(1) As a result of taking the actions shown above, Keebler expects to incur a
total of $34.7 million in one-time cash costs in 1996, which have been
reserved for on Keebler's consolidated balance sheet. As of April 20, 1996,
$14.2 million of such one-time costs had been paid from Keebler's available
cash.
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REDUCED CORPORATE OVERHEAD
Following the Keebler Acquisition, management took a series of actions to
reduce headquarters administration costs. At November 15, 1995, Keebler employed
690 persons at its corporate headquarters. As a result of attrition and
reductions made by current management after the Keebler Acquisition, the number
of persons employed at corporate headquarters was approximately 442 at June 30,
1996.
Savings at Corporate Headquarters. As a result of these actions, corporate
headquarter costs have been reduced by $14.8 million from the fiscal year 1995
level, which figure includes a reduction in non-personnel costs. The associated
personnel reductions resulted in severance costs of $12.2 million, which had
been reserved for on Keebler's consolidated balance sheet and as of April 20,
1996 had been paid out of Keebler's available cash.
Research and Development. Keebler has reduced the 1996 R&D budget by $5.7
million from the amount spent in 1995 (which figure includes reductions in
non-personnel costs) by concentrating R&D efforts on projects that are focused
on developing and reconfiguring products in Keebler's existing cookie and
cracker product lines rather than on developing products outside Keebler's
existing product lines. The one-time severance costs associated with this
reduction are $0.9 million, which had been reserved for on the consolidated
balance sheet and as of April 20, 1996 had been paid out of Keebler's available
cash. Prior to the Keebler Acquisition, Keebler pursued the development of
numerous new products (more than 30 in 1995), which resulted in few successes
and many inefficiencies. A senior level, multi-functional new products
development team has been assembled that will set priorities and streamline the
development process with the objectives of improving efficiency and product
success rates and accelerating new product development.
Keebler also plans to reduce the costs of future new product introductions
by using contract manufacturers during the initial stages of a product launch
and moving production in-house only once the new product has proven its
viability.
REDUCED MANUFACTURING OVERHEAD AND CLOSING OF ATLANTA PLANT
Reduced Manufacturing Costs. Keebler determined that its six major bakeries
were overstaffed and reduced bakery overhead and shipping department costs by
eliminating 75 positions in the bakeries and shipping departments, for
annualized personnel cost savings of $3.9 million. These personnel reductions
triggered severance payments of $1.1 million, which had been reserved for on the
consolidated balance sheet and as of April 20, 1996 had been paid out of
Keebler's available cash.
Closing of Atlanta Plant. As a result of overbuilding and automation,
Keebler's bakeries operated at approximately 75% of capacity in 1995 (based on
five day work weeks of three shifts per day). On March 1, 1996, Keebler
announced that its Atlanta manufacturing facility would be closed to reduce
excess capacity and completed the shutdown in June 1996. Management expects to
achieve net manufacturing savings in bakery costs of $9.8 million at an annual
rate. The majority of the volume produced at the Atlanta facility has been
relocated to the remaining facilities of the Company where capacity is
available. Management expects to incur a one-time cost of $18.0 million related
to the closing, which has been reserved for on the consolidated balance sheet of
Keebler.
REDUCED MEDIA ADVERTISING AND CONSUMER PROMOTION EXPENDITURES
In fiscal year 1995, Keebler increased its total marketing expenditures by
$39.4 million over fiscal year 1994 expenditures. Much of the increase in
spending from 1994 to 1995 resulted from the introduction of more than 30 new
products, most of which failed to meet sales projections. Certain new products
involved the introduction of new brands, which required a high level of initial
advertising and promotional spending. The new product introduction program for
1996 will emphasize line extensions of
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Keebler's existing products, which should not require a significant investment
in building new brand awareness.
In the future, Keebler's media and consumer spending will emphasize building
Keebler's brand equity. Management intends to return its total fiscal year 1996
brand marketing expenditures as a percentage of gross sales (including trade
spending) to approximately the fiscal year 1994 levels. Total Keebler brand
advertising and consumer promotion expenditures will be reduced by $27.8 million
from 1995 levels. Most of this reduction results from the elimination of
programs that management believes were either ineffective or inconsistent with
Keebler's strategy going forward.
OTHER COST REDUCTIONS
Package Weight Overfills. Prior to the Keebler Acquisition, package weight
overfills at the Keebler bakeries were running as much as 5% over the delivered
packaged weight in order to assure compliance with state package weight
regulations. Efforts are underway to bring Keebler's overfill levels to a
Company goal of 2%. A target for scrap reduction also is in place.
Purchasing. Among other projects, Keebler is currently developing and taking
advantage of purchasing synergies with Flowers. See "Raw Materials."
STRUCTURAL REORGANIZATION OF SALES AND MARKETING
Since the Keebler Acquisition, management reorganized its retail branded
sales and marketing functions into five separate regions, each led by a regional
vice president. The corporate headquarters sales and distribution staff has been
reduced significantly as the business emphasis and day-to-day management
responsibility has shifted to the regional management teams. Each regional
management team consists of a Vice President--General Manager, a sales director,
a distribution director, a marketing manager and a finance manager. The vice
president and finance positions are new positions.
While Keebler will continue to follow a national business plan, each region
has profit accountability and is charged with developing regional marketing
plans that are consistent with the overall Keebler strategy and total resource
allocation. The regional teams are also responsible for reducing distribution
inefficiencies.
Management is implementing incentive systems throughout Keebler that are
profit-based and not solely volume-based. Prior to the Keebler Acquisition, the
majority of the incentive programs were based on sales volume, which resulted in
a bias of Keebler's sales mix toward higher volume, lower margin items. These
programs resulted in unprofitable marketing spending to drive the sales volume
of such lower margin items. Keebler implemented its new sales incentive program
in the southeastern region in April 1996 and expects to implement the new sales
incentive program in the rest of the country by September 1996.
Corporate headquarters retains responsibility for the national business plan
and day-to-day planning and execution of advertising, major consumer promotions,
new product development and integration of corporate functions such as
manufacturing and logistics as well as communication among such business
functions.
TARGETED MARKETING STRATEGY
There are six key components to the new Keebler marketing strategy:
1. Focus marketing investments behind the Keebler brand umbrella.
2. Regionalize marketing efforts to reflect different market share levels
and regional cookie and cracker segmentation.
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3. Focus marketing resources on differentiated, higher margin items rather
than on lower margin, commodity-like items.
4. Allocate marketing resources to better leverage the DSD sales and
distribution system.
5. Aggressively pursue non-supermarket business.
6. Focused new product introductions.
Keebler Brand Umbrella Strategy. Keebler(R) is one of the most widely
recognized brands among U.S. households, enjoying a 97% brand awareness level
(based on data compiled by Luhrs Marketing Research Corporation on behalf of
Keebler in 1992) with 70% of households purchasing at least one product with the
Keebler(R) brand name during the twelve months ended May 22, 1994 as estimated
by IRI. Supporting and emphasizing the Keebler brand umbrella while allowing for
individual product brand distinctiveness will be the core of the new strategy.
Regionalize Marketing Efforts. Prior to the Keebler Acquisition, Keebler
followed a national marketing philosophy with plans developed at corporate
headquarters. Little recognition was given to Keebler's differing regional
market share levels or to regional segmentation within the cookie and cracker
markets. The new regional management structure will create opportunities not
previously identified by corporate headquarters. Corporate headquarters will
play a critical role in ensuring that the local marketing plans are compatible
with overall marketing strategy and consistent with manufacturing, sales and
distribution capabilities.
Focus on Differentiated, Higher Margin Items. The margin contribution
structure of Keebler's individual products varies widely. In the past, Keebler's
marketing focus and sales incentive system emphasized volume alone, which placed
undue emphasis on sales of Keebler's high tonnage, price-driven products.
Keebler has a portfolio of differentiated, higher margin items that, as a result
of previous incentive systems, have been undermarketed. The new Keebler
marketing strategy will reallocate marketing and selling resources behind a
product portfolio strategy that will emphasize total dollar contribution after
marketing expense. Sales incentive programs will be designed to motivate
Keebler's sales force to achieve the product portfolio strategy goals.
Leverage the DSD System. Prior to the Keebler Acquisition, Keebler's
organizational structure did little to encourage in-store promotions despite the
impulse dynamics of cookie and cracker buying with over 25% of volume purchased
in connection with in-store displays as reported by IRI. While some fully
integrated promotions were developed, the lack of shared objectives between
sales and marketing resulted in below optimum execution. In the new Keebler
organization, product advertising is fully integrated with consumer and trade
promotions.
Expand Non-supermarket Business. While at least $1.7 billion or 22% of
cookies and crackers were purchased outside of supermarkets in 1995 as reported
by IRI, Keebler believes that less than 14% of its sales were generated in
non-supermarket channels (which include club stores such as Sam's Club and Price
Costco, mass merchandisers such as Wal-Mart and Target, small grocery stores,
convenience stores and vending distributors) in 1995. Total industry
non-supermarket sales of cookies and crackers combined grew 8% in 1995 compared
to a decline in supermarket sales of cookies and crackers of 1.5%, in each case
based on dollar sales as reported by IRI. Non-supermarket channels require
programming and distribution strategies different from those needed for
supermarkets. Under Keebler's new management, a senior executive with experience
in non-supermarket channels has been recruited. Keebler believes that his
experience in developing products and programs that meet the specific needs of
the non-supermarket channels should increase Keebler's sales to these channels.
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Focused New Product Introductions. In recent years, prior to the Keebler
Acquisition, Keebler introduced a large number of new products that varied
greatly from Keebler's existing products and required a large marketing
investment. Many of these products were unsuccessful. Keebler performed best in
developing and introducing new products that represent line extensions with
variations or reconfigurations of Keebler's existing product lines. Accordingly,
management plans to focus its product development on new products that are
primarily variations of existing Keebler products, especially in those Keebler
segments that are well differentiated and have high profit margins. Packaging
format alternatives will be tailored to the needs of the growing non-supermarket
channels. Keebler will work closely with a network of contract manufacturers to
develop new products that are consistent with this strategy.
HISTORY OF SUNSHINE
The origins of Sunshine can be traced to 1882, when two brothers, Jacob and
Joseph Loose, entered the baking and confectionery business in Kansas City,
Missouri. In 1908, Sunshine expanded into the northeast, opened a bakery in
Boston, and introduced Hydrox, the original chocolate, creme-filled sandwich
cookie. In 1912, Sunshine opened what was at that time the largest bakery in the
world, in Long Island City, New York.
During the 1920s and 1930s, Sunshine introduced Krispy saltines, Cheez-It
snack crackers, Hi Ho Deluxe crackers, Sunshine Honey Graham crackers, Vienna
Fingers sandwich cookies, Hydrox and Chip-A-Roos chocolate chip cookies. In
April 1988, Sunshine was purchased by GFI.
As a result of a cost reduction program implemented during the early 1970's,
Sunshine converted its sales and distribution system from a DSD sales and
distribution system to a customer warehouse sales and distribution system.
However, Sunshine's primary competitors, Nabisco and Keebler, maintained their
respective DSD systems, and Sunshine's share of the cookie and cracker markets
has gradually declined. To address these declines in recent years, Sunshine
increased its rate of new product introductions, lowered prices and changed the
focus of its marketing expenditures. However, these efforts did not stop
Sunshine's market share erosion. In order to improve its internal cost
structure, Sunshine management took a series of steps in fiscal year 1996 to
downsize its business and to improve its profitability. Sunshine's decision to
close its Oakland bakery (completed in July 1995) and sell its Salerno bakery
near Chicago (completed in November 1995) increased system wide capacity
utilization and reduced fixed manufacturing overhead. In January 1996, Sunshine
sold its unprofitable regional Salerno cookie and cracker division, exited
certain other non-core businesses, including the ice cream wafer and private
label segments, and pruned its product line in order to focus on its core
national brands.
KEEBLER'S ACQUISITION OF SUNSHINE
On June 4, 1996, Keebler acquired Sunshine and has begun the process of
integrating the two companies. In addition to the strategic value of combining
Keebler and Sunshine, the Company's management expects that such integration
will provide economic efficiencies in administration, purchasing, production,
sales, distribution and marketing. In particular, management believes that
Keebler's DSD system will provide a more effective vehicle for marketing the
Sunshine branded retail products throughout the United States.
LEVERAGING KEEBLER'S DSD SYSTEM.
In contrast to Nabisco and Keebler, Sunshine primarily employs a customer
warehouse sales and distribution system. Approximately 87% of Sunshine's retail
volume in 1995 was delivered to its customers' warehouses, while only 13% (in
Philadelphia, New Jersey and New York) was delivered directly to retail stores
by Sunshine's DSD sales and distribution system. The Company intends to phase
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Sunshine's retail volume out of its current customer warehouse sales and
distribution system and into Keebler's national DSD sales and distribution
system on a region-by-region basis.
As a result of Keebler's exit from salty snacks in January 1996, Keebler's
DSD system has excess capacity. This excess capacity will enable Keebler to
absorb Sunshine's retail volume without significant investment in fixed assets.
Given that Keebler's DSD system (trucks, warehouses, and sales and distribution
personnel) currently services substantially all of the major stores where
Sunshine products are sold, the addition of Sunshine's retail volume will
decrease the system's excess capacity and increase its efficiency. Redundant
warehouses, vehicles and sales personnel costs will be reduced. Management
expects a one-time cost of $29.8 million associated with the integration of
Sunshine's retail volume into Keebler's DSD system, which has been reserved for
on the Company's consolidated balance sheet. These estimated costs include
severance costs, lease termination costs and temporary increases in
manufacturing costs. Also, the Company intends to temporarily increase marketing
expenditures in connection with this transition by an aggregate of $15 million
over the two years following the Sunshine Acquisition, which expenditures will
not be reserved for on the Company's consolidated balance sheet.
In addition, by distributing Sunshine's retail volume through Keebler's DSD
system, customer warehouse loading and slotting charges and customer deductions
will be reduced. During Sunshine's fiscal year ended March 31, 1996, more than
90% of Sunshine's retail volume was sold on promotion due, in part, to customer
forward buying (i.e., customer's buying large quantities of products on
promotion beyond current needs and holding such quantities as inventory), as
compared to Keebler's level of approximately 67% of retail volume in fiscal year
1995 sold on promotion. DSD systems, by bypassing customers' warehouses, prevent
these forward buying practices.
Management also believes that the improved in-store service provided by
Keebler's DSD system will allow for improved marketing and distribution of
Sunshine's core retail branded products.
ADDITIONAL SYNERGIES RESULTING FROM THE COMBINATION OF SUNSHINE AND KEEBLER
By combining Sunshine and Keebler, the Company expects to benefit in the
areas of sales and distribution (as discussed above), marketing, administration,
production and purchasing.
Marketing Sunshine Products under Keebler's Brand Umbrella Strategy. As
discussed above, Keebler has one of the most widely recognized brand names among
U.S. households, whereas the "Sunshine" name is not as well recognized. However,
some of Sunshine's individual products, such as Cheez-it, Vienna Fingers, Hydrox
and Krispy, are well known by consumers. Consequently, the marketing strategy
for Sunshine products under the Keebler brand umbrella will capitalize on
Keebler's overall brand name recognition as well as the brand name recognition
of Sunshine's individual products.
The individual product offerings of Keebler and Sunshine are well suited for
integration. Keebler is generally strong in cookie and cracker segments in which
Sunshine is weak or not present; while Sunshine's products are generally strong
where Keebler is weak. With respect to regional markets, Sunshine is strongest
on the east and west coasts, which historically have been Keebler's lower
relative share regions.
Combining Corporate Functions. The Company expects to close Sunshine's
corporate headquarters within the first year following the Sunshine Acquisition
and integrate all administrative and R&D functions into Keebler's corporate
headquarters and R&D facility. The general and administrative expenses
associated with Sunshine's corporate headquarters for fiscal year 1996 totaled
approximately $15 million. Management expects that these expenses will be
reduced through the integration of these functions into Keebler's corporate
headquarters and R&D facility, and management has reserved for $12.0 million of
one-time costs associated with this integration on the Company's consolidated
balance sheet.
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Unlike Keebler, Sunshine performs many of its administrative functions at
each of its bakeries. The Company plans to eliminate these positions at the
bakeries by centralizing these administrative functions at Keebler's corporate
headquarters. The general and administrative expenses associated with Sunshine's
bakeries totaled approximately $7 million in fiscal year 1996. Management
expects that these expenses will be reduced through the integration of these
functions into Keebler's corporate headquarters, and management has reserved for
$1.0 million of one-time costs associated with this integration on the Company's
consolidated balance sheet.
Rationalize Production. Sunshine's bakeries operated at approximately 64% of
capacity in fiscal 1996 (based on five day work weeks of three shifts per day).
Management believes that combining Keebler's and Sunshine's operations will
offer opportunities to rationalize the combined manufacturing system through the
closure of up to two manufacturing plants by the end of fiscal year 1998.
Management has reserved for $19.0 million of one-time costs associated with this
manufacturing rationalization.
Purchasing Synergies. With the addition of Sunshine, the Company's raw
material purchases will increase. Among other projects, the Company is currently
developing and taking advantage of purchasing synergies with Flowers. See "Raw
Materials."
PRODUCTS AND MARKETS
The individual product offerings of Keebler and Sunshine are well suited for
integration. Keebler is generally strong in cookie and cracker segments in which
Sunshine is weak or not present; while Sunshine's products are generally strong
where Keebler is weak. Together, the Company produces and markets nine of the
top 25 cookies and ten of the top 25 crackers in the United States based on
dollar sales and has a combined 20.4% share of the U.S. cookie market and 27.1%
of the U.S. cracker market.
Cookie Brands
In 1995, gross sales of Keebler's retail branded cookies amounted to $497.2
million, or 33.4% of Keebler's total gross sales. Keebler currently has seven of
the top 25 cookie brands in the U.S. cookie market based on dollar sales. Chips
Deluxe is Keebler's largest cookie brand and is available in a number of
varieties including original, Rainbow, Chocolate Lovers, Soft 'n' Chewy and a
reduced fat version, and is the number two brand in the chocolate chip cookie
segment based on dollar sales. Fudge Shoppe is Keebler's second largest cookie
brand and is the leading brand in the enrobed cookie category based on dollar
sales. Other popular Keebler cookie brands include Sandies, Soft Batch and
Keebler vanilla wafers, which each rank number one or number two in their
respective cookie segments.
In the fiscal year ended March 31, 1996, gross sales of Sunshine's retail
branded cookies amounted to $170.6 million, or 28.1% of Sunshine's total gross
sales. Sunshine currently has two of the top 25 cookie brands in the U.S. cookie
market based on dollar sales. Vienna Fingers is Sunshine's largest and most
successful cookie brand, and is the number one brand in the non-chocolate
sandwich cookie segment. Hydrox is Sunshine's second largest cookie brand. Other
popular Sunshine cookie products include Sunshine Golden Fruit bars, Sunshine
sugar wafers and Sunshine vanilla wafers.
Cracker Brands
In 1995, gross sales of Keebler's retail branded crackers (including
imported crackers sold under other branded labels) amounted to $551.5 million,
or 37.1% of Keebler's total gross sales. Keebler currently produces and markets
eight of the top 25 selling cracker brands in the U.S. based on dollar sales.
Zesta saltines is Keebler's largest selling cracker and is the second leading
branded saltine cracker. Town House is Keebler's second largest selling cracker.
Other popular Keebler cracker brands
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<PAGE>
include Graham Selects, Wheatables, Club, Munch'ems and Toasteds. Club, Town
House and Graham Selects rank number two in their respective cracker segments.
Keebler imports and distributes Carr's crackers in the United States under
an exclusive long-term licensing and distribution agreement with United
Biscuits. Carr's crackers are manufactured by McVities, a subsidiary of United
Biscuits. Carr's crackers are the top selling premium crackers in the United
States. Pursuant to the licensing and distribution agreement, Keebler has the
right to produce new cookie and cracker products under the Carr's label, which
can be marketed throughout the United States. In addition to Carr's crackers,
Keebler imports a variety of other products including Ryvita crispbread and Finn
Crisp. Keebler's imported products are sold and merchandised by 75 specialty
distributors to approximately 30,000 retail stores.
In the fiscal year ended March 31, 1996, gross sales of Sunshine's retail
branded crackers amounted to $315.6 million, or 52.0% of Sunshine's total gross
sales. Sunshine currently has two of the top fifteen cracker brands based on
dollar sales. Cheez-it is Sunshine's largest selling cracker and is the leading
branded snack cracker in the United States based on dollar sales. Krispy is
Sunshine's second largest selling cracker. Other popular Sunshine cracker brands
include Cheez-it Party Mix, Hi Ho Deluxe and Graham Classics.
Pie Crusts
Preformed pie crusts, sold under the Keebler Ready-Crust brand name,
accounted for approximately 70% of the U.S. retail preformed pie crust market
based on dollar sales. Keebler introduced a reduced-fat Ready-Crust product in
the latter part of 1995. Keebler's dedicated Ready-Crust sales team, assisted by
a national system of independent brokers, markets Ready-Crust products, which
are shipped directly to customers' warehouses.
Ice Cream Cones
Management believes Keebler is the leading manufacturer of ice cream cones
in the United States based on 1995 sales. Keebler markets its ice cream cones
through retail and foodservice channels and produces cones for various
restaurants and ice cream retailers, such as McDonald's and TCBY.
New Products
Within the past few years, new products in the cookie and cracker markets
have primarily targeted the "better-for-you" segment, in which Keebler has
launched an Elfin Delights brand of "better-for-you" cookies, as well as
reduced-fat or fat-free versions of Chips Deluxe, Keebler vanilla wafers and
Pecan Sandies cookies, and Zesta, Town House, Wheatables, Munch'ems and Toasteds
crackers. Sunshine launched reduced-fat or fat-free versions of Vienna Fingers,
chocolate Graham Classics, Sunshine Golden Fruit bars, Cheez-it, Hi Ho and
Krispy over the past three fiscal years. Management intends to focus the
Company's new product efforts primarily on products in its existing cookie and
cracker lines. Management believes that these new product opportunities do not
require substantial investment in research and development, and provide a better
risk/reward trade-off. See "Keebler Strategy--Cost Reductions--Reduced Corporate
Overhead--Research and Development" and "--Targeted Marketing Strategy--Focused
New Product Introductions."
Other Product Lines
In 1995, Keebler's products other than retail branded cookies and crackers
accounted for $438.1 million or 29.5% of Keebler's gross sales. Set forth below
is a description of Keebler's other product lines.
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Private Label Products. In 1993, Keebler expanded into the private label
cookie and cracker market with its purchase of Bake-Line, a producer of private
label cookie products. While Bake-Line had historically concentrated on cookie
products, Keebler expanded into the private label cracker market in 1994.
Keebler is the industry's leading manufacturer of private label cookie products
in the U.S. with 1995 supermarket sales of $124.3 million and an approximate 30%
share of the private label cookie market in terms of dollar sales. Keebler
serves leading grocery chains in the U.S. with a variety of products ranging
from value-oriented standard products to premium items that compete with branded
alternatives. Keebler's plant in Des Plaines, Illinois is dedicated to producing
private label cookies, and is capable of producing a wide variety of products
with a multitude of packaging options to meet the wide-ranging demands of
Keebler's private label customers. Keebler's private label cookies and crackers
are shipped via common carrier directly to customer warehouses.
Products for the Foodservice Market. Keebler's sales to the foodservice
market in 1995 amounted to $103.1 million, led by cracker products which
represented over 70% of volume, and Sunshine's gross sales to the foodservice
market in the fiscal year ended March 31, 1996, amounted to $72.5 million or
11.9% of Sunshine's total gross sales. The Company is the leading supplier of
cookies and crackers purchased by the foodservice market in the United States
based on 1995 sales as reported by IFMATRAC. The Company's foodservice products
are sold by a national sales force dedicated exclusively to the foodservice
market, with the assistance of independent brokers.
Custom Products for Other Marketers of Branded Food Products. Keebler
manufactures a variety of custom products for other marketers of branded food
products. In particular, Keebler has manufactured Pop Tarts for Kellogg since
the product's introduction in 1963. Today, Kellogg is Keebler's largest
customer. Over the 32-year relationship, Keebler has manufactured a variety of
Kellogg branded products including Pop Tarts, Cracklin' Oat Bran and Nutri-Grain
bars. Sales to Kellogg in fiscal year 1995 grew as a result of the introduction
of a low-fat Pop Tart and strong demand for Nutri-Grain bars. While Keebler
expects its long-term relationship with Kellogg to continue, there can be no
assurance of a continued relationship. Other custom products produced for other
marketers of branded food products include crackers for Oscar Mayer Lunchables
and Starkist Charlie Tuna snack kits, Kraft Handi-Snacks, Gerber Biter biscuits
and McDonaldland cookies. These custom products are packaged under the other
companies' labels and shipped from Keebler's plants to the other companies'
regional warehouses or distribution centers via common carrier.
CUSTOMERS
The Company's top 10 customers in 1995 (on a pro forma basis) were Kellogg,
Kroger/Dillon, Wal-Mart, American Stores, Food Lion, Winn-Dixie, Albertson's,
Sysco, Safeway and SuperValu/Wetterau, which together accounted for 26.3% of the
Company's pro forma 1995 gross sales.
MANUFACTURING AND DISTRIBUTION FACILITIES
Manufacturing Facilities
Keebler owns and operates nine manufacturing facilities in the U.S., where
more than 425 thousand tons of product were manufactured on 41 primary
production lines in 1995. As a result of capital expenditures made by Keebler
over the past decade, management believes that Keebler's manufacturing
facilities are state-of-the-art. Management has budgeted $20 million on capital
expenditures for Keebler alone in fiscal year 1996. The six largest facilities,
responsible for over 78% of Keebler's total production with over 335 thousand
tons of output in 1994, are located in Grand Rapids, Michigan; Cincinnati, Ohio;
Denver, Colorado; Macon, Georgia; Atlanta, Georgia and Des Plaines, Illinois.
Keebler also owns and operates a small bakery in Florence, Kentucky, which
produces enrobed cookies and frozen cakes; an ice cream cone plant in Chicago,
Illinois and a co-packing operation in
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Athens, Georgia. Keebler estimates that its manufacturing facilities ran at
approximately 75% of their total capacity in 1995 (based on five-day work weeks
of three shifts per day).
Sunshine owns and operates four bakeries located in Sayreville, New Jersey;
Kansas City, Kansas; Columbus, Georgia and Santa Fe Springs, California, where
more than 170 thousand tons of product were manufactured on 22 primary
production lines during Sunshine's fiscal 1996. Sunshine estimated that its
bakeries operated at approximately 64% of capacity during Sunshine's fiscal
1996. Sunshine also owns and operates a dairy in Fremont, Ohio that produced 4.4
thousand tons of cheese for Sunshine in its 1996 fiscal year. The dairy operated
at maximum capacity during Sunshine's fiscal 1996. Sunshine relies on outside
sources for its additional cheese requirements.
Distribution Facilities
Keebler's distribution facilities consist of seven bakery shipping centers
(six owned and one leased) and of 61 distribution centers (ten owned and 51
leased) throughout the United States. Keebler's fleet consists of over 1,000
trucks, most of which are leased. Sunshine leases thirteen distribution centers
and owns two distribution centers, which are primarily located on the east and
west coasts.
RAW MATERIALS
The primary raw materials used in the Company's food products consist of
flour, sugar, shortening, chocolate and milk. The Company uses corrugated
cardboard and plastics to package its products. Among other projects, the
Company is currently developing and taking advantage of purchasing synergies
created by combining the purchasing of Keebler and Flowers, with Sunshine's
purchasing to be included. Management believes that the most significant
opportunities are with packaging materials (corrugated shipping cartons, plastic
trays, wrapping film, etc.) where suppliers may grant price concessions in
exchange for guaranteed volume and long production runs. In raw materials
procurement (flour, sugar, shortening, etc.), the Company uses hedging
techniques to minimize the impact of price fluctuations and not for speculative
or trading purposes. There can be no assurance, however, that such strategies
will result in a reduction in the Company's raw material costs.
INFORMATION SYSTEMS
In 1994, Keebler upgraded its management information system to the SAP R/3
system and began installation of the new system in 1995. Keebler invested
approximately $33 million in the system prior to the Keebler Acquisition.
Current management expects to complete the implementation of the new system at
Keebler during 1996 with an additional investment of approximately $7 million.
Sunshine will be integrated into Keebler's information system on a timely basis.
Management believes that upon completion of such implementation Keebler will
realize significant improvement in its ability to deliver timely and accurate
information, thereby facilitating more informed management decisions.
EMPLOYEES
The Company employs approximately 11,400 persons, of which approximately
5,100 are represented by unions. The Company believes its relations with its
employees to be good.
PATENTS, LICENSES AND TRADEMARKS
The Company owns a number of patents, licenses and trademarks. The Company's
principal trademarks include Keebler(R), Ernie the Keebler Elf(R), the Hollow
Tree logo, Cheez-It(R), Chips Deluxe(R), Chip-A-Roos(R), Club(R), Elfin
Delights(R), Fudge Shoppe(R), Graham Selects(R), Hydrox(R), Krispy(R),
Munch'ems(R), Ready-Crust(R), Sandies(R), Soft Batch(R), Toasteds(R), Town
House(R), Vienna Fingers(R), Wheatables(R), and Zesta(R). The Company is the
exclusive licensee of the Carr's(R) brand name in the
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United States. Such brand names are considered to be of material importance to
the business of the Company since they have the effect of developing brand
identification and maintaining consumer loyalty. Management is not aware of any
fact that would negatively impact the continuing use of any of its patents,
licenses, trademarks or trade names.
ENVIRONMENTAL
The Company's operations and properties generally are subject to federal,
state and local laws and regulations relating to the storage, handling, emission
and discharge of materials into the environment. The Company expects to continue
to incur costs for its ongoing operations to comply with environmental laws.
An affiliate of United Biscuits, the former owner of Keebler, has agreed to
indemnify the Company for certain environmental losses relating to matters that
existed prior to the Keebler Acquisition, subject to, among other things, the
Company bearing the first $500,000 of such losses and the giving of notice of a
claim within three years of the Keebler Acquisition.
GFI has agreed to indemnify INFLO and the Company for certain environmental
losses relating to matters prior to the Sunshine Acquisition, subject to, among
other things, INFLO and the Company bearing the first $2.0 million of such
environmental losses and certain other indemnifiable losses and GFI's liability
for such environmental losses and certain other indemnifiable losses being
limited to an escrow account consisting of Bermore's shares of INFLO Common
Stock and Bermore's warrants to purchase shares of INFLO Common Stock plus $10.0
million in cash and the giving of notice of such claim within 18 months of the
Sunshine Acquisition.
Although it is difficult to estimate the cost of complying with
environmental laws, the Company does not believe that compliance with or
liability under any environmental laws will have a material adverse effect on
its results of operations or financial condition.
LITIGATION
The Company is involved in routine litigation, none of which it believes
will have a material adverse effect on its results of operations or financial
condition.
REGULATORY
The Company is subject to regulation by the Food and Drug Administration,
the United States Department of Agriculture, the Federal Trade Commission, the
Environmental Protection Agency, the Interstate Commerce Commission, the
Department of Commerce, as well as by various state agencies with respect to the
production, packing, labeling and distribution of its food products. The Company
believes it is in compliance in all material respects with the applicable rules
and regulations of such agencies.
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THE INDUSTRY
MARKET SIZE
In 1995, the U.S. retail cookie and cracker market generated sales of more
than $7.9 billion, of which $6.2 billion was through supermarkets as reported by
IRI. Cookies accounted for $3.6 billion, or 58.1% of the retail cookie and
cracker sales through supermarkets in 1995 and crackers accounted for $2.6
billion, or 41.9%.
INDUSTRY TRENDS
The U.S. combined cookie and cracker market has been relatively stable,
experiencing slow but steady growth over the last twenty years. The following
graphs illustrate the historical cookie and cracker industry trends in the
United States based on sales (measured by weight and dollars) in supermarkets.
U.S. COOKIE AND CRACKER SALES
(BY WEIGHT)
[GRAPH]
U.S. COOKIE AND CRACKER SALES
(BY DOLLARS)
[GRAPH]
While changing consumer preference can lead to shifts among cookie and
cracker categories, overall cookie and cracker sales have remained steady. For
example, the better-for-you cookie and cracker categories experienced
significant growth between 1991 and 1995. However, the growth rate of
better-for-you products slowed in 1995 to a 26% annual growth rate and decreased
5% for the first 24 weeks of 1996 compared to the first 24 weeks of 1995, in
each case based on supermarket sales (measured by weight) as reported by IRI.
The Company believes growth in the better-for-you category has resulted from
consumers' attention to the "healthiness" of products. In order to capitalize on
this trend, major branded producers and private label sellers introduced
numerous reduced-fat, low-fat and fat-free products. Better-for-you cookie and
cracker products have increased from 155 million pounds sold in supermarkets in
1993 to 360 million pounds sold in supermarkets in 1995 as reported by IRI.
Growth in the U.S. private label market has exceeded that of the overall
cookie and cracker market over the last three years. Private label cookie and
cracker products represented a 16.6% share of the market based on sales
(measured by weight) in supermarkets for the year ended December 31, 1995, up
1.5 share percentage points over the 1992 share. The principal reason for this
growth has been the advent of private label products that are similar in quality
to branded products but are often available at significantly lower prices than
national brands.
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COMPETITION
Below is a summary of the market share trends of each of the major category
competitors based on sales (measured by weight and dollars) in supermarkets. As
the tables show, the shares of the Company and its primary competitor, Nabisco,
within the cookie and cracker industry have not changed significantly in the
period from January 1, 1992 through June 15, 1996.
U.S. COMBINED COOKIE AND
CRACKER MARKET SHARE TRENDS
[GRAPH]
U.S. COMBINED COOKIE AND
CRACKER MARKET SHARE TRENDS
Source: IRI
Note: Figures for Keebler include its private label sales, but exclude sales of
Carr's products. Private Label includes Bake-Line for years not owned by
Keebler.
The U.S. cookie and cracker market is highly competitive. The U.S. branded
cookie and cracker industry is led by two competitors, Nabisco and the Company,
which together account for nearly 60% of cookie and cracker sales. The Company,
as the number two competitor, has more than four times the cookie and cracker
sales of the number three competitor. Smaller competitors include numerous
national, regional and local manufacturers of both branded and private label
products, which together accounted for approximately 40% of the U.S. cookie and
cracker sales in 1995. Competition for sales is based primarily on price, brand
recognition, brand loyalty, quality and in-store execution of promotional
programs.
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MANAGEMENT
EXECUTIVE OFFICERS
The following table sets forth the name, age, positions and offices held (as
of the date hereof) and a brief account of the business experience of each of
the Company's current executive officers. Except as otherwise indicated, no
family relationship exists between any executive officer or director of the
Company. No executive officer of the Company serves as a director of any company
whose securities are registered under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Executive officers of the Company are elected by
and serve at the discretion of the Board of Directors of the Company. The
address of each of the executive officers of the Company is Keebler Corporation,
One Hollow Tree Lane, Elmhurst, Illinois 60126.
<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------- --- ---------------------------------------------------------
<S> <C> <C>
Sam K. Reed................ 49 President, Chief Executive Officer and Director of the
Company since January 1996. Mr. Reed has participated
in several leveraged buyouts during his 21 years in the
snack and baking industries. He served as CEO of
Specialty Foods Corporation's $450.0 million Western
Bakery Group division until January 1995. Prior to
that, he was President and CEO of Mother's Cake and
Cookie Co. from 1991 to 1994, and held Executive Vice
President positions at Wyndham Bakery Products from
1988 to 1990 and Murray Bakery Products from 1985 to
1988. Mr. Reed managed a natural foods company from
1984 to 1985, which later became Quaker Oats rice cake
division. He started his career in 1975 with Oroweat
Foods Company where he spent 10 years in finance,
manufacturing and general management. Mr. Reed received
a B.A. from Rice University and an M.B.A. from
Stanford.
David B. Vermylen.......... 45 President-Keebler Brands since January 1996. Mr. Vermylen
manages Keebler's branded cookies and crackers, pie
crust and imported products sector. He has 22 years
experience in marketing consumer packaged goods
including cookies, cereals, beverages and convenience
foods. Mr. Vermylen spent 14 years in product
management at General Foods from 1974 to 1988 managing
a diversity of businesses, including being Vice
President of Marketing for Post Cereals. He served as
Vice President--Marketing at Mother's Cake & Cookie Co.
from 1991 to 1994, then President and COO from 1994 to
1995, then in 1995 as Chairman/President/CEO of
Brothers Gourmet Coffee, a publicly traded specialty
beverage manufacturer and retailer. Mr. Vermylen was
also a founding partner of a consulting firm
specializing in food marketing and grocery
distribution. He holds a B.A. in economics from
Georgetown University and an M.B.A. from New York
University.
</TABLE>
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<PAGE>
<TABLE><CAPTION>
NAME AGE POSITION
- --------------------------- --- ---------------------------------------------------------
<S> <C> <C>
E. Nichol McCully.......... 42 Chief Financial Officer and Senior Vice President-Finance
of the Company since January 1996. Mr. McCully has over
eight years experience as a senior financial executive
in food industry leveraged buyouts, most recently as
group CFO for the Western Bakery Group of Specialty
Foods Corporation from 1993 to 1995. Mr. McCully was
Vice President, Finance for Mother's Cake & Cookie Co.
from 1991 until its acquisition by Specialty Foods in
1993. From 1990 to 1991, he was Vice President,
Finance, and from 1988 to 1990, he was Controller for
Spreckels Sugar Co. Prior to entering the food
industry, Mr. McCully held financial management
positions with Triad Systems Corporation and Wells
Fargo Leasing Corporation, and he has auditing
experience with Arthur Andersen & Co. Mr. McCully
received a B.A. from UC Berkeley and an M.B.A. from
UCLA. He is also a Certified Public Accountant.
Jack M. Lotker............. 52 President-Specialty Products of the Company since
January, 1996. Mr. Lotker has worked in the food industry
for 20 years, most recently at Homeland Stores of
Oklahoma from 1988 to 1995. His experience in the
baking industry and with DSD systems includes two years
at CPC International as Vice President of Dry Products
from 1986 to 1988 and eight years at Arnold Food
Company as Vice President & Group Executive from 1978
to 1986. Mr. Lotker headed the American Bakers
Association Industrial Relations Committee from 1983 to
1986 and has an extensive knowledge of the interaction
among food retailing, wholesale bakery distribution and
unionized bakery operations as a manager in three
leveraged buyouts since 1983. Mr. Lotker received his
B.A. from Queens College and his M.B.A. from Long
Island University.
James Willard.............. 55 Senior Vice President-Operations of the Company since
July 1996. With 32 years experience in the food industry,
Mr. Willard most recently was Senior Vice President at
Nabisco Biscuit Co. from 1993 to 1996 and Senior Vice
President Operations and Technical Services at Nabisco
Specialty Products Division from 1991 to 1993. From
1988 to 1991, Mr. Willard was Senior Vice
President-Operations at ALPO Pet Foods, Inc., and Mr.
Willard was Senior Vice President-North American
Operations at Cadbury Schweppes, Inc. from 1986 to
1988. Prior to those assignments, Mr. Willard held
various positions at Nestle Foods Corporation from 1964
to 1986. These positions were Vice President-U.S.
Chocolate Manufacturing (1983 to 1986), General
Manager-Chocolate Manufacturing (1980 to 1983 and 1975
to 1978), General Manager-Fruits, Tomatoes & Meats
(1978 to 1980), Division Manager-Manufacturing (1971 to
1975), Assistant Manager-Quality Control (1970 to 1972)
and Microbiologist and Chemist-Regional Laboratory
(1964 to 1970). Mr. Willard received an M.S. from Ohio
State University and a B.S. from Capital University.
</TABLE>
The executive officers of INFLO are Mr. Reed, Chief Executive Officer and
President, and Mr. McCully, Vice President, Treasurer and Secretary.
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<PAGE>
DIRECTORS
The following table sets forth the names, ages, other positions and offices
held and a brief account of the business experience of each of the Company's
directors. Unless otherwise noted, no director of the Company serves as a
director of any company whose securities are registered under the Exchange Act.
All directors serve until a successor is elected. All directors of the Company
also serve and have served as directors of INFLO since January 1996, except for
Mr. Debbane, who was appointed as a director of INFLO in May 1996.
<TABLE>
<CAPTION>
NAME AGE OTHER POSITIONS
- --------------------------- --- ---------------------------------------------------------
<S> <C> <C>
Sam K. Reed................ 49 See "Executive Officers."
Robert P. Crozer........... 49 Director of the Company since March 1996. Mr. Crozer has
served as Vice Chairman of the Board of Flowers since
1989. He joined Flowers in 1973, and has been a Director
of Flowers since 1979. Mr. Crozer served as a Director of
Marketing and Planning of Flowers from 1979 to 1985,
President and Chief Operating Officer, Convenience
Products Group of Flowers from 1979 to 1989, and Vice
President-- Marketing of Flowers from 1985 to 1989. Mr.
Crozer also serves on the board of directors of Davis
Water & Waste Industries Incorporated.(1)(2)
Raymond Debbane............ 41 Director of the Company since May 1996. Mr. Debbane has
served as the President of Invus since 1985. From 1982 to
1985, Mr. Debbane was a Manager in the Paris office of
The Boston Consulting Group, where he was employed since
1979.(3)
Sacha Lainovic............. 39 Director of the Company since March 1996. Mr. Lainovic
has served as an Executive Vice President of Invus since
1985. Mr. Lainovic was a Manager in the Paris office of
The Boston Consulting Group from 1984 to 1985, where he
was employed since 1981.(3)
Amos R. McMullian.......... 58 Director of the Company since March 1996. Mr. McMullian
has served as Chief Executive Officer of Flowers since
April 1981 and Chairman of the Board of Flowers since
January 1985. Mr. McMullian joined Flowers in 1963 and
served as assistant controller, data processing
coordinator, assistant plant manager, plant manager,
plant president, regional vice president and President of
the Bakery and Snack Groups of Flowers. In 1976, he was
appointed President and Chief Operating Officer of
Flowers and was elected to the Board of Directors of
Flowers. He served as Vice Chairman of the Board of
Flowers from 1984 to 1985.(1)
Christopher J. Sobecki..... 38 Director of the Company since March 1996, Mr. Sobecki has
served as a Managing Director of Invus since 1993 after
joining Invus in 1989.(3)
C. Martin Wood III......... 52 Director of the Company since March 1996. Mr. Wood has
served as Senior Vice President and Chief Financial
Officer of Flowers since September 1978. Mr. Wood joined
Flowers in 1970 as Director of New Product Development.
He was appointed Director of Marketing Services of
Flowers the following year, Director of Finance in 1973,
and Vice President-Finance in 1976. Mr. Wood has been a
Director of Flowers since 1975.(1)
</TABLE>
- ------------
(1) The address of Messrs. Crozer, McMullian and Wood is Flowers Industries,
Inc., 11796 U.S. Highway 19 South, Thomasville, Georgia 31792.
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<PAGE>
(2) Messrs. Crozer and Wood are brothers-in-law.
(3) The address of Messrs. Debbane, Lainovic and Sobecki is The Invus Group,
Ltd., 135 East 57th Street, 30th Floor, New York, New York 10022.
In addition, pursuant to the GFI Stockholder's Agreement, Bermore has
designated Mr. Michael R.B. Uytengsu as a non-voting, ex-officio representative
to the Board of Directors of INFLO. See "Certain Related Transactions--GFI
Stockholder's Agreement." Mr. Uytengsu's address is G.F. Industries, Inc., 999
Baker Way, Suite 200, San Mateo, California 94404.
COMPENSATION OF OFFICERS
The Company paid no remuneration to its current executive officers for the
fiscal year ended December 30, 1995. The following table sets forth the initial
annual cash compensation that is expected to be paid to the five executive
officers of the Company (the "Named Executive Officers") and the number of
shares of INFLO Common Stock underlying Options (as defined herein) that have
been granted to date, and to all executive officers of the Company as a group
for services in all capacities to be rendered to the Company.
<TABLE>
<CAPTION>
SHARES OF INFLO
COMMON
CASH STOCK UNDERLYING
NAME POSITION COMPENSATION(1) OPTIONS GRANTED
- --------------------------------- ----------------------------- --------------- ----------------
<S> <C> <C> <C>
Sam K. Reed...................... President, Chief Executive $ 650,000 225,000
Officer and Director
David B. Vermylen................ President--Keebler Brands $ 325,000 52,500
E. Nichol McCully................ Chief Financial Officer and $ 240,000 52,500
Senior Vice President--
Finance
Jack M. Lotker................... President--Specialty Products $ 225,000 52,500
James Willard.................... Senior Vice President-- $ 280,000 52,500
Operations
All executive officers as a
group, consisting of the five
persons named above............ $ 1,720,000 435,000
</TABLE>
- ------------
(1) Amounts listed for the named individuals and all executive officers as a
group are annual base salaries, including amounts to be deferred in
accordance with any deferred salary option plan of the Company.
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<PAGE>
COMPENSATION OF DIRECTORS
No director of the Company receives remuneration for serving as a director.
MANAGEMENT INCENTIVE PROGRAM
Since the Keebler Acquisition, INFLO has sold 2.3% of its common stock and
granted Options to purchase additional shares to members of Keebler's management
(each, a "Purchaser"), which together with management's existing shares would
represent 8.6% of the INFLO Common Stock on a fully diluted basis. The INFLO
Common Stock purchased and Options granted are governed by the agreements
described below.
Management Stockholder's Agreement. Principal terms of the management
stockholder's agreement (the "Management Stockholder's Agreement") include:
Restrictions on Transfer. Each Purchaser's INFLO Common Stock (including
shares acquired pursuant to the exercise of Options) will be nontransferable for
5 years from the date of delivery of the shares to the Purchaser (the "Purchase
Date") unless transferred pursuant to (i) an effective registration statement
(subject to restrictions on transfer immediately preceding and following the
effective date thereof), (ii) the sale participation agreement (the "Sale
Participation Agreement"), (iii) the provisions described below under "--Right
of First Refusal," "--'Put' of INFLO Common Stock and Options upon Purchaser's
Death or Disability" or "--'Call' of INFLO Common Stock and Options", (iv) a
transfer to the estate of the Purchaser, (v) the establishment of certain trusts
or (vi) a testamentary transfer.
Right of First Refusal. After five years following the Purchase Date if a
public offering of INFLO Common Stock has not occurred, INFLO will have a right
of first refusal to repurchase any of the Purchaser's INFLO Common Stock on
terms and in amounts identical to those offered to the Purchaser; if the right
is not exercised, the Purchaser may sell all (but not less than all) of such
offered shares to the prospective purchaser.
"Put" of INFLO Common Stock and Options Upon Purchaser's Death or
Disability. If, prior to a public offering, the Purchaser dies or becomes
permanently disabled while (i) either an employee of INFLO or its subsidiaries
or (ii) retired after age 65 and after 3 years' service (in either case, "Death
or Disability"), the Purchaser or his estate or trust may require INFLO to (i)
repurchase on one occasion during the following six months any of the
Purchaser's INFLO Common Stock at the greater of $10.00 or the book value (or,
if a public offering occurs during such period, market value) for each such
share (the "Put Price") or (ii) pay for each Option exercisable by the Purchaser
at such time (including Time Options (as defined below) and, if the cumulative
EBITDA target (as defined in the non-qualified stock option agreements described
below) is met for the previous plan year, Performance Options (as defined below)
accelerated because of such Death or Disability) any excess of the Put Price
over $10.00 (the "Excess Amount"), subject to any prohibition of such repurchase
under any indenture, other loan document or state law provision, in which case
such payment will occur following the elimination of such restriction at a price
based upon the then prevailing Put Price.
"Call" of INFLO Common Stock and Options. If the Purchaser's employment with
INFLO or its subsidiaries terminates for any reason prior to the fifth
anniversary of the Purchase Date, INFLO may repurchase all (but not less than
all) of the Purchaser's INFLO Common Stock at a "Call Repurchase Price" per
share equal to (i) if the Purchaser's termination is due to Death or Disability,
the Put Price, (ii) if the Purchaser retires after age 65 after at least three
years service with INFLO and its subsidiaries or is terminated without cause or
quits for good reason, the book value (or, if a public
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offering has occurred, market value), (iii) if the Purchaser is terminated for
cause or the Purchaser's INFLO Common Stock is transferred in violation of the
Management Stockholder's Agreement, the lesser of (A) book value (or, if a
public offering has occurred, market value) and (B) $10.00 or (iv) if the
Purchaser is terminated for any other reason, the lesser of (A) book value (or,
if a public offering has occurred, market value) and (B) $10.00 plus 20% of the
Excess Amount for each year following the Purchase Date. If INFLO exercises its
right to repurchase the Purchaser's INFLO Common Stock, INFLO may also redeem
and cancel the Purchaser's exercisable Options at the amount, if any, by which
the Call Repurchase Price exceeds $10.00.
Registration Rights. Until the later of five years following the Purchase
Date or the first occurrence of a qualified public offering of INFLO Common
Stock for the account of Artal or Flowers, the Purchaser will have limited
"piggyback" registration rights with respect to the Common Stock, subject to
standard conditions and limitations; however, the Purchaser will not have
"demand" registration rights.
Non-Compete and Confidentiality Covenants. Following any termination of
employment, at the option of the Company, the Purchaser will be subject to a
non-compete covenant on a month-to-month basis for up to two years, in exchange
for payment of an amount equal to such employee's monthly base salary on such
termination date, subject to reduction and/or reimbursement to the extent such
Purchaser is compensated for permitted employment. The Purchaser is also subject
to a confidentiality covenant with regard to information obtained in his/her
capacity as an employee of the Company.
1996 Stock Purchase and Option Plan and Non-Qualified Stock Option
Agreement. The 1996 Stock Purchase and Option Plan (the "Plan") provides for
awards of non-qualified options, incentive stock options and other equity-based
awards covering an aggregate of 2,000,000 shares of INFLO Common Stock.
Non-qualified options under the Plan to purchase 1,123,200 shares of INFLO
Common Stock (the "Options") were issued pursuant to non-qualified stock option
agreements (the "Non-Qualified Stock Option Agreements"). Such Options have an
exercise price of $10.00 per share and are either "Time Options" or "Performance
Options". Time Options vest 20% per year over the five year period following the
Purchase Date, while Performance Options vest 25% per year for the first three
years and 12.5% per year for the following two years in which certain annual and
cumulative EBITDA targets are achieved, subject to "catch-up vesting" for unmet
target years upon the attainment of EBITDA targets in subsequent years.
Regardless of performance against EBITDA targets, all Performance Options vest
nine years from the date of the Keebler Acquisition. Vesting ceases upon
termination of the Purchaser's employment; however, Time Options (and
Performance Options, if and only if the cumulative EBITDA target was met for the
preceding plan year) vest in full upon Death or Disability. The Options expire
upon the earlier of (i) 10 years following the Keebler Acquisition, (ii) the
first anniversary of Death or Disability, (iii) a specified period following any
termination of employment other than for Cause, Death or Disability, (iv)
termination for Cause and (v) in certain circumstances, the date of any merger
or reconsolidation. Exercisability of Time Options (and Performance Options, if
and only if the cumulative EBITDA target was met for the preceding plan year)
will accelerate upon a change of control of INFLO.
Sale Participation Agreement. Each Purchaser will be a party to a Sale
Participation Agreement, which will entitle the Purchaser to participate on a
pro rata basis in certain sales of INFLO Common Stock by Artal or Flowers prior
to the fifth anniversary of INFLO's first public offering.
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PRINCIPAL STOCKHOLDERS
The Company is a direct, wholly owned subsidiary of INFLO. The following
table sets forth certain information regarding the beneficial ownership of INFLO
Common Stock by (i) all persons known by the Company to own beneficially more
than 5% of INFLO's Common Stock, (ii) each director who is a stockholder, (iii)
the Chief Executive Officer and each of the Named Executive Officers and (iv)
all directors and executive officers as a group.
<TABLE>
<CAPTION>
PERCENTAGE
NUMBER OF OF
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES COMMON STOCK
- --------------------------------------------------------------- ---------------- ------------
<S> <C> <C>
Artal Luxembourg S.A.(1)....................................... 6,105,469 45.2%
39 Boulevard Royal
Luxembourg City, Luxembourg 2449
Flowers Industries, Inc.(2).................................... 6,105,469 45.2
11796 U.S. Highway 19 South
P.O. Box 1338
Thomasville, Georgia 31792
Bermore Ltd.(3)................................................ 990,076 7.3
c/o G.F. Industries, Inc.
999 Baker Way, Suite 200
San Mateo, California 94404
Sam K. Reed.................................................... 100,000 0.7
David B. Vermylen.............................................. 17,500 --
E. Nichol McCully.............................................. 17,500 --
Jack M. Lotker................................................. 17,500 --
James Willard.................................................. 17,500 --
All directors and executive officers as a group
(consisting of eleven persons)............................... 170,000 1.3%
</TABLE>
- ------------
(1) The parent entity of Artal Luxembourg S.A. is Artal Group S.A. ("Artal
Group"), a Luxembourg company. Approximately 45% of the issued and
outstanding capital stock of Artal Group is in the form of bearer shares and
the other 55% of the shares of capital stock is held by Stichting
Administratiekantoor Artal, a foundation organized under Dutch law (the
"Foundation"). The address of the Foundation is Zypendaalsweq 25, 6814 CC
Ainham, The Netherlands. A Dutch foundation is a pass-through entity that
issues certificates of interest in the foundation to its beneficial owners.
All decisions with respect to the capital stock held by the Foundation are
made by the Foundation's board of directors. The members of the board of
directors of the Foundation are Eric Wittouck, Chairman; Philippe M.J.B.
Guillaume; Mrs. Astrid van der Meerschen-Ullens de Schooten; Alain E.M.
Jolly; Jean-Charles A. Ullens de Schooten; Emile Vogt; Mrs. Brigitte P.
Wittouck; Philippe Ch. J.M.E.; Ravilex Trust Reg., a legal entity; and
Ullens de Schooten; Ravilex Trust Reg. Euramagro N.V., a legal entity. See
"Sponsors--Artal."
(2) Flowers Industries, Inc. is currently subject to the periodic reporting and
other information requirements of the Exchange Act. Flower's common stock is
listed on the New York Stock Exchange. See "Sponsors--Flowers."
(3) Bermore Ltd. is a privately held Bermuda limited company and the parent of
GFI. Bermore owns a warrant to purchase an additional 1,070,352 shares of
INFLO Common Stock which together with Bermore's existing shares would
represent approximately 13.2% of the shares of INFLO Common Stock on a fully
diluted basis.
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CERTAIN RELATED TRANSACTIONS
The summaries of the Investor Stockholders' Agreement and the GFI
Stockholder's Agreement set forth below do not purport to be complete and are
qualified in their entirety by reference to all the provisions of the Investor
Stockholders' Agreement and the GFI Stockholder's Agreement, respectively,
copies of which have been filed as exhibits to the Registration Statement of
which this Prospectus forms a part.
INVESTOR STOCKHOLDERS' AGREEMENT
Simultaneously with the closing of the Keebler Acquisition, Artal, Flowers
and INFLO entered into an Investor Stockholders' Agreement (the "Investor
Stockholders' Agreement") governing the relationships between and among INFLO
and Artal and Flowers, as holders of the INFLO Common Stock. Subsequent
transferees of Artal and Flowers must, subject to certain limited exceptions,
agree to be bound by the Investor Stockholders' Agreement (Artal, Flowers and
such transferees, the "Investor Stockholders").
The Investor Stockholders' Agreement imposes on the Investor Stockholders
certain restrictions on the transfer of INFLO Common Stock until the seventh
anniversary of the Keebler Acquisition, subject to certain exceptions. The
Investor Stockholders' Agreement provides that, at any time after the third
anniversary of the Keebler Acquisition, either Artal or Flowers may notify the
other that it wishes to dispose of its equity interest in INFLO. In such event,
Artal will have the authority to solicit offers for and negotiate the sale of
INFLO (or, in certain circumstances, the requesting party's interest therein) to
a third party or to commence a public offering (each a "Liquidity Transaction").
Each of Artal and Flowers will have the right (and, in the case of a sale of a
controlling interest in, or a sale of all or substantially all of the assets of,
INFLO, the obligation) to participate pro rata in any such Liquidity
Transaction. A Liquidity Transaction may result in a Change of Control under the
Indenture. See "Description of Notes--Certain Covenants--Change of Control." In
addition, the Investor Stockholders' Agreement grants the Investor Stockholders
certain demand and incidental rights to register their shares of INFLO Common
Stock for public sale under the Securities Act.
The Investor Stockholders' Agreement provides that the Board of Directors of
INFLO shall consist of three Artal designees, three Flowers designees and the
Chief Executive Officer of INFLO. The number of designees for each of Artal and
Flowers is subject to decrease if its respective equity ownership in INFLO falls
below certain threshold levels. The Investor Stockholders' Agreement also
provides that certain significant corporate actions (as well as certain
related-party transactions) are subject to supermajority board approval.
GFI STOCKHOLDER'S AGREEMENT
Simultaneously with the closing of the Sunshine Acquisition, Artal, Flowers,
INFLO and GFI entered into a Stockholder's Agreement (the "GFI Stockholder's
Agreement") governing the relationships between Artal, Flowers and INFLO, on the
one hand, and GFI, on the other. Subsequent to the closing of the Sunshine
Acquisition, GFI assigned its rights, duties and obligations under the GFI
Stockholder's Agreement to Bermore. Subsequent transferees of Bermore must,
subject to certain limited exceptions, agree to be bound by the GFI
Stockholder's Agreement (GFI, Bermore and such transferees, the "GFI
Stockholders.")
The GFI Stockholder's Agreement provides that, subject to certain limited
exceptions, the GFI Stockholders may not transfer their shares of INFLO Common
Stock until the seventh anniversary of the Keebler Acquisition without the prior
consent of both Artal and Flowers, which consent shall not be unreasonably
withheld after the third anniversary of the Sunshine Acquisition. Bermore shall
have the right to participate pro rata in any Liquidity Transaction (as defined
in the Investor Stockholders'
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Agreement), and Artal and Flowers together may require Bermore to participate
pro rata in any such Liquidity Transaction. In addition, the GFI Stockholder's
Agreement grants the GFI Stockholders certain demand and incidental registration
rights to register their shares of INFLO Common Stock for public sale under the
Securities Act.
The GFI Stockholder's Agreement provides that Bermore shall be entitled to
designate one individual as a non-voting, ex-officio representative to the Board
of Directors of INFLO (the "GFI Representative"). However, Bermore shall not be
entitled to designate a GFI Representative if, at any time, Bermore, its
affiliates and certain permitted transferees cease to own at least 90% of that
number of shares of INFLO Common Stock (subject to adjustments resulting from
certain corporate restructurings) that GFI originally acquired pursuant to the
GFI Stockholder's Agreement. The GFI Stockholder's Agreement also provides that
certain charter or by-law amendments that would adversely affect (except in
immaterial respects) Bermore's rights under the GFI Stockholder's Agreement (as
well as certain related-party transactions) will require the prior approval of
the GFI Representative. See "Management--Directors."
OTHER
In connection with the sale of 312,500 shares of INFLO Common Stock to
members of management, INFLO repurchased from each of Artal and Flowers 94,531
shares of INFLO Common Stock at $10.00 per share, the original purchase price
paid by Artal and Flowers to INFLO.
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DESCRIPTION OF SENIOR CREDIT FACILITY
AND THE UB NOTE
The summaries of the Senior Credit Facility and the UB Note set forth below
do not purport to be complete and are qualified in their entirety by reference
to all the provisions of the Senior Credit Facility and the UB Note, copies of
which have been filed as exhibits to the Registration Statement of which this
Prospectus forms a part.
SENIOR CREDIT FACILITY
The Senior Credit Facility is provided by a syndicate of banks and other
financial institutions led by Scotiabank, as administrative agent, syndication
agent and documentation agent. The Senior Credit Facility provides for
$292,875,000 in Term Loans and a $155.0 million revolving credit facility
("Revolving Credit Facility"), which includes borrowing capacity available for
letters of credit ("Letters of Credit") of up to $45.0 million and for
borrowings of up to $20.0 million on same-day notice ("Swingline Loans"). The
Term Loans are comprised of Term A Loans ($138,125,000), which mature six years
after the Keebler Acquisition, Term B Loans ($89,850,000), which mature seven
and one-half years after the Keebler Acquisition, and Term C Loans ($64.9
million), which mature eight and one-half years after the Keebler Acquisition.
The Revolving Credit Facility commitment terminates six years after the date of
the Keebler Acquisition.
At the Company's option, the Revolving Loans and the Term A Loans bear
interest at either (i) Scotiabank's alternate base rate plus 1.75%, or (ii)
Scotiabank's reserve-adjusted London interbank offering ("LIBO") rate plus
2.75%. Swingline Loans bear interest at Scotiabank's alternate base rate plus
1.75%. The above margins for Revolving Loans and Term A Loans will be subject to
performance based step-downs, on or after December 4, 1996.
At the Company's option, the Term B Loans bear interest at either (i)
Scotiabank's alternate base rate plus 2.25%, or (ii) Scotiabank's
reserve-adjusted LIBO rate plus 3.25%. At the Company's option, the Term C Loans
bear interest at either (i) Scotiabank's alternate base rate plus 2.50%, or (ii)
Scotiabank's reserve-adjusted LIBO rate plus 3.50%.
Effective as of February 1, 1996, the Company entered into an interest rate
swap agreement with Scotiabank pursuant to which the Company has agreed to pay a
fixed rate of approximately 5.02% per annum for 3 years on $170.0 million and
Scotiabank has agreed to pay the applicable 3-month LIBO rate for such time on
such amount, which may be extended for an additional two years at the option of
Scotiabank.
For each standby Letter of Credit, the Company pays to each Lender with a
commitment to make Revolving Loans a per annum fee equal to the margin for
Revolving Loans that accrue interest at the reserve adjusted LIBO rate, payable
quarterly in arrears. For each trade Letter of Credit, the Company pays to each
Lender with a commitment to make Revolving Loans a fee equal to 1 3/8% per annum
on the face amount of such trade Letter of Credit, payable quarterly in arrears.
Interest periods for reserve-adjusted LIBO rate Loans are, at the Company's
option, one, two, three or six months (or, if available to each relevant Lender,
nine or twelve months). Interest on LIBO rate Loans is payable on the last
business day of the applicable interest period for such Loans and, if earlier,
each three-month anniversary following the commencement of such interest period.
Interest on alternate base rate Loans is payable quarterly in arrears.
Outstanding Loans are voluntarily payable without penalty and applied pro
rata to the remaining Term A Loans, Term B Loans and Term C Loans, pro-rata in
accordance with each remaining amortization payment, and then to a reduction in
the Revolving Loan commitment amount (the
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<PAGE>
"Revolving Loan Commitment Amount"); provided, however, that LIBO rate breakage
costs, if any (including as a result of any mandatory repayments), shall be for
the account of the Company.
The Term Loans and Revolving Loan Commitment Amount are subject to mandatory
prepayment with (i) 100% of the net proceeds of asset sales, subject to certain
exceptions, (ii) 100% of the net proceeds of debt issuances, subject to certain
exceptions, (iii) 100% of the net proceeds of equity issuances, subject to
certain exceptions, and (iv) 75% of annual excess cash flow, in each case
applied pro-rata to the remaining Term A Loans, Term B Loans and Term C Loans,
pro-rata in accordance with each remaining amortization payment, and then to a
reduction in the Revolving Loan Commitment Amount.
Each Lender of Term B Loans has the right to decline to have its Term B
Loans prepaid with the amounts set forth above, in which case the amounts that
would have been applied to a prepayment of the Term B Loans shall instead be
applied first to a prepayment of the Term A Loans (until paid in full), second,
to a prepayment of Term B Loans and Term C Loans owing to those Lenders that
agree to accept such additional prepayments, and then to a reduction in the
Revolving Loan Commitment Amount. Each Lender of Term C Loans has the right to
decline to have its Term C Loans prepaid with the amounts set forth above, in
which case the amounts that would have been applied to a prepayment of the Term
C Loans shall instead be applied first to a prepayment of the Term A Loans
(until paid in full), second, to a prepayment of Term B Loans and Term C Loans
owing to those Lenders that agree to accept such additional prepayments, and
then to a reduction in the Revolving Loan Commitment Amount.
The Senior Credit Facility is secured by a first-priority perfected security
interest (subject to customary permitted encumbrances) in all tangible and
intangible personal property (including trademarks and licenses) and all
material real property of the Company and certain of its direct and indirect
subsidiaries, whenever acquired and wherever located. The Lenders have received
guarantees from INFLO and all direct and indirect subsidiaries of the Company
(the "Guarantors"). The Senior Credit Facility is also secured by a first
priority pledge of 100% of the capital stock of the Company and all of its
subsidiaries (whether direct or indirect), in addition to a first priority
pledge of all notes evidencing intercompany indebtedness of the Company or its
subsidiaries.
The Senior Credit Facility contains affirmative covenants, including that
the Company maintain interest rate protection agreements in amounts and with
terms satisfactory to the Administrative Agent.
The Senior Credit Facility contains certain negative covenants that
restrict, among other things, the Company's ability to (i) incur additional debt
(including subordinated debt), sale leasebacks and contingent liabilities; (ii)
make dividends or similar distributions or pay management or consulting fees,
provided, however, that the Company will be permitted to pay a one time cash
dividend payment of $25,000,000, but only if no default shall have occurred and
be continuing (or would result therefrom) and the ratio of total debt/EBITDA (as
defined in the Senior Credit Facility) is less than 3.0:1 (on a pro forma basis
after giving effect to such $25,000,000 dividend) for the two most recent
consecutive fiscal quarters; (iii) repurchase capital stock; (iv) incur liens or
other encumbrances; (v) sell assets or make similar transfers, other than
inventory in the ordinary course of business or unless net proceeds from such
asset sales are used to repay the Loans, in the manner described therein; (vi)
make investments or acquisitions (in a single transaction or in a series of
related transactions); (vii) merge, consolidate and or similarly combine or
change its business conduct; or (viii) refinance, defease, repurchase or prepay
the UB Note, except with other unsecured subordinated debt and certain equity
proceeds.
The Senior Credit Facility also contains covenants that restrict the
Company's ability to amend the terms of the Indenture, and prohibits the Company
from refinancing the Notes or the Exchange Notes (subject to certain
exceptions), making any non-mandatory payments in respect of the Notes or the
Exchange Notes or making any optional redemption, purchase or defeasance of the
Notes or the Exchange Notes.
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The Senior Credit Facility contains certain financial covenants that require
the Company, among other things, to (i) maintain a minimum net worth (as defined
in the Senior Credit Facility); (ii) maintain a maximum ratio of total funded
debt to EBITDA (as defined in the Senior Credit Facility); (iii) maintain a
minimum ratio of EBITDA to interest expense; (iv) maintain a minimum ratio of
EBITDA minus capital expenditures to the sum of cash taxes, cash interest and
mandatory amortization of indebtedness; and (v) limit capital expenditures.
The Term A Loans are amortized over a 6 year period, the Term B Loans over a
7 1/2 year period and the Term C Loans over an 8 1/2 year period.
Events of default under the Senior Credit Facility include, among other
things: (i) failure of the Company to pay principal thereunder or reimbursement
obligations or deposit cash for collateral when due, or to pay interest or any
other amount due within three business days after the date due; (ii) material
inaccuracies in any representations, warranties or other statements in the
credit documents; (iii) default in the performance of any covenants after the
applicable grace period, if any; (iv) default under certain other agreements
governing indebtedness; (v) certain events of bankruptcy or insolvency; (vi)
failure to satisfy certain material ERISA requirements; (vii) unfavorable
judgments; (viii) certain events with respect to the Company's pension plans;
and (ix) the occurrence of a Change of Control (as defined therein).
THE UB NOTE
In connection with the Keebler Acquisition, INFLO issued to United Biscuits
the UB Note in the principal amount of $32.5 million bearing interest at 10% per
annum commencing January 26, 1999. Interest on the UB Note is payable in kind
until December 31, 2001, after which interest becomes payable in cash. The
principal amount of the UB Note is due on January 26, 2007.
Pursuant to the terms of the UB Note, all amounts payable with respect to
the UB Note are subordinated in right of payment to the Notes and the Exchange
Notes to the same extent that the Notes and the Exchange Notes are subordinated
to the Senior Credit Facility. No payment on the UB Note may be made if (i) a
payment default has occurred and is continuing with respect to the obligations
under the Notes or the Exchange Notes (or the other obligations that are senior
to the UB Note), or (ii) upon written notice to INFLO after any other default
permitting acceleration of amounts outstanding with respect to the Company's
obligations under the Notes or the Exchange Notes (or the other obligations that
are senior to the UB Note) shall have occurred and be continuing (but such
restriction on payment shall not continue beyond 180 days from such default or
notice).
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DESCRIPTION OF EXCHANGE NOTES
GENERAL
The Exchange Notes are to be issued under the indenture dated as of June 15,
1996 (the "Indenture") between the Company, the Guarantors and U.S. Trust
Company of New York, as Trustee (the "Trustee"), a copy of which has been filed
as an exhibit to the Registration Statement of which this Prospectus forms a
part and is available upon request to the Company. The following summary of
certain provisions of the Indenture and the Exchange Notes does not purport to
be complete and is subject to, and is qualified in its entirety by reference to,
all the provisions of the Indenture (including the definitions of certain terms
therein and those terms made a part thereof by the Trust Indenture Act) and the
Exchange Notes. Capitalized terms used herein and not otherwise defined have the
meanings set forth in "--Certain Definitions."
The Exchange Notes will be unsecured senior subordinated obligations of the
Company, limited to $125 million aggregate principal amount, and will mature on
July 1, 2006. Each Exchange Note will bear interest at the rate per annum shown
on the front cover of this Prospectus from the date of issuance, or from the
most recent date to which interest has been paid or provided for, payable
semiannually on January 1 and July 1 of each year commencing January 1, 1997 to
holders of record at the close of business on the December 15 and June 15
immediately preceding such interest payment date.
The Exchange Notes will be issuable and transferable in denominations of
$1,000 and integral multiples thereof. No service charge will be made for any
registration of transfer or exchange of Notes or Exchange Notes, but the Company
may require payment of a sum sufficient to cover any transfer tax or other
similar governmental charge payable in connection therewith.
OPTIONAL REDEMPTION
The Exchange Notes will be subject to redemption at any time on or after
July 1, 2001 (but not prior thereto, except as provided below), at the option of
the Company, in whole or in part, on not less than 30 nor more than 60 days'
prior notice in amounts of $1,000 or an integral multiple thereof at the
following redemption prices (expressed as percentages of the principal amount),
if redeemed during the 12-month period beginning July 1 of the years indicated
below:
REDEMPTION
YEAR PRICE
- ------------------------------------------------------------------- ----------
2001............................................................... 104.500%
2002............................................................... 103.375%
2003............................................................... 102.250%
2004............................................................... 101.125%
and thereafter at 100.0% of the principal amount, in each case together with
accrued and unpaid interest, if any, to the redemption date (subject to the
right of holders of record on relevant record dates to receive interest due on
relevant interest payment dates).
In addition, at any time or from time to time prior to July 1, 1999 the
Company may redeem Exchange Notes having a principal amount of up to 35% of the
original aggregate principal amount of the Exchange Notes within 60 days
following one or more Public Equity Offerings with the net proceeds of such
offerings at a redemption price equal to 110.0% of the principal amount thereof,
together with the accrued and unpaid interest, if any, to the date of redemption
(subject to the right of holders of record on relevant record dates to receive
interest due on relevant interest payment dates); provided that immediately
after giving effect to each such redemption, at least 65% of the original
aggregate principal amount of the Exchange Notes remains outstanding.
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If less than all of the Exchange Notes are to be redeemed, the Trustees
shall select the Exchange Notes or portions thereof to be redeemed pro rata, by
lot or by any other method the Trustee shall deem fair and reasonable.
SINKING FUND
The Exchange Notes will not be entitled to the benefit of any sinking fund
or other mandatory redemption obligation prior to maturity.
GUARANTEES
All of the Company's existing and future Restricted Subsidiaries (referred
to herein as the "Guarantors"), will unconditionally guarantee on a senior
subordinated basis the performance and punctual payment when due, whether at
maturity, by acceleration or otherwise, of all obligations of the Company under
the Indenture and the Exchange Notes and will rank junior in right of payment to
all existing and future Senior Indebtedness of the Guarantors including their
guarantees of the Company's obligations under the Credit Agreement. Each
Guarantee will be limited in amount to an amount not to exceed the maximum
amount that can, after giving effect to all other contingent and fixed
liabilities of the applicable Guarantor, be guaranteed by such Guarantor,
without rendering such Guarantee voidable under applicable law relating to
fraudulent conveyance or fraudulent transfer or similar laws affecting the
rights of creditors generally. Each Guarantor will agree to pay, in addition to
the amount stated above, any and all expenses (including reasonable counsel fees
and expenses) incurred by the Trustee or any holder of an Exchange Note in
enforcing any rights under the Guarantee with respect to such Guarantor.
Each Guarantee is a continuing guarantee and shall (a) remain in full force
and effect until payment in full of all the Exchange Notes, (b) be binding upon
the relevant Guarantor, and (c) enure to the benefit of and be enforceable by
the Trustee, the holders of Exchange Notes and their successors, transferees and
assigns.
RANKING
The Indebtedness evidenced by the Exchange Notes and any Guarantee will be
senior subordinated, unsecured obligations of the Company and the Guarantors,
respectively. The payment of the principal of and interest on the Exchange
Notes, the payment of all other obligations relating to the Exchange Notes
(including prepayment premiums, liquidated damages, fees, costs, expenses,
indemnities and rescission or damage claims) and the payment of any obligation
in respect of any Guarantee of obligations relating to the Exchange Notes (all
of the foregoing being collectively referred to as the "Exchange Note
Obligations") are subordinate in right of payment, as set forth in the
Indenture, to the prior payment in full of all Senior Indebtedness of the
Company or Senior Indebtedness of the relevant Guarantor, as the case may be,
whether outstanding on the Issue Date or thereafter incurred, including the
Company's and such Guarantor's obligations under or with respect to the Credit
Agreement. For purposes of this section, "payment in full," as used with respect
to Senior Indebtedness, means the payment of cash.
After giving pro forma effect to the Sunshine Acquisition, the related
financing transactions and the Notes Offering, as of April 20, 1996: (A) the
Company would have had approximately $335.1 million of Senior Indebtedness all
of which would have been secured, and the Company would have had no senior
subordinated or subordinated Indebtedness (other than the Exchange Notes); and
(B) the Guarantors would have had approximately $335.1 million of Senior
Indebtedness (all of which would have represented Guarantees of Senior
Indebtedness of the Company). On a pro forma basis, as of April 20, 1996, the
Company would have had approximately $120 million of additional borrowing
availability under the Revolving Credit Facility. Although the Indenture
contains limitations on the amount of additional Indebtedness that the Company
and any Guarantor may incur, under certain
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circumstances the amount of such Indebtedness could be substantial and, in any
case, such Indebtedness may be Senior Indebtedness.
Indebtedness of the Company or any Guarantor that is Senior Indebtedness
will rank senior to the Exchange Notes and the relevant Guarantee, respectively,
in accordance with the provisions of the Indenture. The Exchange Notes and each
Guarantee will in all respects rank pari passu with all other Senior
Subordinated Indebtedness of the Company and the relevant Guarantor,
respectively. Each of the Company and each Guarantor has agreed in the Indenture
that it will not incur, directly or indirectly, any Indebtedness which is
subordinate or junior in ranking in right of payment to its Senior Indebtedness
unless such Indebtedness is Senior Subordinated Indebtedness or is expressly
subordinated in right of payment to Senior Subordinated Indebtedness. Unsecured
Indebtedness is not deemed to be subordinated or junior to Secured Indebtedness
merely because it is unsecured.
The Company may not, and will not permit any Guarantor to, make any payment,
distribution or other transfer of the assets of the Company or such Guarantor
(or any other payment, distribution or other transfer on behalf of the Company
or any Guarantor from any source) of any kind, or character, whether direct or
indirect, by set-off or otherwise, and whether in cash, property or securities
(other than Reorganization Securities) in respect of the Exchange Note
Obligations or make any deposit pursuant to the provisions described under
"Defeasance" below and may not, directly or indirectly, repurchase, redeem or
otherwise or retire any Exchange Notes, whether pursuant to the terms of the
Exchange Notes or upon acceleration or otherwise (collectively, "pay the
Exchange Notes") if (i) all or any portion of the principal (including any
reimbursement obligation) of, premium, if any, or interest commitment fee or
letter of credit fee on or relating to, any Designated Senior Indebtedness is
not paid when due or (ii) any other default on Designated Senior Indebtedness
occurs and the maturity of such Designated Senior Indebtedness is accelerated in
accordance with its terms unless, in either case, the default has been cured or
waived and any such acceleration has been rescinded or such Designated Senior
Indebtedness has been paid in full. However, the Company may pay the Exchange
Notes without regard to the foregoing if the Company and the Trustee receive
written notice approving such payment from the Representatives of all Designated
Senior Indebtedness with respect to which either of the events set forth in
clause (i) or (ii) of the immediately preceding sentence has occurred and is
continuing. During the continuance of any default (other than a default
described in clause (i) or (ii) of the second preceding sentence) with respect
to any Designated Senior Indebtedness pursuant to which the maturity thereof may
be accelerated immediately without further notice (except such notice as may be
required to effect such acceleration) or the expiration of any applicable grace
periods, neither the Company nor any other Person may pay the Exchange Notes for
a period (a "Payment Blockage Period") commencing upon the receipt by the
Trustee (with a copy to the Company) of written notice (a "Blockage Notice") of
such default from the Representative of any Designated Senior Indebtedness
specifying an election to effect a Payment Blockage Period and ending 179 days
thereafter (or earlier if such Payment Blockage Period is terminated (i) by
written notice to the Trustee and the Company from the Person or Persons who
gave such Blockage Notice, (ii) because the default giving rise to such Blockage
Notice is no longer continuing or (iii) by repayment in full of such Designated
Senior Indebtedness); provided, however, that so long as there shall remain
outstanding any Senior Indebtedness under the Credit Agreement, a Blockage
Notice may be given only by the Credit Agent unless otherwise agreed to in
writing by the lenders named therein. Notwithstanding the provisions described
in the immediately preceding sentence (but subject to the provisions contained
in the first sentence of this paragraph), the Company may resume payments on the
Exchange Notes after the end of such Payment Blockage Period. Not more than one
Blockage Notice may be given in any consecutive 360-day period, irrespective of
the number of defaults with respect to Designated Senior Indebtedness during
such period.
Upon any payment, distribution or other transfer of the assets of the
Company or any Guarantor (or any other payment, distribution or other transfer
on behalf of the Company or any Guarantor from any source) of any kind or
character, whether direct or indirect, by set-off or otherwise, and whether in
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cash, property or securities (other than Reorganization Securities), upon any
dissolution, winding up, total or partial liquidation or reorganization of the
Company or any Guarantor (whether voluntary or involuntary, including in
bankruptcy, insolvency or receivership proceedings or upon any assignment for
the benefit of creditors or any other marshalling of the Company's or any
Guarantor's assets and liabilities), the holders of Senior Indebtedness of the
Company shall be entitled to receive payment in full of all Senior Indebtedness
before the holders of the Exchange Notes are entitled to receive any payment or
distribution of cash, securities or other property with respect to the Exchange
Note Obligations (other than Reorganization Securities) and until all
obligations with respect to Senior Indebtedness of the Company is paid in full,
any payment, distribution, or other transfer of assets of the Company or any
Guarantor of any kind or character, whether direct or indirect, by set-off or
otherwise, and whether in cash, securities or property (other than
Reorganization Securities), to which holders of the Exchange Notes would be
entitled but for the subordination provisions of the Indenture will be made to
holders of such Senior Indebtedness as their interests may appear. If a
distribution is made to holders of the Exchange Notes that, due to the
subordination provisions, should not have been made to them, such holders are
required to hold it in trust for the holders of Senior Indebtedness and pay it
over to them as their interests may appear.
If payment of the Exchange Notes is accelerated because of an Event of
Default, the Company or the Trustee shall promptly notify the holders of all
Designated Senior Indebtedness or the Representatives of such holders of the
acceleration. If any Designated Senior Indebtedness is outstanding, neither the
Company nor any other Person may pay the Exchange Notes until five Business Days
after the Representatives of all the issues of Designated Senior Indebtedness
receive notice of such acceleration and, thereafter, may pay the Exchange Notes
only if the Indenture otherwise permits payments at that time.
The obligations of a Guarantor under its Guarantee, as they relate to the
principal of and interest on the Exchange Notes, are unsecured senior
subordinated obligations. As such, the rights of holders of the Exchange Notes
to receive payment by a Guarantor pursuant to its Guarantee will be subordinated
in right of payment to the rights of holders of Senior Indebtedness of such
Guarantor. The terms of the subordination provisions described above with
respect to the Company's obligations under the Exchange Notes apply equally to a
Guarantor and the obligations of such Guarantor under its Guarantee.
By reason of the subordination provisions contained in the Indenture, in the
event of insolvency, creditors of the Company or a Guarantor who are holders of
Senior Indebtedness of the Company or such Guarantor, as the case may be, may
recover more, ratably, than the holders of the Exchange Notes.
CERTAIN COVENANTS
The Indenture contains certain covenants including, among others, the
following:
Limitation on Indebtedness. (a) The Company shall not, and shall not permit
any of its Restricted Subsidiaries to, incur any Indebtedness; provided,
however, that the Company may incur Indebtedness (including through the issuance
of Disqualified Capital Stock) if on the date of such incurrence the
Consolidated Coverage Ratio would be greater than (i) 2.00:1, if such
Indebtedness is incurred prior to the expiration of 24 months after the Issue
Date, and (ii) 2.50:1 if such Indebtedness is incurred on or subsequent to the
expiration of 24 months after the Issue Date.
(b) Notwithstanding the foregoing paragraph (a), the Company and its
Restricted Subsidiaries may incur Indebtedness to the extent set forth below:
(i) Indebtedness of the Company incurred pursuant to the Credit Agreement in an
amount, at any one time outstanding, not to exceed the sum of (x) $155.0 million
pursuant to a revolving credit, swing line and/or letter of credit facility;
provided, however, that on the Business Day on which any Permitted Receivables
Transaction is consummated, the amount of Indebtedness permitted to be
outstanding under the Credit Agreement pursuant to this clause (x) shall be
reduced by an amount equal to the Receivables Proceeds with respect to such
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Permitted Receivables Transaction, and (y) the aggregate principal amount of the
term loans under the Credit Agreement as in effect as of the date hereof less
the amount of any principal payments made on account of such term loans; (ii)
Indebtedness (x) of the Company to any Restricted Subsidiary and (y) of any
Restricted Subsidiary to the Company or any other Restricted Subsidiary; (iii)
Indebtedness of the Company represented by the Exchange Notes; (iv) any
Indebtedness of the Company (other than the Indebtedness described in clauses
(i) and (ii) above) outstanding on the date of the Indenture; (v) Indebtedness
represented by the Guarantees of the Exchange Notes and Guarantees of
Indebtedness incurred pursuant to clause (i) above; (vi) Indebtedness of the
Company or any Restricted Subsidiary under Currency Agreements, Interest Rate
Agreements and Commodity Hedging Obligations that are entered into by the
Company or such Restricted Subsidiary for bona fide hedging purposes (as
determined in good faith by the Board of Directors or senior management of the
Company or such Restricted Subsidiary) with respect to Indebtedness of the
Company or such Restricted Subsidiary incurred without violation of the
Indenture or with respect to customary commercial transactions of the Company or
such Restricted Subsidiary entered into in the ordinary course of business;
(vii) Indebtedness (including Capitalized Lease Obligations) incurred by the
Company or any Restricted Subsidiary to finance the purchase, lease or
improvement of property (real or personal) or equipment (whether through the
direct purchase of assets or the Capital Stock of any Person owning such assets)
in an aggregate principal amount which, when aggregated with the principal
amount of all other Indebtedness then outstanding and incurred pursuant to this
clause (vii), does not exceed 10% of Consolidated Net Tangible Assets; (viii)
Indebtedness incurred by the Company or any Restricted Subsidiary constituting
reimbursement obligations with respect to letters of credit issued in the
ordinary course of business, including, without limitation, letters of credit in
respect of workers' compensation claims or self-insurance, or other Indebtedness
with respect to reimbursement type obligations regarding workers' compensation
claims; provided, that upon the drawing of such letters of credit or the
incurrence of such Indebtedness, such obligations are reimbursed within 30 days
following such incurrence; (ix) Acquired Indebtedness; provided, however, that
such Indebtedness is not incurred in contemplation of such acquisition or
merger; and provided, further that the Company would have been able to incur
such Indebtedness at the time of the incurrence thereof pursuant to clause (a)
above, determined on a pro forma basis as if such transaction had occurred at
the beginning of such four-quarter period and such Indebtedness and the
operating results of such merged or acquired entity had been included for all
purposes in such pro forma calculation as if such entity had been a Restricted
Subsidiary at the beginning of such four-quarter period; (x) obligations in
respect of performance and surety bonds and completion guarantees provided by
the Company or any Restricted Subsidiary in the ordinary course of business;
(xi) additional indebtedness in an aggregate amount not to exceed $50.0 million
at any one time outstanding; and (xii) Refinancing Indebtedness; provided,
however, that (A) the principal amount of such Refinancing Indebtedness shall
not exceed the principal or accreted amount (in the case of any Indebtedness
issued with original issue discount, as such) of Indebtedness so extended,
refinanced, renewed, replaced, substituted or refunded (the "Refinanced
Indebtedness"), (B) the Refinancing Indebtedness shall have a Weighted Average
Life to Maturity of not less than the stated maturity of the Refinanced
Indebtedness and (C) the Refinancing Indebtedness shall rank in right of payment
relative to the Exchange Notes on terms at least as favorable to the holders of
Exchange Notes as those contained in the documentation governing the Refinanced
Indebtedness.
(c) Notwithstanding any other provision of this covenant, neither the
Company nor any Restricted Subsidiary shall incur any Indebtedness (i) pursuant
to paragraph (b) above, if the proceeds thereof are used, directly or
indirectly, to repay, prepay, redeem, defease, retire, refund or refinance any
Subordinated Indebtedness unless such Indebtedness shall be subordinated to the
Exchange Notes to at least the same extent as such Subordinated Indebtedness or
(ii) pursuant to paragraph (a) or (b) if such Indebtedness is subordinate or
junior in ranking in any respect to any Senior Indebtedness unless such
Indebtedness is Senior Subordinated Indebtedness or is expressly subordinated in
right of payment to Senior Subordinated Indebtedness.
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(d) The Company shall not incur any Secured Indebtedness that is not Senior
Indebtedness unless contemporaneously therewith effective provision is made to
secure the Exchange Notes equally and ratably with such Secured Indebtedness for
so long as such Secured Indebtedness is secured by a Lien.
Limitation on Restricted Payments. (a) The Company shall not, and shall not
permit any Restricted Subsidiary to, directly or indirectly:
(i) declare or pay any dividend on, or make any distribution to holders
of, any shares of its Capital Stock (other than dividends or distributions
payable solely in shares of its Capital Stock (other than Disqualified
Capital Stock) or in options, warrants or other rights to acquire such
Capital Stock and other than dividends and distributions paid by a
Restricted Subsidiary to the Company or to another Restricted Subsidiary);
(ii) purchase, redeem or otherwise acquire or retire for value, directly
or indirectly, any shares of the Capital Stock of the Company or any
Restricted Subsidiary or options, warrants or other rights to acquire such
Capital Stock;
(iii) make any principal payment on, or repurchase, redeem, defease,
retire or otherwise acquire for value, prior to the relevant scheduled
principal payment, sinking fund or maturity, any Subordinated Indebtedness;
or
(iv) make any Investment in any Person, including, without limitation,
any Unrestricted Subsidiary (other than a Permitted Investment)
(the foregoing actions described in clauses (i) through (iv) above being
hereinafter collectively referred to as "Restricted Payments") unless after
giving effect to the proposed Restricted Payment, (A) no Default or Event of
Default shall have occurred and be continuing and such Restricted Payment shall
not cause or constitute a Default or an Event of Default; (B) immediately before
and immediately after giving effect to such transaction on a pro forma basis,
the Company could incur $1.00 of additional Indebtedness pursuant to paragraph
(a) under "Limitation on Indebtedness"; and (C) the aggregate amount of all such
Restricted Payments (the amount of any such Restricted Payment, if other than
cash, to be determined in good faith by the Board of Directors of the Company,
whose determination shall be conclusive and evidenced by a resolution of the
Board of Directors) declared or made after the Issue Date (including such
Restricted Payment) does not exceed the sum of:
(i) 50% of the aggregate cumulative Consolidated Net Income (or, if such
aggregate cumulative Consolidated Net Income shall be a loss, minus 100% of
such loss) of the Company accrued on a cumulative basis during the period
(taken as one accounting period) from the fiscal quarter that first begins
after the Issue Date to the end of the Company's most recently ended fiscal
quarter for which internal financial statements are available at the time of
such Restricted Payment;
(ii) the aggregate Net Cash Proceeds received after the Issue Date by
the Company from the issuance or sale (other than to any of its
Subsidiaries) of its shares of Capital Stock (other than Disqualified
Capital Stock) or any options, warrants or rights to purchase such shares of
Capital Stock (other than Disqualified Capital Stock) or other cash
contributions to its capital (excluding amounts used pursuant to clauses
(ii) or (iii) of paragraph (b) below);
(iii) the aggregate Net Cash Proceeds received after the Issue Date by
the Company (other than from any of its Subsidiaries) upon the exercise of
any options, warrants or rights to purchase shares of Capital Stock (other
than Disqualified Capital Stock) of the Company;
(iv) the aggregate Net Cash Proceeds received after the Issue Date by
the Company from Indebtedness of the Company or Disqualified Capital Stock
of the Company that has been converted into or exchanged for Capital Stock
(other than Disqualified Capital Stock) of the Company or options, warrants
or rights to acquire such Capital Stock, to the extent such Indebtedness of
the Company or Disqualified Capital Stock of the Company was originally
incurred or issued for cash, plus the aggregate Net Cash Proceeds received
by the Company at the time of such conversion or exchange;
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(v) to the extent not included in Consolidated Net Income, the net
reduction (received by the Company or any Restricted Subsidiary in cash) in
Investments (other than Permitted Investments) made by the Company and the
Restricted Subsidiaries since the Issue Date, not to exceed, in the case of
any Investments in any Person, the amount of Investments (other than
Permitted Investments) made by the Company and the Restricted Subsidiaries
in such Person since the Issue Date.
(b) Notwithstanding the foregoing, and in the case of clauses (v), (vii),
(viii) (x) and (x) below, so long as there is no Default or Event of Default
continuing, the foregoing provisions shall not prohibit the following actions:
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at such date of declaration such payment would be
permitted by the provisions of paragraph (a) of this "Limitation on
Restricted Payments" covenant (such payment being deemed to have been paid
on such date of declaration for purposes of the calculation required by
paragraph (a) of this "Limitation on Restricted Payments" covenant);
(ii) the repurchase, redemption, or other acquisition or retirement of
any shares of any class of Capital Stock of the Company or warrants, options
or other rights to acquire such stock in exchange for, or out of the Net
Cash Proceeds of a substantially concurrent issue and sale (other than to a
Subsidiary) for cash of, any Capital Stock (other than Disqualified Capital
Stock) of the Company or warrants, options or other rights to acquire such
Capital Stock;
(iii) any repurchase, redemption, defeasance, retirement, refinancing or
acquisition for value or payment of principal of any Subordinated
Indebtedness in exchange for, or out of the net proceeds of a substantially
concurrent issuance and sale (other than to a Subsidiary) for cash of, any
Capital Stock (other than Disqualified Capital Stock) of the Company or
warrants, options or other rights to acquire such Capital Stock;
(iv) the repurchase, redemption, defeasance, retirement or other
acquisition for value or payment of principal of any Subordinated
Indebtedness through the issuance of Refinancing Indebtedness;
(v) the repurchase, redemption, acquisition or retirement of shares of
Capital Stock of the Parent or options, warrants or other rights to purchase
such shares held by officers or employees or former officers or employees of
the Parent, the Company or any of their Subsidiaries (or their estates or
beneficiaries), or dividends to the Parent for such purpose, upon death,
disability, retirement, or termination of employment, pursuant to the terms
of any employee stock option or stock purchase plan or agreement or
management equity plan or other agreement, for an aggregate amount in any
fiscal year of the Company ending subsequent to the Issue Date not to exceed
$2.5 million (plus, in the case of the repurchase of Capital Stock held by
the estate of a deceased officer or employee, a sum equal to the net cash
proceeds, if any, received by the Company under any policy or policies of
key man insurance on the life of such officer or employee); provided,
however, that, to the extent that the aggregate amount so paid in any fiscal
year of the Company is less than $2.5 million, a sum equal to the difference
between $2.5 million and the aggregate amounts paid pursuant to this clause
(v) in any such fiscal year shall be added to the amount otherwise permitted
to be paid in any subsequent fiscal year, but in no event shall the
aggregate amount so paid in any fiscal year exceed the sum of $5.0 million
(plus the net cash proceeds of any key man life insurance policies as
aforesaid);
(vi) the payment of any dividend or distributions by the Company to the
Parent pursuant to the terms of any bona fide tax sharing agreement among
the Company, the Parent and other members of the consolidated group of
corporations of which the Company is a member;
(vii) the payment of management, consulting and advisory fees and
related expenses to the Sponsors not to exceed $1.5 million in any fiscal
year of the Company;
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(viii) any Investments in (x) Unrestricted Subsidiaries (excluding
Receivables Co.) having an aggregate fair market value, taken together with
all other Investments made pursuant to this subclause (x) that are at that
time outstanding, not to exceed $15.0 million at the time of such Investment
(with the fair market value of each Investment being measured at the time
made and without giving effect to subsequent changes in value) and (y)
Receivables Co. in connection with a Permitted Receivables Transaction;
(ix) the payment of dividends or distributions to the Parent for the
purpose of enabling the Parent to pay its franchise taxes and other fees
required to maintain its legal existence and to provide for operating costs
of up to $100,000 per fiscal year;
(x) the payment of any cash dividend on the Capital Stock of the Company
following a Public Equity Offering; provided that the aggregate amount of
all such dividends so paid in any fiscal year of the Company pursuant to
this clause (x) shall not exceed 6% of the Net Cash Proceeds received by the
Company in such Public Equity Offering;
(xi) other Restricted Payments not to exceed $15.0 million in the
aggregate; and
(xii) the repurchase of Equity Interests deemed to occur upon the
exercise of stock options if such Equity Interests represent a portion of
the exercise price of such options.
The actions described in clauses (i), (v), (vii), (x) and (xi) of this paragraph
(b) shall be Restricted Payments that shall be permitted to be taken in
accordance with this paragraph (b) but shall reduce the amount that would
otherwise be available for Restricted Payments under clause (C) of paragraph (a)
of this "Limitation on Restricted Payments" covenant (provided that any dividend
paid pursuant to clause (i) of this paragraph (b) shall reduce the amount that
would otherwise be available under clause (C) of paragraph (a) of this
"Limitation on Restricted Payments" covenant when declared, but not also when
paid pursuant to such clause (i)) and the actions described in clauses (ii),
(iii), (iv), (vi), (viii), (ix) and (xii) of this paragraph (b) shall be
permitted to be taken in accordance with this paragraph and shall not reduce the
amount that would otherwise be available for Restricted Payments under clause
(C) of paragraph (a).
Limitation on Liens. The Company shall not, and shall not permit any
Restricted Subsidiary to, directly or indirectly, incur, assume or suffer to
exist any Lien of any kind upon any of its property or assets (including any
shares of Capital Stock or Indebtedness of any Restricted Subsidiary), whether
owned on the Issue Date or acquired after the Issue Date, or any income or
profits therefrom, except if the Exchange Notes (or the Guarantee of the
Exchange Notes, in the case of Liens on properties or
assets of any Guarantor) and all other amounts due under the Indenture are
directly secured equally and ratably with (or prior to in the case of Liens with
respect to Subordinated Indebtedness) the obligation or liability secured by
such Lien, excluding, however, from the operation of the foregoing any of the
following:
(a) any Lien existing as of the Issue Date;
(b) any Lien arising by reason of (i) any judgment, decree or order of any
court, so long as such Lien is in existence less than 30 days after the entry
thereof or adequately bonded or the payment of such judgment, decree or order is
covered (subject to a customary deductible) by insurance maintained with
responsible insurance companies; (ii) taxes, assessments or other governmental
charges that are not yet delinquent or are being contested in good faith; (iii)
security for payment of workers' compensation or other insurance; (iv) good
faith deposits in connection with tenders, leases or contracts (other than
contracts for the payment of borrowed money); (v) zoning restrictions,
easements, licenses, reservations, provisions, covenants, conditions, waivers,
restrictions on the use of property or minor irregularities of title (and with
respect to leasehold interests, mortgages, obligations, liens and other
encumbrances incurred, created, assumed or permitted to exist and arising by,
through or under a landlord or owner of the leased property, with or without
consent of the lessee), none of which materially impairs the use of any property
or assets material to the operation of the business of the
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Company or any Restricted Subsidiary or the value of such property or assets for
the purpose of such business; (vi) deposits to secure public or statutory
obligations, or in lieu of surety or appeal bonds with respect to matters not
yet finally determined and being contested in good faith by negotiations or by
appropriate proceedings that suspend the collection thereof; or (vii) operation
of law in favor of mechanics, materialmen, laborers, employees or suppliers,
incurred in the ordinary course of business for sums that are not yet delinquent
or are being contested in good faith by negotiations or by appropriate
proceedings that suspend the collection thereof;
(c) any Lien now or hereafter existing on property or assets of the Company
or any Guarantor securing Senior Indebtedness of such Person;
(d) any Lien securing Acquired Indebtedness created prior to (and not
created in connection with, or in contemplation of) the incurrence of such
Indebtedness by the Company or a Restricted Subsidiary; provided that any such
Lien extends only to the assets that were subject to such Lien securing such
Acquired Indebtedness prior to the related acquisition;
(e) leases or subleases granted by the Company or any of its Subsidiaries to
any other Person in the ordinary course of business;
(f) Liens in the nature of trustees' Liens granted pursuant to any indenture
governing any indebtedness permitted by the covenant on "--Limitation on
Indebtedness" in each case in favor of the trustee under such indenture and
securing only obligations to pay any compensation to such trustee, to reimburse
its expenses and to indemnify it under the terms thereof; and
(g) any extension, renewal, refinancing or replacement, in whole or in part,
of any Lien described in the foregoing clauses (a) through (f) so long as the
amount of property or assets subject to such Lien is not increased thereby.
Limitations on Lines of Business. The Company shall not, and shall not
permit its Restricted Subsidiaries to, engage in any business other than those
engaged in on the date of the Indenture and lines of business incidental,
similar or related thereto.
Merger and Consolidation. The Company shall not consolidate with or merge
with or into, or convey, transfer or lease all or substantially all its assets
to, any Person, unless: (i) the resulting, surviving or transferee Person (the
"Successor Company") shall be a Person organized and existing under the laws of
the United States of America, any state thereof or the District of Columbia and
the Successor Company (if not the Company) shall expressly assume, by an
indenture supplemental to the Indenture, executed and delivered to the Trustee,
in form reasonably satisfactory to the Trustee, all the obligations of the
Company under the Exchange Notes and the Indenture; (ii) immediately after
giving effect to such transaction (and treating any Indebtedness which becomes
an obligation of the Successor Company or any Restricted Subsidiary as a result
of such transaction as having been incurred by such Successor Company or such
Restricted Subsidiary at the time of such transaction), no Event of Default
shall have occurred and be continuing; (iii) immediately after giving effect to
such transaction, the Consolidated Coverage Ratio of the Successor Company is at
least 1.00:1; provided, however, that, if the Consolidated Coverage Ratio of the
Company before giving effect to such transaction is within a range set forth in
column (A) below, then the Consolidated Coverage Ratio of the Successor Company
shall be at least equal to the lesser of (1) the ratio determined by multiplying
the relevant percentage set forth in column (B) below by the Consolidated
Coverage Ratio prior to such transaction and (2) the relevant ratio set forth in
column (C) below:
(A) (B) (C)
- ----------------- --- -----------
1.00:1 to 1.99:1 100% 1.60:1
2.00:1 to 2.99:1 90% 2.10:1
3.00:1 to 3.99:1 80% 2.40:1
4.00:1 to
greater......... 70% 2.50:1;
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(iv) immediately after giving effect to such transaction, the Successor
Company shall have Consolidated Net Worth in an amount which is not less than
the Consolidated Net Worth of the Company prior to such transaction; and
(v) the Company shall have delivered to the Trustee an Officer's Certificate
and an Opinion of Counsel, each stating that such consolidation, merger or
transfer and each supplemental indenture (if any) comply with the Indenture.
The Successor Company shall be the successor of the Company and shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under the Indenture, but the predecessor Company in the case of a
conveyance, transfer or lease shall not be released from the obligation to pay
the principal of and interest on the Exchange Notes.
Change of Control. If a Change of Control shall occur at any time, then each
holder of Exchange Notes shall have the right to require that the Company
purchase such holder's Exchange Notes in whole or in part in any integral
multiple of $1,000, for a cash purchase price (the "Change of Control Purchase
Price") equal to 101% of the principal amount of such Exchange Notes, plus
accrued and unpaid interest, if any, on such Exchange Notes to the date of
purchase (the "Change of Control Purchase Date"), pursuant to the offer
described below (the "Change of Control Offer") and the other procedures set
forth in the Indenture.
Within 15 days following any Change of Control, the Company shall notify the
Trustee thereof and give written notice of such Change of Control to each holder
of Exchange Notes by first-class mail, postage prepaid, at his address appearing
in the security register, stating, among other things, (i) that a Change of
Control has occurred and that such holder has the right to require the Company
to purchase each holder's Exchange Notes, in whole or in part, at the Change of
Control Purchase Price; (ii) the Change of Control Purchase Price and the Change
of Control Purchase Date which shall be a Business Day no earlier than 30 days
nor later than 60 days from the date such notice is mailed, or such later date
as is necessary to comply with requirements under the Exchange Act; (iii) that
any Exchange Note not tendered for purchase will continue to accrue interest;
(iv) that, unless the Company defaults in the payment of the Change of Control
Purchase Price, any Exchange Notes accepted for payment pursuant to the Change
of Control Offer shall cease to accrue interest after the Change of Control
Purchase Date; and (v) certain other procedures that a holder of Exchange Notes
must follow to accept a Change of Control Offer or to withdraw such acceptance.
If a Change of Control Offer is made, there can be no assurance that the
Company will have available funds sufficient to pay the Change of Control
Purchase Price for all of the Exchange Notes that might be delivered by holders
of the Exchange Notes seeking to accept the Change of Control Offer. The Credit
Agreement prohibits the purchase of the Exchange Notes by the Company prior to
full repayment of Indebtedness thereunder and, upon a Change of Control, all
amounts outstanding under the Credit Agreement may become due and payable. There
can be no assurance that, in the event of a Change of Control, the Company will
be able to obtain the necessary consents from the lenders under the Credit
Agreement to consummate a Change of Control Offer. The failure of the Company to
make or consummate the Change of Control Offer or pay the Change of Control
Purchase Price when due would result in an Event of Default.
The existence of a right of the holder of an Exchange Note to require the
Company to purchase such holder's Exchange Notes upon a Change of Control may
deter a third party from acquiring the Company in a transaction which
constitutes a Change of Control.
The Company will comply with the applicable tender offer rules, including
Rule 14e-1 under the Exchange Act, and any other applicable securities laws or
regulations in connection with a Change of Control Offer.
The Company will not, and will not permit any Subsidiary to, create or
permit to exist or become effective any restriction (other than restrictions in
effect on the Issue Date with respect to Indebtedness
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outstanding on the Issue Date and refinancing thereof and customary default
provisions) that would materially impair the ability of the Company to make a
Change of Control Offer to purchase the Exchange Notes or, if such Change of
Control Offer is made, to pay for the Exchange Notes tendered for purchase.
Commission Reports. Notwithstanding that the Company may not be subject to
the reporting requirements of Sections 13 or 15(d) of the Exchange Act, so long
as any Exchange Notes are outstanding, the Company will furnish to the Trustee
and the holders of Exchange Notes (i) within 45 days after the end of each of
the first three fiscal quarters of each fiscal year and 90 days of the end of
each fiscal year all quarterly and annual financial information, as the case may
be, that would be required to be contained in a filing with the Commission on
Forms 10-Q and 10-K if the Company were required to file any such Forms,
including a "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and, with respect to the annual information only, a
report thereon by the Company's certified independent accountants and (ii) all
current reports that would be required to be filed with the Commission on Form
8-K if the Company were required to file such reports. In addition, whether or
not required by the rules and regulations of the Commission, the Company will
file a copy of all such information and reports with the Commission for public
availability (unless the Commission will not accept such a filing) and make such
information available to securities analysts and prospective investors upon
request. Furthermore, for so long as any of the Exchange Notes remain
outstanding, the Company has agreed to make available to any prospective
purchaser of the Exchange Notes or beneficial owner of the Exchange Notes, in
connection with any sale thereof, the information required by Rule 144(d)(4)
under the Securities Act.
Limitation on Restrictions on Distributions from Restricted Subsidiaries.
The Company shall not, and shall not permit any Restricted Subsidiary to, create
or otherwise cause or permit to exist or become effective any consensual
encumbrance or restriction on the ability of any Restricted Subsidiary (a) to
pay dividends or make any other distributions on its Capital Stock or pay any
Indebtedness owed to the Company or any Restricted Subsidiary, (b) to make any
loans or advances to the Company or any Restricted Subsidiary or (c) to transfer
any of its property or assets to the Company or any Restricted Subsidiary,
except: (i) any encumbrance or restriction pursuant to an agreement in effect at
or entered into on the Issue Date; (ii) any encumbrance or restriction with
respect to a Restricted Subsidiary pursuant to an agreement relating to any
Indebtedness incurred by such Restricted Subsidiary on or prior to the date on
which such Restricted Subsidiary was acquired by the Company (other than
Indebtedness incurred as consideration in, or to provide all or any portion of
the funds or credit support utilized to consummate, the transaction or series of
related transactions pursuant to which such Restricted Subsidiary became a
Restricted Subsidiary or was acquired by the Company) and outstanding on such
date; (iii) any encumbrance or restriction pursuant to an agreement effecting a
refinancing of Indebtedness incurred pursuant to an agreement referred to in
clause (i) or (ii) of this covenant or contained in any amendment to an
agreement referred to in clause (i) or (ii) of this covenant; provided, however,
that the encumbrances and restrictions with respect to such Restricted
Subsidiary contained in any such refinancing agreement or amendment are no less
favorable in any material respect to the holders of the Exchange Notes than
encumbrances and restrictions with respect to such Restricted Subsidiary
contained in any agreements; (iv) any encumbrance or restriction (A) that
restricts in a customary manner the subletting, assignment or transfer of any
property or asset that is a lease, license, conveyance or contract or similar
property or asset that is the subject of such encumbrance or restriction, (B)
existing by virtue of any transfer of, agreement to transfer, option or right
with respect to, or Lien on, any property or assets of the Company or any
Restricted Subsidiary not otherwise prohibited by the Indenture or (C) arising
or agreed to in the ordinary course of business, not relating to any
Indebtedness, and that do not, individually or in the aggregate, detract from
the value of property or assets of the Company or any Restricted Subsidiary in
any manner material to the Company or any Restricted Subsidiary; provided that,
in each case, such encumbrance or restriction relates to, and restricts dealings
with, only the property or asset that is the subject of such encumbrance or
restriction; and provided further, that such encumbrance or restriction does not
prohibit, limit or otherwise restrict
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the making or payment of any dividend or other distribution to the Company or
any Restricted Subsidiary; (v) any restriction with respect to a Restricted
Subsidiary imposed pursuant to an agreement entered into for the sale or
disposition of all or substantially all the Capital Stock or assets of such
Restricted Subsidiary pending the closing of such sale or disposition or
pursuant to a Permitted Receivables Transaction; and (vi) any restrictions on
cash or other deposits or net worth imposed by customers under contracts entered
into in the ordinary course of business.
Limitation on Sales of Assets and Subsidiary Stock. (a) The Company shall
not, and shall not permit any Restricted Subsidiary to, make any Asset
Disposition unless (i) the Company or such Restricted Subsidiary receives
consideration (including by way of relief from, or by any other Person assuming
sole responsibility for, any liabilities, contingent or otherwise) at the time
of such Asset Disposition at least equal to the Fair Market Value of the shares
or assets that are the subject matter of such Asset Disposition, (ii) at least
80% of the consideration therefor received by the Company or such Restricted
Subsidiary is in the form of cash (provided, however, that in the case of any
Asset Disposition or group of related Asset Dispositions involving total
consideration of not more than $20.0 million, at least 50% of the consideration
therefor received by the Company or such Restricted Subsidiary is in the form of
cash; provided, further, however, that the foregoing exception shall be
available only in respect of Asset Dispositions, whether or not related,
involving cumulative aggregate consideration not to exceed $50.0 million); and
(iii) an amount equal to 100% of the Net Available Cash from such Asset
Disposition is applied by the Company (or such Restricted Subsidiary, as the
case may be) (A) first, to the extent the Company elects (or is required by the
terms of any Senior Indebtedness or any Indebtedness (other than Preferred
Stock) of a Restricted Subsidiary), to prepay, repay or purchase such Senior
Indebtedness or such Indebtedness (other than Preferred Stock) of a Restricted
Subsidiary (in each case other than Indebtedness owed to the Company or an
Affiliate of the Company) within one year after the later of the date of such
Asset Disposition or the receipt of such Net Available Cash, (B) second, to the
extent of the balance of Net Available Cash after application in accordance with
clause (A), to the extent the Company elects, to secure letter of credit
obligations to the extent such related letters of credit have not been drawn
upon or returned undrawn; (C) third, to the extent of the balance of Net
Available Cash after application in accordance with clauses (A) and (B), to the
extent the Company or such Restricted Subsidiary elects, within one year from
the later of the date of such Asset Disposition or the receipt of such Net
Available Cash, to reinvest in, Additional Assets (including by means of an
Investment in Additional Assets by a Restricted Subsidiary with Net Available
Cash received by the Company or another Restricted Subsidiary) or apply against
restructuring expenses, not to exceed $30.0 million in cumulative aggregate
amount, incurred in connection with the restructuring reserves established from
time to time on the Company's balance sheet; and (D) fourth, to the extent of
the balance of such Net Available Cash after application in accordance with
clauses (A), (B) and (C), to make an offer to purchase Exchange Notes pursuant
and subject to the conditions of the Indenture to the holders of the Exchange
Notes at a purchase price of 100% of the principal amount thereof plus accrued
and unpaid interest to the purchase date; provided, however, that, in connection
with any prepayment, repayment or purchase of Indebtedness pursuant to clause
(A) or (B) above, the Company or such Restricted Subsidiary shall retire such
Indebtedness and shall cause the related loan commitment (if any) to be
permanently reduced in an amount equal to the principal amount so prepaid,
repaid or purchased. The Company shall not be required to make an offer for
Exchange Notes pursuant to this covenant if the Net Available Cash available
therefor (after application of the proceeds as provided in clauses (A), (B) and
(C)) is less than $10.0 million (which lesser amounts shall be carried forward
for purposes of determining whether an offer is required with respect to the Net
Available Cash from any subsequent Asset Disposition).
For the purposes of clause (a)(ii) of this covenant, the following will be
deemed to be cash: (x) the assumption of Indebtedness (other than Disqualified
Capital Stock) of the Company or any Restricted Subsidiary and the release of
the Company or such Restricted Subsidiary from all liability on such
Indebtedness in connection with such Asset Disposition and (y) securities
received by the Company or any Restricted Subsidiary of the Company from the
transferee that are promptly converted by the Company or such Restricted
Subsidiary into cash.
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(b) In the event of an Asset Disposition that requires the purchase of
Exchange Notes pursuant to clause (a)(iii)(D), the Company will be required to
purchase Exchange Notes tendered pursuant to an offer by the Company for the
Exchange Notes at a purchase price of 100% of their principal amount plus
accrued interest to the purchase date in accordance with the procedures
(including prorating in the event of oversubscription) set forth in the
Indenture.
(c) The Company shall comply with the applicable tender offer rules,
including Rule 14e-1 under the Exchange Act, and any other securities laws or
regulations in connection with the repurchase of Exchange Notes pursuant to this
covenant.
Limitation on Affiliate Transactions. (a) The Company shall not, and shall
not permit any Restricted Subsidiary to, directly or indirectly, enter into or
conduct any transaction (including the purchase, sale, lease or exchange of any
property or the rendering of any service) with any Affiliate of the Company (an
"Affiliate Transaction") unless: (i) the terms of such Affiliate Transaction are
no less favorable to the Company or such Restricted Subsidiary, as the case may
be, than those that could be obtained at the time of such transaction in
arms'-length dealings with a Person who is not such an Affiliate; (ii) in the
event such Affiliate Transaction involves an aggregate amount in excess of $5.0
million, either (A) the terms of such transaction have been approved by a
majority of the members of the Board of Directors of the Company and by a
majority of the disinterested members of such Board, if any (and such majority
or majorities, as the case may be, determines that such Affiliate Transaction
satisfies the criteria in (i) above) or (B) the Company has received a written
opinion from an independent investment banking firm of nationally recognized
standing that such Affiliate Transaction is fair to the Company or such
Subsidiary, as the case may be, from a financial point of view; and (iii) in the
event such Affiliate Transaction involves the purchase or sale of Equity
Interests, or the purchase, sale or lease of assets (other than sales of
inventory to an Affiliate by the Company or a Restricted Subsidiary or purchases
of raw materials from an Affiliate by the Company or such Restricted Subsidiary,
pursuant to a continuing commercial agreement entered into between the Company
or such Restricted Subsidiary and such Affiliate in the ordinary course, and in
furtherance of the business of the Company or such Restricted Subsidiary), in
each case, in an aggregate amount in excess of $20.0 million, the Company has
received a written opinion from an independent investment banking firm of
nationally recognized standing that such Affiliate Transaction is fair to the
Company or such Restricted Subsidiary, as the case may be, from a financial
point of view.
(b) The provisions of the foregoing paragraph (a) will not prohibit (i) any
Restricted Payment permitted to be paid or made pursuant to the covenant
described under "Limitation on Restricted Payments", (ii) the performance of the
Company's or a Restricted Subsidiary's obligations under any employment
contract, collective bargaining agreement, employee benefit plan, related trust
agreement or any other similar arrangement heretofore or hereafter entered into
in the ordinary course of business, (iii) payment of compensation to employees,
officers, directors or consultants in the ordinary course of business, (iv)
maintenance in the ordinary course of business of benefit programs or
arrangements for employees, officers or directors, including vacation plans,
health and life insurance plans, deferred compensation plans, and retirement or
savings plans and similar plans, (v) any transaction between the Company and a
Restricted Subsidiary or between Restricted Subsidiaries, (vi) any agreement in
effect as of the Issue Date or any amendment thereto or any transaction
contemplated thereby, or (vii) the payment of management, consulting and
advisory fees and related expenses to the Sponsors not to exceed $1.5 million in
any fiscal year of the Company.
Limitation on Sale of Capital Stock of Restricted Subsidiaries. The Company
(i) shall not, and shall not permit any Restricted Subsidiary to, transfer,
convey, sell or otherwise dispose of any Capital Stock of any Restricted
Subsidiary to any Person (other than to the Company or a Restricted Subsidiary)
and (ii) shall not permit any Restricted Subsidiary to issue any of its Capital
Stock to any Person other than to the Company or a Restricted Subsidiary;
provided, however, that the foregoing shall not prohibit the transfer,
conveyance, sale or other disposition of all the Capital Stock of a Restricted
Subsidiary if the net cash proceeds from such transfer, conveyance, sale or
other disposition
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are applied in accordance with the covenant described above under "Limitation on
Sales of Assets and Subsidiary Stock."
EVENTS OF DEFAULT
An Event of Default is defined in the Indenture as (i) a default in any
payment of interest on any Exchange Note when due, continued for 30 days, (ii) a
default in the payment of principal of any Exchange Note when due at its Stated
Maturity, upon optional redemption, upon required repurchase, upon declaration
or otherwise, (iii) the failure by the Company to comply with its obligations
under "Merger and Consolidation", (iv) the failure by the Company to comply for
30 days after notice with any of its obligations under the covenants described
under "Certain Covenants" above (in each case, other than a failure to purchase
Exchange Notes which shall constitute an Event of Default under clause (ii)
above) other than "--Merger and Consolidation", (v) the failure by the Company
to comply for 60 days after notice with its other covenants and agreements
contained in the Indenture, (vi) Indebtedness of the Company or any Restricted
Subsidiary is not paid within any applicable grace period after final maturity
or is accelerated by the holders thereof because of a default and the total
amount of such Indebtedness unpaid or accelerated exceeds $10.0 million (the
"cross acceleration provision"), (vii) certain events of bankruptcy, insolvency
or reorganization of the Company or a Material Subsidiary (the "bankruptcy
provisions"), (viii) any judgment or decree for the payment of money in excess
of $10.0 million (to the extent not covered by insurance) is rendered against
the Company or a Material Subsidiary and is not discharged and either (A) an
enforcement proceeding has been commenced by any creditor upon such judgment or
decree and is not promptly stayed or (B) such judgment or decree shall remain
undischarged or unstayed for a period of 60 days following the entry of such
judgment or decree (the "judgment default provision") or (ix) the failure of any
Guarantee of the Exchange Notes to be in full force and effect (except as
contemplated by the terms thereof) or the denial or disaffirmation by any
Guarantor of its obligations under the Indenture or any Guarantee of the
Exchange Notes if such failure is not cured, or such denial or disaffirmation is
not rescinded or revoked, within 10 days. However, a default under clauses (iv)
and (v) will not constitute an Event of Default until the Trustee or the holders
of at least 25% in principal amount of the outstanding Exchange Notes notify the
Company of the default and the Company does not cure such default within the
time specified in clauses (iv) and (v) hereof after receipt of such notice.
If an Event of Default (other than an Event of Default specified in clause
(vii) above with respect to the Company) occurs and is continuing, the Trustee,
by notice to the Company, or the holders of at least 25% in outstanding
principal amount of the Exchange Notes, by notice to the Company and the
Trustee, may declare the principal of, and accrued and unpaid interest on, all
the Exchange Notes to be due and payable. Upon such a declaration, such
principal and interest shall be due and payable (i) if no Indebtedness is
outstanding under the Credit Agreement, immediately, and (ii) if any
Indebtedness is outstanding under the Credit Agreement, upon the first to occur
of (x) the acceleration of any such Indebtedness or (y) the fifth Business Day
after receipt by the Company and the Credit Agent of such written notice of
acceleration. If an Event of Default relating to certain events of bankruptcy,
insolvency or reorganization of the Company occurs and is continuing, the
principal of, and accrued and unpaid interest on, all the Exchange Notes shall
ipso facto become and be immediately due and payable without any declaration or
other act on the part of the Trustee or any holders. Under certain
circumstances, the holders of a majority in principal amount of the outstanding
Exchange Notes may rescind any such acceleration with respect to the Exchange
Notes and its consequences.
In the event of any Event of Default specified in clause (v) above, such
Event of Default and all consequences thereof (including, without limitation,
any acceleration or resulting payment default) shall be annulled, waived and
rescinded, automatically and without any action by the Trustee or the holders of
the Exchange Notes, if within 20 days after the occurrence of such Event of
Default, (i) the holders of the Indebtedness to which such Event of Default
relates have rescinded or waived the
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acceleration, notice or action (as the case may be) giving rise to such Event of
Default, or (ii) the default that is the basis for such Event of Default has
been cured.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, if an Event of Default occurs and is continuing, the Trustee will be
under no obligation to exercise any of the rights or powers under the Indenture
at the request or direction of any of the holders unless such holders have
offered to the Trustee reasonable indemnity or security against any loss,
liability or expense. Except to enforce the right to receive payment of
principal, premium (if any) or interest when due, no holder may pursue any
remedy with respect to the Indenture or the Exchange Notes unless (i) such
holder has previously given the Trustee notice that an Event of Default is
continuing, (ii) holders of at least 25% in outstanding principal amount of the
outstanding Exchange Notes have requested the Trustee to pursue the remedy,
(iii) such holders have offered the Trustee reasonable security or indemnity
against any loss, liability or expense, (iv) the Trustee has not complied with
such request within 60 days after the receipt of the request and the offer of
security or indemnity, and (v) the holders of a majority in principal amount of
the outstanding Exchange Notes have not given the Trustee a direction that is
inconsistent with such request within such 60 day period. Subject to certain
restrictions, the holders of a majority in principal amount of the outstanding
Exchange Notes are given the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. The Trustee, however,
may refuse to follow any direction that conflicts with law or the Indenture or
that the Trustee determines is unduly prejudicial to the rights of any other
holder or that would involve the Trustee in personal liability. Prior to taking
any action under the Indenture, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses caused
by taking or not taking such action.
The Indenture provides that if a Default occurs and is continuing and is
known to the Trustee, the Trustee must mail to each holder notice of the Default
within 90 days after it occurs. Except in the case of a Default in the payment
of principal of, premium (if any) or interest on any Exchange Note, the Trustee
may withhold notice if and so long as a committee of its trust officers in good
faith determines that withholding notice is in the interests of the holders of
the Exchange Notes. In addition, the Company is required to deliver to the
Trustee, within 120 days after the end of each fiscal year, a certificate
indicating whether the signers thereof know of any Default that occurred during
the previous year. The Company also is required to deliver to the Trustee,
within 30 days after the occurrence thereof, written notice of any events which
would constitute certain Defaults, their status and what action the Company is
taking or proposes to take in respect thereof.
AMENDMENTS AND WAIVERS
Subject to certain exceptions, the Indenture may be amended with the consent
of the holders of a majority in principal amount of the Exchange Notes then
outstanding and any past default or compliance with any provisions may be waived
with the consent of the holders of a majority in principal amount of the
Exchange Notes then outstanding. However, without the consent of each holder of
an outstanding Exchange Note affected, no amendment may, among other things, (i)
reduce the amount of Exchange Notes whose holders must consent to an amendment,
(ii) reduce the rate of or extend the time for payment of interest on any
Exchange Note, (iii) reduce the principal of or extend the Stated Maturity of
any Note, (iv) reduce the premium payable upon the redemption or repurchase of
any Exchange Note or change the time at which any Exchange Note may or shall be
redeemed or repurchased in accordance with the Indenture, (v) make any Exchange
Note payable in money other than that stated in the Exchange Note, (vi) modify
or affect in any manner adverse to the holders of the Exchange Notes, the terms
and conditions of the obligation of the Company for the due and punctual payment
of the principal of or interest on the Exchange Notes or (vii) make any change
in the amendment provisions which require each holder's consent or in the waiver
provisions.
Without the consent of any holder, the Company and the Trustee may amend the
Indenture to cure any ambiguity, omission, defect or inconsistency, to provide
for the assumption by a successor
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corporation of the obligations of the Company under the Indenture, to provide
for uncertificated Exchange Notes in addition to or in place of certificated
Exchange Notes (provided that the uncertificated Exchange Notes are issued in
registered form for purposes of Section 163(f) of the Code, or in a manner such
that the uncertificated Exchange Notes are described in Section 163(f) (2) (B)
of the Code), to make any change in the provisions described under "--Ranking"
that would limit or terminate the benefits available to any holder of Senior
Indebtedness (or Representatives therefor) under "--Ranking," to add Guarantees
with respect to the Exchange Notes, to secure the Exchange Notes, to add to the
covenants of the Company for the benefit of the holders of the Exchange Notes or
to surrender any right or power conferred upon the Company, to make any change
that does not adversely affect the rights of any holder or to comply with any
requirement of the Commission in connection with the qualification of the
Indenture under the Trust Indenture Act. However, no amendment may be made to
the subordination provisions of the Indenture that adversely affects the rights
of any holder of Senior Indebtedness then outstanding unless the holders of such
Senior Indebtedness (or any group or representative thereof authorized to give a
consent) consent to such change.
The consent of the holders is not necessary under the Indenture to approve
the particular form of any proposed amendment. It is sufficient if such consent
approves the substance of the proposed amendment.
After an amendment under the Indenture becomes effective, the Company is
required to mail to the holders a notice briefly describing such amendment.
However, the failure to give such notice to all the holders, or any defect
therein, will not impair or affect the validity of the amendment.
TRANSFER AND EXCHANGE
A holder of Exchange Notes may transfer or exchange Exchange Notes in
accordance with the Indenture. Upon any transfer or exchange, the registrar and
the Trustee may require the holder of an Exchange Note, among other things, to
furnish appropriate endorsements and transfer documents and the Company may
require the holder of an Exchange Note to pay any taxes or other charges
required by law. The Company is not required to transfer or exchange any
Exchange Note selected for redemption or to transfer or exchange any Exchange
Note for a period of 15 days prior to a selection of Exchange Notes to be
redeemed. The Exchange Notes will be issued in registered form and the
registered holder of a Exchange Note will be treated as the owner of such
Exchange Note for all purposes.
DEFEASANCE
The Company at any time may terminate all its obligations under the Exchange
Notes and the Indenture ("legal defeasance"), except for certain obligations,
including those respecting the defeasance trust and obligations to register the
transfer or exchange of the Exchange Notes, to replace mutilated, destroyed,
lost or stolen Exchange Notes and to maintain a registrar and paying agent in
respect of the Exchange Notes. The Company at any time may terminate its
obligations under certain covenants described under "Certain Covenants" (other
than "Merger and Consolidation"), the operation of the cross acceleration
provision, the bankruptcy provisions with respect to Material Subsidiaries and
the judgment default provision described under "Defaults" above and the
limitations contained in clauses (iii) and (iv) under "Certain Covenants--Merger
and Consolidation" above ("covenant defeasance"). The Credit Agreement prohibits
the legal defeasance and covenant defeasance of the Exchange Notes as long as
there are obligations outstanding under the Credit Agreement.
The Company may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. If the Company exercises its
legal defeasance option, payment of the Exchange Notes may not be accelerated
because of an Event of Default with respect thereto. If the Company exercises
its covenant defeasance option, payment of the Exchange Notes may not be
accelerated because of an Event of Default specified in clause (iv), (vi), (vii)
(with respect only to Material Subsidiaries), or (viii) (with respect to
Material Subsidiaries) or (ix) under "Defaults" above
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or because of the failure of the Company to comply with clause (iii) or (iv)
under "Certain Covenants-- Merger and Consolidation" above.
In order to exercise either defeasance option, the Company must irrevocably
deposit in trust (the "defeasance trust") with the Trustee money or U.S.
Government Obligations for the payment of principal of and interest on the
Exchange Notes to redemption or maturity, as the case may be, and must comply
with certain other conditions, including delivery to the Trustee of an Opinion
of Counsel to the effect that holders of the Exchange Notes will not recognize
income, gain or loss for federal income tax purposes as a result of such deposit
and defeasance and will be subject to federal income tax on the same amount and
in the same manner and at the same times as would have been the case if such
deposit and defeasance had not occurred (and, in the case of legal defeasance
only, such Opinion of Counsel must be based on a ruling of the Internal Revenue
Service or other change in applicable federal income tax law).
CONCERNING THE TRUSTEE
U.S. Trust Company of New York is to be the Trustee under the Indenture and
has been appointed by the Company as Registrar and Paying Agent with regard to
the Exchange Notes.
GOVERNING LAW
The Indenture provides that it and the Exchange Notes will be governed by,
and construed in accordance with, the laws of the State of New York without
giving effect to applicable principles of conflict of laws to the extent that
the application of the law of another jurisdiction would be required thereby.
CERTAIN DEFINITIONS
"Account" means any account (as that term is defined in Section 9-106 of the
Uniform Commercial Code as in effect from time to time in the State of New York)
of the Company or any of its Subsidiaries arising from the sale or lease of
goods or rendering of services."
"Acquired Indebtedness" means Indebtedness of a Person (i) existing at the
time such Person becomes a Restricted Subsidiary or (ii) assumed by the Company
or a Restricted Subsidiary in connection with the acquisition of assets from
such Person. Acquired Indebtedness shall be deemed to be incurred on the date of
the related acquisition of assets from any Person or the date the acquired
Person becomes a Restricted Subsidiary.
"Additional Assets" mean (i) any property or assets (other than Indebtedness
and Capital Stock) to be used by the Company or a Restricted Subsidiary in a
Related Business; or (ii) the Capital Stock of a Person that becomes a
Restricted Subsidiary as a result of the acquisition of such Capital Stock by
the Company or another Restricted Subsidiary; provided, however, that, in the
case of clause (ii), such Person is primarily engaged in a Related Business.
"Affiliate" of any specified Person means (i) any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person or (ii) any Person who is a director or
officer (a) of such Person, (b) of any Subsidiary of such Person or (c) of any
Person described in clause (i) above. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. For
purposes of the covenants described under "Certain Covenants-Limitation on Sales
of Assets and Subsidiary Stock", "--Limitation on Restricted Payments" and
"--Limitation on Affiliate Transactions" only, "Affiliate" shall also mean any
beneficial owner of shares representing 5% or more of the total voting power of
the outstanding voting shares of Capital Stock of the Company on a fully diluted
basis or of rights or
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warrants to purchase such voting shares (whether or not currently exercisable)
and any Person who would be an Affiliate of any such beneficial owner pursuant
to the first sentence hereof.
"ARTAL" means Artal Luxembourg S.A., a corporation organized under the laws
of Luxembourg.
"Asset Disposition" means any sale, lease, transfer, issuance or other
disposition (or series of related sales, leases, transfers, issuances or
dispositions that are part of a common plan) of shares of Capital Stock of a
Restricted Subsidiary (other than directors' qualifying shares), property or
other assets (each referred to for the purposes of this definition as a
"disposition") by the Company or any of its Restricted Subsidiaries (including
any disposition by means of a merger, consolidation or similar transaction)
other than (i) a disposition by a Restricted Subsidiary to the Company or by the
Company or a Restricted Subsidiary to a Restricted Subsidiary, (ii) a
disposition of inventory in the ordinary course of business, (iii) a disposition
of obsolete or worn out equipment or equipment that is no longer useful in the
conduct of the business of the Company and its Restricted Subsidiaries and that
is disposed of in each case in the ordinary course of business, (iv) a transfer
involving assets with a Fair Market Value not in excess of $1 million, (v) any
sale of equity interests in, or Indebtedness or other securities of, an
Unrestricted Subsidiary, and (vi) a disposition of all or substantially all of
the assets of the Company in a manner permitted pursuant to the provisions
described under "Certain Covenants-- Merger and Consolidation"; and (vii) a
disposition of Accounts pursuant to a Permitted Receivables Transaction.
"Average Life" means, as of the date of determination, with respect to any
Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the sum
of the products of the numbers of years from the date of determination to the
dates of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to Preferred Stock multiplied by the
amount of such payment by (ii) the sum of all such payments.
"Board of Directors" means either the Board of Directors of the Company or
any committee of such Board of Directors duly authorized to act hereunder.
"Business Day" means a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
close.
"Capital Stock" means (i) any and all shares, interests, participations or
other equivalents of or interests in (however designated) corporate stock,
including, without limitation, shares of preferred or preference stock, (ii) all
partnership interests (whether general or limited) in any Person which is a
partnership, (iii) all membership interests or limited liability company
interests in any limited liability company, and (iv) all equity or ownership
interests in any Person of any other type.
"Capitalized Lease Obligations" means, without duplication, all monetary
obligations of the Company or any of its Restricted Subsidiaries under any
leasing or similar arrangement which, in accordance with GAAP, would be
classified as capitalized leases and, for purposes of the Indenture, the amount
of such obligations shall be the capitalized amount thereof, determined in
accordance with GAAP, and the stated maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment of a
penalty.
"Change of Control" means the occurrence of any of the following events:
(i) the failure of the Sponsors, collectively, to own, free and clear of
all Liens or other encumbrances, an aggregate of at least 40% of the
outstanding voting shares of Capital Stock of the Parent on a fully diluted
basis;
(ii) the failure of one of either the Permitted ARTAL Investor Group or
Flowers, as the case may be, to own, directly or indirectly through wholly
owned Subsidiaries, free and clear of all
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Liens, at least 25% of the outstanding voting shares of Capital Stock of the
Parent on a fully diluted basis;
(iii) any "person" or "group" (as such terms are used in Rule 13d-5
under the Exchange Act, and Sections 13(d) and 14(d) of the Exchange Act) of
persons becomes, directly or indirectly, in a single transaction or in a
related series of transactions by way of merger, consolidation, or other
business combination or otherwise, the "beneficial owner" (as such term is
used in Rule 13d-3 of the Exchange Act) of voting shares of Capital Stock of
the Parent representing a percentage of the outstanding voting shares of
Capital Stock of the Parent on a fully-diluted basis that is equal to or
higher than the highest percentage of such outstanding voting shares of
Capital Stock then owned, individually, by either the Permitted ARTAL
Investor Group or Flowers, as the case may be;
(iv) the failure of the Parent to own, free and clear of all Liens
(other than Liens to secure any Senior Indebtedness), 100% of the
outstanding voting shares of Capital Stock of the Company on a fully diluted
basis other than as a consequence of a merger of the Company with or into
the Parent; or
(v) during any period of 24 consecutive months, individuals who at the
beginning of such period constituted the Board of Directors of the Parent
(together with any new directors whose election to such Board or whose
nomination for election by the stockholders of the Parent was approved by a
vote of a majority of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute
a majority of the Board of Directors of the Parent then in office.
For the purposes of clauses (i), (ii), (iii) and (v) of this definition, the
term Parent shall include the Company from and after the date of the merger, if
any, of the Parent with or into the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission.
"Commodity Hedging Obligations" means, with respect to any Person, all
liabilities of such Person under commodity hedging agreements, and all other
agreements or arrangements designed to protect such Person against fluctuations
in the cost and supply of critical commodities, including flour, sugar and
packaging materials, required in a Related Business of the Company and its
Restricted Subsidiaries.
"Consolidated Cash Flow" for any period means the Consolidated Net Income of
the Company and its consolidated Restricted Subsidiaries for such period, plus
the following to the extent deducted in calculating such Consolidated Net
Income: (i) income tax expense; (ii) Consolidated Interest Expense; (iii)
depreciation expense; (iv) amortization expense; and (v) non-cash expenses
related to employee benefits, in each case for such period.
"Consolidated Coverage Ratio," as of any date of determination, means the
ratio of (i) the aggregate amount of Consolidated Cash Flow for the period
consisting of the most recent four consecutive fiscal quarters ending prior to
the date of such determination to (ii) Consolidated Interest Expense for such
period; provided, however, that (1) if the Company or any of its Restricted
Subsidiaries has incurred any Indebtedness since the beginning of such period
that remains outstanding or if the transaction giving rise to the need to
calculate the Consolidated Coverage Ratio is an incurrence of Indebtedness, or
both, Consolidated Cash Flow and Consolidated Interest Expense for such period
shall be calculated after giving effect on a pro forma basis to such
Indebtedness as if such Indebtedness had been incurred on the first day of such
period and the discharge of any other Indebtedness repaid, repurchased, defeased
or otherwise discharged with the proceeds of such new Indebtedness as if such
discharge had occurred on the first day of such period, (2) if since the
beginning of such period the Company or any of its Restricted Subsidiaries shall
have made any Asset Disposition, Consolidated Cash Flow for such period shall be
reduced by an amount equal to the Consolidated Cash
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Flow (if positive) attributable to the assets which are the subject of such
Asset Disposition for such period or increased by an amount equal to the
Consolidated Cash Flow (if negative) attributable thereto for such period, and
Consolidated Interest Expense for such period shall be reduced by an amount
equal to the Consolidated Interest Expense attributable to any Indebtedness of
the Company or any of its Restricted Subsidiaries repaid, repurchased, defeased
or otherwise discharged with respect to the Company and its continuing
Restricted Subsidiaries in connection with such Asset Disposition for such
period (or, if the Capital Stock of any Restricted Subsidiary of the Company is
sold, the Consolidated Interest Expense for such period directly attributable to
the Indebtedness of such Restricted Subsidiary to the extent the Company and its
continuing Restricted Subsidiaries are no longer liable for such Indebtedness
after such sale), (3) if since the beginning of such period the Company or any
of its Restricted Subsidiaries (by merger or otherwise) shall have made an
Investment in any Restricted Subsidiary of the Company (or any Person which
becomes a Restricted Subsidiary of the Company) or an acquisition of assets,
including any Investment in a Restricted Subsidiary of the Company or any
acquisition of assets occurring in connection with a transaction causing a
calculation to be made hereunder, which constitutes all or substantially all of
an operating unit of a business, Consolidated Cash Flow and Consolidated
Interest Expense for such period shall be calculated after giving pro forma
effect thereto (including the incurrence of any Indebtedness) as if such
Investment or acquisition occurred on the first day of such period, and (4) if
since the beginning of such period any Person (that subsequently became a
Restricted Subsidiary of the Company or was merged with or into the Company or
any Restricted Subsidiary of the Company since the beginning of such period)
shall have made any Asset Disposition or any Investment or acquisition of assets
that would have required an adjustment pursuant to clause (2) or (3) above if
made by the Company or a Restricted Subsidiary of the Company during such
period, Consolidated Cash Flow and Consolidated Interest Expense for such period
shall be calculated after giving pro forma effect thereto as if such Asset
Disposition, Investment or acquisition occurred on the first day of such period.
For purposes of this definition, whenever pro forma effect is to be given to an
acquisition of assets, the amount of income or earnings relating thereto and the
amount of Consolidated Interest Expense associated with any Indebtedness
incurred in connection therewith, the pro forma calculations shall be determined
in good faith by a responsible financial or accounting Officer of the Company.
If any Indebtedness bears a floating rate of interest and is being given pro
forma effect, the interest expense on such Indebtedness shall be calculated as
if the rate in effect on the date of determination had been the applicable rate
for the entire period (taking into account any Interest Rate Agreement
applicable to such Indebtedness if such Interest Rate Agreement has a remaining
term in excess of 12 months).
"Consolidated Current Liabilities," as of the date of determination, means
the aggregate amount of liabilities of the Company and its Restricted
Subsidiaries which may properly be classified as current liabilities (including
taxes accrued as estimated), after eliminating (i) all inter-company items
between the Company and any Subsidiary and (ii) all current maturities of
long-term Indebtedness, all as determined in accordance with GAAP.
"Consolidated Interest Expense" means, for any period, the total interest
expense of the Company and its Restricted Subsidiaries, plus, to the extent not
included in such interest expense, (i) interest expense attributable to
Capitalized Lease Obligations, (ii) amortization of debt discount and debt
issuance cost, (iii) capitalized interest, (iv) non-cash interest expense, (v)
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing, (vi) interest actually paid by the
Company or any such Restricted Subsidiary under any Guarantee of Indebtedness or
other obligation of any other Person, (vii) net costs associated with Currency
Agreements and Interest Rate Agreements (including amortization of fees), (viii)
interest (or other fees in the nature of interest or discount accrued and paid
or payable in cash) in respect of the Permitted Receivables Transaction, and
(ix) the product of (a) all Preferred Stock dividends in respect of all
Preferred Stock of Restricted Subsidiaries of the Company and Disqualified
Capital Stock of the Company held by Persons other than the Company or a
Restricted Subsidiary multiplied by (b) a fraction, the numerator of which is
one and the denominator of which is one minus the then current
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combined federal, state and local statutory tax rate of the Company, expressed
as a decimal, in each case, determined on a consolidated basis in accordance
with GAAP.
"Consolidated Net Income" means, for any period, the net income (loss) of
the Company and its consolidated Restricted Subsidiaries; provided, however,
that there shall not be included in such Consolidated Net Income: (i) any net
income (loss) of any Person if such Person is not a Restricted Subsidiary,
except that (A) subject to the limitations contained in clause (iv) below, the
Company's equity in the net income of any such Person for such period shall be
included in such Consolidated Net Income up to the aggregate amount of cash
actually distributed by such Person during such period to the Company or a
Restricted Subsidiary as a dividend or other distribution (subject, in the case
of a dividend or other distribution to a Restricted Subsidiary, to the
limitations contained in clause (iii) below) and (B) the Company's equity in a
net loss of any such Person for such period shall be included in determining
such Consolidated Net Income; (ii) any net income (loss) of any person acquired
by the Company or a Restricted Subsidiary in a pooling of interests transaction
for any period prior to the date of such acquisition; (iii) any net income
(loss) of any Restricted Subsidiary if such Restricted Subsidiary is subject to
restrictions, directly or indirectly, on the payment of dividends or the making
of distributions by such Restricted Subsidiary, directly or indirectly, to the
Company, except that (A) subject to the limitations contained in (iv) below, the
Company's equity in the net income of any such Restricted Subsidiary for such
period shall be included in such Consolidated Net Income up to the aggregate
amount of cash that could have been distributed by such Restricted Subsidiary
during such period to the Company or another Restricted Subsidiary as a dividend
(subject, in the case of a dividend that could have been made to another
Restricted Subsidiary, to the limitation contained in this clause) and (B) the
Company's equity in a net loss of any such Restricted Subsidiary for such period
shall be included in determining such Consolidated Net Income; (iv) any gain or
loss realized upon the sale or other disposition of any assets of the Company or
its consolidated Restricted Subsidiaries which are not sold or otherwise
disposed of in the ordinary course of business and any gain or loss realized
upon the sale or other disposition of any Capital Stock of any Person; (v) any
extraordinary gain or loss; and (vi) the cumulative effect of a change in
accounting principles.
"Consolidated Net Tangible Assets" means, as of any date of determination,
as applied to the Company, the total amount of assets (less accumulated
depreciation or amortization, allowances for doubtful receivables, other
applicable reserves and other properly deductible items) which would appear on a
consolidated balance sheet of the Company and its Restricted Subsidiaries,
determined on a consolidated basis in accordance with GAAP, and after giving
effect to purchase accounting and after deducting therefrom, to the extent
otherwise included, the amounts of: (i) Consolidated Current Liabilities; (ii)
minority interests in Subsidiaries held by any entity other than the Company or
a Restricted Subsidiary; (iii) excess of cost over fair value of assets of
businesses acquired, as determined in good faith by the Board of Directors; (iv)
any revaluation or other write-up in value of assets subsequent to January 26,
1996 as a result of a change in the method of valuation in accordance with GAAP;
(v) unamortized debt discount and expenses and other unamortized deferred
charges, goodwill, patents, trademarks, service marks, trade names, copyrights,
licenses, organization or developmental expenses and other intangible items;
(vi) treasury stock; and (vii) any cash set apart and held in a sinking or other
analogous fund established for the purpose of redemption or other retirement of
Capital Stock to the extent such obligation is not reflected in Consolidated
Current Liabilities.
"Consolidated Net Worth" means the total of the amounts shown on the balance
sheet of the Company and its consolidated Restricted Subsidiaries, determined on
a consolidated basis in accordance with GAAP, as of the end of the most recent
fiscal quarter of the Company ending prior to the taking of any action for the
purpose of which the determination is being made as (i) the par or stated value
of all outstanding Capital Stock of the Company plus (ii) paid in capital or
capital surplus relating to such Capital Stock plus (iii) any retained earnings
or earned surplus less (A) any accumulated deficit and (B) any amounts
attributable to Disqualified Capital Stock.
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"Credit Agent" means The Bank of Nova Scotia, in its capacity as
Administrative Agent for the lenders party to the Credit Agreement, or any
successor or successors thereto.
"Credit Agreement" means, collectively, the Amended and Restated Credit
Agreement, dated as of June 4, 1996, by and among the Company, the lenders named
therein, the co-agents named therein and The Bank of Nova Scotia as
Administrative Agent for the lenders, including any related notes, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, as such credit agreement and/or related documents may be amended,
restated, supplemented, renewed, replaced or otherwise modified from time to
time whether or not with the same agent or lenders and irrespective of any
changes in the terms and conditions thereof. Without limiting the generality of
the foregoing, the term "Credit Agreement" shall include any amendment,
amendment and restatement, renewal, extension, restructuring, supplement or
modification to the Credit Agreement and all refundings, refinancing and
replacements of any facility provided for therein, including any agreement or
agreements, (i) extending the maturity of any Indebtedness incurred thereunder
or contemplated thereby, (ii) adding or deleting borrowers or guarantors
thereunder or (iii) increasing the amount of Indebtedness incurred thereunder or
available to be borrowed thereunder to the extent permitted under the Indenture.
"Currency Agreement" means, in respect of a Person, any foreign exchange
contract, currency swap agreement or other similar agreement as to which such
Person is a party or a beneficiary.
"Default" means any event that is or, with the passage of time or the giving
of notice or both, would be an Event of Default.
"Designated Senior Indebtedness" means (i) the Credit Agreement and (ii) any
other Senior Indebtedness which, at the date of determination, has an aggregate
principal amount outstanding of, or under which, at the date of determination,
the holders thereof are committed to lend up to, at least $10.0 million and is
specifically designated by the Company in the instrument evidencing or governing
such Senior Indebtedness as "Designated Senior Indebtedness" for purposes of the
Indenture.
"Designated Subsidiary" means, individually, Keebler International Prep
Track & Field Invitational Foundation, an Illinois not-for-profit corporation,
Keebler Company Foundation, an Illinois not-for-profit corporation, and Keebler
Foreign Sales Corporation, a U.S. Virgin Islands corporation and collectively,
means all such corporations.
"Disqualified Capital Stock" means, with respect to any Person, any Capital
Stock of such Person which by its terms (or by the terms of any security into
which it is convertible or for which it is exchangeable) or upon the happening
of any event (i) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise, (ii) is convertible or exchangeable for Indebtedness or
Disqualified Capital Stock or (iii) is redeemable at the option of the holder
thereof, in whole or in part, in each case on or prior to the first anniversary
of the final Stated Maturity of the Exchange Notes.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means, with respect to any asset or property, the sale
value that would be obtained in an arm's-length transaction between an informed
and willing seller under no compulsion to sell and an informed and willing buyer
under no compulsion to buy as determined by the Board of Directors in good faith
and evidenced by a resolution of the Board of Directors.
"Flowers" means Flowers Industries, Inc., a Georgia corporation.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect from time to time, including those set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and
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pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession. All ratios and computations based on GAAP contained in
the Indenture shall be computed in conformity with GAAP as in effect on the date
of the Indenture.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person and any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation of any other Person (whether arising by virtue
of partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Indebtedness of the payment thereof or
to protect such obligee against loss in respect thereof (in whole or in part);
provided, however, 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.
"Guarantor" means (i) each of the Company's Restricted Subsidiaries existing
on the date hereof and (ii) each other Person that executes a guarantee of the
obligations of the Company under the Exchange Notes and the Indenture from time
to time, and their respective successors and assigns; provided, however, that
"Guarantor" shall not include any Person that is released from its Guarantee of
the obligations of the Company under the Exchange Notes and the Indenture.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication), (i) the principal of and premium (if any)
in respect of indebtedness of such Person for borrowed money, (ii) the principal
of and premium (if any) in respect of obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii) all obligations of
such Person in respect of letters of credit or other similar instruments
(including reimbursement obligations with respect thereto) (other than
obligations with respect to letters of credit securing obligations (other than
obligations described in clauses (i), (ii) and (v)) entered into in the ordinary
course of business of such Person to the extent that such letters of credit are
not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed
no later than the third business day following receipt by such Person of a
demand for reimbursement following payment on the letter of credit), (iv) all
obligations of such Person to pay the deferred and unpaid purchase price of
property or services (other than accounts payable to trade creditors arising in
the ordinary course of business), which purchase price is due more than six
months after the date of placing such property in service or taking delivery and
title thereto or the completion of such services, (v) all Capitalized Lease
Obligations of such Person, (vi) all Indebtedness of other Persons secured by a
Lien on any asset of such Person, whether or not such Indebtedness is assumed by
such Person; provided, however, that the amount of Indebtedness of such Person
shall be the lesser of (A) the Fair Market Value of such asset at such date of
determination or (B) the amount of such Indebtedness of such other Persons,
(vii) all Indebtedness of other Persons to the extent Guaranteed by such Person,
(viii) the amount of all obligations of such Person with respect to the
redemption, repayment or other repurchase of any Disqualified Capital Stock or,
with respect to any Restricted Subsidiary of the Company, any Preferred Stock
(but excluding, in each case, any accrued dividends) and (ix) to the extent not
otherwise included in this definition, obligations of such Person under Currency
Agreements, Interest Rate Agreements and Commodity Hedging Obligations. The
amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and the
maximum liability, upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations at such date.
"Indenture" means the Indenture as amended from time to time.
"Interest Rate Agreement" means with respect to any Person any interest rate
protection agreement, interest rate future agreement, interest rate option
agreement, interest rate swap agreement,
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interest rate cap agreement, interest rate collar agreement, interest rate hedge
agreement or other similar agreement or arrangement as to which such Person is
party or a beneficiary.
"Investment" in any Person means any direct or indirect advance, loan (other
than advances to customers in the ordinary course of business that are recorded
as accounts receivable on the balance sheet of such Person) or other extension
of credit (including by way of Guarantee or similar arrangement, but excluding
any debt or extension of credit represented by a bank deposit other than a time
deposit) or capital contribution to (by means of any transfer of cash or other
property to others or any payment for property or services for the account or
use of others), or any purchase or acquisition of Capital Stock, Indebtedness or
other similar instruments issued by such Person.
"Issue Date" means June 25, 1996.
"Lien" means any security interest, mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
charge against or interest in property, or any filing or recording of any
instrument or document in respect of the foregoing, to secure payment of a debt
or performance of an obligation or other priority or preferential arrangement of
any kind or nature whatsoever.
"Material Subsidiary" means (i) any Subsidiary of the Company which is a
"significant subsidiary" as defined in Rule 1-02(v) of Regulation S-X under the
Securities Act and the Exchange Act (as such Regulation is in effect on the date
hereof), and (ii) any other Subsidiary of the Company which is material to the
business, earnings, prospects, assets or condition, financial or otherwise, of
the Company and its Subsidiaries taken as a whole.
"Net Available Cash" from an Asset Disposition means cash payments received
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise, but only as and when
received, but excluding any other consideration received in the form of
assumption by the acquiring Person of Indebtedness or other obligations relating
to the properties or assets that are the subject of such Asset Disposition or
received in any other noncash form) therefrom, in each case net of (i) all
legal, title and recording tax expenses, commissions and other fees and expenses
incurred, and all federal, state, foreign and local taxes required to be paid or
accrued as a liability under GAAP, as a consequence of such Asset Disposition,
(ii) all payments made on any Indebtedness which is secured by any assets
subject to such Asset Disposition, in accordance with the terms of any Lien upon
such assets, or which must by its terms, or in order to obtain a necessary
consent to such Asset Disposition, or by applicable law, be repaid out of the
proceeds from such Asset Disposition, (iii) all distributions and other payments
required to be made to any Person owning a beneficial interest in assets subject
to sale or minority interest holders in Subsidiaries or joint ventures as a
result of such Asset Disposition and (iv) the deduction of appropriate amounts
to be provided by the seller as a reserve, in accordance with GAAP, against any
liabilities associated with the assets disposed of in such Asset Disposition and
retained by the Company or any Restricted Subsidiary of the Company after such
Asset Disposition.
"Net Cash Proceeds," with respect to any issuance or sale of Capital Stock,
means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result of such issuance or sale.
"Officer" means the Chairman of the Board of Directors, the Vice Chairman,
the President, any Vice President (whether or not designated by a number or
numbers or a word or words added before or after the title "Vice President"),
the Treasurer, the Secretary or the Assistant Secretary of the Company.
"Officers' Certificate" means a certificate signed by the Chairman of the
Board of Directors, the Vice Chairman or the President or any Vice President
(whether or not designated by a number or
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numbers or a word or words added before or after the title "Vice President") and
by the Treasurer or the Secretary or any Assistant Secretary of the Company and
delivered to the Trustee. Each such certificate shall comply with Section 314 of
the Trust Indenture Act and include the statements provided for in the
Indenture.
"Opinion of Counsel" means an opinion in writing signed by legal counsel who
may be an employee of or counsel to the Company or who may be other counsel
satisfactory to the Trustee. Each such opinion shall comply with Section 314 of
the Trust Indenture Act and include the statements provided for in the
Indenture, if and to the extent required hereby.
"Parent" means INFLO Holdings Corporation, a Delaware corporation.
"Permitted ARTAL Investor Group" means ARTAL or any of its direct or
indirect wholly owned Subsidiaries and ARTAL Group S.A., a Luxembourg
corporation or any of its direct or indirect wholly owned Subsidiaries.
"Permitted Investment" means an Investment by the Company or any of its
Subsidiaries in (i) a Restricted Subsidiary of the Company or a Person which
will, upon making such Investment, become a Restricted Subsidiary; provided,
however, that the primary business of such Subsidiary is a Related Business;
(ii) another Person if as a result of such Investment such other Person is
merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company or a Subsidiary of the Company;
provided, however, that such Person's primary business is a Related Business;
(iii) Temporary Cash Investments; (iv) receivables owing to the Company or any
of its Subsidiaries, if created or acquired in the ordinary course of business
and payable or dischargeable in accordance with customary trade terms; (v)
payroll, travel and similar advances to cover matters that are expected at the
time of such advances ultimately to be treated as expenses for accounting
purposes and that are made in the ordinary course of business; (vi) loans or
advances to employees made in the ordinary course of business not in excess of
$2.5 million outstanding at any time; (vii) stock, obligations or securities
received in settlement of debts created in the ordinary course of business and
owing to the Company or any of its Subsidiaries or in satisfaction of judgments
or claims; (viii) Currency Agreements, Interest Rate Agreements, Commodity
Hedging Obligations which are entered into by the Company for bona fide hedging
purposes (as determined in good faith by the Board of Directors or senior
management of the Company) with respect to Indebtedness of the Company incurred
without violation of the Indenture or to customary commercial transactions of
the Company entered into in the ordinary course of business; (ix) any Investment
(other than a Temporary Cash Investment) evidenced by securities or other assets
received in connection with an Asset Disposition pursuant to the provisions of
"--Limitations on Sales of Assets and Subsidiary Stock"; (x) any Investment that
is permitted by and made in accordance with the provisions of paragraph (b) of
the covenant described under "--Transactions with Affiliates" (except
transactions described in clause (i) of such paragraph); or (xi) Investments,
the payment for which consists exclusively of Equity Interests (exclusive of
Disqualified Capital Stock) in the Company.
"Permitted Receivables Transaction" means any transaction providing for the
sale or financing of Accounts to the extent (i) the aggregate principal amount
outstanding of such financing (whether pursuant to a sale or a financing) does
not exceed at any time $145.0 million and (ii) recourse at any time to the
Company and its Subsidiaries for credit losses (i.e. defaults) on account of
sold Accounts shall not exceed $35.0 million.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, government
or any agency or political subdivision hereof or any other entity.
"Preferred Stock," as applied to the Capital Stock of any corporation, means
Capital Stock of any class or classes (however designated) which is preferred as
to the payment of dividends, or as to the
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distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such corporation, over shares of Capital Stock of any other class
of such corporation.
"principal" of an Exchange Note means the principal of the Exchange Note
plus the premium, if any, payable on the Exchange Note which is due or overdue
or is to become due at the relevant time.
"property" of any Person means all types of real, personal, tangible,
intangible or mixed property owned by such Person whether or not included in the
most recent consolidated balance sheet of such Person under GAAP.
"Public Equity Offering" means an underwritten primary public offering for
the account of the Company (which term shall be deemed for the purpose of this
definition to include the Parent if, in connection with or in anticipation of
such public offering, the Company shall have been merged with and into the
Parent) of Capital Stock (or other voting shares or voting interests) of the
Company pursuant to an effective registration statement (other than a
registration statement on Form S-4, S-8 or any successor or similar forms) under
the Securities Act.
"Receivables Co." means any special purpose, bankruptcy-remote, wholly-owned
Subsidiary of the Company organized after the date hereof (or such other Person
designated by the Company) that purchases Accounts generated by the Company or
any of its Subsidiaries in connection with a Permitted Receivables Transaction.
"Receivables Proceeds" means, with respect to a Permitted Receivables
Transaction, the proceeds received from such Permitted Receivables Transaction.
"Refinancing Indebtedness" means Indebtedness issued in exchange for, or the
proceeds of which are used to extend, refinance, renew, replace or refund any
Indebtedness permitted to be incurred under the covenant described under
"--Limitations on Indebtedness".
"Related Business" means the businesses in which the Company and its
Subsidiaries are engaged on the date of the Indenture and any business which is
incidental, similar or related thereto.
"Reorganization Securities" means, with respect to any reorganization,
composition, arrangement, adjustment or readjustment of the Company or any
Guarantor or of their respective securities, securities of the Company or such
Guarantor as reorganized or readjusted that are subordinated, at least to the
same extent as the Exchange Notes, to the payment of all outstanding Senior
Indebtedness after giving effect to such plan of reorganization or readjustment;
provided, however, that (a) in the case of debt securities, (i) such securities
shall not provide for amortization (including sinking fund and mandatory
prepayment provisions) commencing prior to six months following the final
scheduled maturity of all Senior Indebtedness of the Company or such Guarantor
(as modified by such plan of reorganization or readjustment), as the case may
be, (ii) if the rate of interest on such securities is fixed, such rate of
interest shall not exceed the greater of (A) the rate of interest on the
Exchange Notes and (B) the sum of (x) the weighted average rate of interest on
the Indebtedness under the Credit Agreement on the effective date of such plan
of reorganization or readjustment and (y) the difference (such difference, the
"Interest Differential") between the rate of interest on the Exchange Notes and
the weighted average rate of interest on Indebtedness under the Credit
Agreement, in each case immediately prior to the commencement of such
reorganization, composition, arrangement, adjustment or readjustment, (iii) if
the rate of interest on such securities floats, such interest rate shall not
exceed at any time the sum of the weighted average interest rate on Indebtedness
under the Credit Agreement at such time and the Interest Differential, and (iv)
such securities shall not have covenants or default provisions materially more
beneficial to the holders of the Exchange Notes than those in effect with
respect to the Exchange Notes on their issue date and (b) in the case of all
securities (including debt securities), the distribution of such securities was
authorized by an order or decree of a court of competent jurisdiction and such
order gives effect to (and states in such order or decree that effect has been
given to) the subordination of such securities to all Senior Indebtedness of the
Company or such Guarantor not paid in full in cash in connection with such
reorganization; provided that all such Senior
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Indebtedness is assumed by the reorganized corporation, and the rights of the
holders of any such Senior Indebtedness are not, without the consent of such
holders, altered by such reorganization, which consent shall be deemed to have
been given if the holders of such Senior Indebtedness, individually or as a
class, shall have approved such reorganization.
"Representative" for any issue of Indebtedness shall mean the Person acting
as agent, trustee or in a similar representative capacity for the holders of
such Indebtedness, provided that if, and for so long as, any issue of
Indebtedness lacks such a representative, then the Representative for such issue
of Indebtedness shall at all such times constitute the holders of a majority in
outstanding principal amount of the respective issue of Indebtedness.
"Restricted Subsidiary" shall mean any Subsidiary other than an Unrestricted
Subsidiary.
"Secured Indebtedness" means any Indebtedness of the Company secured by a
Lien.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Indebtedness" means the principal of, premium (if any) and interest
(including interest accruing on or after the filing of any petitions in
bankruptcy or for reorganization relating to the Company regardless of whether
an allowed claim in such proceeding) on, and fees and other amounts owing in
respect of, the Credit Agreement and other Indebtedness of the Company or a
Guarantor which is permitted under the Indenture and whether outstanding on the
Issue Date or thereafter issued, unless, in the instrument creating or
evidencing the same or pursuant to which it is outstanding, it is provided that
the obligations of the Company or such Guarantor in respect of such Indebtedness
are not superior in right of payment to the Exchange Notes; provided, however,
that Senior Indebtedness will not include (i) any obligation of the Company or
any Guarantor to any Subsidiary of the Company or the Company, or (ii) any
Senior Subordinated Indebtedness or Subordinated Indebtedness.
"Senior Subordinated Indebtedness" means the Exchange Notes and any other
Indebtedness of the Company that specifically provides that such Indebtedness is
to rank pari passu with the Exchange Notes in right of payment and is not
subordinated by its terms in right of payment to any Indebtedness or other
obligation of the Company that is not Senior Indebtedness.
"Sponsors" means the Permitted ARTAL Investor Group and Flowers.
"Stated Maturity" means, with respect to any security, the date specified in
such security as the fixed date on which the payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision.
"Subordinated Indebtedness" means any Indebtedness of the Company (whether
outstanding on the Issue Date or thereafter incurred) that is subordinate or
junior in right of payment to the Exchange Notes pursuant to a written
agreement.
"Subsidiary" of any Person means any corporation, association, partnership
or other business entity of which more than 50% of the total voting power of
shares of Capital Stock or other interests (including partnership interests)
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by (i) such Person, (ii) such Person and one
or more Subsidiaries of such Person or (iii) one or more Subsidiaries of such
Person. Unless otherwise specified herein, each reference to a Subsidiary shall
refer to a Subsidiary of the Company.
"Temporary Cash Investments" means any of the following: (i) any Investment
in direct obligations of the United States of America or any agency thereof or
obligations Guaranteed by the United States of America or any agency thereof,
(ii) Investments in time deposit accounts, certificates of deposit and money
market deposits maturing within 180 days of the date of acquisition thereof
issued by a bank or trust company which is organized under the laws of the
United States of America, any state thereof or any foreign country recognized by
the United States of America having capital, surplus and
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undivided profits aggregating in excess of $500 million (or the foreign currency
equivalent thereof) and whose long-term debt, or whose parent holding company's
long-term debt, is rated "A" (or such similar equivalent rating) or higher by at
least one nationally recognized statistical rating organization (as defined in
Rule 436 under the Securities Act), (iii) repurchase obligations with a term of
not more than seven days for underlying securities of the types described in
clause (i) above entered into with a bank meeting the qualifications described
in clause (ii) above, or (iv) Investments in commercial paper, maturing not more
than 180 days after the date of acquisition, issued by a corporation (other than
an Affiliate of the Company) organized and in existence under the laws of the
United States of America or any foreign country recognized by the United States
of America with a rating at the time as of which any investment therein is made
of "P-1" (or higher) according to Moody's Investors Service, Inc. or "A-1" (or
higher) according to Standard and Poor's Ratings Group.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable or redeemable at the issuer's option.
"Unrestricted Subsidiary" means (i) Receivables Co., (ii) the Designated
Subsidiaries, and (iii) any Subsidiary (other than a Subsidiary which would
constitute a Material Subsidiary) that at the time of determination shall have
been designated an Unrestricted Subsidiary by the Board of Directors of the
Company in the manner provided below and which remains so designated at the time
of determination. The Board of Directors of the Company may, by a Board
resolution delivered to the Trustee, designate any Restricted Subsidiary of the
Company (other than a Material Subsidiary) (including any newly acquired or
newly formed Subsidiary of the Company) to be an Unrestricted Subsidiary unless
such Restricted Subsidiary owns any Capital Stock of, or owns or holds any Lien
on any property of, the Company or any Restricted Subsidiary, and provided that
no Default or Event of Default shall have occurred and be continuing at the time
of or after giving effect to such designation. The Board of Directors of the
Company may designate any Unrestricted Subsidiary to be a Restricted Subsidiary
of the Company, provided that (i) no Default or Event of Default shall have
occurred and be continuing at the time of or after giving effect to such
designation and (ii) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately following such designation would, if incurred at such
time, have been permitted to be incurred for all purposes of the Indenture. Any
designation by the Board of Directors of the Company pursuant to the Indenture
shall be evidenced to the Trustee by promptly filing with the Trustee a copy of
the Board resolutions giving effect to such designation and an Officer's
Certificate certifying that such designation complied with the foregoing
provisions.
"voting shares" of a Person means all classes of Capital Stock of such
Person then outstanding and normally entitled to vote in the election of
directors or managers.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
or Disqualified Capital Stock, as the case may be, at any date, the number of
years obtained by dividing (a) the sum of the products obtained by multiplying
(x) the amount of each then remaining installment, sinking fund, serial maturity
or other required payments of principal, including payment at final maturity, in
respect thereof, by (y) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the making of such payment,
by (b) the then outstanding principal amount or liquidation preference, as
applicable, of such Indebtedness or Disqualified Stock, as the case may be.
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BOOK-ENTRY; DELIVERY AND FORM
Except as set forth below, the Exchange Notes will initially be represented
by one or more permanent global certificates in definitive, fully registered
form (each a "Global Exchange Note"). Each Global Exchange Note will be
deposited on the Exchange Date with, or on behalf of, the Depository Trust
Company (the "Depository") and registered in the name of Cede & Co., as nominee
of the Depository, or will remain in the custody of the Trustee under the
Indenture, pursuant to the FAST Balance Certificate Agreement between the
Depository and the Trustee. Each Global Exchange Note will be subject to certain
restrictions on transfer and will bear the legend regarding such restrictions
set forth herein under the heading "Transfer Restrictions."
Holders of Exchange Notes who elect to take physical delivery of their
certificates instead of holding their interests through the Global Exchange Note
(collectively referred to herein as the "Non-Global Holders") will be issued in
registered form (a "Certificated Exchange Note"). Upon the transfer of any
Certificated Exchange Note initially issued to a Non-Global Holder, such
Certificated Exchange Note will, unless the transferee requests otherwise or a
Global Exchange Note has previously been exchanged in whole for Certificated
Exchange Notes, be exchanged for an interest in such Global Exchange Note.
The Depository has advised the Company that it is (i) a limited purpose
trust company organized under the laws of the State of New York, (ii) a member
of the Federal Reserve System, (iii) a "clearing corporation" within the meaning
of the Uniform Commercial Code, as amended and (iv) a "Clearing Agency"
registered pursuant to Section 17A of the Exchange Act. The Depository was
created to hold securities for its participants (collectively, the
"Participants") and facilitates the clearance and settlement of securities
transactions between Participants through electronic book-entry changes to the
accounts of its Participants, thereby eliminating the need for physical transfer
and delivery of certificates. The Participants include securities brokers and
dealers (including the Initial Purchasers), banks and trust companies, clearing
corporations and certain other organizations. Access to the Depository's system
is also available to other entities such as banks, brokers, dealers and trust
companies (collectively, the "Indirect Participants") that clear through or
maintain a custodial relationship with a Participant, either directly or
indirectly. QIBs may elect to hold Notes purchased by them through the
Depository. QIBs who are not Participants may beneficially own securities held
by or on behalf of the Depository only through Participants or Indirect
Participants.
GLOBAL EXCHANGE NOTE
The Company expects that pursuant to procedures established by the
Depository (i) upon the issuance of the Global Exchange Note, the Depository or
its custodian will credit the accounts of Participants designated by the Initial
Purchasers with an interest in the Global Exchange Note and (ii) ownership of
beneficial interests in the Global Exchange Note will be shown on, and the
transfer of ownership thereof will be effected only through, records maintained
by the Depository or its nominee (with respect to the interests of Participants)
and the records of Participants and the Indirect Participants (with respect to
interests of persons other than Participants).
So long as the Depository or its nominee is the registered owner of the
Global Exchange Note, the Depository or such nominee, as the case may be, will
be considered the sole owner or Holder of the Exchange Notes represented by the
Global Exchange Note for all purposes under the Indenture. No beneficial owner
of an interest in the Global Exchange Note will be able to transfer that
interest except in accordance with the Depository's procedures, in addition to
those provided for under the Indenture with respect to the Exchange Notes.
Payments with respect to the principal of, premium, if any, and interest on
any Exchange Notes represented by the Global Exchange Note on the applicable
record date will be payable by the Trustee
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to or at the direction of the Depository or its nominee in its capacity as the
registered Holder of the Global Exchange Note representing such Exchange Notes
under the Indenture. None of the Company, the Trustee or any paying agent will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of Exchange Notes by the Depository, or for
maintaining, supervising or reviewing any records of the Depository relating to
such Exchange Notes. The Company expects that the Depository or its nominee,
upon receipt of any payment of principal, premium, if any, or interest in
respect of the Global Exchange Note will credit Participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of the Global Exchange Note as shown on the records of the
Depository or its nominee. Payments by the Participants and the Indirect
Participants to the beneficial owners of the Exchange Notes will be governed by
standing instructions and customary practice, as is now the case with securities
held for the account of customers registered in the names of nominees for such
customers, and will be the responsibility of the Participants or the Indirect
Participants, as the case may be.
Transfers between Participants will be effected in the ordinary way through
the Depository's funds system in accordance with the Depository's rules and will
be settled in federal funds. If a holder requires physical delivery of a
Certificated Security for any reason, including to sell Exchange Notes to
persons in states that require physical delivery of the Exchange Notes, or to
pledge such securities, such holder must transfer its interest in the Global
Exchange Note in accordance with the normal procedures of the Depository and the
procedures set forth in the Indenture.
The Depository has advised the Company that it will take any action
permitted to be taken by a holder of Exchange Notes (including the presentation
of Exchange Notes for exchange as described below) only at the direction of one
or more Participants to whose account the Depository's interests in the Global
Note are credited and only in respect of such portion of the aggregate principal
amount of Exchange Notes as to which such Participant or Participants has or
have given such direction. However, if there is an Event of Default under the
Indenture, the Depository will exchange the Global Exchange Note for
Certificated Exchange Notes, which it will distribute to its Participants.
Although the Depository has agreed to the foregoing procedures in order to
facilitate transfers of interests in the Global Exchange Note among
Participants, it is under no obligation to perform such procedures, and such
procedures may be discontinued at any time. Neither the Company nor the Trustee
nor any paying agent will have any responsibility for the performance by the
Depository or its Participants or Indirect Participants of their respective
obligations under the rules and procedures governing their operations.
CERTIFICATED EXCHANGE NOTES
If (i) the Company notifies the Trustee in writing that the Depository is no
longer willing or able to act as a depository and the Company is unable to
locate a qualified successor depository within 90 days or (ii) the Company, at
its option, notifies the Trustee in writing that it elects to cause the issuance
of Exchange Notes in definitive form under the Indenture, then, upon surrender
by the Depository of the Global Exchange Note, Certificated Exchange Notes will
be issued to each person that the Depository identifies as the beneficial owner
of the Exchange Notes represented by the Global Exchange Note.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
EXCHANGE OF NOTES
The exchange of Exchange Notes for Notes in the Exchange Offer will not
constitute a taxable event to holders for United States federal income tax
purposes. Consequently, no gain or loss will be recognized by a holder upon
receipt of an Exchange Note, the holding period of the Exchange Note will
include the holding period of the Note and the basis of the Exchange Note will
be the same as the basis of the Note immediately before the exchange.
IN ANY EVENT, PERSONS CONSIDERING THE EXCHANGE OF NOTES FOR EXCHANGE NOTES
SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE UNITED STATES FEDERAL
INCOME TAX CONSEQUENCES IN LIGHT OF THEIR PARTICULAR SITUATIONS AS WELL AS ANY
CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION.
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
EXCHANGE OFFER
The Company, the Guarantors and the Initial Purchasers entered into the
Registration Rights Agreement on June 25, 1996 (the "Issuance Date"), pursuant
to which the Company and the Guarantors agreed, for the benefit of the holders
of Notes, that they would, at the expense of the Company and the Guarantors, (i)
file the Exchange Offer Registration Statement with the Commission with respect
to the Exchange Offer to exchange the Notes for Exchange Notes having terms that
are identical in all material respects to the terms of the Notes (except that
the Exchange Notes would not contain terms with respect to transfer
restrictions) within 45 days after the Issuance Date, (ii) use their best
efforts to cause the Exchange Offer Registration Statement to be declared
effective by the Commission under the Securities Act within 120 days after the
Issuance Date and (iii) use their best efforts to consummate the Exchange Offer
within 150 days after the Issuance Date. Upon the Exchange Offer Registration
Statement being declared effective, the Company agreed to offer the Exchange
Notes in exchange for surrender of the Notes. The Company will keep the Exchange
Offer open for at least 20 business days (or longer if required by applicable
law) after the date that notice of the Exchange Offer is mailed to the holders
of Notes. For each Note surrendered to the Company pursuant to the Exchange
Offer, the holder of a Note who surrendered such Note will receive an Exchange
Note having a principal amount equal to that of the surrendered Note. Interest
on each Exchange Note will accrue from the last interest payment date on which
interest was paid on the Note surrendered in exchange therefor or, if no
interest has been paid on such Note, from the original issue date of such Note.
Under existing Commission interpretations, the Exchange Notes would generally be
freely transferable by holders thereof, other than affiliates of the Company,
after the Exchange Offer without further registration under the Securities Act
(subject to certain representations required to be made by each Holder, as set
forth below in the immediately following paragraph; provided, that in the case
of broker-dealers ("Participating Broker-Dealers"), a prospectus meeting the
requirements of the Securities Act is delivered as required. The Commission has
taken the position that Participating Broker-Dealers may fulfill their
prospectus delivery requirements with respect to the Exchange Notes (other than
a resale of an unsold allotment from the original sale of the Notes) with the
prospectus contained in the Exchange Offer Registration Statement. The Company
and the Guarantors agreed to make available for a period of up to 180 days after
consummation of the Exchange Offer a prospectus meeting the requirements of the
Securities Act to any Participating Broker-Dealer and any other persons, if any,
with similar prospectus delivery requirements, for use in connection with any
resale of Exchange Notes. A Participating Broker-Dealer or any other person that
delivers such a prospectus to purchasers in connection with such resales will be
subject to certain of the civil liability provisions under the Securities Act
and will be bound by the provisions of the Registration Rights Agreement
(including certain indemnification rights and obligations thereunder).
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The Registration Statement of which this Prospectus forms a part constitutes
the Exchange Offer Registration Statement for the Exchange Offer.
Each holder of a Note who wishes to exchange Notes for Exchange Notes in the
Exchange Offer will be required to make certain representations, including
representations that (i) any Exchange Notes to be received by it will be
acquired in the ordinary course of its business, (ii) it has no arrangement or
understanding with any person to participate in the distribution of the Exchange
Notes in violation of the provisions of the Securities Act, (iii) it is not a
broker-dealer that acquired Notes directly from the Company, (iv) it is not an
"affiliate" (as defined in Rule 405 under the Securities Act) of the Company or,
if it is such an affiliate, it will comply with the registration and prospectus
delivery requirements of the Securities Act to the extent applicable and (v) it
is not acting on behalf of any person who could not truthfully make the
foregoing representations.
If the holder of a Note is not a broker-dealer, it will be required to
represent that it is not engaged in, and does not intend to engage in, a
distribution of the Exchange Notes. If the Holder is a broker-dealer that will
receive Exchange Notes for its own account in exchange for Notes that were
acquired as a result of market-making activities or other trading activities, it
will be required to acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes.
SHELF REGISTRATION
If the Commission's policy with respect to exchange offers of the type
contemplated by subparagraph (a) changes such that the Company reasonably
determines that the Exchange Offer cannot be consummated, the Company and the
Guarantors agreed to file with the Commission, as soon as practicable after such
determination, a registration statement on an appropriate form under the
Securities Act, including therein a prospectus under cover of which, pursuant to
Rule 415 under the Securities Act, the holders of the Notes will be free to
offer and sell the Notes from time to time without restrictions or limitations
under the Securities Act (a "Shelf Registration Statement"). The Company and the
Guarantors agreed to use their best efforts to cause the Shelf Registration
Statement to become effective under the Securities Act on or prior to the later
of (x) the 120th calendar day after the Issuance Date or (y) the 45th calendar
day after the publication of the change in law or interpretation and to keep
effective the Shelf Registration Statement until the earlier of three years from
the Issuance Date or such shorter period ending when all Notes covered by the
Shelf Registration Statement have been sold in the manner set forth and as
contemplated in the Shelf Registration Statement or when the Notes become
eligible for resale pursuant to Rule 144 under the Securities Act without volume
restrictions. The Company agreed in the event of the filing of the Shelf
Registration Statement, to provide to each holder of a Note copies of the
prospectus that is a part of the Shelf Registration Statement, notify each such
holder when the Shelf Registration Statement has become effective and take
certain other actions as are required to permit unrestricted resales of the
Notes. A holder that sells its Notes pursuant to the Shelf Registration
Statement generally would be required to be named as a selling securityholder in
the related prospectus and to deliver a prospectus to purchasers, would be
subject to certain of the civil liability provisions under the Securities Act in
connection with such sales and would be bound by the provisions of the
Registration Rights Agreement that are applicable to such holder (including
certain indemnification rights and obligations thereunder).
ADDITIONAL INTEREST
In the event that (i) the Exchange Offer is not consummated on or prior to
the 150th calendar day following the Issuance Date or (ii) changes in law or the
applicable interpretation of the Commission staff do not permit the Company to
effect the Exchange Offer and a Shelf Registration Statement with respect to the
Notes is not declared effective under the Securities Act on or prior to the
later of (x) the 120th calendar day after the Issuance Date and (y) the 45th
calendar day after the publication of the change in law or interpretation, the
interest rate borne by the Notes shall be increased by one-half of
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one percent per annum following, in the case of clause (i) such 120- or 150-day
period, as the case may be or, in the case of clause (ii) such 45- or 120-day
period, as applicable. The aggregate amount of such increase from the original
interest rate pursuant to these provisions will in no event exceed one-half of
one percent per annum. Such increase will cease to be effective on the date of
consummation of the Exchange Offer or the effectiveness of a Shelf Registration
Statement, as the case may be.
Any amounts of additional interest due pursuant to the paragraph above will
be payable in cash, on the same original interest payment dates as the Notes.
The amount of additional interest will be determined by multiplying the
applicable additional interest rate by the principal amount of the affected
Notes of such Holders, multiplied by a fraction, the numerator of which is the
number of days such additional interest rate was applicable during such period
(determined on the basis of a 360-day year comprised of twelve 30-day months
and, in the case of a partial month, the actual number of days elapsed), and the
denominator of which is 360.
The foregoing description of the Registration Rights Agreement is a summary
only, does not purport to be complete and is qualified in its entirety by
reference to all provisions of the Registration Rights Agreement, which has been
filed as an exhibit to the Registration Statement of which this Prospectus is a
part.
As a result of the making of, and upon acceptance for exchange of all
validity tendered Notes pursuant to the terms of, the Exchange Offer, the
Company and the Guarantors will have fulfilled certain of their obligations
under the Registration Rights Agreement and accordingly, there will be no
increase in the interest rate on the Notes and the holders of the Notes will
have no further registration or other rights under such agreement.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account pursuant
to the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of Exchange Notes received in exchange for Notes where
such Notes were acquired as a result of market-making activities or other
trading activities. The Company and the Guarantors have agreed that, for a
period of 180 days after the Expiration Date, it will make this Prospectus, as
amended or supplemented, available to any broker-dealer for use in connection
with any such resale. In addition, until , 1996, all dealers
effecting transactions in the Exchange Notes may be required to deliver a
prospectus.
The Company will not receive any proceeds from any sale of Exchange Notes by
broker-dealers. Exchange Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the Exchange Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such broker-
dealer or the purchasers of any such Exchange Notes. Any broker-dealer that
resells Exchange Notes that were received by it for its own account pursuant to
the Exchange Offer and any broker or dealer that participates in a distribution
of such Exchange Notes may be deemed to be an "underwriter" within the meaning
of the Securities Act. The Letter of Transmittal states that, by acknowledging
that it will deliver and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
The Company will promptly send additional copies of this Prospectus and any
amendment or supplement to this Prospectus to any broker-dealer that requests
such documents in the Letter of Transmittal. The Company has agreed to pay all
expenses incident to the Exchange Offer (including the expenses of one counsel
for the holders of the Notes) other than commissions or concessions of any
brokers or dealers and will indemnify the holders of the Notes (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
LEGAL MATTERS
Certain legal matters will be passed upon for the Company and the Guarantors
by Simpson Thacher & Bartlett (a partnership which includes professional
corporations), New York, New York.
INDEPENDENT AUDITORS
The consolidated balance sheets of Keebler Cookie/Cracker Company (as
defined) as of December 30, 1995 and December 31, 1994, and the related
consolidated statements of operations, company deficit, and cash flows for the
three fiscal years ended December 30, 1995, included in this Prospectus, have
been included herein in reliance on the report of Coopers & Lybrand L.L.P.,
independent accountants, given on the authority of that firm as experts in
accounting and auditing.
The financial statements of Sunshine Biscuits, Inc. included in this
prospectus have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report appearing herein, and are included in reliance upon the
report of such firm given upon their authority as experts in accounting and
auditing.
110
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Keebler Corporation
Consolidated Balance Sheets at April 20, 1996 and for Predecessor at December 30,
1995............................................................................ F-2
Consolidated Statements of Operations at April 20, 1996 and for Predecessor at
April 22, 1995....................................................................... F-3
Consolidated Statements of Cash Flows at April 22, 1996 and for Predecessor at
April 22, 1995....................................................................... F-4
Notes to Consolidated Financial Statements....................................... F-5
Keebler Cookie/Cracker Company (as defined)
Report of Independent Accountants dated April 2, 1996.............................. F-8
Consolidated Balance Sheets at December 30, 1995 and December 31, 1994........... F-9
Consolidated Statements of Operations for the Years Ended December 30, 1995,
December 31, 1994 and January 1, 1994................................................ F-10
Consolidated Statements of Company Deficit for the Years Ended December 30, 1995,
December 31, 1994 and January 1, 1994................................................ F-11
Consolidated Statements of Cash Flows for the Years Ended December 30, 1995,
December 31, 1994 and January 1, 1994................................................ F-12
Notes to Consolidated Financial Statements....................................... F-13
Sunshine Biscuits, Inc.
Independent Auditors' Report dated May 15, 1996.................................... F-28
Balance Sheets--March 31, 1996 and 1995.......................................... F-29
Statements of Operations--Years Ended March 31, 1996, 1995 and 1994.............. F-30
Statements of Stockholder's Equity--Years Ended March 31, 1996, 1995 and 1994.... F-31
Statements of Cash Flows--Years Ended 1996, 1995 and 1994........................ F-32
Notes to Financial Statements--Years Ended March 31, 1996, 1995 and 1994......... F-33
</TABLE>
F-1
<PAGE>
KEEBLER CORPORATION
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR
------------
APRIL 20, DECEMBER 30,
1996 1995
--------- ------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents.......................................... $ 46,863 $ 2,945
Trade accounts and notes receivable................................ 88,029 102,957
Receivables from affiliates........................................ -- 3,214
Inventories........................................................ 58,631 58,271
Deferred income taxes.............................................. 42,243 24,579
Other.............................................................. 17,071 33,139
--------- ------------
Total current assets........................................... 252,837 225,105
Property, Plant, and Equipment, Net.................................. 409,916 372,743
Intangibles.......................................................... 138,113 52,639
Prepaid Pension...................................................... 44,523 23,588
Other Assets......................................................... 22,146 3,790
--------- ------------
Total assets................................................... $ 867,535 $ 677,865
--------- ------------
--------- ------------
LIABILITIES AND SHAREHOLDER'S EQUITY (DEFICIT)
Current Liabilities:
Commercial paper and revolving credit facilities................... $ -- $ 284,000
Current maturities of long-term debt............................... 17,822 22,846
Trade accounts payable............................................. 70,088 49,603
Accrued liabilities................................................ 170,952 117,606
Income taxes payable............................................... 988 22,037
Restructuring reserves............................................. -- 38,168
--------- ------------
Total current liabilities...................................... 259,850 534,260
Long-term Debt....................................................... 326,650 5,200
Notes Payable to Affiliate........................................... -- 105,000
Other Liabilities:
Deferred income taxes.............................................. 62,802 32,691
Postretirement/employment obligations.............................. 27,188 44,173
Deferred compensation.............................................. 16,864 16,281
Other.............................................................. 23,180 10,921
--------- ------------
Total other liabilities........................................ 130,034 104,066
Commitments and Contingencies
Consolidated Shareholder's Equity (Deficit):
Common Stock (1,000 shares issued and outstanding)................. 1,000 1,000
Additional paid-in capital......................................... 148,418 745,000
Intercompany with excluded businesses.............................. -- (517,562)
Retained earnings (deficit)........................................ 1,583 (299,099)
--------- ------------
Total shareholder's equity (deficit)........................... 151,001 (70,661)
--------- ------------
Total liabilities and shareholder's equity (deficit)........... $ 867,535 $ 677,865
--------- ------------
--------- ------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-2
<PAGE>
KEEBLER CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
TWELVE WEEKS ENDED
----------------------
APRIL 20, APRIL 22,
1996 1995
--------- ---------
<S> <C> <C>
Net Sales.............................................................. $ 335,259 $ 328,175
Costs and Expenses:
Cost of sales........................................................ 157,449 155,544
Selling, marketing, and administrative expenses...................... 166,536 172,216
--------- ---------
Income from Operations................................................. 11,274 415
Interest, Net.......................................................... 7,725 6,668
Income (Loss) before Income Taxes...................................... 3,549 (6,253)
Income tax expense................................................... 1,966 --
--------- ---------
Net Income (Loss)...................................................... $ 1,583 $ (6,253)
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE>
KEEBLER CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
TWELVE WEEKS ENDED
----------------------
APRIL 20, APRIL 22,
1996 1995
--------- ---------
<S> <C> <C>
Cash Flows Provided from (Used by) Operating Activities
Net income (loss).................................................... $ 1,583 $ (6,253)
Adjustments to reconcile net income to cash from operating
activities:
Depreciation and amortization...................................... 11,144 8,487
Changes in assets and liabilities:
Working capital adjustment paid by United Biscuits................... 32,609 --
Trade accounts and notes receivable, net............................. 7,411 (11,974)
Inventories.......................................................... (858) 1,661
Income taxes payable................................................. 988 --
Other current assets................................................. (825) (6,242)
Accounts payable and other current liabilities....................... (2,755) 5,690
Restructuring........................................................ -- (8,976)
Other, net............................................................. (2,519) (1,380)
--------- ---------
Cash provided from (used by) operating activities................ 46,778 (18,987)
Cash Flows Used by Investing Activities
Property additions................................................... (2,012) (11,235)
Proceeds from property disposals..................................... 786 626
--------- ---------
Cash used by investing activities................................ (1,226) (10,609)
Cash Flows Provided from (Used by) Financing Activities
Payment of long-term debt............................................ (803) (8,756)
Commercial paper and revolving credit facilities, net................ -- 59,400
Change in intercompany with excluded businesses...................... -- (29,688)
--------- ---------
Cash provided from (used by) financing activities.................. (803) 20,956
--------- ---------
Increase (decrease) in cash and cash equivalents................... 44,749 (8,640)
Cash and cash equivalents at beginning of period presented......... 2,114 11,301
--------- ---------
Cash and cash equivalents at end of period presented............... $ 46,863 $ 2,661
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE>
KEEBLER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. INTERIM FINANCIAL STATEMENTS
The unaudited interim consolidated financial statements included herein are
prepared pursuant to the rules and regulations for interim reporting under the
Securities Exchange Act of 1934. Accordingly, certain information and footnote
disclosures normally accompanying the annual financial statements have been
omitted. The interim financial statements and notes should be read in
conjunction with annual audited consolidated financial statements and notes
thereto. The accompanying unaudited interim consolidated financial statements
contain all adjustments, consisting only of normal adjustments, which in the
opinion of management are necessary for a fair statement of the results for the
interim periods. Results for the interim periods are not necessarily indicative
of results for the full year.
2. TRADE ACCOUNTS AND NOTES RECEIVABLE
Trade accounts and notes receivable are net of allowances of $4.2 million at
April 20, 1996 and $3.2 million at December 30, 1995.
3. PROPERTY, PLANT & EQUIPMENT
A summary of property, plant and equipment, including related accumulated
depreciation follows:
<TABLE>
<CAPTION>
APRIL 20, DECEMBER 30,
1996 1995
--------- ------------
<S> <C> <C>
(IN THOUSANDS)
Land................................................ $ 15,378 $ 8,825
Buildings........................................... 84,515 118,559
Machinery and equipment 249,404 490,186
Office furniture and fixtures....................... 31,029 47,791
Delivery equipment.................................. 4,138 5,869
Construction in progress............................ 33,348 37,255
--------- ------------
417,812 708,485
Accumulated depreciation............................ (7,896) (335,742)
--------- ------------
$ 409,916 $ 372,743
--------- ------------
--------- ------------
</TABLE>
4. SUPPLEMENTAL CASH FLOW DISCLOSURES
<TABLE>
<CAPTION>
FOR THE TWELVE WEEKS ENDED
----------------------------
APRIL 20, APRIL 22,
1996 1995
--------- ---------
<S> <C> <C>
(IN THOUSANDS)
Interest paid................................ $ 694 $ 3,823
Income taxes paid............................ $ 822 $ 732
</TABLE>
5. ACQUISITION OF KEEBLER COOKIE/CRACKER COMPANY BY INFLO HOLDINGS CORPORATION
On January 26, 1996, UB Investments (Netherlands) B.V. sold all the stock of
the ultimate parent of Keebler Cookie/Cracker Company, UB Investments US Inc.
(UBIUS) to INFLO Holdings Corporation (INFLO). Subsequent to the acquisition,
UBIUS changed its name to Keebler Corporation (the Company). The aggregate gross
purchase price of $487.5 million (excluding fees and expenses paid at closing of
approximately $15.3 million) was financed by $125.0 million in equity from INFLO
Holdings, $200.0 million in Senior Term Notes, $125.0 million in Increasing Rate
Notes, the assumption of $20.3 million in existing senior indebtedness of the
Company and a note payable (Seller Note) by INFLO Holdings Corporation to UB
Investments (Netherlands) B.V. for $32.5 million. The Seller Note does not bear
interest until January 26, 1999 and has been accounted for as a capital
contribution
F-5
<PAGE>
KEEBLER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)--(CONTINUED)
5. ACQUISITION OF KEEBLER COOKIE/CRACKER COMPANY BY INFLO HOLDINGS
CORPORATION--(CONTINUED)
to Keebler Corporation at a discounted value of $24.4 million. In addition,
Keebler Corporation, subsequent to the purchase by INFLO Holdings, received a
working capital adjustment of $32.6 million from United Biscuits pursuant to the
terms of the purchase agreement.
The acquisition of Keebler Corporation has been accounted for as a purchase.
Under purchase accounting the total purchase price and the fair value of
liabilities assumed has been allocated to the tangible and intangible assets of
Keebler Corporation based upon their respective fair values. The assigned values
reflected in the April 20, 1996 balance sheet include estimates which may be
revised during fiscal 1996. Using the current assigned values, the acquisition
resulted in goodwill of $138.9 million, which is being amortized over a 40-year
period.
6. DEBT COMMITMENTS
Long-term debt consists of the following as of April 20, 1996 (dollars in
thousands):
<TABLE>
<CAPTION>
INTEREST APRIL 20,
RATE FINAL MATURITY 1996
-------- ----------------- ---------
<S> <C> <C> <C>
Revolving Loan..................... 10,0000% January 31, 2002 $ --
Term-A Loan--swapped............... 7.7685% January 31, 2002 85,000
Term-A Loan--floating.............. 7.8800% January 31, 2002 15,000
Term-B Loan--swapped............... 8.2685% August 6, 2003 51,000
Term-B Loan--floating.............. 8.3800% August 6, 2003 9,000
Term-C Loan--swapped............... 8.5185% August 8, 2004 34,000
Term-C Loan--floating.............. 8.6300% August 8, 2004 6,000
Increasing Rate Notes.............. 12.0000% January 26, 1997 125,000
Other Senior....................... various 2001-2005 19,472
---------
344,472
Current maturities................. 17,822
---------
$ 326,650
---------
---------
</TABLE>
The Company's primary credit financing as of April 20, 1996 was provided by
a $305.0 million Credit Agreement consisting of a $105.0 million Revolving Loan
facility and three Term Loans (Term Loans A, B and C) aggregating $200.0
million. Interest on the Revolving Loans and Term Loans is calculated based upon
a Base Rate plus applicable margin. The Base Rate can at the Company's option be
1) the higher of the base domestic lending rate as established by the
Administrative Agent for the Lenders under the Credit Agreement, or the Federal
Funds Rate plus one-half of one-percent, or 2) a reserve percentage adjusted
LIBO Rate as offered by the Administrative Agent's office in London. Base Rate
loan interest rates fluctuate immediately based upon a change in the established
Base Rate by the Administrative Agent. LIBO Rate loans maintain a fixed rate of
interest based upon the one, two, three or six month rate elected by the Company
on the date the loan is converted to the LIBO Rate option. The applicable margin
for Revolving Loans and Term-A Loans was initially set at 1.75% for Base Rate
loans and 2.75% for LIBO Rate loans through July 26, 1996. Subsequent to July
26, 1996, the Base and LIBO Rate applicable margins will vary from .5%-1.75% and
1.50%-2.75%, respectively, based upon the relationship of debt to adjusted
earnings.
Any unused borrowings under the Revolving Loan facility are subject to a
commitment fee, which through July 26, 1996 is .5%. Subsequent to July 26, 1996
the commitment fee will vary from .375% - .5% based upon the relationship of
debt to adjusted earnings.
F-6
<PAGE>
KEEBLER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)--(CONTINUED)
6. DEBT COMMITMENTS--(CONTINUED)
As of April 20, 1996 the Company had a Revolving Loan facility with a
nominal available balance of $105.0 million. Actual available borrowings under
the Revolving Loan facility can be reduced by the level of qualifying working
capital as defined in the Company's Credit Agreement. As of April 20, 1996 the
gross available borrowings under the Revolving Loan facility were $103.3
million, based on the working capital calculation. This gross available balance
is further reduced by certain letters of credit totaling $10.9 million, leaving
available borrowings under the Revolving Loan facility of $92.4 million.
On January 30, 1996 the Company entered into a swap transaction with the
Bank of Nova Scotia, who also serves as the Administrative Agent for the Lenders
under the Credit Agreement. This swap transaction had the effect of converting
the base rate on $170.0 million of the Term Loans to a fixed rate obligation of
5.0185% plus applicable margin through February 1, 1999. The maturity date on
the swap transaction can be extended to February 1, 2001 at the option of the
Bank of Nova Scotia on January 28, 1999.
The Increasing Rate Notes were issued to finance the acquisition of the
Company and are intended to be replaced during 1996 through a private placement
offering and subsequent registration. The maturity of the Notes is subject to
extension. The Notes bear an initial rate of interest through January 25, 1997
of 12.0%. In the event the Notes are not replaced, the interest rate on the
Notes will increase to 14.5% by November 26, 1997. In the event the Notes have
not been replaced by January 26, 1997, Nomura Holding America Inc. will be
entitled to exercise warrants equal to 2.5% of the fully diluted outstanding
shares of common stock of the Company. In the event the Notes have not been
replaced by January 26, 1998, Nomura Holding America Inc. will be entitled to
exercise warrants equal to an additional 5% of the fully diluted outstanding
shares of common stock of the Company.
Other Senior debt of $8.9 million has been classified as a current maturity
of long-term debt pending any required amendments or modifications to the
obligations as a result of the sale of UBIUS and its subsidiaries.
7. FISCAL PERIODS PRESENTED
Keebler Corporation's first quarter of 1996 comprises the twelve weeks ended
April 20, 1996. Keebler Corporation's fiscal year typically consists of thirteen
four-week periods, with its first quarter consisting of four four-week periods.
Keebler Corporation's acquisition closed on the last day of the first four-week
period of Keebler's fiscal 1996, and therefore its first quarter 1996 consists
of the three four-week periods ended April 20, 1996. Comparable 1995 data has
been presented for the predecessor company for the three four-week period ended
April 22, 1995.
8. SUBSEQUENT EVENT--ACQUISITION OF SUNSHINE BISCUITS, INC.
On June 4, 1996, the Company acquired Sunshine Biscuits, Inc. (Sunshine)
from G.F. Industries, Inc. ("GFT") for an aggregate consideration of $171.6
million (excluding related fees and expenses paid at closing of approximately
$2.2 million). The Sunshine acquisition was funded by (i) $150.2 million in
cash, of which $36.2 million was provided by Keebler's existing cash sources and
$114.0 million was provided by borrowings under the Amended and Restated Credit
Agreement, and (ii) the issuance to GFI of approximately $23.6 million of INFLO
common stock and warrants, which was accounted for as a capital contribution.
These shares and warrants represent 13.2% of INFLO's Common Stock on a fully
diluted basis.
The acquisition of Sunshine has been accounted for as a purchase. Based upon
a preliminary purchase price allocation, the acquisition resulted in goodwill of
$122.9 million, which is being amortized over a 40-year perid.
F-7
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors and Shareholder of
UB Investments US Inc.
We have audited the accompanying consolidated balance sheets of Keebler
Cookie/Cracker Company, as defined in Note 1, as of December 30, 1995 and
December 31, 1994, and the related consolidated statements of operations,
company deficit, and cash flows for the three years in the period ended December
30, 1995. 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 in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Keebler
Cookie/Cracker Company at December 30, 1995 and December 31, 1994, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 30, 1995 in conformity with generally
accepted accounting principles.
As described in notes to the consolidated financial statements, in 1994 the
Company changed its method of accounting for postemployment benefits and spare
machinery and equipment parts and, in 1993, its method of accounting for
postretirement benefits other than pensions.
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
April 2, 1996
F-8
<PAGE>
KEEBLER COOKIE/CRACKER COMPANY
(AS DEFINED)
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 30, DECEMBER 31,
1995 1994
------------ ------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents.......................................... $ 2,945 $ 12,504
Trade accounts and notes receivable................................ 102,957 89,896
Receivables from affiliates........................................ 3,214 --
Inventories........................................................ 58,271 63,994
Deferred income taxes.............................................. 24,579 30,299
Other.............................................................. 33,139 33,393
------------ ------------
Total current assets........................................... 225,105 230,086
Property, Plant, and Equipment, Net.................................. 372,743 356,603
Goodwill............................................................. 52,639 54,292
Prepaid Pension...................................................... 23,588 24,543
Other Assets......................................................... 3,790 8,223
------------ ------------
Total assets................................................... $677,865 $673,747
------------ ------------
------------ ------------
LIABILITIES AND COMPANY DEFICIT
Current Liabilities:
Commercial paper and revolving credit facilities................... $284,000 $149,500
Current maturities of long-term debt............................... 22,846 4,868
Current maturities of note payable to affiliate.................... -- 25,000
Trade accounts payable............................................. 49,603 48,372
Accrued liabilities................................................ 117,606 111,085
Income taxes payable to affiliates................................. 22,037 23,341
Restructuring reserves............................................. 38,168 36,323
Accounts payable to affiliates..................................... -- 1,555
------------ ------------
Total current liabilities.................................... 534,260 400,044
Long-term Debt....................................................... 5,200 50,720
Notes Payable to Affiliate........................................... 105,000 525,000
Other Liabilities:
Deferred income taxes.............................................. 32,691 39,935
Postretirement/employment obligations.............................. 44,173 41,487
Restructuring reserves............................................. -- 31,457
Deferred compensation.............................................. 16,281 14,136
Other.............................................................. 10,921 9,829
------------ ------------
Total other liabilities...................................... 104,066 136,844
Commitments and Contingencies
Consolidated Company Deficit:
Capital............................................................ 746,000 301,000
Intercompany with excluded businesses.............................. (517,562) (437,795)
Retained deficit................................................... (299,099) (302,066)
------------ ------------
Total company deficit.......................................... (70,661) (438,861)
------------ ------------
Total liabilities and company deficit.......................... $677,865 $673,747
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-9
<PAGE>
KEEBLER COOKIE/CRACKER COMPANY
(AS DEFINED)
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 30, DECEMBER 31, JANUARY 1,
1995 1994 1994
------------ ------------ ----------
<S> <C> <C> <C>
Net Sales.............................................. $1,442,882 $1,412,537 $1,411,956
Costs and Expenses:
Cost of sales........................................ 672,800 626,103 610,289
Selling, marketing, and administrative expenses...... 738,846 675,019 662,530
------------ ------------ ----------
31,236 111,415 139,137
Restructuring........................................ -- -- 102,881
------------ ------------ ----------
Income from Operations................................. 31,236 111,415 36,256
Interest:
Interest income from affiliates...................... (1) (25) (644)
Interest income...................................... (151) (118) (252)
Interest expense to affiliates....................... 11,802 65,194 74,440
Interest expense..................................... 16,619 9,440 8,004
------------ ------------ ----------
Income (Loss) before Income Taxes and Accounting
Changes................................................ 2,967 36,924 (45,292)
Income tax expense................................... -- 10,618 13,998
------------ ------------ ----------
Income (Loss) before Cumulative Effect of Accounting
Changes................................................ 2,967 26,306 (59,290)
Cumulative effect of accounting changes.............. -- 1,208 20,699
------------ ------------ ----------
Net Income (Loss)...................................... $ 2,967 $ 25,098 $ (79,989)
------------ ------------ ----------
------------ ------------ ----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-10
<PAGE>
KEEBLER COOKIE/CRACKER COMPANY
(AS DEFINED)
CONSOLIDATED STATEMENTS OF COMPANY DEFICIT
(IN THOUSANDS)
<TABLE>
<CAPTION>
INTERCOMPANY
WITH EXCLUDED RETAINED
CAPITAL BUSINESSES DEFICIT TOTAL
-------- ------------- --------- ---------
<S> <C> <C> <C> <C>
Balance at January 2, 1993.................... $ 1,000 $(280,164) $(247,175) $(526,339)
Net loss.................................... (79,989) (79,989)
Change in funding and intercompany.......... (93,848) (93,848)
-------- ------------- --------- ---------
Balance at January 1, 1994.................... 1,000 (374,012) (327,164) (700,176)
Net income.................................. 25,098 25,098
Change in funding and intercompany.......... (63,783) (63,783)
Recapitalization of debt with UB Investments
(Netherlands) B.V............................. 300,000 300,000
-------- ------------- --------- ---------
Balance at December 31, 1994.................. 301,000 (437,795) (302,066) (438,861)
Net income.................................. 2,967 2,967
Change in funding and intercompany.......... (79,767) (79,767)
Recapitalization of debt with UB Investments
(Netherlands) B.V............................. 445,000 445,000
-------- ------------- --------- ---------
Balance at December 30, 1995.................. $746,000 $(517,562) $(299,099) $ (70,661)
-------- ------------- --------- ---------
-------- ------------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-11
<PAGE>
KEEBLER COOKIE/CRACKER COMPANY
(AS DEFINED)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 30, DECEMBER 31, JANUARY 1,
1995 1994 1994
------------ ------------ ----------
<S> <C> <C> <C>
Cash Flows Provided from Operating Activities
Net income (loss)......................................... $ 2,967 $ 25,098 $ (79,989)
Adjustments to reconcile net income to cash from
operating activities:
Depreciation and amortization........................... 36,453 35,271 37,383
Deferred income taxes................................... (1,524) 13 5,511
Restructuring provision................................. -- -- 102,881
Cumulative effect of accounting changes................. -- 1,208 20,699
Changes in assets and liabilities (excluding effect of
acquisition):
Trade accounts and notes receivable, net................ (13,061) 2,653 (11,809)
Receivables (payables) from affiliates, net............. (4,769) (20,350) 69,986
Inventories............................................. 5,723 (5,381) 341
Income taxes payable.................................... (1,304) 32,973 5,339
Other current assets.................................... 254 (7,743) (2,524)
Accounts payable and other current liabilities.......... 7,752 1,001 (3,004)
Restructuring........................................... (29,612) (19,154) (14,270)
Other, net................................................ 10,046 152 (22,079)
------------ ------------ ----------
Cash provided from operating activities............... 12,925 45,741 108,465
Cash Flows Used by Investing Activities
Property additions........................................ (52,179) (48,313) (25,498)
Proceeds from property disposals.......................... 2,504 1,670 12,061
Acquisition of Bake-Line Products, Inc., net of cash
acquired.................................................... -- -- (69,827)
Other..................................................... -- 1,204 --
------------ ------------ ----------
Cash used by investing activities..................... (49,675) (45,439) (83,264)
Cash Flows Provided from (Used by) Financing Activities
Payment of long-term debt................................. (27,542) (6,670) (16,195)
Commercial paper and revolving credit facilities, net..... 134,500 76,300 73,200
Change in intercompany with excluded businesses........... (79,767) (63,783) (93,848)
------------ ------------ ----------
Cash provided from (used by) financing activities....... 27,191 5,847 (36,843)
------------ ------------ ----------
(Decrease) increase in cash and cash equivalents........ (9,559) 6,149 (11,642)
Cash and cash equivalents at beginning of year.......... 12,504 6,355 17,997
------------ ------------ ----------
Cash and cash equivalents at end of year................ $ 2,945 $ 12,504 $ 6,355
------------ ------------ ----------
------------ ------------ ----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-12
<PAGE>
KEEBLER COOKIE/CRACKER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements include certain accounts
of UB Investments US Inc. and subsidiaries that are involved in the manufacture,
sale and distribution of cookie and cracker products and certain co-pack
arrangements for products. The consolidated financial statements include certain
accounts of the following legal entities: UB Investments US Inc. (UBIUS),
Keebler Company, Athens Packaging, Inc., Emerald Industries, Inc., Shaffer,
Clarke & Co., Inc., Bake-Line Products, Inc., Johnston's Ready Crust, all of
which are wholly-owned subsidiaries of UBIUS, and certain financing transactions
of the financing subsidiaries of UBIUS.
The consolidated entity, as described above, is referred to as Keebler
Cookie/Cracker Company or "the Company" in the consolidated financial
statements.
UBIUS, a manufacturer and distributor of food products, was, as of December
30, 1995, a wholly-owned subsidiary of UB Investments (Netherlands) B.V., a
Dutch Company. UB Investments (Netherlands) B.V. is a member of the worldwide
group of affiliated companies owned by United Biscuits (Holdings) plc., a
publicly held company in the United Kingdom. UBIUS was formed in 1992 as a
result of the legal restructuring of United Biscuit (Holdings) plc.'s operations
in the United States. UBIUS received the stock of its subsidiaries in exchange
for $850 million in debt with UB Investments (Netherlands) B.V. as well as all
of the capital stock of UBIUS.
On January 9, 1996, U.B. Investments (Netherlands) B.V. sold the assets and
stock of Bernardi Italian Foods Co., The Original Chili Bowl, Inc., Chinese Food
Processing Corp. (wholly-owned subsidiaries collectively known as the Frozen
Food businesses) and certain assets of Keebler Company to Windsor Food Company
Ltd. The sale was effective as of December 31, 1995.
On January 24, 1996, UBIUS sold to Kelly Food Products, Inc. selected assets
of the Salty Snacks business including its production plant in Bluffton,
Indiana, trademarks and other intangibles related to this business, inventory
and additional personal property including selected assets related to the
convenience sales division.
On January 26, 1996, UB Investments (Netherlands) B.V. sold all the stock of
UBIUS to INFLO Holdings Corporation. This sale specifically excludes the stock
of the Frozen Food businesses as well as the Salty Snacks business conducted by
Keebler Company and other subsidiaries of UBIUS, and the UBIUS finance companies
of U.B.H.C., Inc. and U.B.F.C., Inc., also wholly-owned subsidiaries.
The consolidated financial statements present the historical financial
position, results of operations and cash flows of the Company described above.
The accompanying consolidated financial statements exclude the assets,
liabilities, equity, and the profit and loss accounts of the Salty Snacks
business, conducted by Keebler Company and Emerald Industries Inc. II; the
Frozen Foods businesses, conducted primarily by Bernardi's Italian Foods Co.,
The Original Chili Bowl, Inc., and Chinese Food Processing Corp.; and the
finance Companies of U.B.H.C., Inc. and U.B.F.C., Inc., except for certain
financing transactions. The businesses, as described above, not included in
these consolidated financial statements are collectively referred to herein as
the Excluded Businesses which, in aggregate, had net sales of $206.5 million,
$257.7 million and $306.1 million for the years ended December 30, 1995,
December 31, 1994 and January 1, 1994, respectively. All of the legal entities
referred to above in describing the Excluded Businesses are wholly-owned
subsidiaries of UBIUS. Intercompany balances resulting from transactions between
Keebler Cookie/Cracker Company and the Excluded Businesses
F-13
<PAGE>
KEEBLER COOKIE/CRACKER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
1. BASIS OF PRESENTATION--(CONTINUED)
are classified as a separate component of equity. Allocations for certain
activities including retail sales, distribution, and administration have been
made between the Company and the Excluded Businesses.
The financial position, results of operations and cash flows of the Company,
as presented in these consolidated financial statements, may not be the same had
the Company not been in the Salty Snacks and Frozen Foods businesses, primarily
due to the allocation of certain fixed costs to these businesses.
Principles of Consolidation
Intercompany accounts and transactions within the UBIUS group have been
eliminated, except those with the Excluded Businesses as described above.
Fiscal Year
The Company's fiscal year is comprised of 52 or 53 weeks and ends on the
Saturday nearest December 31. Fiscal years 1995, 1994 and 1993 were comprised of
52 weeks.
Reclassifications
Certain amounts in the 1994 consolidated financial statements have been
reclassified to conform with the 1995 presentation.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash Equivalents
All highly liquid instruments purchased with a maturity of three months or
less are classified as cash equivalents. The carrying amount of cash equivalents
approximates fair value due to the relatively short maturity of these
investments. Substantially all cash equivalents of UBIUS and its subsidiaries
are included in these consolidated financial statements.
Trade Receivables
Substantially all of the Company's trade receivables are from retail dealers
and wholesale distributors. The Company performs periodic credit evaluations of
its customers' financial condition and generally does not require collateral.
Receivables, as shown on the consolidated balance sheets, were net of allowances
of $3.2 million as of December 30, 1995 and $1.5 million as of December 31,
1994.
Inventories
Inventories are stated at the lower of cost or market with cost determined
principally by the last in, first out (LIFO) method. Inventories stated under
the LIFO method represent approximately 92% of total inventories in 1995 and 95%
of total inventories in 1994. Because the Company has adopted a natural business
unit single pool approach to determining LIFO inventory cost, classification of
inventory by its component parts is impractical. The excess of the current
production cost of inventories over LIFO cost was approximately $16.3 million
and $16.2 million at December 30, 1995 and December 31, 1994, respectively.
F-14
<PAGE>
KEEBLER COOKIE/CRACKER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation expense is
computed using the straight-line method based on the estimated useful lives of
the depreciable assets. Accelerated depreciation methods are used for income tax
purposes. Certain facilities and equipment held under capital leases are
classified as assets and amortized using the straight-line method over the lease
terms, and the related obligations are recorded as liabilities. Lease
amortization is included in depreciation expense.
Goodwill
Goodwill consists primarily of the excess of cost over the fair value of
tangible net assets acquired in the purchases of Johnston's Ready Crust and
Bake-Line Products, Inc. Goodwill is amortized on a straight-line basis over a
period of up to 40 years.
Accumulated amortization of goodwill was $27.5 million and $25.8 million as
of December 30, 1995 and December 31, 1994, respectively.
Research and Development
Activities related to new product development and major improvements to
existing products and processes are expensed as incurred and were $12.7 million,
$13.3 million and $13.2 million in 1995, 1994 and 1993, respectively.
Advertising and Consumer Promotion
Advertising and consumer promotion costs are expensed when incurred.
Advertising and consumer promotion expenses were $68.0 million, $55.4 million
and $49.3 million in 1995, 1994 and 1993, respectively.
Income Taxes
The consolidated financial statements reflect the application of Statement
of Financial Accounting Standards (SFAS) No. 109, "Accounting For Income Taxes".
The Company is part of a consolidated federal income tax return filed by UBIUS.
The tax provision was prepared on a stand alone basis. The consolidated balance
sheet includes a liability of $22.0 million and $23.3 million as of December 30,
1995 and December 31, 1994, respectively, for income taxes payable to
affiliates. This liability is the result of calculating the tax provision for
Keebler Cookie/Cracker Company on a stand-alone basis. As UBIUS has a
significant net operating loss carryforward, this liability does not represent a
future cash payment obligation by Keebler Cookie/Cracker Company.
Use of Estimates
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from these estimates.
F-15
<PAGE>
KEEBLER COOKIE/CRACKER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
3. CHANGES IN ACCOUNTING POLICIES
Effective January 2, 1994, the Company adopted SFAS No. 112, "Employers'
Accounting for Postemployment Benefits". The Company recorded a $4.0 million
obligation as a cumulative effect of accounting change for which no tax benefit
was ascribed. Prior to this date, these expenses were recognized on the
pay-as-you-go basis.
As of December 31, 1994, the Company also adopted a policy of capitalizing
spare machinery and equipment parts. Previously, spare machinery and equipment
parts were expensed when purchased. This new policy was adopted in order to
bring the Company in conformity with United Biscuits' guidelines and to match
the cost with the associated benefit of these supplies. Expense is recognized as
the parts are used. Adoption of the new policy resulted in a pre-tax benefit of
$4.6 million, $2.8 million net of income tax.
Effective January 3, 1993, the Company adopted SFAS No. 106 "Employers'
Accounting for Postretirement Benefits Other than Pensions." The Company
recorded a $34.2 million obligation as a cumulative effect of accounting change,
resulting in an after tax charge of $20.7 million.
4. PROPERTY, PLANT & EQUIPMENT
A summary of property, plant, and equipment, including the related
accumulated depreciation follows:
<TABLE>
<CAPTION>
DECEMBER 30, DECEMBER 31,
1995 1994
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Land.............................................. $ 8,825 $ 8,907
Buildings......................................... 118,559 117,168
Machinery and equipment........................... 490,186 468,066
Office furniture and fixtures..................... 47,791 39,477
Delivery equipment................................ 5,869 4,020
Construction in progress.......................... 37,255 31,215
------------ ------------
708,485 668,853
Accumulated depreciation.......................... (335,742) (312,250)
------------ ------------
$372,743 $356,603
------------ ------------
------------ ------------
</TABLE>
F-16
<PAGE>
KEEBLER COOKIE/CRACKER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
5. ACCRUED LIABILITIES
Accrued liabilities consist of the following:
<TABLE>
<CAPTION>
DECEMBER 30, DECEMBER 31,
1995 1994
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Self insurance reserves........................... $ 52,157 $ 50,462
Employee compensation............................. 26,366 31,710
Marketing and consumer promotions................. 25,484 17,806
Taxes, other than income.......................... 6,544 4,594
Interest.......................................... 933 2,417
Postretirement benefit obligation................. 2,792 2,237
Other............................................. 3,330 1,859
------------ ------------
$117,606 $111,085
------------ ------------
------------ ------------
</TABLE>
6. DEBT AND LEASE COMMITMENTS
UBIUS maintains a commercial paper program in the United States which is
supported by a line of credit agreement which is guaranteed by United Biscuits
(Holdings) plc. The commercial paper program, while in part maintained by
U.B.F.C., an Excluded Business, has been fully included in these consolidated
financial statements as the proceeds of these borrowings are used to finance the
Company's operations. Consistent with the inclusion of the commercial paper
obligations, cash equivalents maintained at U.B.F.C. are included in these
consolidated financial statements. The line of credit agreement in support of
the commercial paper program totaled $100 million as of December 31, 1994 and
was expanded to $200 million on June 9, 1995. This agreement can be canceled at
any time. The commercial paper had a weighted average interest rate of 5.9%,
4.4% and 6.1% during 1995, 1994 and 1993, respectively. The Company had $184.0
million and $94.5 million of outstanding borrowings under this program as of
December 30, 1995 and December 31, 1994, respectively. The interest rate was
6.1% for year-end 1995 and 1994.
The Company, along with other United Biscuits (Holdings) plc. affiliated
companies, has access to a revolving credit agreement in Europe which is
guaranteed by United Biscuits (Holdings) plc. The funding under this agreement
goes through U.B.H.C., a wholly-owned subsidiary of UBIUS, an entity which is
not part of these consolidated financial statements. However, the funding is
solely in support of the Company's operations and, therefore, has been included,
in substance, as an obligation of the Company. Available borrowings under this
agreement are limited by total United Biscuits (Holdings) plc. borrowings.
Maximum borrowings under this agreement were $300 million as of year-end 1995
and 1994. The agreement had a weighted average interest rate of 6.2%, 5.6% and
3.5% during 1995, 1994 and 1993, respectively. The interest rate at year-end was
6.0% and 5.6% for 1995 and 1994, respectively. The Company had $100 million and
$55 million of outstanding borrowings under this program as of December 30, 1995
and December 31, 1994, respectively.
F-17
<PAGE>
KEEBLER COOKIE/CRACKER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
6. DEBT AND LEASE COMMITMENTS--(CONTINUED)
Long-term debt consists of the following:
<TABLE>
<CAPTION>
INTEREST FINAL DECEMBER 30, DECEMBER 31,
RATE MATURITY 1995 1994
-------- ----------------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Senior notes........................... 11.54% December 1, 1999 $ -- $ 6,250
Senior notes........................... 8.7% March 1, 2002 -- 20,000
Capital lease obligations.............. Various 1994-2008 6,794 7,353
Equipment purchase obligations......... Various 1994-2013 15,840 16,290
Other.................................. 5,412 5,695
------------ ------------
28,046 55,588
Current maturities..................... 22,846 4,868
------------ ------------
$ 5,200 $ 50,720
------------ ------------
------------ ------------
</TABLE>
The capital lease obligations and equipment purchase obligations have been
classified as current maturities of long-term debt at year-end 1995 pending any
required amendments or modifications to the obligations primarily as a result of
the sale of UBIUS and its subsidiaries.
In January 1996, $2.0 million of the capital lease obligations and equipment
purchase obligations were repaid. The remaining borrowings, classified as
current maturities of long-term debt, are expected to remain in place.
In 1995, the Company prepaid $22.5 million of the senior notes.
Interest of $26.2 million, $99.7 million and $64.2 million was paid for the
years ended December 30, 1995, December 31, 1994 and January 1, 1994,
respectively. This amount includes interest paid on the notes payable to
affiliates as discussed in Note 7.
Aggregate annual maturities of long-term debt as of December 30, 1995 are as
follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
1996.......................................................... $ 22,846
1997.......................................................... 300
1998.......................................................... 300
1999.......................................................... 4,600
2000.......................................................... --
2001 and thereafter........................................... --
--------------
$ 28,046
--------------
--------------
</TABLE>
F-18
<PAGE>
KEEBLER COOKIE/CRACKER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
6. DEBT AND LEASE COMMITMENTS--(CONTINUED)
Assets recorded under capitalized lease agreements and equipment purchase
obligations included in property, plant, and equipment consist of the following:
<TABLE>
<CAPTION>
DECEMBER 30, DECEMBER 31,
1995 1994
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Land.............................................. $ 1,246 $ 1,246
Buildings......................................... 6,170 6,830
Machinery and equipment........................... 6,955 7,386
------------ ------------
14,371 15,462
Accumulated depreciation.......................... (8,942) (9,296)
------------ ------------
$ 5,429 $ 6,166
------------ ------------
------------ ------------
</TABLE>
Future minimum lease payments under capital and operating leases that have
initial or remaining noncancelable terms in excess of one year are as follows:
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
------- ---------
(LN THOUSANDS)
<S> <C> <C>
1996................................................... $ 842 $ 24,457
1997................................................... 941 21,581
1998................................................... 847 18,511
1999................................................... 524 14,292
2000................................................... 477 13,600
2001 and thereafter.................................... 6,534 39,814
------- ---------
Total minimum payments................................. 10,165 $ 132,255
---------
---------
Amount representing interest........................... (3,371)
-------
Obligations under capital leases....................... 6,794
Obligations due within one year........................ (411)
-------
Long-term obligations under capital leases............. $ 6,383
-------
-------
</TABLE>
Rent expense for all operating leases was $36.6 million, $37.2 million and
$39.6 million for 1995, 1994 and 1993, respectively.
F-19
<PAGE>
KEEBLER COOKIE/CRACKER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
7. NOTES PAYABLE TO AFFILIATES
As part of the reorganization of United Biscuits (Holdings) plc. operations
in the United States, UBIUS received the stock of its subsidiaries in exchange
for notes payable. The notes payable were as follows:
<TABLE>
<CAPTION>
NOTE INTEREST FINAL DECEMBER 30, DECEMBER 31,
PAYABLE RATE MATURITY 1995 1994
- -------------------------------------- -------- ------------------ ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
In the amount of $300 million......... 9.75% September 20, 2002 -- --
In the amount of $550 million......... 8.24% September 20, 1999 $105,000 $550,000
------------ ------------
$105,000 $550,000
------------ ------------
------------ ------------
</TABLE>
On September 7, 1994, UBIUS received a capital contribution of $300 million
from UB Investments (Netherlands) B.V. and used the capital contribution to
satisfy the obligations under the note in the amount of $300 million. The annual
maturities of the $550 million note payable are 1996--$100
million, 1997--$100 million, 1998--$150 million, and 1999--$175 million. On
February 1, 1995, the Company received a capital contribution of $445 million
from UB Investments (Netherlands) B.V. which was used by the Company to satisfy
the obligations which would have been due in years 1995, 1996, 1997, 1998 and a
portion of the payment due in 1999 leaving one payment for the balance of $105
million due September 1999.
8. EMPLOYEE BENEFIT PLANS
The Company maintains trusteed, noncontributory pension plans covering
certain salaried and hourly-paid employees of the Company. Assets held by the
plans consist primarily of common stocks, collective trust funds, government
securities, bonds, and guaranteed insurance contracts. Benefits provided under
the defined-benefit pension plans are primarily based on years of service and
the employee's final level of compensation. The Company's funding policy is to
contribute annually not less than the ERISA minimum funding requirements.
Pension expense included the following components:
<TABLE>
<CAPTION>
YEAR ENDED
------------------------------------------
DECEMBER 30, DECEMBER 31, JANUARY 1,
1995 1994 1994
------------ ------------ ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost............................ $ 6,337 $ 7,562 $ 6,514
Interest cost........................... 13,733 13,235 13,497
Actual return on plan assets............ (43,208) (9,199) (29,200)
Net amortization of transition
obligation.............................. 610 611 611
Deferral of gains (losses).............. 24,214 (10,299) 13,815
Prior service cost...................... (155) (508) (508)
Net gain................................ (432) -- --
------------ ------------ ----------
$ 1,099 $ 1,402 $ 4,729
------------ ------------ ----------
------------ ------------ ----------
</TABLE>
F-20
<PAGE>
KEEBLER COOKIE/CRACKER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
8. EMPLOYEE BENEFIT PLANS--(CONTINUED)
The funded status of the Company's pension plans and amounts recognized in
the consolidated balance sheets are as follows:
<TABLE>
<CAPTION>
DECEMBER 30, DECEMBER 31,
1995 1994
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Actuarial present value of accumulated benefit obligation:
Vested............................................................. $ (134,716) $ (109,576)
Nonvested.......................................................... (23,859) (21,683)
------------ ------------
$ (158,575) $ (131,259)
------------ ------------
------------ ------------
Projected benefit obligation....................................... $ (199,175) $ (166,262)
Plan assets at fair value.......................................... 239,093 205,318
------------ ------------
Plan assets greater than projected benefit obligation.............. 39,918 39,056
Unrecognized transition obligation................................. 3,648 4,166
Unrecognized prior service......................................... (1,128) (1,237)
Unrecognized net gain.............................................. (18,850) (17,442)
------------ ------------
Pension asset...................................................... $ 23,588 $ 24,543
------------ ------------
------------ ------------
</TABLE>
Assumptions used in accounting for the defined-benefit pension plans at each
year-end are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Discount rate............................................ 7.5% 8.5% 7.8%
Rate of compensation level increases..................... 4.0% 4.4% 4.4%
Expected long-term rate of return on plan assets......... 9.0% 10.0% 9.5%
</TABLE>
Included in plan assets are real estate investments of $7.2 million in two
distribution centers which are under two operating leases to a subsidiary of
UBIUS.
In addition, the Company maintains an unfunded supplemental retirement plan
for certain highly compensated executives. Benefits provided are based on years
of service. Vesting is graduated depending on termination after age 55.
The supplemental retirement expense includes the following components:
<TABLE>
<CAPTION>
YEAR ENDED
------------------------------------------
DECEMBER 30, DECEMBER 31, JANUARY 1,
1995 1994 1994
------------ ------------ ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost............................ $ 452 $ 126 $ 372
Interest cost........................... 854 710 866
Net amortization of transition
obligation.............................. 111 110 110
Prior service cost...................... 170 134 91
Net loss................................ -- -- 126
------------ ------------ ----------
$1,587 $1,080 $1,565
------------ ------------ ----------
------------ ------------ ----------
</TABLE>
F-21
<PAGE>
KEEBLER COOKIE/CRACKER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
8. EMPLOYEE BENEFIT PLANS--(CONTINUED)
The unfunded status of the supplemental retirement plan and the amounts
recognized in the consolidated balance sheets are as follows:
<TABLE>
<CAPTION>
YEAR ENDED
----------------------------
DECEMBER 30, DECEMBER 31,
1995 1994
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Actuarial present value of accumulated benefit
obligation
Vested............................................ $(11,301) $ (9,509)
Nonvested......................................... -- --
------------ ------------
$(11,301) $ (9,509)
------------ ------------
------------ ------------
Projected benefit obligation...................... $(12,077) $(10,185)
Plan assets at fair value......................... -- --
------------ ------------
Projected benefit obligation in excess of plan
assets............................................ (12,077) (10,185)
Unrecognized transition obligation................ 664 775
Unrecognized prior service cost................... 1,307 1,477
Unrecognized net loss............................. 1,732 611
------------ ------------
Plan obligation included in other long-term
liabilities..................................... $ (8,374) $ (7,322)
------------ ------------
------------ ------------
</TABLE>
Assumptions used in accounting for the supplemental retirement plan at each
year-end are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Discount rate............................................ 7.5% 8.5% 7.75%
Rate of compensation level increase...................... 4.0% 4.5% 4.50%
</TABLE>
The Company also contributes to a retirement program for Grand Rapids union
employees. Benefits provided under the plan are based on a flat monthly amount
for each year of service and are unrelated to compensation. Contributions are
made based on a negotiated hourly rate. In 1995, 1994 and 1993, the Company
expensed contributions of $2.5 million, $2.3 million and $2.1 million,
respectively.
There are also various multiemployer union administered defined-benefit and
defined-contribution pension plans to which the Company contributes. Benefits
provided under the multiemployer pension plans are generally based on years of
service and employee age. Expense under these plans was $9.4 million, $8.4
million and $10.5 million in 1995, 1994 and 1993, respectively.
The Company also offers certain employees participation in the Keebler
Company Salaried Savings Plan, a defined-contribution plan. Certain nonunion
employees who meet certain length-of-service requirements may elect to
participate in the Plan. Contributions, made by participants with no Company
matching, are based on an elected percentage of the participants' compensation
within a specified range.
F-22
<PAGE>
KEEBLER COOKIE/CRACKER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
9. POSTRETIREMENT BENEFITS
The Company provides certain medical and life insurance benefits for
eligible retired employees. The medical plan, which covers nonunion employees
with 10 or more years of service, is a comprehensive indemnity-type plan. The
plan incorporates up-front deductible, coinsurance payments, and employee
contributions which are based on length of service. The life insurance plan
offers a small amount of coverage versus the amount the employees had while
employed. The Company does not fund the Plan.
The net periodic postretirement benefit cost includes the following
components:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
------------------------------------------
DECEMBER 30, DECEMBER 31, JANUARY 1,
1995 1994 1994
------------ ------------ ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost............................................. $1,531 $1,599 $1,437
Interest cost............................................ 3,161 2,983 3,167
------------ ------------ ----------
Net periodic postretirement benefit cost................. $4,692 $4,582 $4,604
------------ ------------ ----------
------------ ------------ ----------
</TABLE>
The funded status of the Plan reconciled to the postretirement obligation in
the Company's balance sheet is as follows:
<TABLE>
<CAPTION>
DECEMBER 30, DECEMBER 31,
1995 1994
------------ ------------
(LN THOUSANDS)
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees........................................ $ 18,710 $ 20,889
Fully eligible active Plan participants......... 3,497 3,296
Other active participants....................... 19,421 14,004
------------ ------------
Total............................................. 41,628 38,189
Unrecognized net gain............................. 1,037 1,435
------------ ------------
Postretirement obligation......................... $ 42,665 $ 39,624
------------ ------------
------------ ------------
</TABLE>
The accumulated postretirement benefit obligation was determined using a
weighted-average discount rate of 7.5% and 8.5% in 1995 and 1994, respectively.
The weighted-average annual assumed rate of increase in the cost of covered
benefits is 8% for 1996 declining gradually to an ultimate trend rate of 5% by
the year 2000. A 1% increase in the trend rate for health care costs would have
increased the accumulated benefit obligation as of December 30, 1995 by $2.5
million and the net periodic benefit cost by $.2 million for the year.
F-23
<PAGE>
KEEBLER COOKIE/CRACKER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
10. INCOME TAXES
Income tax expense consists of the following:
<TABLE>
<CAPTION>
YEAR ENDED
------------------------------------------
DECEMBER 30, DECEMBER 31, JANUARY 1,
1995 1994 1994
------------ ------------ ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Current:
Federal................................................ $ 1,524 $ 7,055 $ 8,411
State.................................................. -- 3,550 76
------------ ------------ ----------
Current provision for income taxes....................... 1,524 10,605 8,487
------------ ------------ ----------
Deferred:
Federal................................................ (1,524) 11 4,878
State.................................................. -- 2 633
------------ ------------ ----------
Deferred provision for income taxes...................... (1,524) 13 5,511
------------ ------------ ----------
$ -- $ 10,618 $ 13,998
------------ ------------ ----------
------------ ------------ ----------
</TABLE>
The differences between the tax provision calculated at federal statutory
income tax rate and the company's consolidated income tax provision are as
follows:
<TABLE>
<CAPTION>
YEAR ENDED
------------------------------------------
DECEMBER 30, DECEMBER 31, JANUARY 1,
1995 1994 1994
------------ ------------ ----------
(LN THOUSANDS)
<S> <C> <C> <C>
U.S. federal statutory rate.............................. $ 1,038 $ 12,923 $ (15,852)
State income taxes (net of federal benefit).............. -- 3,552 709
Deferred tax asset valuation adjustment:
Change in valuation allowance.......................... (2,639) (5,947) 26,628
Attributed to accounting changes....................... -- (1,582) --
Intangible amortization.................................. 601 466 500
Non-taxable items........................................ 309 527 171
All others............................................... 691 679 1,842
------------ ------------ ----------
$ -- $ 10,618 $ 13,998
------------ ------------ ----------
------------ ------------ ----------
</TABLE>
F-24
<PAGE>
KEEBLER COOKIE/CRACKER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
10. INCOME TAXES--(CONTINUED)
The deferred tax assets and deferred tax (liabilities) recorded on the
balance sheet consist of the following:
<TABLE>
<CAPTION>
DECEMBER 30, DECEMBER 31,
1995 1994
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Depreciation...................................... $(69,960) $ (63,651)
Pension asset..................................... (9,109) (9,736)
Capitalized interest.............................. (1,010) (1,150)
Other............................................. (131) (217)
------------ ------------
(80,210) (74,754)
------------ ------------
Operating loss carryforwards...................... 7,261 --
Reorganization costs.............................. 19,623 30,063
Benefit plans..................................... 24,136 23,254
Workers' compensation............................. 17,874 16,628
Incentives and deferred compensation.............. 9,897 8,632
Charitable contributions.......................... 9,170 6,962
Other............................................. 2,179 260
------------ ------------
90,140 85,799
Valuation allowance............................... (18,042) (20,681)
------------ ------------
$ (8,112) $ (9,636)
------------ ------------
------------ ------------
</TABLE>
Net operating loss carryforwards for UBIUS total approximately $204 million
through 1995 and expire in 2008 through 2010. The net operating loss
carryforward assigned to the legal entities which comprise Keebler
Cookie/Cracker Company is approximately $195 million. These carryforwards have
been fully reserved as the realization is not likely.
Income taxes paid (refunded) for UBIUS were approximately $2.3 million,
$(22.8) million and $3.2 million in 1995, 1994 and 1993, respectively. These
payments (refunds) are not separable between Keebler Cookie/Cracker Company and
the Excluded Businesses.
11. RESTRUCTURING CHARGE
In 1993, the Company recorded a pre-tax charge of $102.9 million to
restructure operations. Included in this charge are the estimated costs of $68.5
million for severance relating to a management reorganization and to streamline
the sales and distribution network, $16.1 million for plant closing costs, and
$18.3 million for writing down to net realizable value machinery and equipment
of which the value has been impaired.
In conjunction with the decision to enter into the Stock Purchase Agreement
with INFLO Holdings Corporation, certain elements of the Company's restructuring
initiative to streamline the sales and distribution network have been suspended.
As of December 30, 1995 restructuring reserves of $30.0 million for this
initiative were included in the consolidated balance sheet.
Restructuring reserves remaining at December 30, 1995 relate primarily to
future cash costs to streamline the sales and distribution network and related
information systems.
F-25
<PAGE>
KEEBLER COOKIE/CRACKER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
12. ACQUISITION OF BAKE-LINE PRODUCTS, INC.
On January 8, 1993, the Company purchased the stock of Bake-Line Products,
Inc. for $69.8 million, net of $0.2 million in cash acquired. The acquisition
resulted in goodwill of $49.0 million. The acquisition has been accounted for as
a purchase.
13. TRANSACTIONS AND ALLOCATIONS WITH RELATED PARTIES
The Company conducts business with various affiliated companies that
ultimately are under the control of UB (Holdings) plc. Transactions with related
parties include financing with receivables and payables and the purchase of
product for resale in the United States. Notes payable to affiliates are
summarized in Note 7. Purchases of product from affiliated companies for resale
in the United States were $11.3 million for the year ended 1995, $9.4 million
for the year ended 1994 and $10.8 million for the year ended 1993.
In addition, UBIUS provides certain shared services to its various
businesses. Shared services include the retail sales force organization, a
nationwide distribution network, and various corporate administrative services
including centralized cash management, information services, purchasing, risk
management, human resources, legal, and general management. The costs associated
with these shared services have been allocated among the various UBIUS
businesses, including those businesses included in these consolidated financial
statements. Included in these consolidated financial statements are expenses of
$301.7 million, $284.4 million and $278.0 million for these shared services for
the years ended December 30, 1995, December 31, 1994 and January 1, 1994,
respectively, representing approximately 83%, 80% and 76%, respectively, of
UBIUS's total cost of these shared services in each of those years. Management
believes that these allocations are reasonable estimates of the total costs
incurred for these businesses. The bases for these allocations are summarized
below.
Retail Sales. The retail sales organization is primarily structured around
two sales organizations, direct store delivery (DSD) and Convenience. The costs
associated with the retail sales organizations are first assigned to the
businesses on the basis of specific identification. The remaining costs of the
retail sales organization are either allocated to the businesses based upon
units sold, or applied based on other representative methods.
Distribution. Costs are allocated on a full cost basis to the Salty Snacks
business based on its estimated usage of the various services provided by the
distribution network. Different selling channels or classes of customers utilize
the system's facilities in varying rates and patterns. Costs associated with
warehouse handling, labor and storage, Keebler's store door delivery fleet,
shipping and consolidation warehouse centers, and distribution administration
were allocated based on utilization rates, traffic patterns and labor standards.
Distribution support costs were not allocated to the Frozen Foods businesses, as
these businesses do not utilize this distribution system.
Corporate Administration. Costs for information services support are
allocated based on estimated system transaction and information systems support
staff time. Credit and accounts receivable support expense is allocated to Salty
Snacks and Frozen Foods based on gross sales. Market research and public
relations administrative costs are allocated based on research activity and
gross sales. All other administrative support costs (including senior
management, legal, human resources, corporate finance) have been assigned only
to Keebler Cookie/Cracker Company.
F-26
<PAGE>
KEEBLER COOKIE/CRACKER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
14. FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair market value of financial instruments, which includes other
long-term receivables, short-term borrowings, and long-term borrowings, was
estimated using discounted cash flow analyses based on current interest rates
which would be obtained for similar financial instruments. The carrying amounts
of these financial instruments approximate fair value.
The Company often enters into exchange traded commodity futures and options
contracts to protect the Company against a portion of adverse raw material price
movements. The Company does not enter into derivative transactions for
speculative purposes. Gains or losses realized from the liquidation or
expiration of the contracts are recognized as part of the cost of raw materials.
Gains or losses are deferred until realized. Cost of goods sold was reduced by
gains on futures and options transactions of $3.4 million in 1995, $0.6 million
in 1994 and $1.8 million in 1993. As of December 30, 1995, $0.1 million in
unrealized futures contracts losses have been deferred. There were no
outstanding options contracts at December 30, 1995. As of December 30, 1995 the
notional amount of open futures contracts was $13.7 million.
15. COMMITMENTS AND CONTINGENCIES
The Company is from time to time a defendant in various lawsuits and claims
incidental to its business. Although the Company is not able to estimate its
ultimate liability in these matters with absolute certainty, in the opinion of
management, such proceedings in the aggregate will not have a material adverse
effect on the Company's financial position or results of operations.
* * * * *
F-27
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Stockholder
Sunshine Biscuits, Inc.
Woodbridge, New Jersey
We have audited the accompanying balance sheets of Sunshine Biscuits, Inc. (a
wholly-owned subsidiary of G.F. Industries, Inc.) (the "Company") as of March
31, 1996 and 1995, and the related statements of operations, stockholder's
equity and cash flows for each of the three years in the period ended March 31,
1996. 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 in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company at March 31, 1996 and 1995, and
the results of its operations and its cash flows for each of the three years in
the period ended March 31, 1996 in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
MAY 15, 1996
F-28
<PAGE>
SUNSHINE BISCUITS, INC.
BALANCE SHEETS
MARCH 31, 1996 AND 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS 1996 1995
-------- --------
<S> <C> <C>
CURRENT ASSETS:
Cash................................................................. $ 1,841 $ 2,140
Trade accounts receivable, less allowance for doubtful accounts of
$830 and $1,399.................................................... 42,361 43,036
Due from Parent and affiliates....................................... 3,362 2,783
Inventories.......................................................... 35,220 44,272
Prepaid expenses and other........................................... 5,428 5,583
Deferred income taxes................................................ 6,767 11,521
-------- --------
Total current assets........................................... 94,979 109,335
PROPERTY HELD FOR SALE--Net............................................ 993 1,698
PROPERTY, PLANT AND EQUIPMENT--Net..................................... 88,844 98,879
OTHER ASSETS........................................................... 27,877 30,409
-------- --------
TOTAL ASSETS........................................................... $212,693 $240,321
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Trade accounts payable............................................... $ 32,944 $ 35,497
Other accrued liabilities............................................ 27,444 40,020
Accrued restructuring costs.......................................... 1,904 9,830
Due to affiliates.................................................... 399 2,802
Current maturities of long-term debt................................. 13,192 33
-------- --------
Total current liabilities...................................... 75,883 88,182
LONG-TERM DEBT......................................................... 73,458 93,780
OTHER LIABILITIES...................................................... 30,638 31,475
DEFERRED INCOME TAXES.................................................. 10,058 9,325
STOCKHOLDER'S EQUITY:
Common stock, no par value; authorized, issued and outstanding 100
shares................................................................. 15,000 15,000
Additional paid-in capital........................................... 19,660 19,660
Accumulated deficit.................................................. (12,004) (17,101)
-------- --------
Total stockholder's equity..................................... 22,656 17,559
-------- --------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY............................. $212,693 $240,321
-------- --------
-------- --------
</TABLE>
See notes to financial statements.
F-29
<PAGE>
SUNSHINE BISCUITS, INC.
STATEMENTS OF OPERATIONS
YEARS ENDED MARCH 31, 1996, 1995 AND 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
SALES (Net of discounts and allowances of $21,450, $24,637
and $22,155)................................................ $628,302 $629,841 $643,215
COST OF SALES............................................... 339,982 350,283 335,416
-------- -------- --------
GROSS MARGIN................................................ 288,320 279,558 307,799
-------- -------- --------
OPERATING EXPENSES:
Selling and marketing..................................... 258,018 272,476 267,782
General and administrative................................ 22,585 23,233 23,620
Restructuring charge (gain)............................... (16,458) 21,933 --
Other..................................................... 727 5,051 955
-------- -------- --------
INCOME (LOSS) FROM OPERATIONS............................... 23,448 (43,135) 15,442
INTEREST EXPENSE............................................ 9,361 8,409 6,529
-------- -------- --------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
AND EXTRAORDINARY ITEM.................................... 14,087 (51,544) 8,913
ALLOCATED INCOME TAXES (TAX BENEFIT)........................ 6,169 (18,918) 4,033
-------- -------- --------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE
EXTRAORDINARY ITEM.......................................... 7,918 (32,626) 4,880
LOSS FROM DISCONTINUED OPERATIONS........................... -- -- (2,610)
-------- -------- --------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM..................... 7,918 (32,626) 2,270
EXTRAORDINARY ITEM--LOSS ON EARLY EXTINGUISHMENT OF DEBT
(NET OF TAX)................................................ 2,821 -- --
-------- -------- --------
NET INCOME (LOSS)........................................... $ 5,097 $(32,626) $ 2,270
-------- -------- --------
-------- -------- --------
</TABLE>
See notes to financial statements.
F-30
<PAGE>
SUNSHINE BISCUITS, INC.
STATEMENTS OF STOCKHOLDER'S EQUITY
YEARS ENDED MARCH 31, 1996, 1995 AND 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
RETAINED
ADDITIONAL EARNINGS TOTAL
COMMON PAID-IN (ACCUMULATED STOCKHOLDER'S
STOCK CAPITAL DEFICIT) EQUITY
------- ---------- ------------ -------------
<S> <C> <C> <C> <C>
BALANCE, MARCH 31, 1993......................... $15,000 $ 35,000 $ 13,255 $63,255
Capital contribution.......................... -- 8,000 -- 8,000
Transfer of snack food businesses to Parent... -- (23,340) -- (23,340)
Net income.................................... -- -- 2,270 2,270
------- ---------- ------------ -------------
BALANCE, MARCH 31, 1994......................... 15,000 19,660 15,525 50,185
Net loss...................................... -- -- (32,626) (32,626)
------- ---------- ------------ -------------
BALANCE, MARCH 31, 1995......................... 15,000 19,660 (17,101) 17,559
Net income.................................... -- -- 5,097 5,097
------- ---------- ------------ -------------
BALANCE, MARCH 31, 1996......................... $15,000 $ 19,660 $(12,004) $22,656
------- ---------- ------------ -------------
------- ---------- ------------ -------------
</TABLE>
See notes to financial statements.
F-31
<PAGE>
SUNSHINE BISCUITS, INC.
STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 1996, 1995 AND 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).......................................... $ 5,097 $(32,626) $ 2,270
Adjustments to reconcile net income (loss) to net cash
(used in) provided by operating activities:
Loss from discontinued operations........................ -- -- 2,610
Depreciation and amortization............................ 8,204 8,773 9,049
Deferred income taxes (benefit).......................... 6,109 (20,211) (190)
Extraordinary item--loss on extinguishment of debt....... 2,821 -- --
Restructuring charge (gain).............................. (16,458) 21,933 --
Other.................................................... 108 3 (62)
Changes in assets and liabilities:
Decrease (increase) in accounts receivable............... 675 11,568 (6,228)
Decrease (increase) in inventory......................... 9,052 7,248 (5,474)
Decrease in prepaid expenses and other................... 155 7,553 432
Changes in amounts due to and due from affiliates--net... (2,982) 1,278 (6,494)
Decrease (increase) in other noncurrent assets........... 1,962 (11,547) 394
(Decrease) increase in trade accounts payable............ (2,553) 4,695 3,989
(Decrease) increase in other accrued liabilities......... (12,576) (1,504) 2,568
Decrease in accrued restructuring charges................ (5,417) -- --
Increase in income taxes payable......................... -- -- 158
Increase (decrease) in long-term liabilities............. (2,484) 14,886 1,857
-------- -------- --------
Net cash (used in) provided by operating activities.... (8,287) 12,049 4,879
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures....................................... (6,108) (10,660) (10,930)
Proceeds from sale of plant and distribution operation..... 21,954 -- --
Proceeds from sale of other assets......................... 1,321 34 10
-------- -------- --------
Net cash provided by (used in) investing activities.... 17,167 (10,626) (10,920)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from loan refinancing............................. 74,522 -- --
Payment of debt issue costs................................ (1,116) (47) (1,461)
Payments of revolving credit loans......................... (21,635) (1,460) (4,989)
(Payments) proceeds on senior secured notes................ (60,500) -- 60,500
Payments on other loans and capital leases................. (450) (35) (48,248)
-------- -------- --------
Net cash (used in) provided by financing activities.... (9,179) (1,542) 5,802
-------- -------- --------
NET DECREASE IN CASH......................................... (299) (119) (239)
CASH, BEGINNING OF YEAR...................................... 2,140 2,259 2,498
-------- -------- --------
CASH, END OF YEAR............................................ $ 1,841 $ 2,140 $ 2,259
-------- -------- --------
-------- -------- --------
</TABLE>
See notes to financial statements.
F-32
<PAGE>
SUNSHINE BISCUITS, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 1996, 1995 AND 1994
(IN THOUSANDS)
1. ORGANIZATION AND OPERATIONS
Sunshine Biscuits, Inc. (the "Company") is a wholly-owned subsidiary of G.F.
Industries, Inc. (the "Parent"). The Company manufactures cookies, crackers and
related products at several plants located in the United States. These products
are sold directly to retailers, distributors and food service customers. No
single customer accounts for more than 10% of total revenues and export sales
are not significant. As discussed in Note 15, in 1994 the Company transferred to
the Parent its salty snack foods operations.
On March 29, 1996 the Parent announced that it had entered into preliminary
discussions with a third party with respect to a possible merger of the Company.
As of May 15, 1996, no definitive purchase agreement has been signed.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from these estimates.
INVENTORIES--Inventories are stated at the lower of last-in, first-out
("LIFO") cost or market.
PROPERTY, PLANT AND EQUIPMENT--Property, plant and equipment is stated at
fair market value determined at the time the Company was acquired by the Parent.
Property, plant and equipment additions subsequent to such acquisition are
stated at cost, including capitalized interest related to plant expansion and
other major capital projects. Capitalized leases are stated at the lesser of the
present value of future minimum lease payments or the fair value of the leased
property. Depreciation is computed using the straight-line method over the
estimated economic useful lives of the related assets. Leasehold improvements
are amortized over related lease terms.
OTHER ASSETS--The excess cost over fair value of assets acquired is being
amortized over 40 years. Debt issuance costs are being amortized over the terms
of the related loans. Package design and plate costs are deferred and amortized
over periods from twelve to sixty months. On an on-going basis, the Company
reassesses the recorded values of long-lived assets based on estimated
undiscounted expected future cash flows. If the results of these periodic
assessments indicate that an impairment may be likely, the Company recognizes a
charge to operations at that time.
ALLOCATED INCOME TAXES--The Company's taxable income or loss is included in
the Parent's consolidated Federal income tax return. A tax-sharing agreement
between the Parent and its subsidiaries specifies that income taxes will be
allocated to each company in an amount equal to the amount of income tax that
would be due if the Company filed separate income tax returns. The Company
receives benefit for losses to the extent that it has paid tax in the past.
Allocated income taxes in these financial statements have been recognized in
accordance with Statement of Financial Accounting Standards No. 109, and
deferred income taxes provided for the differences between the tax bases of
assets and liabilities and their related financial statement amounts using
current income tax rates.
F-33
<PAGE>
SUNSHINE BISCUITS, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED MARCH 31, 1996, 1995 AND 1994
(IN THOUSANDS)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
FAIR VALUE OF FINANCIAL INSTRUMENTS--The fair market value of certain
financial instruments, including cash, accounts receivable, accounts payable,
amounts due to and from affiliates and other accrued liabilities, approximate
the amounts recorded in the balance sheet because of the relatively current
maturities of these financial instruments. The fair market value of long-term
debt at March 31, 1996 and 1995 approximates the amounts recorded in the balance
sheet based on information available to the Company with respect to interest
rates and terms for similar financial instruments.
ADVERTISING AND CONSUMER PROMOTION--Advertising and consumer promotion costs
of $7,231 in 1996, $24,062 in 1995 and $16,083 in 1994 are expensed when
incurred.
NEW ACCOUNTING STANDARD--Financial Accounting Standards No. 121, Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
of, is effective for the Company's fiscal year ending March 31, 1997. This
standard requires impairment losses to be recorded on long-lived assets and
certain intangible assets when the undiscounted cash flows estimated to be
generated by those assets are less than the assets' carrying amount. Although
the Company has not yet completed its evaluation of the impact of adopting this
standard, management does not expect the effect, if any, to be significant.
RECLASSIFICATIONS--Certain prior year financial statement amounts have been
reclassified to conform to classifications used in the 1996 financial
statements.
3. RESTRUCTURING PROGRAMS
Results of operations for 1995 include the accrual of $21,933 for a
restructuring program designed to reduce costs and improve operating efficiency.
The restructuring represents primarily the closing of the Oakland, California
bakery and includes (1) a provision to adjust the carrying values of property
held for sale to estimated net realizable values ($7.5 million); (2) severance
and related benefits ($9.3 million); (3) facility shutdown costs ($1.7 million);
and (4) other related expenses ($3.4 million). During 1996, the Company
substantially completed this restructuring program and, as a result, accrued
restructuring costs were reduced by approximately $2,913. This amount is
included in restructuring gain in 1996.
Also during 1996, the Company sold its Chicago, Illinois bakery for cash
proceeds of approximately $17,600, resulting in a gain of approximately $15,900,
and sold its Chicago-based distribution operations for cash proceeds of
approximately $4,200, resulting in a loss of approximately $2,400. As a result
of these transactions, the Company reduced its workforce and recognized a
curtailment gain for the net decrease in accrued pension and postretirement
benefit obligations (see Note 11). Also in connection with the sale of the
distribution operations, the Company recorded a withdrawal liability of
approximately $250 related to a multiemployer pension plan.
On March 27, 1996, the Company entered into a contract to sell the Oakland
bakery property for approximately $2,700. The closing is subject to the
satisfaction of certain conditions. The Company expects that the sale will be
completed in September 1996 at which time any gain, net of related costs to
dispose of the property, will be recognized.
F-34
<PAGE>
SUNSHINE BISCUITS, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED MARCH 31, 1996, 1995 AND 1994
(IN THOUSANDS)
4. INVENTORIES
Inventories at March 31, 1996 and 1995 consist of the following:
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Finished goods.......................................... $20,046 $27,742
Raw materials........................................... 11,328 12,116
Packaging............................................... 3,846 4,414
------- -------
Total................................................... $35,220 $44,272
------- -------
------- -------
</TABLE>
The cost of finished goods on the LIFO method exceeds their replacement cost
by approximately $1,768 and $2,867 at March 31, 1996 and 1995, respectively. The
replacement cost of raw materials and packaging exceeds their LIFO cost by
approximately $5,618 and $5,716 at March 31, 1996 and 1995, respectively.
Inventory reductions during 1996 resulted in a LIFO liquidation which
decreased net income by approximately $540.
5. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at March 31, 1996 and 1995 consists of the
following:
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Land and improvements................................. $ 7,575 $ 9,666
Buildings and improvements............................ 42,885 43,194
Machinery and equipment............................... 89,629 91,236
Vehicles.............................................. 1,348 2,304
Leasehold improvements................................ 1,924 1,953
Construction in progress.............................. 4,587 6,948
-------- --------
Total................................................. 147,948 155,301
Less accumulated depreciation and amortization........ (59,104) (56,422)
-------- --------
Total................................................. $ 88,844 $ 98,879
-------- --------
-------- --------
</TABLE>
Property above excludes $993 and $1,698 at March 31, 1996 and 1995,
respectively, relating to the Company's closure of the Oakland bakery. Such
amounts have been segregated in the accompanying balance sheet as property held
for sale.
F-35
<PAGE>
SUNSHINE BISCUITS, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED MARCH 31, 1996, 1995 AND 1994
(IN THOUSANDS)
6. OTHER ASSETS
Other assets at March 31, 1996 and 1995 consist of the following:
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Excess cost over fair value of assets acquired (net of
related amortization of $2,005 and $1,559)............ $14,261 $14,707
Intangible pension asset................................ 10,610 11,613
Debt issuance costs..................................... 1,023 1,132
Other................................................... 1,983 2,957
------- -------
Total................................................... $27,877 $30,409
------- -------
------- -------
</TABLE>
7. TRADE ACCOUNTS PAYABLE AND OTHER ACCRUED LIABILITIES
Checks outstanding in excess of related cash balances totaling $9,935 and
$10,509 at March 31, 1996 and 1995, respectively, are included in trade accounts
payable.
Other accrued liabilities at March 31, 1996 and 1995 consist of the
following:
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Accrued selling expenses................................ $ 7,030 $15,298
Compensation and payroll taxes.......................... 11,335 13,544
Other................................................... 9,079 11,178
------- -------
Total................................................... $27,444 $40,020
------- -------
------- -------
</TABLE>
8. INCOME TAXES
Allocated income taxes (tax benefit) from continuing operations for the
years ended March 31, 1996, 1995 and 1994 consist of the following:
<TABLE>
<CAPTION>
1996 1995 1994
------ -------- ------
<S> <C> <C> <C>
Currently (receivable) payable:
Federal....................................... $ 60 $ 1,341 $3,334
State......................................... -- (48) 889
------ -------- ------
Total currently payable......................... 60 1,293 4,223
------ -------- ------
Deferred:
Federal....................................... 4,750 (15,921) (163)
State......................................... 1,359 (4,290) (27)
------ -------- ------
Total deferred.................................. 6,109 (20,211) (190)
------ -------- ------
Total........................................... $6,169 $(18,918) $4,033
------ -------- ------
------ -------- ------
</TABLE>
F-36
<PAGE>
SUNSHINE BISCUITS, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED MARCH 31, 1996, 1995 AND 1994
(IN THOUSANDS)
8. INCOME TAXES--(CONTINUED)
Allocated income taxes in 1996, 1995 and 1994 are at effective rates that
differ from the expected statutory rate of approximately 34% because of state
taxes, goodwill amortization and certain other expenses not deductible for
income tax purposes.
Included in the amount due from Parent and affiliates at March 31, 1996 is
$2,679 which represents the portion of the federal tax benefit of the 1995
consolidated net operating loss carryback allocated to the Company pursuant to
the tax sharing agreement among the Parent and its subsidiaries.
At March 31, 1996, the Company has net operating loss carryforwards for
Federal and State tax purposes of approximately $9,625 and $16,200,
respectively, expiring in 2010.
Deferred tax assets and liabilities at March 31, 1996 and 1995 are as
follows:
<TABLE>
<CAPTION>
1996 1995
---------------------- ----------------------
ASSETS LIABILITIES ASSETS LIABILITIES
------- ----------- ------- -----------
<S> <C> <C> <C> <C>
Current:
Accrued employee benefits.......................... $ 6,323 $ -- $ 4,658 $--
Inventory costing and valuation.................... -- 3,052 -- 3,644
Accrued promotion and marketing costs.............. 175 -- 1,100 --
Accrued restructuring costs........................ 1,206 -- 6,913 --
Accrued plant closing and other costs.............. 557 -- 694 --
Other accrued expenses............................. 688 -- 760 --
Allowance for doubtful accounts.................... 332 -- 560 --
Other.............................................. 538 -- 480 --
------- ----------- ------- -----------
Total current........................................ 9,819 3,052 15,165 3,644
------- ----------- ------- -----------
Noncurrent:
Depreciation....................................... -- 20,381 -- 24,081
Net operating loss carryforwards................... 5,353 -- 7,868 --
Accrued pension and post-retirement benefits....... 4,539 344 6,284 344
Alternative minimum tax credit carryforwards....... 775 -- 948 --
------- ----------- ------- -----------
Total noncurrent..................................... 10,667 20,725 15,100 24,425
------- ----------- ------- -----------
Total................................................ $20,486 $ 23,777 $30,265 $28,069
------- ----------- ------- -----------
------- ----------- ------- -----------
</TABLE>
The Internal Revenue Service has examined the Parent's consolidated income
tax returns for years 1989 through 1992. The Parent believes that the amounts
accrued are adequate to cover taxes payable for these years.
9. OTHER LIABILITIES
Other liabilities as of March 31, 1996 and 1995 consist of the following:
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Postretirement benefit obligations (Note 11)............ $11,347 $15,711
Pension obligation...................................... 19,178 15,694
Other................................................... 113 70
------- -------
Total................................................... $30,638 $31,475
------- -------
------- -------
</TABLE>
F-37
<PAGE>
SUNSHINE BISCUITS, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED MARCH 31, 1996, 1995 AND 1994
(IN THOUSANDS)
10. NOTES PAYABLE
Notes payable as of March 31, 1996 and 1995 consist of the following:
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Borrowings under BankAmerica Business Credit Inc. loan
and security agreement, interest payable monthly at a
rate based on prime or LIBOR(1)......................... $74,105 $ --
Borrowings under Wells Fargo revolving credit loan,
interest payable at a rate based on prime
(9.0% at March 31, 1995) plus .25%(1)................. -- 21,635
Senior secured notes, interest at 8.69% payable semi-
annually in arrears on May 1st and November 1st
commencing May 1, 1994. Notes are payable in
installments beginning in 1997 with final payment due
in 2005(1)............................................ -- 60,500
Notes payable to Parent (includes accrued
interest)(2)............................................ 11,545 10,645
Subordinated, unsecured, note payable to American
Brands, Inc., interest at prime (8.25% at March 31,
1996) payable semi-annually beginning July 1993,
balance due January 22, 1998.......................... 1,000 1,000
Capital lease obligation................................ -- 33
------- -------
Total(3)................................................ 86,650 93,813
Less current maturities, including revolving loans of
$8,192.................................................. 13,192 33
------- -------
Long-term portion....................................... $73,458 $93,780
------- -------
------- -------
</TABLE>
- ------------
(1) On February 1, 1996, the Company refinanced the Wells Fargo and senior
secured notes with BankAmerica Business Credit, Inc. The new credit facility
consists of revolving loans, letters of credit and a term loan of up to
$90,000 in the aggregate. The revolving loans are available for a two-year
period, not exceeding $50,000 at any one time, based on eligible accounts
receivable and inventory. The term loan is for $40,000 and is payable in
twenty-three equal monthly installments with a final balloon payment at
maturity. At March 31, 1996 the amounts outstanding under the revolving
loans and term loan were $34,522 (interest at 7.56%) and $39,583 (interest
at 7.81%), respectively, and letters of credit outstanding totaled $725 at
March 31, 1996. Based on eligible receivables and inventory at March 31,
1996, the Company had $8,657 available under this credit facility. Revolving
loans of $26,330 have been classified as long-term as management expects to
maintain at least this level of borrowings during fiscal year 1997.
The agreement includes restrictive financial covenants related to capital
expenditures, minimum earnings and fixed charge coverage, and borrowings are
collateralized by substantially all of the Company's assets.
As a result of this refinancing, the Company recognized an extraordinary
loss on the early extinguishment of debt of $2,821 (net of related tax
benefit of $2,123).
(2) Notes payable to Parent, due February 1, 2001, are subordinated and bear
interest at prime plus 1/2%. Interest on these notes was approximately $900,
$810 and $495 for the years ended March 31, 1996, 1995 and 1994,
respectively. During 1994, other notes of $8,000 due the Parent were
contributed to capital and recorded as additional paid-in capital.
(3) At March 31, 1996, the long-term portion of notes payable is due, $61,913 in
1998 and $11,545 in 2001.
F-38
<PAGE>
SUNSHINE BISCUITS, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED MARCH 31, 1996, 1995 AND 1994
(IN THOUSANDS)
11. EMPLOYEE BENEFIT PLANS
The following table sets forth the funded status of the Company's pension
plan and the amounts recognized in the Company's financial statements at March
31, 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Actuarial present value of benefit obligation:
Vested............................................ $(197,420) $(174,218)
Nonvested......................................... (16,972) (16,561)
--------- ---------
Total accumulated benefit obligation................ $(214,392) $(190,779)
--------- ---------
--------- ---------
Projected benefit obligation........................ $(221,305) $(199,804)
Plan assets at fair value........................... 195,214 175,085
--------- ---------
Projected benefit obligation in excess of plan
assets.............................................. (26,091) (24,719)
Unrecognized net loss............................... 1,206 5,903
Additional minimum liability........................ (10,610) (11,613)
Unrecognized prior service cost..................... 16,153 14,536
Unrecognized net obligation from adoption........... 164 199
--------- ---------
Accrued pension cost (including intangible pension
asset of $10,610 in 1996 and $11,613 in 1995, see
Note 6)............................................. $ (19,178) $ (15,694)
--------- ---------
--------- ---------
Components of net pension cost for the year:
Service cost-benefits earned during the period.... $ 3,363 $ 3,823
Interest costs on projected benefit obligation.... 16,268 14,888
Return on plan assets............................. (35,297) (12,160)
Net amortization and deferral..................... 19,874 (2,426)
--------- ---------
Net pension cost.................................... $ 4,208 $ 4,125
--------- ---------
--------- ---------
</TABLE>
Prior to March 31, 1994, eligible salaried and hourly employees participated
in defined benefit pension plans sponsored by the Company or the Parent. The
plans provided for payment of retirement benefits and certain disability and
severance benefits. Effective March 31, 1994, a decision was made to merge the
Company's defined benefit pension plan into the Parent's defined benefit pension
plan. Accordingly, for 1994, the Company was allocated pension costs, for both
salaried and hourly employees, by the Parent. Total pension costs allocated for
1994 were $3,905.
During 1995, the Parent reevaluated its continuing operations and decided
that the plan merger described above would not be completed. On December 31,
1994, the Parent's defined benefit pension plan was reorganized into two
continuing plans, one primarily for all employees of the Company and the other
for the employees of the Parent and its other subsidiaries. Certain benefit
obligations and accruals were allocated to the plans in accordance with the
Internal Revenue Code and other regulations and other components of the
projected benefit obligations were allocated on a historical basis as shown
above.
The Company's policy is to make plan contributions required by applicable
ERISA regulations. Plan assets are primarily invested in equity and fixed income
securities. The actuarial present value of the benefit obligation at March 31,
1996 and 1995 was determined using assumed discount rates of 7.75% and 8.5%,
respectively, an expected long-term rate of return on plan assets of 10%, and an
assumed increase in future compensation of 4.75% and 4.5%, respectively.
F-39
<PAGE>
SUNSHINE BISCUITS, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED MARCH 31, 1996, 1995 AND 1994
(IN THOUSANDS)
11. EMPLOYEE BENEFIT PLANS--(CONTINUED)
In addition, the Company provides a savings plan for qualified salaried
employees and matches a portion of employee contributions not to exceed 6% of
gross wages. Expense for this plan was approximately $93, $411 and $692 in 1996,
1995 and 1994, respectively. The Company also provides a savings plan for
certain hourly employees which provides for no matching Company contributions.
In addition to pension benefits, the Company provides certain health care
benefits and life insurance to eligible retired employees (and their eligible
dependents) who are not covered by any collective bargaining agreements. The
Company continues to fund benefit costs on a pay-as-you-go basis, with retirees
paying a portion of the cost.
The following table sets forth amounts recognized in the Company's 1996,
1995 and 1994 financial statements:
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C> <C>
Accumulated postretirement benefit obligation:
Retirees...................................... $14,046 $18,352
Fully eligible active employees............... 5,939 5,702
Other employees............................... 9,908 9,783
------- -------
Total........................................... 29,893 33,837
Unrecognized net gain........................... 9,406 5,828
Unrecognized transition obligation.............. (27,952) (23,954)
------- -------
Accrued postretirement benefit obligation at
March 31 (Note 9)............................... $11,347 $15,711
------- -------
------- -------
<CAPTION>
1996 1995 1994
------- ------- ------
<S> <C> <C> <C>
Service cost of benefits earned................. $ 792 $ 945 $ 891
Interest cost on accumulated postretirement
benefit obligation............................ 2,335 2,574 2,955
Amortization--net............................... 959 1,215 1,447
------- ------- ------
Net postretirement benefit cost for the year.... $ 4,086 $ 4,734 $5,293
------- ------- ------
------- ------- ------
</TABLE>
The assumed health care cost trend rate used in measuring the accumulated
post-retirement benefit obligation was 10.25% and 12% for those retirees not
eligible for Medicare (pre 65 years of age) and 7.25% and 9% for those eligible
for Medicare in 1996 and 1995, respectively, gradually declining to 5.75% and
5.5% by the years 2002 and 2001, respectively, and remaining at that level
thereafter. A one percentage-point increase in the assumed health care cost
trend rate for each year would increase the accumulated postretirement benefit
liability by approximately 10% and 14% and net postretirement health care costs
by approximately 8% and 14% at March 31, 1996 and 1995, respectively. The
assumed discount rate and rate of compensation increases used in determining the
accumulated postretirement benefit obligation were 7.75% and 5.25%,
respectively, at March 31, 1996, and 8.25% and 5.25%, respectively, at March 31,
1995.
In 1996 a net curtailment gain of $5,570 associated with the Company's
restructuring programs (see Note 3) was recognized and is included in
restructuring gains for 1996. In 1995, curtailment losses of $4,650 associated
with these programs were included in restructuring costs.
F-40
<PAGE>
SUNSHINE BISCUITS, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED MARCH 31, 1996, 1995 AND 1994
(IN THOUSANDS)
11. EMPLOYEE BENEFIT PLANS--(CONTINUED)
A Voluntary Employee Beneficiary Association ("VEBA") provides health and
welfare benefits for certain employees. Payments made to the VEBA relating to
future employee benefits are included in prepaid expenses. The Company's policy
is to fund the VEBA based on actual expenses of the preceding year to the extent
deductible under current Federal income tax laws. Expenses funded through the
VEBA were approximately $15,252, $18,212 and $18,298 in 1996, 1995 and 1994,
respectively.
12. LEASES
The Company leases manufacturing, warehouse and office facilities, vehicles
and other bakery equipment under long-term operating leases. These leases
generally contain renewal options for periods ranging from one to ten years and
generally require the payment of other costs such as property taxes, maintenance
and insurance.
Future minimum payments under operating leases as of March 31, 1996 are as
follows:
YEAR ENDING:
- -----------------------------------------------------------------
1997............................................................. $10,273
1998............................................................. 7,892
1999............................................................. 5,559
2000............................................................. 4,240
2001............................................................. 2,960
Thereafter....................................................... 5,051
-------
Total minimum lease payments..................................... $35,975
-------
-------
Rent expense was approximately $12,537, $12,346 and $11,490 for the years
ended March 31, 1996, 1995 and 1994, respectively.
13. SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental cash flow information for the years ended March 31, 1996, 1995
and 1994 is as follows:
1996 1995 1994
------- ------ ------
Cash paid during the year for:
Interest....................................... $10,084 $7,432 $4,181
Income taxes................................... 90 252 724
14. RELATED PARTY TRANSACTIONS
Subsequent to March 31, 1995, one of the Parent's subsidiaries filed for
protection under Chapter 11 of the United States Bankruptcy Code, and another
subsidiary's business was closed and in process of being liquidated. It is
expected that the assets of both of these subsidiaries will be insufficient to
satisfy all of the creditors' claims. For 1996 and 1995, $750 and $2,567,
respectively of trade receivables due from these subsidiaries were written off
as uncollectible. At March 31, 1996, amounts due from Parent and affiliates
includes $513 of these receivables remaining unpaid.
F-41
<PAGE>
SUNSHINE BISCUITS, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED MARCH 31, 1996, 1995 AND 1994
(IN THOUSANDS)
14. RELATED PARTY TRANSACTIONS--(CONTINUED)
The Company is obligated as guarantor under certain lease agreements of
these subsidiaries. At March 31, 1995, the Company recorded a liability of
$1,734 related to its expected future obligations (including rental payments and
carrying costs, etc.) associated with such leases. In 1996 the Company subleased
certain property subject to these leases and, accordingly, reduced the amounts
recorded for these guarantees by approximately $600.
15. DISCONTINUED OPERATIONS
Effective October 1, 1993, the Company transferred its salty snack food
operations to the Parent and has accounted for these businesses as discontinued
operations. Accordingly, their operating results for 1994 have been segregated
in the accompanying statement of operations as follows:
<TABLE>
<S> <C>
Sales............................................................ $42,721
Costs and expenses............................................... (46,895)
Income tax benefit............................................... 1,564
-------
Net loss......................................................... $(2,610)
-------
-------
</TABLE>
******
F-42
<PAGE>
=========================================== ==================================
- ------------------------------------------- ----------------------------------
NO DEALER, SALESPERSON OR ANY OTHER PERSON PROSPECTUS
HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR
TO MAKE ANY REPRESENTATION NOT CONTAINED IN
THIS PROSPECTUS IN CONNECTION WITH THE
OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN HOLLOW TREE LOGO WITH ERNIE]
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, ANY SECURITY
OTHER THAN THE EXCHANGE NOTES OFFERED BY THIS
PROSPECTUS, NOR DOES IT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY
THE EXCHANGE NOTES BY ANYONE IN ANY KEEBLER
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, CORPORATION
IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION
THAT THERE HAS BEEN ANY CHANGE IN THE FACTS
SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS
OF THE COMPANY SINCE THE DATE HEREOF.
-------------------
TABLE OF CONTENTS
PAGE
----
Available Information.................. 2
Disclosure Regarding Forward-Looking
Statements............................ 2
Summary................................ 3
Risk Factors........................... 13
The Acquisitions....................... 17
Sponsors............................... 18
Use of Proceeds........................ 20
The Exchange Offer..................... 20
Pro Forma Capitalization............... 29
Selected Unaudited Pro Forma
Consolidated Financial Data............ 30 OFFER TO EXCHANGE
Selected Historical Financial Data..... 37 $125,000,000 OF ITS
Management's Discussion and Analysis of 10 3/4% SENIOR SUBORDINATED
Financial Condition and Results of NOTES DUE 2006,
Operations........................... 39 WHICH HAVE BEEN
Business............................... 49 REGISTERED UNDER THE
The Industry........................... 63 SECURITIES ACT, FOR
Management............................. 65 $125,000,000 OF ITS
Principal Stockholders................. 71 OUTSTANDING 10 3/4% SENIOR
Certain Related Transactions........... 72 SUBORDINATED NOTES DUE 2006
Description of Senior Credit Facility
and the UB Note...................... 74
Description of Exchange Notes.......... 77
Book-Entry; Delivery and Form.......... 105
Certain United States Federal Income
Tax Consequences..................... 107
Exchange and Registration Rights
Agreement............................ 107 , 1996
Plan of Distribution................... 110
Legal Matters.......................... 110
Independent Auditors................... 110
Index to Financial Statements.......... F-1
-------------------
UNTIL , 1996 (90 DAYS AFTER THE
DATE OF THIS PROSPECTUS) ALL DEALERS EFFECTING
TRANSACTIONS IN THE REGISTERED SECURITIES,
WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS IS IN ADDITION TO THE
OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS
WHEN ACTING AS UNDERWRITERS AND WITH RESPECT
TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
=========================================== ==================================
- ------------------------------------------- ----------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law (the "DGCL") provides
for, among other things:
a. permissive indemnification for expenses, judgments, fines and amounts
paid in settlement actually and reasonably incurred by designated persons,
including directors and officers of a corporation, in the event such persons
are parties to litigation other than stockholder derivative actions if
certain conditions are met;
b. permissive indemnification for expenses actually and reasonably
incurred by designated persons, including directors and officers of a
corporation, in the event such persons are parties to stockholder derivative
actions if certain conditions are met;
c. mandatory indemnification for expenses actually and reasonably
incurred by designated persons, including directors and officers of a
corporation, in the event such persons are successful on the merits or
otherwise in litigation covered by a. and b. above; and
d. that the indemnification provided for by Section 145 shall not be
deemed exclusive of any other rights which may be provided under any by-law,
agreement, stockholder or disinterested director vote, or otherwise.
The Company's Certificate of Incorporation provides that:
"Suits by Third Parties. The corporation shall indemnify any person who
was or is made a party, or is threatened to be made a party, to any
threatened, pending or completed action, suit or proceedings, whether civil,
criminal, administrative or investigative (other than an action by, or in
the right of, the corporation) by reason of the fact that the person is or
was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if the person acted in good
faith and in a manner the person reasonably believed to be in, or not
opposed to, the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe the
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere
or its equivalent shall not, of itself, create a presumption that the person
did not act in good faith and in a manner which the person reasonably
believed to be in, or not opposed to, the best interests of the corporation
and, with respect to any criminal action or proceeding, had reasonable cause
to believe that the conduct was unlawful.
Derivative Suits. The corporation shall indemnify any person who was or
is made a party, or is threatened to be made a party, to any threatened,
pending or completed action or suit by, or in the right of, the corporation
to procure a judgment in its favor by reason of the fact that the person is
or was a director, officer, employee or agent of the corporation, or is or
was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust
or other enterprise, against expenses (including attorneys' fees) actually
and reasonably incurred by the person in connection with the defense or
settlement of such action or suit if the person acted in good faith and in a
manner the person reasonably believed to be in, or not opposed to, the best
interests of the corporation, except that no indemnification shall be made
in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the corporation unless, and only to the extent
that, the Court of Chancery or the court in which
II-1
<PAGE>
such action or suit was brought shall determine upon application that,
despite the adjudication of liability, but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for
such expenses which the Court of Chancery or such other court shall deem
proper.
Indemnification as of Right. To the extent that a director, officer,
employee or agent of the corporation has been successful on the merits, or
otherwise, in defense of any action, suit or proceeding referred to in the
preceding paragraphs, or in defense of any claim issue or matter therein,
the person shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by the person in connection therewith.
Advance of Funds. Expenses incurred by any such person in defending a
civil, criminal, administrative or investigative action, suit or proceeding,
or threat thereof, shall be paid by the corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an
undertaking by, or on behalf of, the director, officer, employee or agent to
repay such amount if it shall ultimately be determined that the person is
not entitled to be indemnified by the corporation as authorized herein.
No director of the corporation shall be liable to the corporation or its
stockholders for monetary damages for breach of his or her fiduciary duty as
a director, provided that nothing contained in this [paragraph] shall
eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of the law, (iii) under Section 174 of the General
Corporation Law of the State of Delaware, or (iv) for any transaction from
which the director derived an improper personal benefit. No amendment,
modification or repeal of this [paragraph] shall apply to, or have any
effect on, the liability or the alleged liability of any director of the
corporation for, or with respect to, any acts or omissions of such director
occurring prior to such amendment, modification or repeal."
The directors and officers of the Company are insured against certain civil
liabilities, including liabilities under federal securities laws, which might be
incurred by them in such capacity.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) See Index to Exhibits.
(b) All schedules are omitted as the required information is presented in
the registrants' consolidated financial statements or related notes or such
schedules are not applicable.
ITEM 22. UNDERTAKINGS
The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933 (the "Securities Act"), unless the information
required to be included in such post-effective amendment is contained in a
periodic report filed by the registrant pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") and
incorporated herein by reference;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represents a fundamental change in the information set forth in the
Registration Statement, unless the information required to be included in
such post-effective amendment is
II-2
<PAGE>
contained in a periodic report filed by the registrant pursuant to Section
13 or Section 15(d) of the Exchange Act and incorporated herein by
reference;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any,
material change to such information in the Registration Statement;
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof;
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering;
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof;
(5) To respond to requests for information that is incorporated by reference
into the prospectus pursuant to Item 4, 10(b), 11 or 13 of this Form, within one
business day of receipt of such request, and to send the incorporated documents
by first class mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of the
Registration Statement through the date of responding to the request; and
(6) To supply by means of a post-effective amendment all information
concerning the Exchange Offer that was not the subject of and included in the
Registration Statement when it became effective.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 20 above, 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 Securities Act and is, therefore, unenforceable. In the event 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 against the registrant by such director, officer or
controlling person 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 against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duty authorized, in the City of Elmhurst, Illinois, on
July 15, 1996
KEEBLER CORPORATION
By: /s/ SAM K. REED
..................................
Sam K. Reed
President, Chief Executive
Officer and Director
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes Sam
K. Reed and E. Nichol McCully, and each of them, with full power of substitution
and full power to act without the other, his or her true and lawful
attorney-in-fact and agent in his or her name, place and stead, to execute in
the name and on behalf of such person, individually and in each capacity stated
below, any and all amendments (including post-effective amendments) to this
Registration Statement and all documents relating thereto, and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, and generally to do all such things in his
or her name and on his or her behalf in his or her respective capacities as
officers or directors of Keebler Corporation to comply with the provisions of
the Securities Act of 1933, as amended, and all requirements of the Securities
and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated below.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------- --------------------------------------- --------------
<S> <C> <C>
/s/ SAM K. REED President, Chief Executive Officer July 15, 1996
....................................... (principal executive officer) and
Sam K. Reed Director
/s/ E. NICHOL MCCULLY Chief Financial Officer and Senior Vice July 15, 1996
....................................... President, Finance (principal
E. Nichol McCully financial officer; principal
accounting officer)
/s/ RAYMOND DEBBANE Director July 15, 1996
.......................................
Raymond Debbane
/s/ SACHA LAINOVIC Director July 15, 1996
.......................................
Sacha Lainovic
/s/ CHRISTOPHER J. SOBECKI Director July 15, 1996
.......................................
Christopher J. Sobecki
/s/ AMOS R. MCMULLIAN Director July 15, 1996
.......................................
Amos R. McMullian
/s/ ROBERT P. CROZER Director July 15, 1996
.......................................
Robert P. Crozer
/s/ C. MARTIN WOOD III Director July 15, 1996
.......................................
C. Martin Wood III
</TABLE>
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duty authorized, in the City of Elmhurst, Illinois, on
July 15, 1996.
KEEBLER BISCUIT COMPANY
By: /s/ SAM K. REED
..................................
Sam K. Reed
President and Director
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes Sam
K. Reed and E. Nichol McCully, and each of them, with full power of substitution
and full power to act without the other, his or her true and lawful
attorney-in-fact and agent in his or her name, place and stead, to execute in
the name and on behalf of such person, individually and in each capacity stated
below, any and all amendments (including post-effective amendments) to this
Registration Statement and all documents relating thereto, and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, and generally to do all such things in his
or her name and on his or her behalf in his or her respective capacities as
officers or directors of Keebler Biscuit Company to comply with the provisions
of the Securities Act of 1933, as amended, and all requirements of the
Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated below.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------- --------------------------------------- --------------
<S> <C> <C>
/s/ SAM K. REED President (principal executive officer) July 15, 1996
....................................... and Director
Sam K. Reed
/s/ E. NICHOL MCCULLY Senior Vice President, Treasurer July 15, 1996
....................................... (principal financial officer;
E. Nichol Mccully principal accounting officer) and
Director
</TABLE>
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duty authorized, in the City of Elmhurst, Illinois, on
July 15, 1996.
SHAFFER, CLARKE & CO., INC.
By: /s/ SAM K. REED
..................................
Sam K. Reed
President and Director
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes Sam
K. Reed and E. Nichol McCully, and each of them, with full power of substitution
and full power to act without the other, his or her true and lawful
attorney-in-fact and agent in his or her name, place and stead, to execute in
the name and on behalf of such person, individually and in each capacity stated
below, any and all amendments (including post-effective amendments) to this
Registration Statement and all documents relating thereto, and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, and generally to do all such things in his
or her name and on his or her behalf in his or her respective capacities as
officers or directors of Shaffer, Clarke & Co., Inc. to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements of
the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated below.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------- --------------------------------------- --------------
<S> <C> <C>
/s/ SAM K. REED President (principal executive officer) July 15, 1996
....................................... and Director
Sam K. Reed
/s/ E. NICHOL MCCULLY Vice President, Treasurer (principal July 15, 1996
....................................... financial officer; principal
E. Nichol Mccully accounting officer) and Director
</TABLE>
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duty authorized, in the City of Elmhurst, Illinois, on
July 15, 1996.
JOHNSTON'S READY-CRUST COMPANY
By: /s/ SAM K. REED
..................................
Sam K. Reed
President and Director
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes Sam
K. Reed and E. Nichol McCully, and each of them, with full power of substitution
and full power to act without the other, his or her true and lawful
attorney-in-fact and agent in his or her name, place and stead, to execute in
the name and on behalf of such person, individually and in each capacity stated
below, any and all amendments (including post-effective amendments) to this
Registration Statement and all documents relating thereto, and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, and generally to do all such things in his
or her name and on his or her behalf in his or her respective capacities as
officers or directors of Johnston's Ready-Crust Company to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements of
the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated below.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------- --------------------------------------- --------------
<S> <C> <C>
/s/ SAM K. REED President (principal executive officer) July 15, 1996
....................................... and Director
Sam K. Reed
/s/ E. NICHOL MCCULLY Vice President, Treasurer (principal July 15, 1996
....................................... financial officer; principal
E. Nichol Mccully accounting officer) and Director
</TABLE>
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duty authorized, in the City of Elmhurst, Illinois, on
July 15, 1996.
EMERALD INDUSTRIES, INC.
By: /s/ SAM K. REED
..................................
Sam K. Reed
President and Director
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes Sam
K. Reed and E. Nichol McCully, and each of them, with full power of substitution
and full power to act without the other, his or her true and lawful
attorney-in-fact and agent in his or her name, place and stead, to execute in
the name and on behalf of such person, individually and in each capacity stated
below, any and all amendments (including post-effective amendments) to this
Registration Statement and all documents relating thereto, and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, and generally to do all such things in his
or her name and on his or her behalf in his or her respective capacities as
officers or directors of Emerald Industries, Inc. to comply with the provisions
of the Securities Act of 1933, as amended, and all requirements of the
Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated below.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------- --------------------------------------- --------------
<S> <C> <C>
/s/ SAM K. REED President (principal executive officer) July 15, 1996
....................................... and Director
Sam K. Reed
/s/ E. NICHOL MCCULLY Vice President, Treasurer (principal July 15, 1996
....................................... financial officer; principal
E. Nichol Mccully accounting officer) and Director
</TABLE>
II-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duty authorized, in the City of Elmhurst, Illinois, on
July 15, 1996.
ATHENS PACKAGING, INC.
By: /s/ SAM K. REED
..................................
Sam K. Reed
President and Director
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes Sam
K. Reed and E. Nichol McCully, and each of them, with full power of substitution
and full power to act without the other, his or her true and lawful
attorney-in-fact and agent in his or her name, place and stead, to execute in
the name and on behalf of such person, individually and in each capacity stated
below, any and all amendments (including post-effective amendments) to this
Registration Statement and all documents relating thereto, and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, and generally to do all such things in his
or her name and on his or her behalf in his or her respective capacities as
officers or directors of Athens Packaging, Inc. to comply with the provisions of
the Securities Act of 1933, as amended, and all requirements of the Securities
and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated below.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------- --------------------------------------- --------------
<S> <C> <C>
/s/ SAM K. REED President (principal executive officer) July 15, 1996
....................................... and Director
Sam K. Reed
/s/ E. NICHOL MCCULLY Vice President, Treasurer (principal July 15, 1996
....................................... financial officer; principal
E. Nichol Mccully accounting officer) and Director
</TABLE>
II-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duty authorized, in the City of Elmhurst, Illinois, on
July 15, 1996.
KEEBLER LEASING CORP.
By: /s/ SAM K. REED
..................................
Sam K. Reed
President and Director
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes Sam
K. Reed and E. Nichol McCully, and each of them, with full power of substitution
and full power to act without the other, his or her true and lawful
attorney-in-fact and agent in his or her name, place and stead, to execute in
the name and on behalf of such person, individually and in each capacity stated
below, any and all amendments (including post-effective amendments) to this
Registration Statement and all documents relating thereto, and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, and generally to do all such things in his
or her name and on his or her behalf in his or her respective capacities as
officers or directors of Keebler Leasing Corp. to comply with the provisions of
the Securities Act of 1933, as amended, and all requirements of the Securities
and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated below.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------- --------------------------------------- --------------
<S> <C> <C>
/s/ SAM K. REED President, Chief Executive Officer July 15, 1996
....................................... (principal executive officer) and
Sam K. Reed Director
/s/ E. NICHOL MCCULLY Vice President, Treasurer, Secretary July 15, 1996
....................................... (principal financial officer;
E. Nichol Mccully principal accounting officer) and
Director
</TABLE>
II-10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duty authorized, in the City of Elmhurst, Illinois, on
July 15, 1996.
BAKE-LINE PRODUCTS, INC.
By: /s/ DAVID M. SHANHOLTZ
..................................
David M. Shanholtz
President
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes Sam
K. Reed and E. Nichol McCully, and each of them, with full power of substitution
and full power to act without the other, his or her true and lawful
attorney-in-fact and agent in his or her name, place and stead, to execute in
the name and on behalf of such person, individually and in each capacity stated
below, any and all amendments (including post-effective amendments) to this
Registration Statement and all documents relating thereto, and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, and generally to do all such things in his
or her name and on his or her behalf in his or her respective capacities as
officers or directors of Bake-Line Products, Inc. to comply with the provisions
of the Securities Act of 1933, as amended, and all requirements of the
Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated below.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------- --------------------------------------- --------------
<S> <C> <C>
/s/ DAVID M. SHANHOLTZ President (principal executive officer) July 15, 1996
.......................................
David M. Shanholtz
/s/ E. NICHOL MCCULLY Vice President, Treasurer (principal July 15, 1996
....................................... financial officer, principal
E. Nichol Mccully accounting officer) and Director
/s/ SAM K. REED Director July 15, 1996
.......................................
Sam K. Reed
</TABLE>
II-11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duty authorized, in the City of Elmhurst, Illinois, on
July 15, 1996.
SUNSHINE BISCUITS, INC.
By: /s/ SAM, K. REED
..................................
Sam K. Reed
President and Director
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes Sam
K. Reed and E. Nichol McCully, and each of them, with full power of substitution
and full power to act without the other, his or her true and lawful
attorney-in-fact and agent in his or her name, place and stead, to execute in
the name and on behalf of such person, individually and in each capacity stated
below, any and all amendments (including post-effective amendments) to this
Registration Statement and all documents relating thereto, and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, and generally to do all such things in his
or her name and on his or her behalf in his or her respective capacities as
officers or directors of Sunshine Biscuits, Inc. to comply with the provisions
of the Securities Act of 1933, as amended, and all requirements of the
Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated below.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------- --------------------------------------- --------------
<S> <C> <C>
/s/ SAM K. REED President (principal executive officer) July 15, 1996
....................................... and Director
Sam K. Reed
/s/ E. NICHOL MCCULLY Vice President, Treasurer (principal July 15, 1996
....................................... financial officer; principal
E. Nichol Mccully accounting officer) and Director
</TABLE>
II-12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duty authorized, in the City of Elmhurst, Illinois, on
July 15, 1996.
STEAMBOAT CORPORATION
By: /s/ SAM K. REED
..................................
Sam K. Reed
President and Director
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes Sam
K. Reed and E. Nichol McCully, and each of them, with full power of substitution
and full power to act without the other, his or her true and lawful
attorney-in-fact and agent in his or her name, place and stead, to execute in
the name and on behalf of such person, individually and in each capacity stated
below, any and all amendments (including post-effective amendments) to this
Registration Statement and all documents relating thereto, and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, and generally to do all such things in his
or her name and on his or her behalf in his or her respective capacities as
officers or directors of Steamboat Corporation. to comply with the provisions of
the Securities Act of 1933, as amended, and all requirements of the Securities
and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated below.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------- --------------------------------------- --------------
<S> <C> <C>
/s/ SAM K. REED President (principal executive officer) July 15, 1996
....................................... and Director
Sam K. Reed
/s/ E. NICHOL MCCULLY Vice President, Treasurer (principal July 15, 1996
....................................... financial officer; principal
E. Nichol Mccully accounting officer) and Director
</TABLE>
II-13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duty authorized, in the City of Elmhurst, Illinois, on
July 15, 1996.
ILLINOIS BAKING CORPORATION
By: /s/ SAM K. REED
..................................
Sam K. Reed
President and Director
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes Sam
K. Reed and E. Nichol McCully, and each of them, with full power of substitution
and full power to act without the other, his or her true and lawful
attorney-in-fact and agent in his or her name, place and stead, to execute in
the name and on behalf of such person, individually and in each capacity stated
below, any and all amendments (including post-effective amendments) to this
Registration Statement and all documents relating thereto, and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, and generally to do all such things in his
or her name and on his or her behalf in his or her respective capacities as
officers or directors of Illinois Baking Corporation. to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements of
the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated below.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------- --------------------------------------- --------------
<S> <C> <C>
/s/ SAM K. REED President (principal executive officer) July 15, 1996
....................................... and Director
Sam K. Reed
/s/ E. NICHOL MCCULLY Vice President, Treasurer (principal July 15, 1996
....................................... financial officer; principal
E. Nichol Mccully accounting officer) and Director
</TABLE>
II-14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duty authorized, in the City of Elmhurst, Illinois, on
July 15, 1996.
KEEBLER COOKIE AND CRACKER COMPANY
By: /s/ SAM K. REED
..................................
Sam K. Reed
President and Director
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes Sam
K. Reed and E. Nichol McCully, and each of them, with full power of substitution
and full power to act without the other, his or her true and lawful
attorney-in-fact and agent in his or her name, place and stead, to execute in
the name and on behalf of such person, individually and in each capacity stated
below, any and all amendments (including post-effective amendments) to this
Registration Statement and all documents relating thereto, and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, and generally to do all such things in his
or her name and on his or her behalf in his or her respective capacities as
officers or directors of Keebler Cookie and Cracker Company to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements of
the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated below.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------- --------------------------------------- --------------
<S> <C> <C>
/s/ SAM K. REED President (principal executive officer) July 15, 1996
....................................... and Director
Sam K. Reed
/s/ E. NICHOL MCCULLY Vice President, Treasurer (principal July 15, 1996
....................................... financial officer; principal
E. Nichol Mccully accounting officer) and Director
</TABLE>
II-15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duty authorized, in the City of Elmhurst, Illinois, on
July 15, 1996.
HOLLOW TREE COMPANY
By: /s/ SAM K. REED
..................................
Sam K. Reed
President and Director
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes Sam
K. Reed and E. Nichol McCully, and each of them, with full power of substitution
and full power to act without the other, his or her true and lawful
attorney-in-fact and agent in his or her name, place and stead, to execute in
the name and on behalf of such person, individually and in each capacity stated
below, any and all amendments (including post-effective amendments) to this
Registration Statement and all documents relating thereto, and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, and generally to do all such things in his
or her name and on his or her behalf in his or her respective capacities as
officers or directors of Hollow Tree Company to comply with the provisions of
the Securities Act of 1933, as amended, and all requirements of the Securities
and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated below.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------- --------------------------------------- --------------
<S> <C> <C>
/s/ SAM K. REED President (principal executive officer) July 15, 1996
....................................... and Director
Sam K. Reed
/s/ E. NICHOL MCCULLY Vice President, Treasurer (principal July 15, 1996
....................................... financial officer; principal
E. Nichol Mccully accounting officer) and Director
</TABLE>
II-16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duty authorized, in the City of Elmhurst, Illinois, on
July 15, 1996.
KEEBLER COMPANY/PUERTO RICO, INC.
By: /s/ SAM K. REED
..................................
Sam K. Reed
President and Director
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes Sam
K. Reed and E. Nichol McCully, and each of them, with full power of substitution
and full power to act without the other, his or her true and lawful
attorney-in-fact and agent in his or her name, place and stead, to execute in
the name and on behalf of such person, individually and in each capacity stated
below, any and all amendments (including post-effective amendments) to this
Registration Statement and all documents relating thereto, and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, and generally to do all such things in his
or her name and on his or her behalf in his or her respective capacities as
officers or directors of Keebler Company/Puerto Rico, Inc. to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements of
the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated below.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------- --------------------------------------- --------------
<S> <C> <C>
/s/ SAM K. REED President (principal executive officer) July 15, 1996
....................................... and Director
Sam K. Reed
/s/ E. NICHOL MCCULLY Vice President, Treasurer (principal July 15, 1996
....................................... financial officer; principal
E. Nichol Mccully accounting officer) and Director
</TABLE>
II-17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duty authorized, in the City of Elmhurst, Illinois, on
July 15, 1996.
KEEBLER H.C., INC.
By: /s/ SAM K.
REED
..................................
Sam K. Reed
President and Director
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes Sam
K. Reed and E. Nichol McCully, and each of them, with full power of substitution
and full power to act without the other, his or her true and lawful
attorney-in-fact and agent in his or her name, place and stead, to execute in
the name and on behalf of such person, individually and in each capacity stated
below, any and all amendments (including post-effective amendments) to this
Registration Statement and all documents relating thereto, and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, and generally to do all such things in his
or her name and on his or her behalf in his or her respective capacities as
officers or directors of Keebler H.C., Inc. to comply with the provisions of the
Securities Act of 1933, as amended, and all requirements of the Securities and
Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated below.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------- --------------------------------------- --------------
<S> <C> <C>
/s/ SAM K. REED President (principal executive officer) July 15, 1996
....................................... and Director
Sam K. Reed
/s/ E. NICHOL MCCULLY Vice President, Treasurer (principal July 15, 1996
....................................... financial officer; principal
E. Nichol Mccully accounting officer) and Director
</TABLE>
II-18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duty authorized, in the City of Elmhurst, Illinois, on
July 15, 1996.
KEEBLER-GEORGIA, INC.
By: /s/ SAM K. REED
..................................
Sam K. Reed
President and Director
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes Sam
K. Reed and E. Nichol McCully, and each of them, with full power of substitution
and full power to act without the other, his or her true and lawful
attorney-in-fact and agent in his or her name, place and stead, to execute in
the name and on behalf of such person, individually and in each capacity stated
below, any and all amendments (including post-effective amendments) to this
Registration Statement and all documents relating thereto, and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, and generally to do all such things in his
or her name and on his or her behalf in his or her respective capacities as
officers or directors of Keebler-Georgia, Inc. to comply with the provisions of
the Securities Act of 1933, as amended, and all requirements of the Securities
and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated below.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------- --------------------------------------- --------------
<S> <C> <C>
/s/ SAM K. REED President (principal executive officer) July 15, 1996
....................................... and Director
Sam K. Reed
/s/ E. NICHOL MCCULLY Vice President, Treasurer (principal July 15, 1996
....................................... financial officer; principal
E. Nichol Mccully accounting officer) and Director
</TABLE>
II-19
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT # DOCUMENT DESCRIPTION
- --------- ----------------------------------------------------------------------------------
<C> <S>
3.1 Articles of Incorporation of Keebler Corporation
3.2 Bylaws of Keebler Corporation
3.3 Articles of Incorporation of Keebler Biscuit Company
3.4 Bylaws of Keebler Biscuit Company
3.5 Articles of Incorporation of Shaffer, Clarke & Co., Inc.
3.6 Bylaws of Shaffer, Clarke & Co., Inc.
3.7 Articles of Incorporation of Johnston's Ready-Crust Company
3.8 Bylaws of Johnston's Ready-Crust Company
3.9 Articles of Incorporation of Emerald Industries, Inc.
3.10 Bylaws of Emerald Industries, Inc.
3.11 Articles of Incorporation of Athens Packaging, Inc.
3.12 Bylaws of Athens Packaging, Inc.
3.13 Articles of Incorporation of Keebler Leasing Corp.
3.14 Bylaws of Keebler Leasing Corp.
3.15 Articles of Incorporation of Bake-Line Products, Inc.
3.16 Bylaws of Bake-Line Products, Inc.
3.17 Articles of Incorporation of Sunshine Biscuits, Inc.
3.18 Bylaws of Sunshine Biscuits, Inc.
3.19 Articles of Incorporation of Steamboat Corporation
3.20 Bylaws of Steamboat Corporation
3.21 Articles of Incorporation of Illinois Baking Corporation
3.22 Bylaws of Illinois Baking Corporation
3.23 Articles of Incorporation of Keebler Cookie and Cracker Company
3.24 Bylaws of Keebler Cookie and Cracker Company
3.25 Articles of Incorporation of Hollow Tree Company
3.26 Bylaws of Hollow Tree Company
3.27 Articles of Incorporation of Keebler Company/Puerto Rico, Inc.
3.28 Bylaws of Keebler Company/Puerto Rico, Inc.
3.29 Articles of Incorporation of Keebler H.C., Inc.
3.30 Bylaws of Keebler H.C., Inc.
3.31 Articles of Incorporation of Keebler-Georgia, Inc.
3.32 Bylaws of Keebler-Georgia, Inc.
4.1 Indenture dated as of June 20, 1996 among Keebler Corporation, the guarantors
named therein and The U.S. Trust Company of New York
4.2 Form of 10 3/4% Senior Subordinated Note due 2006 (included in Exhibit 4.1)
5 Opinion of Simpson Thacher & Bartlett*
10.1 Stockholders' Agreement dated as of January 26, 1996 among INFLO Holdings
Corporation, Artal Luxembourg S.A. and Flowers Industries, Inc.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT # DOCUMENT DESCRIPTION
- --------- ----------------------------------------------------------------------------------
<C> <S>
10.2 Stock Purchase Agreement dated November 5, 1995 between INFLO Holdings Corporation
and UB Investments (Netherlands) B.V. regarding stock of Keebler Corporation
(formerly UB Investments US Inc.)
10.3 Amendment Agreement dated as of January 26, 1996 between INFLO Holdings
Corporation and UB Investments (Netherlands) B.V. regarding stock of Keebler
Corporation (formerly UB Investments US Inc.)
10.4 Form of $32,500,000 Promissory Note made by INFLO Holdings Corporation in favor of
UB Investments (Netherlands) B.V. (included in Exhibit 10.3)
10.5 Distribution Agreement dated as of January 26, 1996 between United Biscuits (UK)
Limited and Shaffer, Clarke & Co., Inc.
10.6 Trademark License Agreement dated as of January 26, 1996 between United Biscuits
(UK) Limited and Shaffer, Clarke & Co., Inc.
10.7 $447,875,000 Amended and Restated Credit Agreement dated as of June 4, 1996, among
Keebler Corporation (formerly Keebler Holding Corp.), as the Borrower, Various
Financial Institutions, as the Lenders, Various Financial Institutions, as the
Co-Agents for the Lenders and The Bank of Nova Scotia, as the Administrative Agent
for the Lenders
10.7(a) Borrower Security Agreement dated as of January 26, 1996 made by Keebler
Corporation in favor of The Bank of Nova Scotia
10.7(b) Subsidiary Security Agreement dated as of January 26, 1996 made by each of the
Keebler Corporation subsidiaries listed as parties thereto in favor of The Bank of
Nova Scotia
10.7(c) Supplement to Subsidiary Security Agreement dated June 4, 1996 made by Sunshine
Biscuits, Inc. in favor of The Bank of Nova Scotia
10.7(d) Holdings Pledge Agreement dated as of January 26, 1996 made by INFLO Holdings
Corporation in favor of The Bank of Nova Scotia
10.7(e) Borrower Pledge Agreement dated as of January 26, 1996 made by Keebler Corporation
in favor of The Bank of Nova Scotia
10.7(f) Acknowledgement and Supplement to Borrower Pledge Agreement dated June 4, 1996
made by Keebler Corporation in favor of The Bank of Nova Scotia
10.7(g) Subsidiary Pledge Agreement dated as of January 26, 1996 made by each of the
Keebler Corporation subsidiaries listed as parties thereto in favor of The Bank of
Nova Scotia
10.7(h) Subsidiary Guaranty dated as of January 26, 1996 made by each of the Keebler
Corporation subsidiaries listed as parties thereto in favor of The Bank of Nova
Scotia
10.7(i) Supplement to Subsidiary Guaranty dated June 4, 1996 made by Sunshine Biscuits,
Inc. in favor of The Bank of Nova Scotia
10.7(j) Holdings Guaranty dated as of January 26, 1996 made by INFLO Holdings Corporation
in favor of The Bank of Nova Scotia
10.7(k) First Amendment to Holdings Guaranty dated June 4, 1996 made by INFLO Holdings
Corporation in favor of The Bank of Nova Scotia
10.7(l) Form of Mortgage and Security Agreement between Keebler Corporation, Mortgagor,
and The Bank of Nova Scotia, Mortgagee
10.7(m) Form of Mortgage and Security Agreement between Sunshine Biscuits, Inc.,
Mortgagor, and The Bank of Nova Scotia, Mortgagee
10.7(n) Form of Revolving Note made by Keebler Corporation dated June 4, 1996
10.7(o) Form of $20,000,000 Swing Line Note dated June 4, 1996 made by Keebler Corporation
to The Bank of Nova Scotia
10.7(p) Form of Term A Note dated June 4, 1996 made by Keebler Corporation
10.7(q) Form of Term B Note dated June 4, 1996 made by Keebler Corporation
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT # DOCUMENT DESCRIPTION
- --------- ----------------------------------------------------------------------------------
<C> <S>
10.7(r) Form of Term C Note dated June 4, 1996 made by Keebler Corporation
10.7(s) Form of Registered Note dated June 4, 1996 made by Keebler Corporation
10.8 Form of Management Stockholder's Agreement between INFLO Holdings Corporation and
Key Employees of INFLO Holdings Corporation and Subsidiaries
10.9 Form of Non-Qualified Stock Option Agreement between INFLO Holdings Corporation
and Key Employees of INFLO Holdings Corporation and Subsidiaries
10.10 Form of 1996 Stock Purchase and Option Plan for Key Employees of INFLO Holdings
Corporation and Subsidiaries
10.11 Form of Sale Participation Agreement among Artal Luxembourg S.A, Flowers
Industries, Inc. and Key Employees of INFLO Holdings Corporation and Subsidiaries
10.12 Stock Purchase Agreement dated June 4, 1996 among INFLO Holdings Corporation,
Keebler Corporation and G.F. Industries, Inc. regarding stock of Sunshine
Biscuits, Inc.
10.13 GFI Stockholder's Agreement dated June 4, 1996 among INFLO Holdings Corporation,
G.F. Industries, Inc., Artal Luxembourg S.A. and Flowers Industries, Inc.
10.14 Warrant to Purchase Shares of Common Stock of INFLO Holdings Corporation, No.
GFI-1
21 Subsidiaries of Keebler Corporation
23.1 Consent of Simpson Thacher & Bartlett (included in Exhibit 5)
23.2 Consent of Coopers & Lybrand L.L.P. (independent auditors)
23.3 Consent of Deloitte & Touche LLP (independent auditors)
24 Power of Attorney (included on pages II-6 and II-7 of this Registration Statement)
25 Statement of Eligibility on Form T-1 of The U.S. Trust Company of New York
27 Financial Data Schedule
99.1 Exchange and Registration Rights Agreement among Keebler Corporation, the
guarantors named therein, Nomura Securities International, Inc. and Morgan Stanley
and Co. Incorporated dated as of June 26, 1996
99.2 Form of Letter of Transmittal
99.3 Form of Notice of Guaranteed Delivery
99.4 Form of Letter to Brokers*
99.5 Form of Letter to Clients*
</TABLE>
- ------------
* To be filed by Amendment
Exhibit 3.1
CERTIFICATE OF INCORPORATION
OF
UNITED BISCUITS U.S., INC.
The undersigned, for the purpose of forming a corporation pursuant to the
provisions of Section 102 of the Delaware General Corporation Law, has executed
the following Certificate of Incorporation:
1. The name of the corporation is:
United Biscuits U.S., Inc.
2. The address of the corporation's registered office is 1209 Orange
Street, Corporation Trust Center, City of Wilmington, County of New Castle, and
State of Delaware, and the name of the corporation's registered agent at such
address is The Corporation Trust Company.
3. The nature of the business or purposes to be conducted or promoted by
this corporation are:
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law.
4. The total number of shares of stock which the corporation shall have
authority to issue is One Thousand (1,000) Common Shares, and the par value of
each such share is One Dollar ($1.00).
5. The name and mailing address of the incorporator is Craig S. Stevens,
677 Larch Avenue, Elmhurst, Illinois 60126.
6. INDEMNIFICATION
Suits by Third Parties. The corporation shall indemnify any person who was
or is made a party, or is threatened to be made a party, to any threatened,
pending or completed action, suit or proceedings, whether civil, criminal,
administrative or investigative (other than an action by, or in the right
of, the corporation) by reason of the fact that the person is or was a
director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if the person acted in good
faith and in a manner the person
<PAGE>
reasonably believed to be in, or not opposed to, the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe the conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction,
or upon a plea of nolo contendere or its equivalent shall not, of itself,
create a presumption that the person did not act in good faith and in a
manner which the person reasonably believed to be in, or not opposed to,
the best interests of the corporation and, with respect to any criminal
action or proceeding, had reasonable cause to believe that the conduct was
unlawful.
Derivative Suits. The corporation shall indemnify any person who was or is
made a party, or is threatened to be made a party, to any threatened,
pending or completed action or suit by, or in the right of, the corporation
to procure a judgment in its favor by reason of the fact that the person is
or was a director, officer, employee or agent of the corporation, or is or
was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust
or other enterprise, against expenses (including attorneys' fees) actually
and reasonably incurred by the person in connection with the defense or
settlement of such action or suit if the person acted in good faith and in
a manner the person reasonably believed to be in, or not opposed to, the
best interests of the corporation, except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation unless, and only to the
extent that, the Court of Chancery or the court in which such action or
suit was brought shall determine upon application that, despite the
adjudication of liability, but in view of all the circumstances of the
case, such person is fairly and reasonably entitled to indemnify for such
expenses which the Court of Chancery or such other court shall deem proper.
Indemnification as of Right. To the extent that a director, officer,
employee or agent of the corporation has been successful on the merits, or
otherwise, in defense of any action, suit or proceeding referred to in the
preceding paragraphs of this Paragraph Six, or in defense of any claim
issue or matter therein, the person shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by the person
in connection therewith.
Advance of Funds. Expenses incurred by any such person in defending a
civil, criminal, administrative or investigative action, suit or
proceeding, or threat thereof, shall be paid by the corporation in advance
of the final disposition of such action, suit or proceeding upon receipt of
an undertaking by, or on behalf of, the director, officer, employee or
agent to repay such amount if it shall ultimately be determined that the
person is not entitled to be indemnified by the corporation as authorized
herein.
<PAGE>
7. MONETARY DAMAGES FOR BREACH
No director of the corporation shall be liable to the corporation or its
stockholders for monetary damages for breach of his or her fiduciary duty
as a director, provided that nothing contained in this Paragraph 7 shall
eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of the law, (iii) under Section 174 of the General
Corporation Law of the State of Delaware, or (iv) for any transaction from
which the director derived an improper personal benefit. No amendment,
modification or repeal of this Paragraph 7 shall apply to, or have any
effect on, the liability or the alleged liability of any director of the
corporation for, or with respect to, any acts or omissions of such director
occurring prior to such amendment, modification or repeal.
IN WITNESS WHEREOF, the incorporator of the above-named corporation has
executed this Certificate of Incorporation on this 10th day of July, 1992.
/s/ Craig S. Stevens
---------------------------
Craig S. Stevens
<PAGE>
UNITED BISCUITS U.S., INC.
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
Pursuant to Section 242 of the General Corporation Law of the State of Delaware,
UNITED BISCUITS U.S., INC. (hereinafter called the "Corporation"), a corporation
organized and existing under and by virtue of the provisions of the General
Corporation Law of the State of Delaware, the Certificate of Incorporation of
which was filed in the office of the Secretary of State of Delaware, hereby
certifies:
FIRST: That, in accordance with the provisions of Section 242 of said
General Corporation Law, the Board of Directors of the Corporation duly adopted
a resolution setting forth and declaring the advisability of the amendment of
the Certificate of Incorporation hereinafter set forth and duly called a meeting
of the sole shareholder for the consideration of such amendment; that at said
meeting of the sole shareholder, which was duly convened and held, the sole
shareholder voted in favor of said amendment; that said amendment, as it was so
adopted, amended Article One of the Certificate of Incorporation of the
Corporation, to read as follows:
1. The name of the corporation is:
US Investments US Inc.
SECOND: That said amendment has been duly adopted in accordance with
the provisions of Section 242 of said General Corporation Law.
IN WITNESS WHEREOF, said UNITED BISCUITS U.S., INC. has caused its
corporate seal to be hereunto affixed and this Certificate to be signed by C.A.
Gerber, its President, and Craig S. Stevens, its Secretary, this 22nd day of
October, 1992.
[ILLEGIBLE]
-----------------------
President
[ILLEGIBLE]
-----------------------
Secretary
(Corporate Seal)
<PAGE>
UNITED BISCUITS U.S., INC.
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
Pursuant to Section 242 of the General Corporation Law of the State of Delaware,
UNITED BISCUITS U.S., INC. (hereinafter called the "Corporation"), a corporation
organized and existing under and by virtue of the provisions of the General
Corporation Law of the State of Delaware, the Certificate of Incorporation of
which was filed in the office of the Secretary of State of Delaware, hereby
certifies:
FIRST: That, in accordance with the provisions of Section 242 of said
General Corporation Law, the Board of Directors of the Corporation duly adopted
a resolution setting forth and declaring the advisability of the amendment of
the Certificate of Incorporation hereinafter set forth and duly called a meeting
of the sole shareholder for the consideration of such amendment; that at said
meeting of the sole shareholder, which was duly convened and held, the sole
shareholder voted in favor of said amendment; that said amendment, as it was so
adopted, amended Article Fourth of the Certificate of Incorporation of the
Corporation, to read as follows:
The total number of shares of stock which the corporation shall have
the authority to issue is One Million (1,000,000) Common Shares, and the
par value of each such share is One Dollar ($1.00).
SECOND: That said amendment has been duly adopted in accordance with
the provisions of Section 242 of said General Corporation Law.
IN WITNESS WHEREOF, said UNITED BISCUITS U.S., INC. has caused its
corporate seal to be hereunto affixed and this Certificate to be signed by C.A.
Gerber, its President, and Craig S. Stevens, its Secretary, this 19th day of
August, 1992.
[ILLEGIBLE]
-----------------------
President
[ILLEGIBLE]
-----------------------
Secretary
(Corporate Seal)
<PAGE>
CERTIFICATE OF OWNERSHIP AND MERGER
MERGER
KEEBLER ACQUISITION CORP.
INTO
UB INVESTMENTS US INC.
---------------------------------------
Pursuant to Section 253 of the General
Corporation Law of the State of Delaware
----------------------------------------
KEEBLER ACQUISITION CORP. (the "Corporation"), a corporation organized and
existing under the laws of the State of Delaware:
DOES HEREBY CERTIFY:
FIRST: That the Corporation owns all of the outstanding shares of common
stock, par value $1.00 per share, of UB Investments US Inc., a Delaware
corporation ("UBIUS"), and UBIUS has no class of stock outstanding other than
said common stock.
SECOND: That the Corporation, by resolutions of its Board of Directors,
duly adopted by unanimous written consent of its members acting without a
meeting pursuant to Section 141(f) of the General Corporation Law of the State
of Delaware (the "DGCL"), dated January 26, 1996, has determined to merge the
Company with and into UBIUS pursuant to Section 253 of the DGCL, with UBIUS as
the surviving corporation (the "Merger"). The resolutions authorizing the Merger
are as follows:
"WHEREAS, the Corporation now owns 1,000,000 shares of common stock,
par value $1.00 per share, of UB Investments US Inc., a Delaware
corporation ("UBIUS"), which shares constitute all of the issue and
outstanding capital stock of UBIUS; and
WHEREAS, it is deemed advisable that the Corporation merge with and
into UBIUS (the "Merger");
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors of the
Corporation hereby authorizes the Merger, with UBIUS to be the surviving
corporation
<PAGE>
(the "Surviving Corporation") in such Merger; and further
RESOLVED, that the Merger shall become effective (the "Effective
Time") upon the filing of a Certificate of Ownership and Merger with the
Secretary of State of the State of Delaware in accordance with the
provisions of Sections 103 and 253 of the General Corporation Law of the
State of Delaware; and further
RESOLVED, that the terms of the Merger are as follows:
(a) Conversions of Shares. At the Effective Time, by virtue of the
Merger and without any action on the part of the holders thereof, each
share of common stock, par value $.01 per share, of the Corporation
outstanding immediately prior to the Effective Time shall be converted into
and shall thereafter evidence 1,000 shares validly issued, fully paid and
nonassessable shares of common stock, par value $1.00 per share, of the
Surviving Corporation.
(b) Name of Surviving Corporation. At the Effective Time and without
any further action on the part of the Corporation or UBIUS, the name of the
Surviving Corporation shall be changed to "Keebler Holding Corp."
(c) Certificate of Incorporation and By-Laws of the Surviving
Corporation. At the Effective Time and without any further action on the
part of the Corporation or UBIUS, the Certificate of Incorporation and
By-Laws of UBIUS shall be the Certificate of Incorporation and By-Laws of
the Surviving Corporation.
(d) Directors and Officers of the Surviving Corporation. The directors
and officers of UBIUS immediately prior to the Effective Time shall be the
directors and officers of the Surviving Corporation.
; and further
RESOLVED, that the Merger be submitted to the sole stockholder of the
Corporation for its consent; and further
RESOLVED, that the proper officers of the Corporation be, and each of
them hereby is, authorized and directed, upon receipt of such consent from
the sole stockholder of the Corporation, to make and execute a Certificate
of Ownership and Merger setting forth the resolutions authorizing the
Corporation to merge itself into UBIUS and the date of adoption thereof,
and to cause the same to be filed with the Secretary of State of the State
of Delaware and a certified copy recorded in the office of the Recorder of
Deeds in the county of Delaware in which the registered office of the
Corporation and UBIUS are located and to do all acts and things, whether
within or without the State of Delaware, which may be in any way whatsoever
necessary or
<PAGE>
proper to effect the Merger."
THIRD: That the Merger has been approved by the holder of all of the
outstanding capital stock of the Corporation entitled to vote thereon by
unanimous written consent without a meeting in accordance with Section 228 of
the DGCL.
FOURTH: That the Merger shall become effective upon the filing of this
Certificate of Ownership and Merger with the Secretary of State of Delaware in
accordance with the provisions of Sections 103 and 253 of the DGCL.
IN WITNESS WHEREOF, KEEBLER ACQUISITION CORP. has caused this Certificate
of Ownership and Merger to be signed by Sam K. Reed, its Chief Executive Officer
and President, this 26th day of January, 1996.
KEEBLER HOLDING CORP.
By: /s/ Sam K. Reed
------------------------------
Name: Sam K. Reed
Title: Chief Executive Officer
and President
<PAGE>
KEEBLER HOLDING CORP.
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
----------------------------------------
Pursuant to Section 242 of the General
Corporation Law of the State of Delaware
-----------------------------------------
KEEBLER HOLDING CORP. (the "Corporation"), a corporation organized and
existing under the laws of the State of Delaware, does hereby certify:
FIRST: That the Board of Directors of the Corporation, acting without a
meeting by unanimous written consent pursuant to Section 141(f) of the General
Corporation Law of the State of Delaware (the "DGCL") on June 6, 1996, duly
adopted a resolution setting forth and declaring the advisability of the
amendment of the Certificate of Incorporation hereinafter set forth (the
"Amendment") and submitted the Amendment to the sole stockholder of the
Corporation (the "Sole Stockholder") for its consideration; that the Sole
Stockholder, acting without a meeting by written consent pursuant to Section
228(a) of the DGCL, approved the Amendment; that the Amendment, as it was so
adopted by the Board of Directors of the Corporation and approved by the Sole
Stockholder, amended Article One of the Certificate of Incorporation of the
Corporation, to read as follows:
"1. The name of the corporation is:
Keebler Corporation."
<PAGE>
2
IN WITNESS WHEREOF, KEEBLER HOLDER CORP. has caused this Certificate of
Amendment to be signed by Sam K. Reed, its Chief Executive Officer and
President, this 7th day of June, 1996.
KEEBLER HOLDING CORP.
By: /s/ Sam K. Reed
------------------------------
Name: Sam K. Reed
Title: Chief Executive Officer
and President
Exhibit 3.2
KEEBLER CORPORATION
BY-LAWS
ARTICLE I
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meeting and Notice. Meetings of the stockholders
of the Corporation shall be held at such place either within or without the
State of Delaware as the Board of Directors may determine.
Section 2. Annual and Special Meetings. Annual meetings of
stockholders shall be held, at a date, time and place fixed by the Board of
Directors and stated in the notice of meeting, to elect a Board of Directors and
to transact such other business as may properly come before the meeting. Special
meetings of the stockholders may be called by the President for any purpose and
shall be called by the President or Secretary if directed by the Board of
Directors or requested in writing by the holders of not less than 25% of the
capital stock of the Corporation. Each such stockholder request shall state the
purpose of the proposed meeting.
Section 3. Notice. Except as otherwise provided by law, at least 10
and not more than 60 days before each meeting of stockholders, written notice of
the time, date and place of the meeting, and, in the case of a special meeting,
the purpose or purposes for which the meeting is called, shall be given to each
stockholder.
Section 4. Quorum. At any meeting of stockholders, the holders of
record, present in person or by proxy, of a majority of the Corporation's issued
and outstanding capital stock shall constitute a quorum for the transaction of
business, except as otherwise provided by law. In the absence of a quorum, any
officer entitled to preside at or to act as secretary of the meeting shall have
power to adjourn the meeting from time to time until a quorum is present.
Section 5. Voting. Except as otherwise provided by law, all matters
submitted to a meeting of stockholders shall be decided by vote of the holders
of record, present in person or by proxy, of a majority of the Corporation's
issued and outstanding capital stock.
<PAGE>
2
ARTICLE II
DIRECTORS
Section 1. Number, Election and Removal of Directors. The number of
Directors that shall constitute the Board of Directors shall not be less than
one or more than fifteen. The first Board of Directors shall consist of two
Directors. Thereafter, within the limits specified above, the number of
Directors shall be determined by the Board of Directors or the stockholders. The
Directors shall be elected by stockholders at their annual meeting. Vacancies
and newly created directorships resulting from any increase in the number of
Directors may be filled by a majority of the Directors then in office, although
less than a quorum, or by the sole remaining Director or by the stockholders. A
Director may be removed with or without cause by the stockholders.
Section 2. Meetings. Regular meetings of the Board of Directors
shall be held at such times and places as may from time to time be fixed by the
Board of Directors or as may be specified in a notice of meeting.
Section 3. Quorum. One-third of the total number of Directors shall
constitute a quorum for the transaction of business. If a quorum is not present
at any meeting of the Board of Directors, the Directors present may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until such a quorum is present. Except as otherwise provided by law,
the Certificate of Incorporation of the Corporation, these By-Laws or any
contract or agreement to which the Corporation is a party, the act of a majority
of the Directors present at any meeting at which there is a quorum shall be the
act of the Board of Directors.
Section 4. Committees. The Board of Directors may, by resolution
adopted by a majority of the whole Board, designate one or more committees,
including, without limitation, an Executive Committee, to have and exercise such
power and authority as the Board of Directors shall specify. In the absence or
disqualification of a member of a 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 Director to act at the
absent or disqualified member.
<PAGE>
3
ARTICLE III
OFFICERS
The officers of the Corporation shall consist of a President, a Vice
President, a Secretary, a Treasurer and such other additional officers with such
titles as the Board of Directors shall determine, all of which shall be chosen
by and shall serve at the pleasure of the Board of Directors. Such officers
shall have the usual powers and shall perform all the usual duties incident to
their respective offices. All officers shall be subject to the supervision and
direction of the Board of Directors. The authority, duties or responsibilities
of any officer of the Corporation may be suspended by the President with or
without cause. Any officer elected or appointed by the Board of Directors may be
removed by the Board of Directors with or without cause.
ARTICLE IV
INDEMNIFICATION
To the fullest extent permitted by the Delaware General Corporation
Law, the corporation shall indemnify any current or former Director or officer
of the Corporation and may, at the discretion of the Board of Directors,
indemnify any current or former employee or agent of the Corporation against all
expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with any threatened, pending or
completed action, suit or proceeding brought by or in the right of the
Corporation or otherwise, to which he was or is a party by reason of his current
or former position with the Corporation or by reason of the fact that he is or
was serving, at the request of the Corporation, as a director, officer, partner,
trustee, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise.
Expenses incurred by a person who is or was a director or officer of
the Corporation in appearing at, participating in or defending any such action,
suit or proceeding shall be paid by the Corporation at reasonable intervals in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of the director or officer to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the Corporation as authorized by this Article. If a claim under
this Article is not paid in full by the Corporation within ninety days after a
written claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be paid
also the expense of prosecuting such claim. It shall be a defense to any such
action (other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition
<PAGE>
4
where the required undertaking, if any is required, has been tendered to the
Corporation) that the claimant has not met the standards of conduct which make
it permissible under the Delaware General Corporation Law or other applicable
law for the corporation to indemnify the claimant for the amount claimed, but
the burden of proving such defense shall be on the Corporation. Neither the
failure of the Corporation (including its board of directors, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he has met the applicable standard of conduct set
forth in the Delaware General Corporation Law or other applicable law, nor an
actual determination by the Corporation (including its board of directors,
independent legal counsel, or its stockholders) that the claimant has not met
the applicable standard of conduct, shall be a defense to the action or create a
presumption that the claimant has not met the applicable standard of conduct.
ARTICLE V
GENERAL PROVISIONS
Section 1. Notices. Whenever any statute, the Certificate of
Incorporation or these By-Laws require notice to be given to any Director or
stockholder, such notice may be given in writing by mail, addressed to such
Director or stockholder at his address as it appears in the records of the
Corporation, with postage thereon prepaid. Such notice shall be deemed to have
been given when it is deposited in the United States mail. Notice to Directors
may also be given by telegram.
Section 2. Fiscal Year. The fiscal year of the Corporation shall be
fixed by the Board of Directors.
Exhibit 3.3
RESTATED CERTIFICATE OF INCORPORATION
OF
KEEBLER COMPANY
A corporation organized and existing under the laws of the State of
Delaware. Craig S. Stevens, Vice President of Keebler Company, hereby certifies
as follows:
1. The name of the corporation is Keebler Company, and the name under which
the corporation was originally incorporated is United Biscuit Company of
America. The date of filing its original Certificate of Incorporation with the
Secretary of State was November 3, 1927.
2. This Restated Certificate of Incorporation only restates and integrates
and does not further amend the provisions of the Certificate of Incorporation of
this corporation as heretofore amended or supplemented and there is no
discrepancy between those provisions and the provisions of this Restated
Certificate of Incorporation.
3. The text of the Certificate of Incorporation as amended or supplemented
heretofore is hereby restated without further amendments or changes to read as
herein set forth in full:
RESTATED CERTIFICATE OF INCORPORATION
OF
KEEBLER COMPANY
ORIGINALLY INCORPORATED AS
UNITED BISCUIT COMPANY OF AMERICA
ON NOVEMBER 3, 1927
This Restated Certificate of Incorporation was duly adopted by the Board of
Directors in accordance with the provisions of Section 245 of the Delaware
General Corporation Law. It only restates and integrates, and does not further
amend the provisions of the Corporation's Certificate of Incorporation, as
theretofore amended or supplemented, and that there is no discrepancy between
those provisions and the provisions of this Restated Certificate.
* * * * *
We, the undersigned, in order to form a corporation for the purposes
hereinafter stated, under and pursuant to the provisions of the General
Corporation Law of the State of Delaware, entitled "An Act providing a General
Corporation Law," approved March 10, 1899, and the acts amendatory thereof and
supplemental thereto, do hereby verify as follows:
FIRST: The name of the Corporation is Keebler Company.
SECOND: The registered office of the Corporation is to be located at 1209
Orange Street, in the City of Wilmington, in the County of New Castle, in the
State of Delaware, 19801. The name of its registered agent is The Corporation
Trust Company, whose address is 1209 Orange Street in said city.
THIRD: The nature of the business of the Corporation and the objects or
purposes to be transacted, promoted or carried on by it, are as follows: to-wit:
<PAGE>
1. To manufacture, produce, purchase, or otherwise acquire, use,
distribute, sell at wholesale or retail, import, export, and otherwise
dispose of said deal in, biscuits, crackers, breads, pastries, confections,
and all other similar and allied foodstuffs and the component parts
thereof.
2. To purchase, subscribe for, or otherwise acquire, hold, sell, exchange,
mortgage, hypothecate or otherwise dispose of, or deal in, the stocks,
notes, bonds, debentures or other evidences of indebtedness and obligations
of this Corporation or of any individual or individuals or of any private,
public, quasi-public or municipal corporations, either domestic or foreign,
state, government, or governmental authority, or of any political or
administrative subdivision or department thereof, and all trust,
participation or other certificates of, or receipts evidencing interest in
any such securities, and to issue in exchange therefor its stock, bonds, or
other obligations; to do any acts or things for the preservation,
protection, improvement or enhancement of the value of any such stocks,
bonds, notes or other evidences of indebtedness held by it and which the
owner of any such stocks, bonds, notes or other evidences of indebtedness,
to exercise all the rights, powers and privileges of ownership, including
(except in the case of its own stock) the right to vote thereon.
3. To purchase or otherwise acquire and to hold for investment and to deal
in any bonds or notes or loans secured by mortgage or other lien on real
property or by pledge of personal property; and to lend money upon mortgage
on real property or upon pledge or hypothecation of personal property or
choses in action.
4. To purchase, lease, erect, or otherwise acquire, exchange, sell, let or
otherwise dispose of, own, maintain, develop and improve any and all
property, real or personal, plants, depots, factories, warehouses, stores,
buildings, or other places useful in connection with the business of the
Corporation.
5. To manufacture or otherwise produce, import, export, buy, sell and in
every way deal with and in, either as principal or agent or otherwise,
goods, wares and merchandise and personal property of every kind and
description.
6. To apply for, obtain, register, purchase, lease or otherwise acquire,
hold, own, use, develop, operate, introduce, sell, assign or otherwise
dispose of, any and all copyrights, trademarks, trade names, brands, labels
and patents, and any and all inventions, improvements, apparatus,
appliances and processes used in connection with, or secured under, letters
patent of the United States of America or elsewhere, or otherwise, and to
use, exercise, develop, or grant licenses in respect of, or otherwise turn
to account, any such copyrights, trademarks, trade names, brands, labels,
patents, inventions, improvements, apparatus, appliances, processes and the
like, or any property or information so acquired.
7. To make and enter into contracts necessary to its business with, and to
act as agent or broker or factor or other representative for, any
individual, firm, syndicate, association, private, public, quasi-public or
municipal corporations, state, government or governmental authority; to
promote and assist financially or otherwise corporations, firms,
syndicates, associations, individuals or others, to enter into, assist,
promote or participate in commercial, mercantile, and industrial works,
contracts, undertakings, ventures, enterprises and operations; to endorse
or underwrite stock, securities or undertakings of any corporation, firm,
individual, syndicate or others; and to aid any lawful enterprise.
8. To borrow money for its corporate purposes; to make, accept, indorse,
execute, issue and deliver bonds, debentures, notes, bills of exchange,
warrants, or other obligations; to mortgage, pledge and hypothecate any
stocks, notes, bonds or other evidences of indebtedness, and any other
property held by it; and to lend money, with or without collateral
security.
<PAGE>
9. To aid by loan, subsidy, guaranty, or in any other manner whatsoever,
any corporation whose stocks, bonds, securities, or other obligations are
in any manner, either directly or indirectly, held or guaranteed; to do any
and all other acts or things toward the preservation, protection,
improvement or enhancement in value of any such stocks, bonds, securities
or other obligations, and to do all and any such acts or things designed to
accomplish any such purpose.
10. To carry on any business or occupation deemed advantageous, which is
necessary to any of the powers or purposes hereinbefore specified; to
acquire, use, undertake, manage, and dispose of contracts, properties, and
rights pertaining to the foregoing business, including the assets,
franchises, business, good will and liabilities of corporations,
associations, firms and individuals, and to give guaranties in respect
thereof, and generally, to do anything that a natural person might lawfully
do or cause to be done in connection with any of the said things.
11. To do all and everything necessary, suitable and proper for the
accomplishment of any of the purposes or the attainment of any of the
objects or the furtherance of any of the powers hereinbefore set forth,
either alone or in association with other corporations, firms, or
individuals, and to do every act or acts, things or things incidental or
appurtenant to or growing out of or connected with the aforesaid business
or powers or any parts or parts thereof, provided the same be not
inconsistent with the laws under which this Corporation is organized.
12. The business or purpose of the Corporation is from time to time to do
any or more of the acts and things hereinabove set forth, and it shall have
power to conduct and carry on its said business, or any part thereof, and
to have one or more offices, and to exercise all or any of its corporate
powers and rights, in the State of Delaware, and in the various other
states, territories, colonies and dependencies of the United States, in the
District of Columbia, and in all or any foreign countries.
FOURTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 1,000 shares of Common Stock, par
value $1.00 per share.
FIFTH: The names and places of residence of each of the original
subscribers to the capital stock and the number of shares subscribed for by each
are as follows:
No. of Shares
Common
Name Residence Stock
HARRY C. HAND 150 Broadway, New York City 5
RAYMOND J. GORMAN 150 Broadway, New York City 5
ARTHUR W. BRITTON 150 Broadway, New York City 5
SIXTH: The Corporation is to have perpetual existence.
SEVENTH: The private property of the stockholders shall not be subject to
the payment of corporate debts to any extent whatever.
EIGHTH: The following provisions are inserted for the regulation of the
business and for the conduct of the affairs of the Corporation and it is
expressly provided that the same are intended to be in furtherance and not in
limitation of or exclusion of the powers conferred by statute.
<PAGE>
The number of directors of the Corporation shall be fixed and may be
altered from time to time as may be provided in the By-Laws. In case of any
increase in the number of directors, the additional directors may be elected by
the directors or by the stockholders at an annual or special meeting, as shall
be provided in the By-Laws.
The Board of Directors may, by resolution or resolutions, passed by a
majority of the whole board, designate one or more committees, such committees
to consist of two or more of the directors of the Corporation, which to the
extent provided in said resolution or resolutions or in the By-Laws of the
Corporation, shall have and may exercise the powers of the Board of Directors in
the management of the business and affairs of the Corporation, and may have
power to authorize the seal of the Corporation to be affixed to all paper which
may require it. Such committee or committees shall have such name or names as
may be stated in the By-Laws of the Corporation or as may be determined from
time to time by resolutions adopted by the Board of Directors.
The By-Laws may prescribe the number of directors necessary to constitute a
quorum, which number may be less than a majority of the whole board of
directors, but not less than the number required by law.
Any one or more or all of the directors may be removed, either with or
without cause, at any time, by vote of the stockholders holding a majority of
the class of stock of the Corporation issued and outstanding then entitled to
vote, at any special meeting, and thereupon the term of such director or
directors who shall have been so removed shall forthwith terminate and there
shall be a vacancy or vacancies in the Board of Directors, to be filled as
provided in the Certificate of Incorporation and By-Laws of the Corporation.
The directors from time to time may determine whether and to what extent,
and at what times and place and under what conditions and regulations, the
accounts and books of the Corporation (other than the stock ledger), or any of
them, shall be open to the inspection of the stockholders, and no stockholder
shall have any right to inspect any account or book or document of the
Corporation, unless expressly so authorized by statute or by a resolution of the
stockholders or the directors.
The directors in their discretion may submit any contract or act for
approval or ratification at any annual meeting of the stockholders or at any
meeting of the stockholders called for the purpose of considering any such act
or contract, and, except as otherwise expressly provided by law or by the
Certificate of Incorporation, any contract or act that shall be approved or be
ratified by the vote of the holders of a majority of the capital stock of the
Corporation which is represented in person or by proxy at such meeting (provided
that a lawful quorum of stockholders be there represented in person or by proxy)
shall be as valid and so binding upon the Corporation and upon all the
stockholders, as though it had been approved or ratified by every stockholder of
the Corporation, whether or not the contract or act would otherwise be open to
legal attack because of directors' interest, or for any other reason.
No contract or other transaction between the Corporation and any other firm
or corporation shall be affected or invalidated by the fact that any one or more
of the directors of the Corporation is or are interested in or is a member,
director or officer of such firm or corporation, and any director or officer may
be a party individually or jointly in such contract or transaction.
Subject always to the By-Laws made by the stockholders, the Board of
Directors may make By-Laws and, from time to time, may alter, amend or repeal
any By-Laws, but any By-Laws made by the Board of Directors may be altered or
repealed by the stockholders.
The Incorporators shall have power to hold meetings either within or
without the State of Delaware.
Both stockholders and directors shall power, if the By-Laws of the
Corporation so provide, to hold their meetings either within or without the
State of Delaware, to have one or more offices in addition to the principal
office in the State of Delaware, and to keep the books of the Corporation
(subject to the provisions of the statutes) outside the State of Delaware at
such places as may be from time to time designated by them.
<PAGE>
The Board of Directors shall have power in their discretion to provide for
and to pay the directors rendering unusual or exceptional services to the
Corporation special compensation appropriate to the value of such services.
(a) INDEMNIFICATION: Suits by Third Parties. The corporation shall
indemnify any person who was or is made a party, or is threatened to be made a
party, to any threatened, pending or completed action, suit or proceedings,
whether civil, criminal, administrative or investigative (other than an action
by, or in the right of, the corporation by reason of the fact that the person is
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if the person acted in good faith and in a
manner the person reasonably believed to be in, or not opposed to, the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe the conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which the person reasonably believed to be in, or not opposed to, the
best interests of the corporation and, with respect to any criminal action or
proceeding, had reasonable cause to believe that the conduct was unlawful.
Derivative Suits. The corporation shall indemnify any person who was or is
made a party, or is threatened to be made a party, to any threatened, pending or
completed action or suit by, or in the right of, the corporation to procure a
judgment in its favor by reason of the fact that the person is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees) actually and reasonably incurred by
the person in connection with the defense or settlement of such action or suit
if the person acted in good faith and in a manner the person reasonably believed
to be in, or not opposed to, the best interests of the corporation, except that
no indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless, and only to the extent that, the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability, but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnify for such expenses
which the Court of Chancery or such other court shall deem proper.
Indemnification as of Right. To the extent that a director, officer,
employee or agent of the corporation has been successful on the merits, or
otherwise, in defense of any action, suit or proceeding referred to in the
preceding paragraphs of this Paragraph (a), or in defense of any claim issue or
matter thereon, the person shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by the person in connection
therewith.
Advance of Funds. Expenses incurred by any such person in defending a
civil, criminal, administrative or investigative action, suit or proceeding, or
threat thereof, shall be paid by the corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking
by, or on behalf of, the director, officer, employee or agent to repay such
amount if it shall ultimately be determined that the person is not entitled to
be indemnified by the corporation as authorized in this Paragraph (a).
(b) No director of the corporation shall be liable to the corporation or
its stockholders for monetary damages for breach of his or her fiduciary duty as
a director, provided that nothing contained in this Paragraph (b) shall
eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of the law, (iii) under Section 174 of the General Corporation
Law of the State of Delaware, or (iv) for any transaction from which the
director derived an improper personal benefit. No amendment, modification or
repeal of this Paragraph (b) shall apply to, or have any effect on, the
liability or the alleged liability of any director of the corporation for, or
with respect to, any acts or omissions of such director occurring prior to such
amendment, modification or repeal.
<PAGE>
In addition to the powers and authorities hereinbefore or by statute
expressly conferred upon them, the directors are hereby empowered to exercise
all such powers and do all such acts and things as may be exercised or done by
the Corporation; subject, nevertheless, to the provisions of the statutes of
Delaware, of this certificate.
and to any By-Laws from time to time made by the stockholders; provided,
however, that no By-Laws so made shall invalidate any prior act of the directors
which would have been valid if such By-Law had not been made.
IN WITNESS WHEREOF, we have hereunto set our hands and seals, the 22nd day
of October, 1927.
HARRY C. HAND (L.S.)
RAYMOND J. GORMAN (L.S.)
ARTHUR W. BRITTON (L.S.)
In presence of:
GEORGE V. REILLY,
As to all.
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that on this 22nd day of October, A.D. 1927, personally
came before me GEORGE V. REILLY, a Notary Public in and for the County and State
aforesaid, HARRY C. HAND, RAYMOND J. GORMAN and ARTHUR W. BRITTON, parties to
the foregoing Certificate of Incorporation, known to me personally to be such,
and severally acknowledge the said certificate to be the act and deed of the
signers, respectively, and that the facts therein stated are truly set forth.
GIVEN under my hand and seal of office the day and year aforesaid.
GEORGE V. REILLY,
Notary Public
New York County Clerk's No. 93.
(NOTARY SEAL) Term Expires March 30, 1929.
<PAGE>
4. This Restated Certificate of Incorporation was duly adopted by the board
of directors in accordance with Section 245 of the General Corporation Law of
the State of Delaware.
IN WITNESS WHEREOF, said Keebler Company (formerly known as United Biscuit
Company of America) has caused the certificate to be signed by Craig S. Stevens,
its Vice President, and attested by Frank A. Massi, its Assistant Secretary,
this 1st day of October, 1993.
KEEBLER COMPANY (formerly) UNITED
BISCUIT COMPANY OF AMERICA
By:
--------------------------------
Craig S. Stevens, Vice President
ATTEST:
By:
-----------------------------------
Frank A. Massi, Assistant Secretary
<PAGE>
KEEBLER COMPANY
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
----------
Pursuant to Section 242 of the General
Corporation Law of the State of Delaware
----------
KEEBLER COMPANY (the "Corporation"), a corporation organized and existing
under the laws of the State of Delaware, does hereby certify:
FIRST: That the Board of Directors of the Corporation, acting without a
meeting by unanimous written consent pursuant to Section 141(f) of the General
Corporation Law of the State of Delaware (the "DGCL") on June 6, 1996, duly
adopted a resolution setting forth and declaring the advisability of the
amendment of the Certificate of Incorporation hereinafter set forth (the
"Amendment") and submitted the Amendment to the sole stockholder of the
Corporation (the "Sole Stockholder") for its consideration; that the Sole
Stockholder, acting without a meeting by written consent pursuant to Section
228(a) of the DGCL, approved the Amendment; that the Amendment, as it was so
adopted by the Board of Directors of the Corporation and approved by the Sole
Stockholder, amended Article One of the Certificate of Incorporation of the
Corporation, to read as follows:
"1. The name of the corporation is:
Keebler Biscuit Company."
IN WITNESS WHEREOF, KEEBLER COMPANY has caused this Certificate of
Amendment to be signed by Sam K. Reed, its President, the 7th day of June, 1996.
KEEBLER COMPANY
By:
------------------
Name: Sam K. Reed
Title: President
Exhibit 3.4
KEEBLER BISCUIT COMPANY
BY-LAWS
ARTICLE I
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meeting and Notice. Meetings of the stockholders
of the Corporation shall be held at such place either within or without the
State of Delaware as the Board of Directors may determine.
Section 2. Annual and Special Meetings. Annual meetings of
stockholders shall be held, at a date, time and place fixed by the Board of
Directors and stated in the notice of meeting, to elect a Board of Directors and
to transact such other business as may properly come before the meeting. Special
meetings of the stockholders may be called by the President for any purpose and
shall be called by the President or Secretary if directed by the Board of
Directors or requested in writing by the holders of not less than 25% of the
capital stock of the Corporation. Each such stockholder request shall state the
purpose of the proposed meeting.
Section 3. Notice. Except as otherwise provided by law, at least 10
and not more than 60 days before each meeting of stockholders, written notice of
the time, date and place of the meeting, and, in the case of a special meeting,
the purpose or purposes for which the meeting is called, shall be given to each
stockholder.
Section 4. Quorum. At any meeting of stockholders, the holders of
record, present in person or by proxy, of a majority of the Corporation's issued
and outstanding capital stock shall constitute a quorum for the transaction of
business, except as otherwise provided by law. In the absence of a quorum, any
officer entitled to preside at or to act as secretary of the meeting shall have
power to adjourn the meeting from time to time until a quorum is present.
Section 5. Voting. Except as otherwise provided by law, all matters
submitted to a meeting of stockholders shall be decided by vote of the holders
of record, present in person or by proxy, of a majority of the Corporation's
issued and outstanding capital stock.
<PAGE>
2
ARTICLE II
DIRECTORS
Section 1. Number, Election and Removal of Directors. The number of
Directors that shall constitute the Board of Directors shall not be less than
one or more than fifteen. The first Board of Directors shall consist of two
Directors. Thereafter, within the limits specified above, the number of
Directors shall be determined by the Board of Directors or the stockholders. The
Directors shall be elected by stockholders at their annual meeting. Vacancies
and newly created directorships resulting from any increase in the number of
Directors may be filled by a majority of the Directors then in office, although
less than a quorum, or by the sole remaining Director or by the stockholders. A
Director may be removed with or without cause by the stockholders.
Section 2. Meetings. Regular meetings of the Board of Directors
shall be held at such times and places as may from time to time be fixed by the
Board of Directors or as may be specified in a notice of meeting.
Section 3. Quorum. One-third of the total number of Directors shall
constitute a quorum for the transaction of business. If a quorum is not present
at any meeting of the Board of Directors, the Directors present may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until such a quorum is present. Except as otherwise provided by law,
the Certificate of Incorporation of the Corporation, these By-Laws or any
contract or agreement to which the Corporation is a party, the act of a majority
of the Directors present at any meeting at which there is a quorum shall be the
act of the Board of Directors.
Section 4. Committees. The Board of Directors may, by resolution
adopted by a majority of the whole Board, designate one or more committees,
including, without limitation, an Executive Committee, to have and exercise such
power and authority as the Board of Directors shall specify. In the absence or
disqualification of a member of a 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 Director to act at the
absent or disqualified member.
<PAGE>
3
ARTICLE III
OFFICERS
The officers of the Corporation shall consist of a President, a Vice
President, a Secretary, a Treasurer and such other additional officers with such
titles as the Board of Directors shall determine, all of which shall be chosen
by and shall serve at the pleasure of the Board of Directors. Such officers
shall have the usual powers and shall perform all the usual duties incident to
their respective offices. All officers shall be subject to the supervision and
direction of the Board of Directors. The authority, duties or responsibilities
of any officer of the Corporation may be suspended by the President with or
without cause. Any officer elected or appointed by the Board of Directors may be
removed by the Board of Directors with or without cause.
ARTICLE IV
INDEMNIFICATION
To the fullest extent permitted by the Delaware General Corporation
Law, the corporation shall indemnify any current or former Director or officer
of the Corporation and may, at the discretion of the Board of Directors,
indemnify any current or former employee or agent of the Corporation against all
expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with any threatened, pending or
completed action, suit or proceeding brought by or in the right of the
Corporation or otherwise, to which he was or is a party by reason of his current
or former position with the Corporation or by reason of the fact that he is or
was serving, at the request of the Corporation, as a director, officer, partner,
trustee, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise.
Expenses incurred by a person who is or was a director or officer of
the Corporation in appearing at, participating in or defending any such action,
suit or proceeding shall be paid by the Corporation at reasonable intervals in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of the director or officer to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the Corporation as authorized by this Article. If a claim under
this Article is not paid in full by the Corporation within ninety days after a
written claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be paid
also the expense of prosecuting such claim. It shall be a defense to any such
action (other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition
<PAGE>
4
where the required undertaking, if any is required, has been tendered to the
Corporation) that the claimant has not met the standards of conduct which make
it permissible under the Delaware General Corporation Law or other applicable
law for the corporation to indemnify the claimant for the amount claimed, but
the burden of proving such defense shall be on the Corporation. Neither the
failure of the Corporation (including its board of directors, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he has met the applicable standard of conduct set
forth in the Delaware General Corporation Law or other applicable law, nor an
actual determination by the Corporation (including its board of directors,
independent legal counsel, or its stockholders) that the claimant has not met
the applicable standard of conduct, shall be a defense to the action or create a
presumption that the claimant has not met the applicable standard of conduct.
ARTICLE V
GENERAL PROVISIONS
Section 1. Notices. Whenever any statute, the Certificate of
Incorporation or these By-Laws require notice to be given to any Director or
stockholder, such notice may be given in writing by mail, addressed to such
Director or stockholder at his address as it appears in the records of the
Corporation, with postage thereon prepaid. Such notice shall be deemed to have
been given when it is deposited in the United States mail. Notice to Directors
may also be given by telegram.
Section 2. Fiscal Year. The fiscal year of the Corporation shall be
fixed by the Board of Directors.
Exhibit 3.5
CERTIFICATE OF INCORPORATION
OF
MEREDITH HOLDINGS, INC.
1. The name of the corporation is: MEREDITH HOLDINGS, INC.
2. The address of its registered office in the State of Delaware is No. 100
West Tenth Street, in the City of Wilmington, County of New Castle. The name of
its registered agent at such address is The Corporation Trust Company.
3. The nature of the business or purpose to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
4. The total number of shares of stock which the corporation shall have
authority to issue is one thousand (1,000) shares of common stock of the par
value of One Dollar ($1.00) each.
5. The name and mailing address of the incorporator is as follows:
Robert S. Rendell Room 5300
200 Park Avenue
New York, New York 10017
6. The corporation is to have perpetual existence.
7. The corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statue, and all rights conferred upon stockholders
herein are granted subject to this reservation.
THE UNDERSIGNED, being the incorporator hereinbefore named, for the purpose
of forming a corporation pursuant to the General Corporation Law of the State of
Delaware, does make this Certificate of Incorporation, hereby declaring and
certifying that this is his act and deed and the facts herein stated are true,
and accordingly has hereunto set his hand this 25th day of July, 1978.
---------------------------
Robert S. Rendell
<PAGE>
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
WASA RY-KING INC.
INTO
SHAFFER, CLARKE & CO., INC.,
* * * * * * * *
SHAFFER, CLARK AND CO., INC., a corporation organized and existing under
the laws of Delaware,
DOES HEREBY CERTIFY:
FIRST: That this corporation was incorporated on the 26th day of July,
1978, pursuant to the Delaware Corporation Law of the State of Delaware.
SECOND: That this corporation owns all of the outstanding shares of the
stock of WASA RY- KING INC., a corporation incorporated on the 7th day of May,
1968, pursuant to the Stock Corporation Act of the State of Connecticut.
THIRD: This corporation, by the following resolutions of its Board of
Directors, duly adopted by the unanimous consent of its members, filed with the
minutes of the board on the 25th day of February, 1980, determined to and did
merge into itself said WASA RY-KING INC.:
RESOLVED, that SHAFFER, CLARKE & CO., INC. merge, and it hereby does merge
into itself said WASA RY-KING INC. and assumes all of its obligations; and
FURTHER RESOLVED, that the merger shall become effective on March 22, 1980.
FURTHER RESOLVED, that the proper officers of this corporation be and they
hereby are directed to make and execute a Certificate of Ownership and Merger
setting forth a copy of the resolutions to merge said WASA RY-KING INC. and
assume its liabilities and obligations, and the date of adoption thereof, and to
cause the same to be filed with the Secretary of State and a certified copy
recorded in the office of the Recorder of Deeds of New Castle County and to do
all acts and things whatsoever, whether within or without the State of Delaware,
which may be in anywise necessary or proper to effect said merger; and
<PAGE>
IN WITNESS WHEREOF, said SHAFFER, CLARKE & CO., INC. has caused this
certificate to be signed by George Korper, its President, and attested by Denis
Deslauriers, its Secretary, this 21st day of March, 1980.
SHAFFER, CLARKE & CO., INC.
By___________________________
George Korper, President
ATTEST:
By_____________________________
Denis Deslauriers, Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
SHAFFER, CLARKE & CO., INC.
Shaffer, Clark & Co., Inc., a corporation duly organized and existing under
the General Corporation Law of the State of Delaware (the "Corporation"), does
hereby certify:
First: That, in accordance with Section 242 of the General Corporation of
the Law of the State of Delaware, the Board of Directors of the Corporation, by
unanimous written consent, has duly adopted a resolution proposing and declaring
it advisable that the Corporation's Certificate of Incorporation be amended by
adding Paragraphs 8 and 9 thereto so that said Paragraphs shall provide as
follows:
8. Indemnification
a. Suits by Third Parties. The corporation shall indemnify any person who was
or is made a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceedings, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
the corporation) by reason of the fact that the person is or was a
director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if the person acted in good
faith and in a manner the person reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe the
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere
or its equivalent shall not, of itself, create a presumption that the
person did not act in good faith and in a manner which the person
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceeding, had
reasonable cause to believe that the conduct was unlawful.
b. Derivative Suits. The corporation shall indemnify any person who was or is
made a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that the person is or
was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees) actually and
reasonably incurred by the person in connection with the defense or
settlement of such action or suit if the person acted in good faith and in
a manner the person reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be made
in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the corporation unless
<PAGE>
and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnify for
such expenses which the Court of Chancery or such other court shall deem
proper.
c. Indemnification as of Right. To the extent that a director, officer,
employee or agent of the corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in this
preceding subparagraphs of this Paragraph 8, or in defense of any claim,
issue or matter therein, the person shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by the person
in connection therewith.
d. Advance of Funds. Expenses incurred by any such person in defending a
civil, criminal, administrative or investigative action, suit or
proceeding, or threat thereof, shall be paid by the corporation in advance
of the final disposition of such action, suit or proceeding upon receipt of
an undertaking by or on behalf of the director, officer, employee or agent
to repay such amount if it shall ultimately be determined that the person
is not entitled to be indemnified by the corporation as authorized in this
Paragraph 8.
9. Liability of Directors. No director of the corporation shall be liable
to the corporation or its stockholders for monetary damages for breach of
his or her fiduciary duty as a director, provided that nothing contained in
this Paragraph 9 shall eliminate or limit the liability of a director (i)
for any breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of the law, (iii) under
Section 174 of the General Corporation Law of the State of Delaware or (iv)
for any transaction from which the director derived an improper personal
benefit. No amendment, modification or repeal of this Paragraph 9 shall
apply to or have any effect on the liability or the alleged liability of
any director of the corporation for or with respect to any acts or
omissions of such director occurring prior to such amendment, modification
or repeal.
Second: That, in accordance with the applicable provisions of Sections 228
of the General Corporation Law of the State of Delaware, the sole stockholder of
the Corporation has given its written consent to said amendment.
Third: That the aforesaid amendment was duly adopted in accordance with the
applicable provisions of sections 242 and 228 of the General Corporation Law of
the State of Delaware.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
signed by George Korper, its President, and attested by Robert D. Larsen, its
Secretary, this 9th day of March, 1988.
SHAFFER, CLARK & CO., INC.
By:__________________________
President
ATTEST:
By:__________________________
Secretary
<PAGE>
CERTIFICATE OF OWNERSHIP AND MERGER
of
BROADWAY CONFECTIONS, INC.
(a New York corporation)
into
SHAFFER, CLARKE & CO., INC.
(a Delaware corporation)
It is hereby certificated that:
1. Shaffer, Clarke & Co., Inc. (the "Corporation") is a business
corporation of the State of Delaware.
2. The Corporation is the owners of all of the outstanding shares of stock
of Broadway Confections, Inc. ("Broadway"), which is a business corporation of
the State of New York.
3. The laws of the jurisdiction of organization of Broadway permit the
merger of a business corporation of that jurisdiction with a business
corporation of another jurisdiction.
4. The Corporation hereby merges Broadway into the Corporation.
5. The following is a copy of the resolutions adopted on February 28, 1989
by the Board of Directors of the Corporation to merge Broadway into the
Corporation:
RESOLVED that Broadway be merged into the Corporation, and that all of the
estate, property, rights, privileges, powers, and franchises of Broadway be
vested in and held and enjoyed by the Corporation as fully and entirely and
without change or diminution as the same were before held and enjoyed by
Broadway in its name; and further
RESOLVED that the Corporation assume all of the obligations of Broadway;
and further
RESOLVED that the Corporation shall cause to be executed and filed and/or
recorded the documents prescribed by the laws of the State of Delaware, by
the laws of the State of New York, and by the laws of any other appropriate
jurisdiction and will cause to be performed all necessary acts within the
jurisdiction of organization of Broadway and of the Corporation and in any
other appropriate jurisdiction.
<PAGE>
IN WITNESS WHEREOF, Shaffer, Clark & Co., Inc. has caused this Certificate
to be signed by Edwin Thoet, Jr, its Vice President-Finance, and attested by
Robert D. Larsen, its Secretary, this 28 day of February, 1989.
SHAFFER, CLARK & CO., INC.
By:_________________________
Edwin Thoet, Jr.
Vice President - Finance
Attest:
- -------------------------
Robert D. Larsen
Secretary
Exhibit 3.6
SHAFFER, CLARKE & CO., INC.
BY-LAWS
ARTICLE I
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meeting and Notice. Meetings of the stockholders
of the Corporation shall be held at such place either within or without the
State of Delaware as the Board of Directors may determine.
Section 2. Annual and Special Meetings. Annual meetings of
stockholders shall be held, at a date, time and place fixed by the Board of
Directors and stated in the notice of meeting, to elect a Board of Directors and
to transact such other business as may properly come before the meeting. Special
meetings of the stockholders may be called by the President for any purpose and
shall be called by the President or Secretary if directed by the Board of
Directors or requested in writing by the holders of not less than 25% of the
capital stock of the Corporation. Each such stockholder request shall state the
purpose of the proposed meeting.
Section 3. Notice. Except as otherwise provided by law, at least 10
and not more than 60 days before each meeting of stockholders, written notice of
the time, date and place of the meeting, and, in the case of a special meeting,
the purpose or purposes for which the meeting is called, shall be given to each
stockholder.
Section 4. Quorum. At any meeting of stockholders, the holders of
record, present in person or by proxy, of a majority of the Corporation's issued
and outstanding capital stock shall constitute a quorum for the transaction of
business, except as otherwise provided by law. In the absence of a quorum, any
officer entitled to preside at or to act as secretary of the meeting shall have
power to adjourn the meeting from time to time until a quorum is present.
Section 5. Voting. Except as otherwise provided by law, all matters
submitted to a meeting of stockholders shall be decided by vote of the holders
of record, present in person or by proxy, of a majority of the Corporation's
issued and outstanding capital stock.
<PAGE>
2
ARTICLE II
DIRECTORS
Section 1. Number, Election and Removal of Directors. The number of
Directors that shall constitute the Board of Directors shall not be less than
one or more than fifteen. The first Board of Directors shall consist of two
Directors. Thereafter, within the limits specified above, the number of
Directors shall be determined by the Board of Directors or the stockholders. The
Directors shall be elected by stockholders at their annual meeting. Vacancies
and newly created directorships resulting from any increase in the number of
Directors may be filled by a majority of the Directors then in office, although
less than a quorum, or by the sole remaining Director or by the stockholders. A
Director may be removed with or without cause by the stockholders.
Section 2. Meetings. Regular meetings of the Board of Directors
shall be held at such times and places as may from time to time be fixed by the
Board of Directors or as may be specified in a notice of meeting.
Section 3. Quorum. One-third of the total number of Directors shall
constitute a quorum for the transaction of business. If a quorum is not present
at any meeting of the Board of Directors, the Directors present may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until such a quorum is present. Except as otherwise provided by law,
the Certificate of Incorporation of the Corporation, these By-Laws or any
contract or agreement to which the Corporation is a party, the act of a majority
of the Directors present at any meeting at which there is a quorum shall be the
act of the Board of Directors.
Section 4. Committees. The Board of Directors may, by resolution
adopted by a majority of the whole Board, designate one or more committees,
including, without limitation, an Executive Committee, to have and exercise such
power and authority as the Board of Directors shall specify. In the absence or
disqualification of a member of a 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 Director to act at the
absent or disqualified member.
<PAGE>
3
ARTICLE III
OFFICERS
The officers of the Corporation shall consist of a President, a Vice
President, a Secretary, a Treasurer and such other additional officers with such
titles as the Board of Directors shall determine, all of which shall be chosen
by and shall serve at the pleasure of the Board of Directors. Such officers
shall have the usual powers and shall perform all the usual duties incident to
their respective offices. All officers shall be subject to the supervision and
direction of the Board of Directors. The authority, duties or responsibilities
of any officer of the Corporation may be suspended by the President with or
without cause. Any officer elected or appointed by the Board of Directors may be
removed by the Board of Directors with or without cause.
ARTICLE IV
INDEMNIFICATION
To the fullest extent permitted by the Delaware General Corporation
Law, the corporation shall indemnify any current or former Director or officer
of the Corporation and may, at the discretion of the Board of Directors,
indemnify any current or former employee or agent of the Corporation against all
expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with any threatened, pending or
completed action, suit or proceeding brought by or in the right of the
Corporation or otherwise, to which he was or is a party by reason of his current
or former position with the Corporation or by reason of the fact that he is or
was serving, at the request of the Corporation, as a director, officer, partner,
trustee, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise.
Expenses incurred by a person who is or was a director or officer of
the Corporation in appearing at, participating in or defending any such action,
suit or proceeding shall be paid by the Corporation at reasonable intervals in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of the director or officer to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the Corporation as authorized by this Article. If a claim under
this Article is not paid in full by the Corporation within ninety days after a
written claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be paid
also the expense of prosecuting such claim. It shall be a defense to any such
action (other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition
<PAGE>
4
where the required undertaking, if any is required, has been tendered to the
Corporation) that the claimant has not met the standards of conduct which make
it permissible under the Delaware General Corporation Law or other applicable
law for the corporation to indemnify the claimant for the amount claimed, but
the burden of proving such defense shall be on the Corporation. Neither the
failure of the Corporation (including its board of directors, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he has met the applicable standard of conduct set
forth in the Delaware General Corporation Law or other applicable law, nor an
actual determination by the Corporation (including its board of directors,
independent legal counsel, or its stockholders) that the claimant has not met
the applicable standard of conduct, shall be a defense to the action or create a
presumption that the claimant has not met the applicable standard of conduct.
ARTICLE V
GENERAL PROVISIONS
Section 1. Notices. Whenever any statute, the Certificate of
Incorporation or these By-Laws require notice to be given to any Director or
stockholder, such notice may be given in writing by mail, addressed to such
Director or stockholder at his address as it appears in the records of the
Corporation, with postage thereon prepaid. Such notice shall be deemed to have
been given when it is deposited in the United States mail. Notice to Directors
may also be given by telegram.
Section 2. Fiscal Year. The fiscal year of the Corporation shall be
fixed by the Board of Directors.
Exhibit 3.7
CERTIFICATE OF INCORPORATION
OF
JOHNSTON'S READY-CRUST CORPORATION
The undersigned, for the purpose of forming a corporation pursuant to the
provisions of Section 102 of the Delaware General Corporation Law, has executed
the following Certificate of Incorporation:
1. The name of the corporation is Johnston"s Ready-Crust Corporation.
2. The address of the corporation's registered office is No. 100 West Tenth
Street, City of Wilmington, County of New Castle, and the name of the
corporation's registered agent at such address is The Corporation Trust Company.
3. The nature of the business or purposes to be conducted or promoted by
this corporation are:
To engage in any lawful act or activity for which corporation may be
organized under the General Corporation Law of Delaware.
4. The total number of shares of stock which the corporation shall have
authority to issue is one thousand (1,000) Common Shares, and the par value of
each such share is One Dollar ($1.00).
5. The name and mailing address of the incorporator is Paul C. Meyer,
Rogers & Wells, 200 Park Avenue, New York, New York 100166.
IN WITNESS WHEREOF, the incorporator of the above-named corporation has
executed this Certificate of Incorporation on this 16th day of July, 1980.
-------------------
PAUL G. MEYER
<PAGE>
CERTIFICATE OF AMENDMENT
BEFORE PAYMENT OF CAPITAL
OF THE
CERTIFICATE OF INCORPORATION
OF
JOHNSTON'S READY-CRUST CORPORATION
The sole incorporator of Johnston's Ready-Crust Corporation (the
"Corporation"), a corporation existing under the laws of the State of Delaware,
does hereby certify as follows:
FIRST: Article 1 of the Certificate of Incorporation of the Corporation has
been amended in its entirety to read as follows:
"1. The name of the corporation is Johnston's Ready-Crust company."
SECOND: The amendment to the Certificate of Incorporation hereinabove set
forth has been duly adopted, in accordance with the provisions of Section 241 of
the Delaware General Corporation Law, by the action of the sole incorporator of
the Corporation.
THIRD: That the Corporation has not received any payment for any of its
stock.
IN WITNESS WHEREOF, the undersigned sole incorporator of Johnston's
Ready-Crust Corporation has caused this certificate to be executed as of the
29th day of July, 1980.
JOHNSTON'S READY-CRUST CORPORATION
----------------------------------
Paul G. Meyer
Exhibit 3.8
JOHNSTON'S READY-CRUST COMPANY
BY-LAWS
ARTICLE I
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meeting and Notice. Meetings of the stockholders
of the Corporation shall be held at such place either within or without the
State of Delaware as the Board of Directors may determine.
Section 2. Annual and Special Meetings. Annual meetings of
stockholders shall be held, at a date, time and place fixed by the Board of
Directors and stated in the notice of meeting, to elect a Board of Directors and
to transact such other business as may properly come before the meeting. Special
meetings of the stockholders may be called by the President for any purpose and
shall be called by the President or Secretary if directed by the Board of
Directors or requested in writing by the holders of not less than 25% of the
capital stock of the Corporation. Each such stockholder request shall state the
purpose of the proposed meeting.
Section 3. Notice. Except as otherwise provided by law, at least 10
and not more than 60 days before each meeting of stockholders, written notice of
the time, date and place of the meeting, and, in the case of a special meeting,
the purpose or purposes for which the meeting is called, shall be given to each
stockholder.
Section 4. Quorum. At any meeting of stockholders, the holders of
record, present in person or by proxy, of a majority of the Corporation's issued
and outstanding capital stock shall constitute a quorum for the transaction of
business, except as otherwise provided by law. In the absence of a quorum, any
officer entitled to preside at or to act as secretary of the meeting shall have
power to adjourn the meeting from time to time until a quorum is present.
Section 5. Voting. Except as otherwise provided by law, all matters
submitted to a meeting of stockholders shall be decided by vote of the holders
of record, present in person or by proxy, of a majority of the Corporation's
issued and outstanding capital stock.
<PAGE>
2
ARTICLE II
DIRECTORS
Section 1. Number, Election and Removal of Directors. The number of
Directors that shall constitute the Board of Directors shall not be less than
one or more than fifteen. The first Board of Directors shall consist of two
Directors. Thereafter, within the limits specified above, the number of
Directors shall be determined by the Board of Directors or the stockholders. The
Directors shall be elected by stockholders at their annual meeting. Vacancies
and newly created directorships resulting from any increase in the number of
Directors may be filled by a majority of the Directors then in office, although
less than a quorum, or by the sole remaining Director or by the stockholders. A
Director may be removed with or without cause by the stockholders.
Section 2. Meetings. Regular meetings of the Board of Directors
shall be held at such times and places as may from time to time be fixed by the
Board of Directors or as may be specified in a notice of meeting.
Section 3. Quorum. One-third of the total number of Directors shall
constitute a quorum for the transaction of business. If a quorum is not present
at any meeting of the Board of Directors, the Directors present may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until such a quorum is present. Except as otherwise provided by law,
the Certificate of Incorporation of the Corporation, these By-Laws or any
contract or agreement to which the Corporation is a party, the act of a majority
of the Directors present at any meeting at which there is a quorum shall be the
act of the Board of Directors.
Section 4. Committees. The Board of Directors may, by resolution
adopted by a majority of the whole Board, designate one or more committees,
including, without limitation, an Executive Committee, to have and exercise such
power and authority as the Board of Directors shall specify. In the absence or
disqualification of a member of a 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 Director to act at the
absent or disqualified member.
<PAGE>
3
ARTICLE III
OFFICERS
The officers of the Corporation shall consist of a President, a Vice
President, a Secretary, a Treasurer and such other additional officers with such
titles as the Board of Directors shall determine, all of which shall be chosen
by and shall serve at the pleasure of the Board of Directors. Such officers
shall have the usual powers and shall perform all the usual duties incident to
their respective offices. All officers shall be subject to the supervision and
direction of the Board of Directors. The authority, duties or responsibilities
of any officer of the Corporation may be suspended by the President with or
without cause. Any officer elected or appointed by the Board of Directors may be
removed by the Board of Directors with or without cause.
ARTICLE IV
INDEMNIFICATION
To the fullest extent permitted by the Delaware General Corporation
Law, the corporation shall indemnify any current or former Director or officer
of the Corporation and may, at the discretion of the Board of Directors,
indemnify any current or former employee or agent of the Corporation against all
expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with any threatened, pending or
completed action, suit or proceeding brought by or in the right of the
Corporation or otherwise, to which he was or is a party by reason of his current
or former position with the Corporation or by reason of the fact that he is or
was serving, at the request of the Corporation, as a director, officer, partner,
trustee, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise.
Expenses incurred by a person who is or was a director or officer of
the Corporation in appearing at, participating in or defending any such action,
suit or proceeding shall be paid by the Corporation at reasonable intervals in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of the director or officer to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the Corporation as authorized by this Article. If a claim under
this Article is not paid in full by the Corporation within ninety days after a
written claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be paid
also the expense of prosecuting such claim. It shall be a defense to any such
action (other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition
<PAGE>
4
where the required undertaking, if any is required, has been tendered to the
Corporation) that the claimant has not met the standards of conduct which make
it permissible under the Delaware General Corporation Law or other applicable
law for the corporation to indemnify the claimant for the amount claimed, but
the burden of proving such defense shall be on the Corporation. Neither the
failure of the Corporation (including its board of directors, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he has met the applicable standard of conduct set
forth in the Delaware General Corporation Law or other applicable law, nor an
actual determination by the Corporation (including its board of directors,
independent legal counsel, or its stockholders) that the claimant has not met
the applicable standard of conduct, shall be a defense to the action or create a
presumption that the claimant has not met the applicable standard of conduct.
ARTICLE V
GENERAL PROVISIONS
Section 1. Notices. Whenever any statute, the Certificate of
Incorporation or these By-Laws require notice to be given to any Director or
stockholder, such notice may be given in writing by mail, addressed to such
Director or stockholder at his address as it appears in the records of the
Corporation, with postage thereon prepaid. Such notice shall be deemed to have
been given when it is deposited in the United States mail. Notice to Directors
may also be given by telegram.
Section 2. Fiscal Year. The fiscal year of the Corporation shall be
fixed by the Board of Directors.
Exhibit 3.9
CERTIFICATE OF INCORPORATION
OF
EMERALD INDUSTRIES, INC.
The undersigned, for the purpose of forming a corporation pursuant to the
provisions of Section 102 of the Delaware General Corporation Law, has executed
the following Certificate of Incorporation:
1. The name of the corporation is:
EMERALD INDUSTRIES, INC.
2. The address of the corporation's registered office is 1209 Orange
Street, Corporation Trust Center, City of Wilmington, County of New Castle, and
State of Delaware, and the name of the corporation's registered agent at such
address is The Corporation Trust Company;
3. The nature of the business or purposes to be conducted or promoted by
this corporation are:
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law;
4. The total number of shares of stock which the corporation shall have
authority to issue is One Thousand (1,000) Common Shares, and the par value of
each such share is One Dollar ($1.00).
5. INDEMNIFICATION
(a) Suits by Third Parties. The corporation shall indemnify any person who
was or is made a party, or is threatened to be made a party, to any threatened,
pending or completed action, suit or proceedings, whether civil, criminal,
administrative or investigative (other than an action by, or in the right of,
the corporation) by reason of the fact that the person is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if the person acted in good faith and in a manner the
person reasonably believed to be in, or not opposed to, the best interests of
the corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe the conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent
<PAGE>
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which the person reasonably believed to be in, or not
opposed to, the best interests of the corporation and, with respect to any
criminal action or proceeding, had reasonable cause to believe that the conduct
was unlawful.
(b) Derivative Suits. The corporation shall indemnify any person who was or
is made a party, or is threatened to be made a party, to any threatened, pending
or completed action or suit by, or in the right of, the corporation to procure a
judgment in its favor by reason of the fact that the person is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprises,
against expenses (including attorneys' fees) actually and reasonably incurred by
the person in connection with the defense or settlement of such action or suit
if the person acted in good faith and in a manner the person reasonably believed
to be in, or not opposed to, the best interests of the corporation, except that
no indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless, and only to the extent that, the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability, but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
(c) Indemnification as of Right. To the extent that a director, officer,
employee or agent of the corporation has been successful on the merits, or
otherwise, in defense of any action, suit or proceeding referred to in the
preceding paragraphs of this Article 5, or in defense of any claim issue or
matter therein, the person shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by the person in connection
therewith.
(d) Advance of Funds. Expenses incurred by any such person in defending a
civil, criminal, administrative or investigative action, suit or proceeding, or
threat thereof, shall be paid by the corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking
by, or on behalf of, the director, officer, employee or agent to repay such
amount if it shall ultimately be determined that the person is not entitled to
be indemnified by the corporation as authorized in this Article 5.
<PAGE>
6. No director of the corporation shall be liable to the corporation or its
stockholders for monetary damages for breach of his or her fiduciary duty as a
director, provided that nothing contained in this Article 6 shall eliminate or
limit the liability of a director (i) for any breach of the director's duty of
loyalty to the corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
the law, (iii) under Section 174 of the General Corporation Law of the State of
Delaware, or (iv) for any transaction from which the director derived an
improper personal benefit. No amendment, modification or repeal of this Article
6 shall apply to, or have any effect on, the liability or the alleged liability
of any director of the corporation for, or with respect to, any acts or
omissions of such director occurring prior to such amendment, modification or
repeal.
7. The name and mailing address of the incorporator is Robert C. McBride,
677 Larch Avenue, Elmhurst, Illinois 60126.
IN WITNESS WHEREOF, the incorporator of the above-named corporation has
executed this Certificate of Incorporation on this 1st day of March, 1988.
---------------------
Robert C. McBride
Exhibit 3.10
EMERALD INDUSTRIES, INC.
BY-LAWS
ARTICLE I
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meeting and Notice. Meetings of the stockholders
of the Corporation shall be held at such place either within or without the
State of Delaware as the Board of Directors may determine.
Section 2. Annual and Special Meetings. Annual meetings of
stockholders shall be held, at a date, time and place fixed by the Board of
Directors and stated in the notice of meeting, to elect a Board of Directors and
to transact such other business as may properly come before the meeting. Special
meetings of the stockholders may be called by the President for any purpose and
shall be called by the President or Secretary if directed by the Board of
Directors or requested in writing by the holders of not less than 25% of the
capital stock of the Corporation. Each such stockholder request shall state the
purpose of the proposed meeting.
Section 3. Notice. Except as otherwise provided by law, at least 10
and not more than 60 days before each meeting of stockholders, written notice of
the time, date and place of the meeting, and, in the case of a special meeting,
the purpose or purposes for which the meeting is called, shall be given to each
stockholder.
Section 4. Quorum. At any meeting of stockholders, the holders of
record, present in person or by proxy, of a majority of the Corporation's issued
and outstanding capital stock shall constitute a quorum for the transaction of
business, except as otherwise provided by law. In the absence of a quorum, any
officer entitled to preside at or to act as secretary of the meeting shall have
power to adjourn the meeting from time to time until a quorum is present.
Section 5. Voting. Except as otherwise provided by law, all matters
submitted to a meeting of stockholders shall be decided by vote of the holders
of record, present in person or by proxy, of a majority of the Corporation's
issued and outstanding capital stock.
<PAGE>
2
ARTICLE II
DIRECTORS
Section 1. Number, Election and Removal of Directors. The number of
Directors that shall constitute the Board of Directors shall not be less than
one or more than fifteen. The first Board of Directors shall consist of two
Directors. Thereafter, within the limits specified above, the number of
Directors shall be determined by the Board of Directors or the stockholders. The
Directors shall be elected by stockholders at their annual meeting. Vacancies
and newly created directorships resulting from any increase in the number of
Directors may be filled by a majority of the Directors then in office, although
less than a quorum, or by the sole remaining Director or by the stockholders. A
Director may be removed with or without cause by the stockholders.
Section 2. Meetings. Regular meetings of the Board of Directors
shall be held at such times and places as may from time to time be fixed by the
Board of Directors or as may be specified in a notice of meeting.
Section 3. Quorum. One-third of the total number of Directors shall
constitute a quorum for the transaction of business. If a quorum is not present
at any meeting of the Board of Directors, the Directors present may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until such a quorum is present. Except as otherwise provided by law,
the Certificate of Incorporation of the Corporation, these By-Laws or any
contract or agreement to which the Corporation is a party, the act of a majority
of the Directors present at any meeting at which there is a quorum shall be the
act of the Board of Directors.
Section 4. Committees. The Board of Directors may, by resolution
adopted by a majority of the whole Board, designate one or more committees,
including, without limitation, an Executive Committee, to have and exercise such
power and authority as the Board of Directors shall specify. In the absence or
disqualification of a member of a 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 Director to act at the
absent or disqualified member.
<PAGE>
3
ARTICLE III
OFFICERS
The officers of the Corporation shall consist of a President, a Vice
President, a Secretary, a Treasurer and such other additional officers with such
titles as the Board of Directors shall determine, all of which shall be chosen
by and shall serve at the pleasure of the Board of Directors. Such officers
shall have the usual powers and shall perform all the usual duties incident to
their respective offices. All officers shall be subject to the supervision and
direction of the Board of Directors. The authority, duties or responsibilities
of any officer of the Corporation may be suspended by the President with or
without cause. Any officer elected or appointed by the Board of Directors may be
removed by the Board of Directors with or without cause.
ARTICLE IV
INDEMNIFICATION
To the fullest extent permitted by the Delaware General Corporation
Law, the corporation shall indemnify any current or former Director or officer
of the Corporation and may, at the discretion of the Board of Directors,
indemnify any current or former employee or agent of the Corporation against all
expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with any threatened, pending or
completed action, suit or proceeding brought by or in the right of the
Corporation or otherwise, to which he was or is a party by reason of his current
or former position with the Corporation or by reason of the fact that he is or
was serving, at the request of the Corporation, as a director, officer, partner,
trustee, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise.
Expenses incurred by a person who is or was a director or officer of
the Corporation in appearing at, participating in or defending any such action,
suit or proceeding shall be paid by the Corporation at reasonable intervals in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of the director or officer to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the Corporation as authorized by this Article. If a claim under
this Article is not paid in full by the Corporation within ninety days after a
written claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be paid
also the expense of prosecuting such claim. It shall be a defense to any such
action (other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition
<PAGE>
4
where the required undertaking, if any is required, has been tendered to the
Corporation) that the claimant has not met the standards of conduct which make
it permissible under the Delaware General Corporation Law or other applicable
law for the corporation to indemnify the claimant for the amount claimed, but
the burden of proving such defense shall be on the Corporation. Neither the
failure of the Corporation (including its board of directors, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he has met the applicable standard of conduct set
forth in the Delaware General Corporation Law or other applicable law, nor an
actual determination by the Corporation (including its board of directors,
independent legal counsel, or its stockholders) that the claimant has not met
the applicable standard of conduct, shall be a defense to the action or create a
presumption that the claimant has not met the applicable standard of conduct.
ARTICLE V
GENERAL PROVISIONS
Section 1. Notices. Whenever any statute, the Certificate of
Incorporation or these By-Laws require notice to be given to any Director or
stockholder, such notice may be given in writing by mail, addressed to such
Director or stockholder at his address as it appears in the records of the
Corporation, with postage thereon prepaid. Such notice shall be deemed to have
been given when it is deposited in the United States mail. Notice to Directors
may also be given by telegram.
Section 2. Fiscal Year. The fiscal year of the Corporation shall be
fixed by the Board of Directors.
Exhibit 3.11
ARTICLES OF INCORPORATION
OF
ATHENS PACKAGING, INC.
I.
The name of the corporation is "Athens Packaging, Inc."
II.
The number of shares the corporation is authorized to issue is One Thousand.
III.
The street address of the initial registered office of the corporation is c/o C
T Corporation System, 1201 Peachtree Street, NE, Atlanta, Fulton County, GA
30361 and the initial registered agent of the corporation at such address is C T
Corporation System.
IV.
The name and address of each incorporator is: S.A. Vertrees, 208 S. LaSalle
Street, Chicago, Illinois 60604.
V.
The mailing address of the initial principal office of the corporation is 677
Larch Avenue, Elmhurst, Illinois.
IN WITNESS WHEREOF, the undersigned has executed these Articles of
Incorporation.
This 17th day of August, 1992
---------------------------
S.A. Vertrees, Incorporator
Exhibit 3.12
BY-LAWS OF
ATHENS PACKAGING, INC.
ARTICLE I
SHAREHOLDERS
Section 1. Annual Meeting. The annual meeting of the shareholders
for the election of Directors and for the transaction of such other business as
may properly come before the meeting shall be held at such place, either within
or without the State of Georgia, on such date and at such time as the Board of
Directors may by resolution provide, or if the Board of Directors fails to
provide, then such meeting shall be held at the principal office of the
Corporation at 10:00 A.M. on the first Tuesday in October of each year, or, if
such date is a legal holiday, on the next succeeding business day. The Board of
Directors may specify by resolution prior to any special meeting of shareholders
held within the year that such meeting shall be in lieu of the annual meeting.
Section 2. Special Meeting; Call and Notice of Meetings. Special
meetings of the shareholders may be called at any time by the Board of
Directors, the President or by the holders of at least twenty-five (25%) per
cent of the outstanding common stock. Such meetings shall be held at such place,
either within or without the State of Georgia, as is stated in the call and
notice thereof. Written notice of each meeting of shareholders, stating the time
and place of the meeting, and the purpose of any special meeting, shall be
mailed to each shareholder at his address shown on the books of the Corporation
<PAGE>
2
not less than ten (10) nor more than sixty (60) days prior to such meeting
unless such shareholder waives notice of the meeting. Any shareholder present at
a meeting in person or represented by proxy shall be deemed to have waived
notice thereof. Notice of any meeting may be given by the Secretary or by the
person or persons calling such meeting. No notice need be given of the time and
place of reconvening of any adjourned meeting, if the time and place to which
the meeting is adjourned are announced at the adjourned meeting.
Section 3. Quorum; Required Shareholder Vote. A quorum for the
transaction of business at any annual or special meeting of shareholders shall
exist when the holders of a majority of the outstanding shares entitled to vote
are represented either in person or by proxy at such meeting. If a quorum is
present, the affirmative vote of the majority of the shares represented at the
meeting and entitled to vote on the subject matter shall be the act of the
shareholders, unless a greater vote is required by law, by the Articles of
Incorporation or by these By-Laws.
Section 4. Proxies. A shareholder may vote either in person or by a
proxy which he has duly executed in writing. No proxy shall be valid after
eleven (11) months from the date of its execution unless a longer period is
expressly provided in the proxy.
Section 5. Action of Shareholders Without Meeting. Any action
required to be, or which may be, taken at a meeting of the shareholders may be
taken without a meeting if written
<PAGE>
3
consent, setting forth the actions so taken, shall be signed by all the
shareholders entitled to vote with respect to the subject matter thereof. Such
consent shall have the same force and effect as a unanimous affirmative vote of
the shareholders and shall be filed with the minutes of the proceedings of the
shareholders.
ARTICLE II
DIRECTORS
Section 1. Power of Directors. The Board of Directors shall manage
the business of the Corporation and, subject to any restrictions imposed by law,
by the Articles of Incorporation or by these By-Laws, may exercise all the
powers of the Corporation.
Section 2. Composition of the Board. The number of directors which
shall constitute the whole board shall be (2). Directors need not be residents
of the State of Georgia or shareholders of the Corporation. At each annual
meeting the shareholders shall fix the number of Directors, and elect the
Directors, who shall serve until their successors are elected and qualified,
provided that the shareholders may increase or reduce the number of Directors
and add or remove Directors with or without cause at any time.
Section 3. Meetings of the Board. The annual meeting of the Board of
Directors for the purpose of electing officers and transacting such other
business as may be brought before the meeting shall be held each year
immediately following the annual meeting of shareholders. The Board of Directors
may by resolution provide for the time and place of other regular
<PAGE>
4
meetings and no notice of such regular meetings need be given. Special meetings
of the Board of Directors may be called by the President or by any two
Directors, and written notice of the time and place of such meetings shall be
given to each Director by first class or air mail at least four days before the
meeting or by telephone, telegraph, cablegram or in person at least two days
before the meeting. Any Director may execute a waiver of notice, either before
or after any meeting, and shall be deemed to have waived notice if he is present
at such meeting. Neither the business to be transacted at, nor the purpose of,
any meeting of the Board of Directors need be stated in the notice or waiver of
notice of such meeting. Any meeting may be held at any place within or without
the State of Georgia. A majority of the Directors in office at any time shall
constitute a quorum for the transaction of business at any meeting. When a
quorum is present, the vote of a majority of the Directors present shall be the
act of the Board of Directors.
Section 4. Action of Board Without Meeting. Any action required or
permitted to be taken at a meeting of the Board of Directors or any committee
thereof may be taken without a meeting if written consent, setting forth the
action so taken, is signed by all of the Directors or committee members and
filed with the minutes of the proceedings of the Board of Directors or
committee. Such consent shall have the same force and effect as a unanimous
affirmative vote of the Board of Directors or committee, as the case may be.
<PAGE>
5
Section 5. Committees. The Board of Directors, by resolution adopted
by a majority of all of the Directors, may designate from its members an
Executive Committee, and/or other committees, which may exercise such authority
as is delegated by the Board of Directors, provided that no committee shall have
the authority of the Board of Directors in reference to (1) amending the
Articles of Incorporation or By-Laws of the Corporation, (2) adopting a plan of
merger or consolidation, (3) the sale, lease, exchange or other disposition of
all or substantially all of the property and assets of the Corporation or (4) a
voluntary dissolution of the Corporation or a revocation thereof.
ARTICLE III
OFFICERS
Section 1. Executive Structure of the Corporation. The officers of
the Corporation shall consist of a President, a Secretary, a Treasurer and such
other officers or assistant officers, including Vice Presidents, as may be
elected by the Board of Directors. Any two or more offices may be held by the
same person, except that the same person shall not be both President and
Secretary. The Board of Directors may designate a Vice President as an Executive
Vice President and may designate the order in which other Vice Presidents may
act.
Section 2. President. The President shall be the chief executive
officer of the Corporation and shall give general supervision and direction to
the affairs of the Corporation, subject to the direction of the Board of
Directors. He shall preside at all meetings of the shareholders.
<PAGE>
6
Section 3. Vice President. The Vice President shall act in the case
of the absence or disability of the President.
Section 4. Secretary. The Secretary shall keep the minutes of the
proceedings of the shareholders and of the Board of Directors and shall have
custody of and attest the seal of the Corporation.
Section 5. Treasurer. The Treasurer shall be responsible for the
maintenance of proper financial books and records of the Corporation.
Section 6. Other Duties and Authority. Each officer, employee and
agent of the Corporation shall have such other duties and authority as may be
conferred upon him by the Board of Directors or delegated to him by the
President.
Section 7. Removal of Officers. Any officer may be removed at any
time by the Board of Directors. This provision shall not prevent the making of a
contract of employment for a definite term with any officer and shall have no
effect upon any cause of action which any officer may have as a result of
removal in breach of a contract of employment.
ARTICLE IV
STOCK
Section 1. Stock Certificates. The shares of stock of the
Corporation shall be represented by certificates in such form as may be approved
by the Board of Directors, which shall be issued to the shareholders of the
Corporation in numerical order from the stock book of the Corporation, and each
of which shall bear the name of the shareholder and the number of shares
<PAGE>
7
represented, and shall be signed by the President or a Vice President and the
Secretary or an Assistant Secretary of the Corporation and shall be sealed with
the seal of the Corporation.
Section 2. Transfer of Stock. Shares of stock of the Corporation
shall be transferred only on the books of the Corporation upon surrender to the
Corporation of the certificate or certificates representing the shares to be
transferred accompanied by an assignment in writing of such shares properly
executed by the shareholder of record or his duly authorized attorney-in-fact
and with all taxes on the transfer having been paid. The Corporation may refuse
any requested transfer until furnished evidence satisfactory to it that such
transfer is proper. Upon the surrender of a certificate for transfer of stock,
such certificate shall at once be conspicuously marked on its face "Cancelled"
and attached securely to the stock book of the Corporation to which it was
attached prior to its issuance. The Board of Directors may make such additional
rules concerning the issuance, transfer and registration of stock and
requirements regarding the establishment of lost, destroyed or wrongfully taken
stock certificates (including any requirement of an indemnity bond prior to
issuance of any replacement certificate) as it deems appropriate.
Section 3. Registered Shareholders. The Corporation may deem and
treat the holder of record of any stock as the absolute owner thereof for all
purposes and shall not be required to take any notice of any right or claim of
right of any other person.
<PAGE>
8
ARTICLE V
DEPOSITORIES, SIGNATURES AND SEAL
Section 1. Depositories. All funds of the Corporation shall be
deposited in the name of the Corporation in such bank, banks, or other financial
institutions as the Board of Directors may from time to time designate and shall
be drawn out on checks, drafts or other orders signed on behalf of the
Corporation by such person or persons as the Board of Directors may from time to
time designate.
Section 2. Contracts and Deeds. All contracts, deeds and other
instruments shall be signed on behalf of the Corporation by the President or by
such other officer, officers, agent or agents as the Board of Directors may from
time to time by resolution provide.
Section 3. Seal. The seal of the Corporation shall be as follows:
If the seal is affixed to a document, the signature of the Secretary
or an Assistant Secretary shall attest the seal. The seal and its attestation
may be lithographed or otherwise printed on any document and shall have, to the
extent permitted by law, the same force and effect as if it had been affixed and
attested manually.
ARTICLE VI
INDEMNITY
Any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or
<PAGE>
9
investigative (including any action by or in the right of the Corporation) by
reason of the fact that he is or was a Director, officer, employee or agent of
the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise shall be indemnified by the Corporation
against expenses (including reasonable attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
Corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful, to the maximum extent
permitted by, and in the manner provided by, the Georgia Business Corporation
Code.
ARTICLE VII
AMENDMENT OF BY-LAWS
The Board of Directors shall have the power to alter, amend or
repeal the By-Laws or adopt new by-laws, but any by-laws adopted by the Board of
Directors may be altered, amended or repealed and new by-laws adopted, by the
shareholders. The shareholders may prescribe that any by-law or by-laws adopted
by them shall not be altered, amended or repealed by the Board of Directors.
Action by the Directors with respect to the By-Laws shall be taken by an
affirmative vote of a majority of all of the
<PAGE>
10
Directors then in office. Action by the shareholders with respect to the By-Laws
shall be taken by an affirmative vote of a majority of all shares outstanding
and entitled to vote.
Exhibit 3.13
CERTIFICATE OF INCORPORATION
OF
ELFIN HOLDINGS CORPORATION
The undersigned, in order to form a corporation for the purpose hereinafter
stated, under and pursuant to the provisions of the Delaware General Corporation
Law, hereby certifies that:
FIRST: The name of the Corporation is Elfin Holdings Corporation.
SECOND: The registered office and registered agent of the Corporation is
The Corporation Trust Company, 1209 Orange Street, Wilmington, New Castle
County, Delaware 19801.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the Delaware General
Corporation Law.
FOURTH: The total number of shares of stock that the Corporation is
authorized to issue is 1,000 shares of Common Stock, par value $0.01 each.
FIFTH: The name and address of the incorporator is Gary I. Sheff, 425
Lexington Avenue, New York City, New York 10017-3954.
SIXTH: The Board of Directors of the Corporation, acting by majority vote,
may alter, amend or repeal the By-Laws of the Corporation.
SEVENTH: Except as otherwise provided by the Delaware General Corporation
Law we the same exists or may hereafter be amended, no director of the
Corporation shall be personally liable to the Corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director. Any repeal or
modification of this Article SEVENTH by the stockholders of the Corporation
shall not adversely affect any right or protection of a director of the
Corporation existing at the time of such repeal or modification.
IN WITNESS WHEREOF, the undersigned has signed this Certificate of
Incorporation on October 31, 1995.
-----------------
Gary I. Sheff
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
ELFIN HOLDINGS CORPORATION
ELFIN HOLDINGS CORPORATION, a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"),
DOES HEREBY CERTIFY:
First: Article First of the Certificate of Incorporation be, and it hereby
is, amended to read as follows
"FIRST, The name of the Corporation is Keebler Leasing Corp."
Second: The Corporation has not received any payment for any of its stock
and pursuant to Section 241 of the Delaware General Corporation Law, this
Certificate of Amendment of the Certificate of Incorporation was duly adopted by
the Sole Incorporator of the Corporation as of January 13, 1996.
-----------------
Gary I. Sheff
Exhibit 3.14
KEEBLER LEASING CORP.
BY-LAWS
ARTICLE I
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meeting and Notice. Meetings of the stockholders
of the Corporation shall be held at such place either within or without the
State of Delaware as the Board of Directors may determine.
Section 2. Annual and Special Meetings. Annual meetings of
stockholders shall be held, at a date, time and place fixed by the Board of
Directors and stated in the notice of meeting, to elect a Board of Directors and
to transact such other business as may properly come before the meeting. Special
meetings of the stockholders may be called by the President for any purpose and
shall be called by the President or Secretary if directed by the Board of
Directors or requested in writing by the holders of not less than 25% of the
capital stock of the Corporation. Each such stockholder request shall state the
purpose of the proposed meeting.
Section 3. Notice. Except as otherwise provided by law, at least 10
and not more than 60 days before each meeting of stockholders, written notice of
the time, date and place of the meeting, and, in the case of a special meeting,
the purpose or purposes for which the meeting is called, shall be given to each
stockholder.
Section 4. Quorum. At any meeting of stockholders, the holders of
record, present in person or by proxy, of a majority of the Corporation's issued
and outstanding capital stock shall constitute a quorum for the transaction of
business, except as otherwise provided by law. In the absence of a quorum, any
officer entitled to preside at or to act as secretary of the meeting shall have
power to adjourn the meeting from time to time until a quorum is present.
Section 5. Voting. Except as otherwise provided by law, all matters
submitted to a meeting of stockholders shall be decided by vote of the holders
of record, present in person or by proxy, of a majority of the Corporation's
issued and outstanding capital stock.
<PAGE>
2
ARTICLE II
DIRECTORS
Section 1. Number, Election and Removal of Directors. The number of
Directors that shall constitute the Board of Directors shall not be less than
one or more than fifteen. The first Board of Directors shall consist of two
Directors. Thereafter, within the limits specified above, the number of
Directors shall be determined by the Board of Directors or the stockholders. The
Directors shall be elected by stockholders at their annual meeting. Vacancies
and newly created directorships resulting from any increase in the number of
Directors may be filled by a majority of the Directors then in office, although
less than a quorum, or by the sole remaining Director or by the stockholders. A
Director may be removed with or without cause by the stockholders.
Section 2. Meetings. Regular meetings of the Board of Directors
shall be held at such times and places as may from time to time be fixed by the
Board of Directors or as may be specified in a notice of meeting.
Section 3. Quorum. One-third of the total number of Directors shall
constitute a quorum for the transaction of business. If a quorum is not present
at any meeting of the Board of Directors, the Directors present may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until such a quorum is present. Except as otherwise provided by law,
the Certificate of Incorporation of the Corporation, these By-Laws or any
contract or agreement to which the Corporation is a party, the act of a majority
of the Directors present at any meeting at which there is a quorum shall be the
act of the Board of Directors.
Section 4. Committees. The Board of Directors may, by resolution
adopted by a majority of the whole Board, designate one or more committees,
including, without limitation, an Executive Committee, to have and exercise such
power and authority as the Board of Directors shall specify. In the absence or
disqualification of a member of a 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 Director to act at the
absent or disqualified member.
<PAGE>
3
ARTICLE III
OFFICERS
The officers of the Corporation shall consist of a President, a Vice
President, a Secretary, a Treasurer and such other additional officers with such
titles as the Board of Directors shall determine, all of which shall be chosen
by and shall serve at the pleasure of the Board of Directors. Such officers
shall have the usual powers and shall perform all the usual duties incident to
their respective offices. All officers shall be subject to the supervision and
direction of the Board of Directors. The authority, duties or responsibilities
of any officer of the Corporation may be suspended by the President with or
without cause. Any officer elected or appointed by the Board of Directors may be
removed by the Board of Directors with or without cause.
ARTICLE IV
INDEMNIFICATION
To the fullest extent permitted by the Delaware General Corporation
Law, the corporation shall indemnify any current or former Director or officer
of the Corporation and may, at the discretion of the Board of Directors,
indemnify any current or former employee or agent of the Corporation against all
expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with any threatened, pending or
completed action, suit or proceeding brought by or in the right of the
Corporation or otherwise, to which he was or is a party by reason of his current
or former position with the Corporation or by reason of the fact that he is or
was serving, at the request of the Corporation, as a director, officer, partner,
trustee, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise.
Expenses incurred by a person who is or was a director or officer of
the Corporation in appearing at, participating in or defending any such action,
suit or proceeding shall be paid by the Corporation at reasonable intervals in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of the director or officer to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the Corporation as authorized by this Article. If a claim under
this Article is not paid in full by the Corporation within ninety days after a
written claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be paid
also the expense of prosecuting such claim. It shall be a defense to any such
action (other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition
<PAGE>
4
where the required undertaking, if any is required, has been tendered to the
Corporation) that the claimant has not met the standards of conduct which make
it permissible under the Delaware General Corporation Law or other applicable
law for the corporation to indemnify the claimant for the amount claimed, but
the burden of proving such defense shall be on the Corporation. Neither the
failure of the Corporation (including its board of directors, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he has met the applicable standard of conduct set
forth in the Delaware General Corporation Law or other applicable law, nor an
actual determination by the Corporation (including its board of directors,
independent legal counsel, or its stockholders) that the claimant has not met
the applicable standard of conduct, shall be a defense to the action or create a
presumption that the claimant has not met the applicable standard of conduct.
ARTICLE V
GENERAL PROVISIONS
Section 1. Notices. Whenever any statute, the Certificate of
Incorporation or these By-Laws require notice to be given to any Director or
stockholder, such notice may be given in writing by mail, addressed to such
Director or stockholder at his address as it appears in the records of the
Corporation, with postage thereon prepaid. Such notice shall be deemed to have
been given when it is deposited in the United States mail. Notice to Directors
may also be given by telegram.
Section 2. Fiscal Year. The fiscal year of the Corporation shall be
fixed by the Board of Directors.
Exhibit 3.15
FORM B
BEFORE ATTEMPTING TO EXECUTE THESE BLANKS BE
SURE TO READ CAREFULLY THE INSTRUCTIONS
ON THE BACK THEREOF.
(THESE ARTICLES MUST BE FILED IN DUPLICATE)
---------------------------------
STATE OF ILLINOIS } (Do not write in this space)
} ss.
COOK COUNTY. } Date Paid 6-22-55
Initial License Fee $ 12.50
Franchise Tax $ 13.55
To CHARLES F. CARPENTIER, Secretary of State: Filing Fee $ 20.00
Clerk None
---------------------------------
We, the undersigned,
1209 21
- --------------------------------------------------------------------------------
Address
Name Number Street City State
- --------------------------------------------------------------------------------
MAXWELL SINGER 120 South LaSalle Street, Chicago 3, Illinois
- --------------------------------------------------------------------------------
ELAINE O. MARKS 120 South LaSalle Street, Chicago 3, Illinois
- --------------------------------------------------------------------------------
MAE R. EPSTEIN 120 South LaSalle Street, Chicago 3, Illinois
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
being natural persons of the age of twenty-one years or more and subscribers to
the shares of the corporation to be organized pursuant hereto, for the purpose
of forming a corporation under "The Business Corporation Act" of the State of
Illinois, do hereby adopt the following Articles of Incorporation:
ARTICLE ONE
The name of the Corporation is: SUN VALLEY BAKING CORP.
ARTICLE TWO
The address of its initial registered office in the State of Illinois is: 120
South LaSalle Street, in the City of Chicago (3) County of Cook and the name of
its initial Registered Agent at said address is: PHILIP R. TOOMIN
<PAGE>
ARTICLE THREE
The duration of the corporation is: Perpetual
ARTICLE FOUR
The purpose or purposes for which the corporation is organized are:
To engage in the business of manufacturer and jobber of bakery goods and
confections; to manufacture, sell and deal in commodities usable in the business
of candy and confectionery manufacturer, and in the manufacture of bakery
products; to manufacture, purchase or otherwise acquire, hold, own, sell, assign
and transfer, invest, trade and deal in goods, wares and merchandise, machinery,
appliances and property of every class and description necessary or incident to
the business of manufacturing and jobbing bakery goods and confections.
ARTICLE FIVE
Paragraph 1: The aggregate number of shares which the corporation is authorized
to issue is 4000, divided into one classes. The designation of each class, the
number of shares of each class, and the par value, if any, of the shares of each
class, or a statement that the shares of any class are without par value, are as
follows:
Series Number of Par Value per share or statement that
Class (If any) Shares shares
are without par value
Common 4000 $25.00 par value
Paragraph 2: The preferences, qualifications, limitations, restrictions and the
special or relative rights in respect of the shares of each class are:
<PAGE>
ARTICLE SIX
The class and number of shares which the corporation proposes to issue
without further report to the Secretary of State, and the consideration
(expressed in dollars) to be received by the corporation therefor, are:
Class of shares Number Total consideration to be
of shares received therefor:
Common 1000 $25,000.00
$
$
$
$
ARTICLE SEVEN
The corporation will not commence business until at lease one thousand
dollars has been received as consideration of the issuance of shares.
ARTICLE EIGHT
The number of directors to be elected at the first meeting of the
Shareholders is: Five
ARTICLE NINE
Paragraph 1: it is estimated that the value of all property to be owned by the
corporation for the following year wherever located will be $25,000.00;
Paragraph 2: It is estimated that the value of the property to be located within
the State of Illinois during the following year will be $25,000.00;
Paragraph 3: It is estimated that the gross amount of business which will be
transacted by the corporation during the following year will be $100,000.00;
Paragraph 4: It is estimated that the gross amount of business which will be
transacted at or from places of business in the State of Illinois during the
following year will be $50,000.00.
-----------------------------
}
-----------------------------
}
-----------------------------
}
----------------------------- Incorporators
}
-----------------------------
}
-----------------------------
}
-----------------------------
<PAGE>
OATH AND ACKNOWLEDGMENT
STATE OF ILLINOIS, }
} ss.
COOK COUNTY. }
I, L. DARLANE SILVERMAN, a Notary Public do hereby certify that on the 21st
day of June, 1995, Maxwell Singer, Elaine O. Marks, and Mae R. Epstein
personally appeared before me and being first duly sworn by me severally
acknowledged that they signed the foregoing document in the respective
capacities therein set forth and declared that the statements therein contained
are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and year
above written.
-----------------------------------
Notary Public
Place
NOTARIAL SEAL
Here
FORM B
- ----------------------------------------
ARTICLES OF INCORPORATION
SUN VALLEY BAKING CORP.
- ----------------------------------------
The following fees are required to be
paid at the time of issuing certificate
of incorporation: Filing fee, $20.00;
Initial license fee of 50(cent) per
$1000.00 or 1/20 of 1% of the amount of
stated capital and paid in surplus the
corporation proposes to issue without
further report (Article Six); Franchise
tax 1/20 of 1% of the issued, as above
noted. However, the minimum annual
franchise tax is $10.00 and varies
monthly on $20,000 or less, as follows:
January, $15; February, $14.17; March,
$13.34; April, $12.50; May, $11.67; June
$10.84; July, $10.00; Aug., $9.17;
Sept., $8.34; Oct., $7.50; Nov., $6.67;
Dec., $5.84; (See Sec. 133, BCA).
In excess of $20,000.00 the franchise
tax per $1000.00 is as follows: Jan.,
$0.75; Feb., .7044; March, .6667; April,
.625; May, .5834; June, .5417; July,
.50; Aug., .4584; Sept., .4167; Oct.
.375; Nov., .3334; Dec., .2917.
All shares issued in excess of the
amount mentioned in Article Six of this
application must be reported within 60
days from date of issuance thereof, and
franchise tax and license fee paid
thereon; otherwise, the corporation is
subject to a penalty of 1% for each
month on the amount until reported and
subject to a fine not to exceed $500.00.
The same fees are required for a
subsequent issue of shares except the
filing fee is $1.00 instead of $20.00.
FILED
JUNE 22 1955
- ----------------------------------------
<PAGE>
----------------------------------------------
(Do not write in this space)
Date Paid 8-24-55
Initial License Fee $
Franchise Tax $
Filing Fee $
(File in Duplicate) Clerk
----------------------------------------------
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
SUN VALLEY BAKING CORP.
--------------------------------------------
(Exact Corporate Name)
To CHARLES F. CARPENTIER
Secretary of State
Springfield, Illinois
The undersigned corporation, for the purpose of amending its Articles of
Incorporation and pursuant to the provisions of Section 55 of "The Business
Corporation Act" of the State of Illinois, hereby executes the following
Articles of Amendment:
ARTICLE FIRST: The name of the corporation is:
SUN VALLEY BAKING CORP.
ARTICLE SECOND: The following amendment or amendments were adopted in the
manner prescribed by "The Business Corporation Act" of the State of Illinois:
BE IT RESOLVED that Article One of the Articles of Incorporation of SUN
VALLEY BAKING CORP. be amended to change the name of the corporation from
SUN VALLEY BAKING CORP. to SUN VALLEY BAKERIES, INC.
PAID
<PAGE>
(Disregard separation ARTICLE THIRD: The number of shares of the
into classes if class corporation outstanding at the time of the
voting does not apply to adoption of said amendment or amendments was 650;
the amendment voted on.) and the number of shares of each class entitled to
vote as a class on the adoption of said amendment
or amendments, and the designation of each such
class were as follows:
Class Number of Shares
Of the 1000 shares reported under Article 6 of the
Articles of Incorporation, only 650; shares have
been issued.
(Disregard separation ARTICLE FOURTH: The number of shares voted
into classes if class for said amendment or amendments was 650; and the
voting does not apply to number of shares voted against said amendment or
the amendment voted on.) amendments was none. The number of shares of each
class entitled to vote as a class voted for and
against said amendment or amendments,
respectively, was:
Class Number of Shares Voted
For Against
(Disregard this Article where ARTICLE FIFTH: The manner is which the
the amendments contain no exchange, reclassification, or cancellation of
such provisions.) issued shares, or the reduction of the number of
authorized shares of any class below the number of
issued shares of that class, provided for said
amendment or amendments, shall be effected, is as
follows:
<PAGE>
(Disregard this Paragraph ARTICLE SIXTH: Paragraph 1: The manner in
where amendments do not which said amendment or amendments effecting a
affect stated capital or change in the amount of stated capital or the
paid-in surplus.) amount of paid-in surplus, or both, is effected is
as follows:
(Disregard this Paragraph Paragraph 2: The amounts of stated capital
where amendments do not and of paid-in surplus as changed by said
affect stated capital or amendment or amendments are as follows:
paid-in surplus.)
Before Amendment After Amendment
Stated Capital...$ $
Paid-in surplus..$ $
IN WITNESS WHEREOF, the undersigned corporation has caused these Articles
of Amendment to be executed in its name by its _____________ President, and its
corporate seal to be hereto affixed, attested by its ___________ Secretary, this
17th day of August, 1955.
SUN VALLEY BAKING CORP.
By
---------------------------
Its President
PLACE
(CORPORATE SEAL)
HERE
ATTEST:
- -----------------------------------
Its Secretary
<PAGE>
STATE OF ILLINOIS )
) ss.
COUNTY OF COOK )
I, L. Darlane Silverman, a Notary Public, do hereby certify that on the
17th day of August 1995 STANLEY BENN personally appeared before me and, being
first duly sworn by me, acknowledged that he signed the foregoing document in
the capacity therein set forth and declared that the statements therein
contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and year
before written.
L. Darlane Silverman
------------------------------
Notary Public.
PLACE
(CORPORATE SEAL)
HERE
Box 3532 File 584
------------ ---------
- ----------------------------------------
ARTICLES OF AMENDMENT
to the
ARTICLES OF INCORPORATION
of
SUN VALLEY BAKING CORP.
Change of Name
FILED
AUG 24 1955
Secretary of State
FILE IN DUPLICATE
Filing Fee $20.00
- ----------------------------------------
<PAGE>
----------------------------------------------
(Do not write in this space)
Date Paid 8-31-59
Initial License Fee $
Franchise Tax $
Filing Fee $20.00
(File in Duplicate) Clerk
----------------------------------------------
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
PAID
SUN VALLEY BAKERIES, INC.
--------------------------------------------
(Exact Corporate Name)
To CHARLES F. CARPENTIER
Secretary of State
Springfield, Illinois
The undersigned corporation, for the purpose of amending its Articles of
Incorporation and pursuant to the provisions of Section 55 of "The Business
Corporation Act" of the State of Illinois, hereby executes the following
Articles of Amendment:
ARTICLE FIRST: The name of the corporation is:
SUN VALLEY BAKERIES, INC.
ARTICLE SECOND: The following amendment or amendments were adopted in the
manner prescribed by "The Business Corporation Act" of the State of Illinois:
RESOLVED, that Articles of Incorporation of this corporation be amended by
changing Article One thereof, so that as amended, said Article One shall read as
follows:
"The name of this corporation is BAKE-LINE PRODUCTS, INC."
<PAGE>
RESOLVED, FURTHER, that the officers of this corporation be and they are
hereby authorized and directed to make, execute and file all documents necessary
or required to effectuate the amendment to the Articles of Incorporation herein
provided to be made.
(Disregard separation ARTICLE THIRD: The number of shares of the
into classes if class corporation outstanding at the time of the
voting does not apply to adoption of said amendment or amendments was 1,000
the amendment voted on.) common shares; and the number of shares of each
class entitled to vote as a class on the adoption
of said amendment or amendments, and the
designation of each such class were as follows:
Class Number of Shares
Common 1,000
(Disregard separation ARTICLE FOURTH: The number of shares voted
into classes if class for said amendment or amendments was 1,000: and
voting does not apply to the number of shares voted against said amendment
the amendment voted on.) or amendments was -0-. The number of shares of
each class entitled to vote as a class voted for
and against said amendment or amendments,
respectively, was:
Class Number of Shares Voted
Common For Against
1,000 -0-
(Disregard this Article ARTICLE FIFTH: The manner is which the
where the amendment exchange, reclassification, or cancellation of
contains no such issued shares, or the reduction of the number of
provisions.) authorized shares of any class below the number of
issued shares of that class, provided for in, or
effected by, this amendment, is as follows:
<PAGE>
(Disregard this Paragraph ARTICLE SIXTH: Paragraph 1: The manner in
where amendment does not which said amendment or amendments effecting a
affect stated capital or change in the amount of stated capital or the
paid-in surplus.) amount of paid-in surplus, or both, is effected is
as follows:
(Disregard this Paragraph Paragraph 2: The amounts of stated capital
where amendment does not and of paid-in surplus as changed by this
affect stated capital or amendment are as follows:
paid-in surplus.)
Before Amendment After Amendment
Stated Capital....$ $
Paid-in surplus...$ $
<PAGE>
IN WITNESS WHEREOF, the undersigned corporation has caused these Articles
of Amendment to be executed in its name by its _____________ President, and its
corporate seal to be hereto affixed, attested by its ___________ Secretary, this
28th day of August, 1959.
SUN VALLEY BAKERIES, INC.
-------------------------------
By
----------------------------
Its President
PLACE
(CORPORATE SEAL)
HERE
ATTEST:
- -----------------------------------
Its Secretary
STATE OF ILLINOIS )
) ss.
COUNTY OF COOK )
I, L. Lorraine Van Boxel, a Notary Public, do hereby certify that on the
28th day of August 1959 WILLIAM SPRINGER personally appeared before me and,
being first duly sworn by me, acknowledged that he signed the foregoing document
in the capacity therein set forth and declared that the statements therein
contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and year
before written.
Lorraine Van Boxel
--------------------------
Notary Public.
PLACE
(CORPORATE SEAL)
HERE
Box 3532 File 584
------------ ---------
- ----------------------------------------
ARTICLES OF AMENDMENT
to the
ARTICLES OF INCORPORATION
of
SUN VALLEY BAKERIES, INC.
Change of Name
FILED
AUG 31 1959
Secretary of State
FILE IN DUPLICATE
Filing Fee $20.00
- ----------------------------------------
(76820--PAM--4-58)
<PAGE>
PLEASE TYPE OR PRINT CLEARLY -- FILING DEADLINE IS PRIOR TO 06/01/84
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RETURN TO: STATE OF ILLINOIS CORPORATION D 3532-584-1
Corporation Department DOMESTIC CORPORATION ANNUAL REPORT FILE NO.
Secretary of State Federal Employer
Springfield, IL 62756 YEAR OF 1984 Identification * 362318208
Telephone (217) Number
782-7808
- --------------------------------------------------------------------------------------------
</TABLE>
o READ ACCOMPANYING FILING INSTRUCTIONS BEFORE MAKING ENTRIES o
PLEASE RETURN PRE-ADDRESSED FORM, OTHER ENCLOSED FORM FOR YOUR FILE. YOUR
CANCELLED CHECK IS YOUR RECEIPT.
BAKE-LINE PRODUCTS, INC. 2) FOR CHANGES ONLY
% THOMAS KALLEN
1701 S. WINTHROP DRIVE ------------------------------------------
DES PLAINES, IL. 60018-0000 Registered Agent
One Bake-Line Plaza
------------------------------------------
Registered Office - Street Address
Des Plaines, IL 606016
------------------------------------------
City, County, IL Zip Code
1B) CORPORATION HAS NO ASSUMED NAME
3) Date Incorporated 06/22/1955 Period of duration PERPETUAL
(If not perpetual)
4) The Names and addresses of the officers and directors are: (if officers are
directors, so state.)
<TABLE>
<CAPTION>
NAME OFFICE NUMBER & STREET CITY STATE ZIP
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Thomas Kallen President & Dir. 6056 N. Kirkwood Chicago IL 60646
- -------------------------------------------------------------------------------------------------
Howard S. Stone Secretary & Dir. 1425 St. Johns Highland Park IL 60035
Avenue
- -------------------------------------------------------------------------------------------------
Thomas Kallen Treasurer & Dir. 6056 N. Kirkwood Chicago IL 60646
- -------------------------------------------------------------------------------------------------
Robert Kallen Director 6056 N. Kirkwood Chicago IL 60646
- -------------------------------------------------------------------------------------------------
David Kallen Director 6056 N. Kirkwood Chicago IL 60646
- -------------------------------------------------------------------------------------------------
Julie Hainsfurther Director 3379 Krenn Avenue Highland Park IL 60035
- -------------------------------------------------------------------------------------------------
</TABLE>
5) The type of business actually conducted in Illinois is:
6) Number of shares authorized and issued (as of 03/31/84)
CLASS SERIES PAR VALUE NUMBERS AUTHORIZED NUMBER ISSUED
Common none $25.00 4,000 1,000
(687.5 in treas.)
7a) The amount of stated capital and 7b) The Taxable Capital on record with
paid-in surplus as of 03/31/84 is: the Secretary of State is:
STATED CAPITAL $25,000.00 Total $25,000
---------- -------
PAID-IN SURPLUS $ none
----------
TOTAL $25,000.00
==========
<PAGE>
(Please complete reverse side of this report)
8) By President 4/19/84
-------------------------------------------------------------------------
(Any Authorized Officer's Signature) Title (Date)
(Pres, or V. Pres. required if changes listed in 2)
ATTEST Secretary 4/19/84
-------------------------------------------------------------------------
Title (Date)
Under the penalty of perjury and as an authorized declare that this annual
reportaand, if applicable, ment of change of registered agent and/or office,
examined by me and is to the best of my knowledge, belief, true, correct and
complete.
Exhibit 3.16
BY-LAWS
OF
BAKE-LINE PRODUCTS, INC.
ARTICLE I
OFFICES
The principal office of the corporation in the State of Illinois
shall be located in the City of Chicago and County of Cook. The corporation may
have such other offices, either within or without the State of Illinois, as the
business of the corporation may require from time to time.
The registered office of the corporation required by The Business
Corporation Act to be maintained in the State of Illinois may be, but need not
be, identical with the principal office in the State of Illinois, and the
address of the registered office may be changed from time to time by the board
of the directors.
ARTICLE II
SHAREHOLDERS
SECTION 1. ANNUAL MEETING. The annual meeting of the shareholders
shall be held on the second Tuesday in February in each year, beginning with the
year 1957, at the hour of 10:00 A.M., for the purpose of electing directors and
for the transaction of such other business as may come before the meeting. If
the day fixed for the annual meeting shall be a legal holiday, such meeting
shall be held on the next succeeding business day. If the election of directors
shall not be held on the day designated herein for any annual meeting, or at any
adjournment thereof, the board of directors shall cause the election to be held
at a meeting of the shareholders as soon thereafter as conveniently may be.
SECTION 2. SPECIAL MEETINGS. Special meetings of the shareholders
may be called by the president, by the board of directors or by the holders of
not less than one-fifth of all the outstanding shares of the corporation.
SECTION 3. PLACE OF MEETING. The board of directors may designate
any place, either within or without the State of Illinois, as the place of
meeting for any annual meeting or for any special meeting called by the board of
directors. A waiver of notice signed by all shareholders may designate any
place, either within or without the State of Illinois, as the place for the
holding of such meeting. If no designation is made, if a special meeting be
otherwise called, the place of meeting shall be the registered office of the
corporation in the State of
<PAGE>
2
Illinois, except as otherwise provided in Section 5 of this article.
SECTION 4. NOTICE OF MEETINGS. Written or printed notice stating the
place, day and hour of the meeting and, in case of a special meeting, the
purpose or purposes for which the meeting is called, shall be delivered not less
than ten nor more than forty days before the date of the meeting, either
personally or by mail, by or at the direction of the president, or the
secretary, or the officer or persons calling the meeting, to each shareholder of
record entitled to vote at such meeting. If mailed, such notice shall be deemed
to be delivered when deposited in the United States mail, addressed to the
shareholder at his address as it appears on the records of the corporation, with
postage thereon prepaid.
SECTION 5. MEETING OF ALL SHAREHOLDERS. If all of the shareholders
shall meet at any time and place, either within or without the State of
Illinois, and consent to the holding of a meeting at such time and place, such
meeting shall be valid without call or notice, and at such meeting any corporate
action may be taken.
SECTION 6. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. For
the purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders, or shareholders entitled to receive payment of any
dividend, or in order to make a determination of shareholders for any other
proper purpose, the board of directors of the corporation may provide that the
stock transfer books shall be closed for a stated period but not to exceed, in
any case, forty days. If the stock transfer books shall be closed for the
purpose of determining shareholders entitled to notice of or to vote at a
meeting of shareholders, such books shall be closed for at least ten days
immediately preceding such meeting. In lieu of closing the stock transfer books,
the board of directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not more than forty
days and, in case of a meeting of shareholders, not less than ten days prior to
the date on which the particular action, requiring such determination of
shareholders, is to be taken. If the stock transfer books are not closed and no
record date is fixed for the determination of shareholders entitled to notice of
or to vote at a meeting of shareholders, or shareholders entitled to receive
payment of a dividend, the date on which notice of the meeting is mailed or the
date on which the resolution of the board of directors declaring such dividend
is adopted, as the case may be, shall be the record date for such determination
of shareholders.
SECTION 7. VOTING LISTS. The officer or agent having charge of the
transfer books for shares of the corporation shall make, at least ten days
before each meeting of shareholders, a complete list of the shareholders
entitled to vote at such meeting, arranged in alphabetical order, with the
address of and
<PAGE>
3
the number of shares held by each, which list, for a period of ten days prior to
such meeting, shall be kept on file at the registered office of the corporation
and shall be subject to inspection by any shareholder at any time during usual
business hours. Such list shall also be produced and kept open at the time and
place of the meeting and shall be subject to the inspection of any shareholder
during the whole time of the meeting. The original share ledger or transfer
book, or a duplicate thereof kept in this State, shall be prima facie evidence
as to who are the shareholders entitled to examine such list or share ledger or
transfer book or to vote at any meeting of shareholders.
SECTION 8. QUORUM. A majority of the outstanding shares of the
corporation, represented in person or by proxy, shall constitute a quorum at any
meeting of shareholders; provided, that if less than a majority of the
outstanding shares are represented at said meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice.
SECTION 9. PROXIES. At all meetings of shareholders, a shareholder
may vote by proxy executed in writing by the shareholder or by his duly
authorized attorney-in-fact. Such proxy shall be filed with the secretary of the
corporation before or at the time of the meeting. No proxy shall be valid after
eleven months from the date of its execution, unless otherwise provided in the
proxy.
SECTION 10. VOTING OF SHARES. Subject to the provisions of Section
12 of this article, each outstanding share, regardless of class, shall be
entitled to one vote upon each matter submitted to vote at a meeting of
shareholders.
SECTION 11. VOTING OF SHARES BY CERTAIN HOLDERS. Shares standing in
the name of another corporation, domestic or foreign, may be voted by such
officer, agent, or proxy as the by-laws of such corporation may prescribe, or,
in the absence of such provision, as the board of directors of such corporation
may determine.
Shares standing in the name of a deceased person may be voted by his
administrator or executor, either in person or by proxy. Shares standing in the
name of a guardian, conservator, or trustee may be voted by such fiduciary,
either in person or by proxy, but no guardian, conservator, or trustee shall be
entitled, as such fiduciary, to vote shares held by him without a transfer of
such shares into his name.
Shares standing in the name of a receiver may be voted by such
receiver and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into his name if authority so to do
be contained in an
<PAGE>
4
appropriate order of the court by which such receiver was appointed.
A shareholder whose shares are pledged shall be entitled to vote
such shares until the shares have been transferred into the name of the pledgee,
and thereafter the pledgee shall be entitled to vote the shares so transferred.
Shares of its own stock belonging to this corporation shall not be
voted, directly or indirectly, at any meeting and shall not be counted in
determining the total number of outstanding shares at any given time, but shares
of its own stock held by it in a fiduciary capacity may be voted and shall be
counted in determining the total number of outstanding shares at any given time.
SECTION 12. CUMULATIVE VOTING. In all elections for directors, every
shareholder shall have the right to vote, in person or by proxy, the number of
shares owned by him, for as many persons as there are directors to be elected,
or to cumulate said shares, and give one candidate as many votes as the number
of directors multiplied by the number of his shares shall equal, or to
distribute them on the same principle among as many candidates as he shall see
fit.
SECTION 13. INFORMAL ACTION BY SHAREHOLDERS. Any action required to
be taken at a meeting of the shareholders, or any other action which may be
taken at a meeting of the shareholders, may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be signed by all of
the shareholders entitled to vote with respect to the subject matter thereof.
SECTION 14. VOTING BY BALLOT. Voting on any question or in any
election may be viva voce unless the presiding officer shall order or any
shareholder shall demand that voting be by ballot.
ARTICLE III
DIRECTORS
SECTION 1. GENERAL POWERS. The business and affairs of the
corporation shall be managed by its board of directors.
SECTION 2. NUMBER, TENURE AND QUALIFICATIONS. The number of
directors which shall constitute the whole board shall be two (2). Each director
shall hold office until the next annual meeting of shareholders or until his
successor shall have been elected and qualified. Directors need not be residents
of Illinois or shareholders of the corporation.
<PAGE>
5
SECTION 3. REGULAR MEETINGS. A regular meeting of the board of
directors shall be held without other notice than this by-law, immediately
after, and at the same place as, the annual meeting of shareholders. The board
of directors may provide, by resolution, the time and place, either within or
without the State of Illinois, for the holding of additional regular meetings
without other notice than such resolution.
SECTION 4. SPECIAL MEETINGS. Special meetings of the board of
directors may be called by or at the request of the president or any two
directors. The person or persons authorized to call special meetings of the
board of directors may fix any place, either within or without the State of
Illinois, as the place for holding any special meeting of the board of directors
called by them.
SECTION 5. NOTICE. Notice of any special meeting shall be given at
least 3 days previously thereto by written notice delivered personally or mailed
to each director at his business address, or by telegram. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail so
addressed, with postage thereon prepaid. If notice be given by telegram, such
notice shall be deemed to be delivered when the telegram is delivered to the
telegraph company. Any director may waive notice of any meeting. The attendance
of a director at any meeting shall constitute a waiver of notice of such
meeting, except where a director attends a meeting for the express purpose of
objecting to the transaction of any business because the meeting is not lawfully
called or convened. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the board of directors need be specified
in the notice or waiver of notice of such meeting.
SECTION 6. QUORUM. A majority of the board of directors shall
constitute a quorum for transaction of business st any meeting of the board of
directors, provided, that if less than a majority of the directors are present
at said meeting, a majority of the directors present may adjourn the meeting
from time to time without further notice.
SECTION 7. MANNER OF ACTING. The act of the majority of the
directors present at a meeting at which a quorum is present shall be the act of
the board of directors.
SECTION 8. VACANCIES. Any vacancy occurring in the board of
directors and any directorship to be filled by reason of an increase in the
number of directors, may be filled by election at an annual meeting or at a
special meeting of shareholders called for that purpose.
SECTION 9. COMPENSATION. By resolution of the board of directors,
the directors may be paid their expenses, if any, of attendance at each meeting
of the board, and may be paid a fixed sum for attendance at meetings or a stated
salary as
<PAGE>
6
directors. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
SECTION 10. PRESUMPTION OF ASSENT. A director of the corporation who
is present at a meeting of the board of directors at which action on any
corporate matter is taken shall be conclusively presumed to have assented to the
action taken unless his dissent shall be entered in the minutes of the meeting
or unless he shall file his written dissent to such action with the person
acting as the secretary of the meeting before the adjournment thereof or shall
forward such dissent by registered mail to the secretary of the corporation
immediately after the adjournment of the meeting. Such right to dissent shall
not apply to a director who voted in favor of such action.
ARTICLE IV
OFFICERS
SECTION 1. NUMBER. The officers of the corporation shall be a
president, one or more vice-presidents (the number thereof to be determined by
the board of directors), a treasurer, and a secretary, and such assistant
treasurers, assistant secretaries or other officers as may be elected or
appointed by the board of directors. Any two or more offices may be held by the
same person, except the offices of president and secretary.
SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the
corporation shall be elected annually by the board of directors at the first
meeting of the board of directors held after each annual meeting of
shareholders. If the election of officers shall not be held at such meeting,
such election shall be held as soon thereafter as conveniently may be. Vacancies
may be filled or new offices filled at any meeting of the board of directors.
Each officer shall hold office until his successor shall have been duly elected
and shall have qualified or until his death or until he shall resign or shall
have been removed in the manner hereinafter provided.
SECTION 3. REMOVAL. Any officer or agent elected or appointed by the
board of directors may be removed by the board of directors whenever in its
judgment the best interests of the corporation would be served thereby, but such
removal shall be without prejudice to the contract rights, if any, of the person
so removed.
SECTION 4. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the board
of directors for the unexpired portion of the term.
<PAGE>
7
["SECTION 5(a) THE CHAIRMAN OF THE BOARD OF DIRECTORS shall preside
at all meetings of Shareholders and Board of Directors. Except where by law, the
Board of Directors or these By-Laws the signature of the President (or another
officer) is required, the Chairman shall possess the same power as the President
to sign, with the Secretary or any other proper officer of the corporation
thereunto authorized by the Board of Directors, all certificates for shares of
the corporation, contracts, deeds, mortgages, bonds or other instruments of the
corporation which the Board of Directors may authorize to be executed. The
Chairman shall be the chief executive of the corporation and shall in general
supervise and control all of the business and affairs of the corporation, but
the Chairman may at any time, and from time to time, delegate such rights and
duties to the President. The Chairman shall also perform such other duties as
may be prescribed by the Board of Directors from time to time.
SECTION 5(b) THE PRESIDENT, in the absence of the Chairman shall
preside at all meetings of shareholders and the Board of Directors. When
authorized by the Chairman, the President shall in general supervise and control
all of the business and affairs of the corporation. He may sign, with the
Secretary or any other proper officer of the corporation thereunto authorized by
the Board of Directors, certificates, any deeds, mortgages, bonds, contracts, or
other instruments which the Board of Directors have authorized to be executed,
except in cases where the signing and execution thereof shall be expressly
delegated by the Board of Directors or by these By-Laws to some other officer or
agent of the corporation."] [Amended January 21, 1987]
SECTION 5. PRESIDENT. The president shall be the principal executive
officer of the corporation and shall in general supervise and control all of the
business and affairs of the corporation. He shall preside at all meetings of the
shareholders and of the board of directors. He may sign, with the secretary or
any other proper officer of the corporation thereunto authorized by the board of
directors, certificates for shares of the corporation, any deeds, mortgages,
bonds, contracts, or other instruments which the board of directors has
authorized to be executed, except in cases where the signing and execution
thereof shill be expressly delegated by the board of directors or by these
by-laws to some other officer or agent of the corporation, or shall be required
by law to be otherwise signed or executed; and in general shall perform all
duties incident to the office of president and such other duties as may be
prescribed by the board of directors from time to time.
SECTION 6. THE VICE-PRESIDENTS. In the absence of the president or
in the event of his inability or refusal to act, the vice-president (or in the
event there be more than one vice-president, the vice-presidents in the order
designated, or in the absence of any designation, then in the order of their
<PAGE>
8
election) shall perform the duties of the president, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
president. Any vice-president may sign, with the secretary or an assistant
secretary, certificates for shares of the corporation; and shall perform such
other duties as from time to time may be assigned to him by the president or by
the board of directors.
SECTION 7. THE TREASURER. If required by the board of directors, the
treasurer shall give a bond for the faithful discharge of his duties in such sum
and with such surety or sureties as the board of directors shall determine. He
shall: (a) have charge and custody of and be responsible for all funds and
securities of the corporation; receive and give receipts for moneys due and
payable to the corporation from any source whatsoever, and deposit all such
moneys in the name of the corporation in such banks, trust companies or other
depositaries as shall be selected in accordance with the provisions of Article V
of these by-laws; (b) in general perform all the duties incident to the office
of treasurer and such other duties as from time to time may be assigned to him
by the president or by the board of directors.
SECTION 8. THE SECRETARY. The secretary shall: (a) keep the minutes
of the shareholders' and of the board of directors' meetings in one or more
books provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these by-laws or as required by law; (c) be
custodian of the corporate records and of the seal of the corporation and see
that the seal of the corporation is affixed to all certificates for shares prior
to the issue thereof and to all documents, the execution of which on behalf of
the corporation under its seal is duly authorized in accordance with the
provisions of these by-laws; (d) keep a register of the post-office address of
each shareholder which shall be furnished to the secretary by such shareholder;
(e) sign with the president, or a vice-president, certificates for shares of the
corporation, the issue of which shall have been authorized by resolution of the
board of directors; (f) have general charge of the stock transfer books of the
corporation; (g) in general perform all 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 by the board of directors.
SECTION 9. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. The
assistant treasurers shall respectively, if required by the board of directors,
give bonds for the faithful discharge of their duties in such sums and with such
sureties as the board of directors shall determine. The assistant secretaries as
thereunto authorized by the board of directors may sign with the president or a
vice-president certificates for shares of the corporation, the issue of which
shall have been authorized by a resolution of the board of directors. The
assistant treasurers and assistant secretaries, in general, shall
<PAGE>
9
perform such duties as shall be assigned to them by the treasurer or the
secretary, respectively, or by the president or the board of directors.
SECTION 10. SALARIES. The salaries of the officers shall be fixed
from time to time by the board of directors and no officer shall be prevented
from receiving such salary by reason of the fact that he is also a director of
the corporation.
ARTICLE V
CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1. CONTRACTS. The board of directors may authorize any
officer or officers, agent or agents, to enter into any contract or execute and
deliver any instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances.
SECTION 2. LOANS. No loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the board of directors. Such authority may be
general or confined to specific instances.
SECTION 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders
for the payment of money, notes or other evidences of indebtedness issued in the
name of the corporation, shall be signed by such officer or officers, agent or
agents of the corporation and in such manner as shall from time to time be
determined by resolution of the board of directors.
SECTION 4. DEPOSITS. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the corporation
in such banks, trust companies or other depositaries as the board of directors
may select.
ARTICLE VI
CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATES FOR SHARES. Certificates representing shares
of the corporation shall be in such form as may be determined by the board of
directors. Such certificates shall be signed by the president or a
vice-president and by the secretary or an assistant secretary and shall be
sealed with the seal of the corporation. All certificates for shares shall be
consecutively numbered or otherwise identified. The name of the person to whom
the shares represented thereby are issued, with the number of shares and date of
issue, shall be entered on the books of the corporation. All certificates
surrendered to the corporation for transfer shall be cancelled and no new
<PAGE>
10
certificate shall be issued until the former certificate for a like number of
shares shall have been surrendered and cancelled, except that in case of a lost,
destroyed or mutilated certificate a new one may be issued therefor upon such
terms and indemnity to the corporation as the board of directors may prescribe.
SECTION 2. TRANSFERS OF SHARES. Transfers of shares of the
corporation shall be made only on the books of the corporation by the holder of
record thereof or by his legal representative, who shall furnish proper evidence
of authority to transfer, or by his attorney thereunto authorized by power of
attorney duly executed and filed with the secretary of the corporation, and on
surrender for cancellation of the certificate for such shares. The person in
whose name shares stand on the books of the corporation shall be deemed the
owner thereof for all purposes as regards the corporation.
ARTICLE VII
FISCAL YEAR
The fiscal year of the corporation shall begin on the first day of
July in each year and end on the last day of June in each year.
ARTICLE VIII
DIVIDENDS
The board of directors may from time to time, declare, and the
corporation may pay, dividends on its outstanding shares in the manner and upon
the terms and conditions provided by law and its articles of incorporation.
ARTICLE IX
SEAL
The board of directors shall provide a corporate seal which shall be
in the form of a circle and shall have inscribed thereon the name of the
corporation and the words, "Corporate Seal, Illinois."
ARTICLE X
WAIVER OF NOTICE
Whenever any notice whatever is required to be given under the
provisions of these by-laws or under the provisions of the articles of
incorporation or under the provisions of The
<PAGE>
11
Business Corporation Act of the State of Illinois, a waiver thereof in writing,
signed by the person or persons entitled to such notice, whether before or after
the time stated therein, shall be deemed equivalent to the giving of such
notice.
ARTICLE XI
AMENDMENTS
These by-laws may be altered, amended or repealed and new by-laws
may be adopted at any meeting of the board of directors of the corporation by a
majority vote of the directors present at the meeting.
Exhibit 3.17
CERTIFICATE OF INCORPORATION of
BISCSUN CORPORATION
1. The name of the Corporation is BISCSUN CORPORATION.
2. The Corporation's principal office in the State of Delaware is
located at No. 100 West Tenth Street, in the City of Wilmington, County of
New Castle. The name and address of its resident agent is The Corporation
Trust Company, No. 100 West Tenth Street, Wilmington 99, Delaware.
3. The nature of the business, or objects or purposes to be
transacted, promoted or carried on, are:
To carry on the business of manufacturing, preparing, producing,
buying, dealing in and with, selling, distributing or otherwise disposing
of, any and all kinds of foods and food products, including (but without
limitation of the scope of the foregoing) biscuits, crackers, cookies,
breads, cakes, pastries, snacks, fruits, juices, soft drinks, non-
intoxicating beverages, confectionery, candies, nuts and any and all other
foods or food products for human or animal use; any commodity, substance,
element, component, ingredient, or factor used or useful in the
manufacture, preparation or production of foods and food products; and also
any materials, accessories, supplies, commodities or things which may be
used or useful in or in connection with the manufacture, preparation,
production, purchase, sale, distribution, or use of any of the articles,
items or things coming within the foregoing descriptions;
<PAGE>
To manufacture, purchase or otherwise acquire, sell, lease or
otherwise dispose of, and deal in or with property or services of any kind
or description;
To purchase or otherwise acquire, hold, own, improve, develop,
sell, mortgage, pledge and otherwise deal in and with real and personal
property of every kind and description in the United States of America, and
in any territory, colony, dependency or district thereof, and in any
foreign country or countries to the extent that the same may be lawfully
permissible;
To apply for, purchase, register, lease or otherwise acquire, to
hold, own, use and operate, and to sell, assign, license or otherwise
dispose of patents or applications therefor under letters patent of the
United States or any foreign country, inventions, improvements, formulas
and processes, trade-marks, trade names, copyrights and rights or interests
in any of the foregoing;
To purchase or otherwise acquire, hold, own, sell, pledge and
otherwise dispose of stocks, bonds and other evidences of indebtedness of
any corporation, domestic or foreign, and to issue in exchange therefor its
stock, bonds or other obligations, and to exercise in respect thereof all
the rights, powers and privileges of individual owners, including the right
to vote thereon; and to aid in any manner permitted by law any corporation
or association, domestic or foreign, of which any stocks, bonds or
evidences of indebtedness are held by or for the Corporation, and to do any
acts or things desired to protect,
<PAGE>
preserve, improve or enhance the value of any such stocks, bonds or
evidences of indebtedness;
In general, to carry on any other business whether or not in
connection with the foregoing, and to have and exercise all the powers
conferred by the laws of Delaware upon corporations formed under the
General Corporation Law of the State of Delaware, and to do any or all of
the things hereinbefore set forth to the same extent as natural persons
could do.
The objects and purposes expressed in the foregoing clauses shall
not be limited or restricted by reference to, or inference from, the terms
of any other clause in this certificate of incorporation, but each object
or purpose stated in the foregoing clauses of this Article shall be
regarded as an independent object or purpose.
4. The total number of shares of stock which the Corporation
shall have authority to issue is 15,000, all of which are to be without par
value. The minimum amount of capital with which this Corporation will
commence business is $1,000.
5. The name and place of residence of each of the incorporators
are as follows:
Name Place of Residence
---- ------------------
S.H. Livesay Wilmington, Delaware
B.J. Consono Wilmington, Delaware
A.D. Grier Wilmington, Delaware
6. The Corporation is to have perpetual existence.
<PAGE>
7. The private property of the stockholders shall not be subject
to the payment of corporate debts to any extent whatever.
8. The number of directors shall be such as from time to time
shall be fixed by, or in the manner provided in, the by-laws but in no case
shall the number be less than that required by law. A director need not be
a stockholder.
9. The Board of Directors is authorized:
(a) To make, alter or repeal the by-laws of the Corporation,
except that any by-law adopted by the stockholders may be altered or
repealed only by the stockholders if such by-law specifically so provides.
(b) To set apart out of any of the funds of the Corporation
available for dividends a reserve or reserves for any proper purpose and to
abolish any such reserve.
10. Any one or more directors may be removed, with or without
cause, either (1) at a meeting of stockholders, by the vote of a majority
of the outstanding shares of stock of the Corporation entitled to vote
thereon, or (2) without a stockholders' meeting, by the consent in writing
thereto executed by all of the stockholders who would be entitled to vote
thereon if such a meeting were held.
11. Meetings of stockholders may be held outside the State of
Delaware, if the by-laws so provide. The books of the Corporation may be
kept outside the State of Delaware at such place or places as may be
designated from time to time by the Board of Directors or in the by-laws of
the Corporation, subject,
<PAGE>
however, to any requirements of law. Elections of directors need not be by
ballot unless, and to the extent that, the by-laws of the Corporation so
provide.
12. Each director and each officer, each former director and each
former officer, and each person who serves or has served at the request of
the Corporation as a director or officer of another corporation, and their
respective heirs and legal representatives shall be indemnified by the
Corporation against expenses (including attorneys' fees) actually and
necessarily incurred by him in connection with any action, suit or
proceeding, civil or criminal (or appeal therein) in which such director,
officer or person is made a party, or with which he shall be threatened, by
reason of his being or having been a director or officer of the Corporation
or of such other corporation (whether or not he has continued to be such
director or officer at the time of the incurring of such expenses), except
in relation to matters as to which it shall be adjudged in such action,
suit or proceeding that such director, officer or person is liable for
negligence or misconduct in the performance of his duty. Such right of
indemnification shall not be exclusive of any other rights to which he may
be entitled apart from this Article.
13. Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the application
in a summary way of this
<PAGE>
Corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this Corporation
under the provisions of section 291 of Title 8 of the Delaware Code or on
the application of trustees in dissolution or of any receiver or receivers
appointed for this Corporation under the provisions of section 279 of Title
8 of the Delaware Code order a meeting of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, to be summoned in such manner as the said
court directs. If a majority in number representing three-fourths in value
of the creditors or class of creditors, and/or of the stockholders or class
of stockholders of this Corporation, as the case may be, agree to any
compromise or arrangement and to any reorganization of this Corporation as
consequence of such compromise or arrangement, the said compromise or
arrangement and the said reorganization shall, if sanctioned by the court
to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this Corporation, as the case may be, and also on this
Corporation.
14. The Corporation reserves the right to amend, alter or repeal
any provision contained in this certificate of incorporation in the manner
now or hereafter prescribed by statute and all rights conferred upon
stockholders herein are subject to this reservation.
THE UNDERSIGNED, being all the incorporators above named, for the
purpose of forming a corporation pursuant to the
<PAGE>
General Corporation Law of the State of Delaware, have hereunto set their
respective hands and seals this 13th day of April,
1996.
S.H. Livesay (SEAL)
B.J. Consono (SEAL)
A.D. Grier (SEAL)
<PAGE>
STATE OF DELAWARE )
: SS.:
COUNTY OF NEW CASTLE )
BE IT REMEMBERED that on this 13th day of April, 1996, personally
came before me, a Notary Public for the State of Delaware, all the parties
to the foregoing certificate of incorporation, known to me personally to be
such, and severally acknowledged the said certificate to be the act and
deed of the signers respectively and that the facts therein stated are
truly set forth.
GIVEN under my hand and seal of office the day and year
aforesaid.
A. Dana Atwell
Notary Public
A. DANA ATWELL
NOTARY PUBLIC
APPOINTED OCT. 29, 1965
STATE OF DELAWARE
TERM TWO YEARS
<PAGE>
STATE OF DELAWARE
OFFICE OF SECRETARY OF STATE
I, ELISHA C. DUKES, Secretary of State of the State of Delaware,
DO HEREBY CERTIFY that the above and foregoing is a true and correct copy
of Certificate of Incorporation of the "BISCSUN CORPORATION", as received
and filed in this office the thirteenth day of April, A.D. 1966, at
10 o'clock A.M.
IN TESTIMONY WHEREOF, I have hereunto set my hand
and official seal at Dover this thirteenth day of April
in the year of our Lord one thousand nine hundred and
sixty-six.
ELISHA C. DUKES
Secretary of State
G.F. DOWNS
Ass't. Secretary of State
Secretary's Office
1855 Delaware 1793
<PAGE>
Received for Record
April 13th, A.D. 1966.
Leo J. Dugan, Jr., Recorder.
STATE OF DELAWARE :
: SS.:
NEW CASTLE COUNTY :
Recorded in the Recorder's Office at Wilmington, in
Incorporation Record , Vol. Page &c., the 13th
day of April, A.D. 1966.
Witness my hand and official seal.
Leo J. Dugan, Jr.
Recorder.
Recorders Office
New Castle Co. Del.
Mercy Justice
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
BISCSUN CORPORATION
BISCSUN CORPORATION, a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware, DOES
HEREBY CERTIFY:
FIRST: That the Board of Directors of the Corporation, at a
meeting duly called and held, and at which a quorum was present and acting
throughout, duly adopted a resolution setting forth and declaring adoption
of the following amendment to the Certificate of Incorporation of the
Corporation:
RESOLVED, that the Certificate of Incorporation of this
Corporation be amended to change the name of the Corporation. To
effect the foregoing amendment, Article 1 is amended to state:
"1. The name of the Corporation is
Sunshine Biscuits, Inc."
SECOND: That said amendment has been consented to and authorized
by the holder of all the Corporation's issued and outstanding stock
entitled to vote thereon in accordance with the provisions of Section 242
of the General Corporation Law of Delaware and filed with the Corporation.
Sunshine Biscuits, Inc., a New York corporation (hereinafter called
the "Corporation"), by its Secretary, S.J. Hamshaw, hereby certifies that the
Corporation consents to the use of the name Sunshine Biscuits, Inc. in
Delaware by Biscsun
<PAGE>
Corporation, a wholly owned subsidiary of the Corporation; that if a plan
of reorganization is approved by the stockholders of the Corporation and
such plan is consummated, the Corporation intends to change its name to
S.B.I. Liquidating Corporation; and that if such plan of reorganization is
not so approved or consummated, the Corporation will cause Sunshine
Biscuits, Inc., a Delaware corporation, to change its name back to Biscsun
Corporation.
SUNSHINE BISCUITS, INC.
By:____________________________________
S.J. Hamshaw, Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
SUNSHINE BISCUITS, INC.
(Pursuant to Section 242 of the General
Corporation Law of the State of Delaware)
SUNSHINE BISCUITS, INC., a corporation organized and existing by
virtue of the General Corporation Law of the State of Delaware (hereinafter
called the "Corporation"), DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of the
Corporation held September 16, 1976 a resolution was duly adopted setting
forth proposed amendments to the Certificate of Incorporation of the
Corporation, declaring said amendments to be advisable and directing that
said amendments be submitted to the sole stockholder of the Corporation
entitled to vote in respect thereof.
SECOND: That thereafter, in accordance with Section 228 of the
General Corporation Law of the State of Delaware, the sole stockholder of
the Corporation holding the necessary number of shares as required by
statute and the Certificate of Incorporation approved and adopted said
amendments by unanimous written consent dated September 16, 1976.
<PAGE>
THIRD: That said amendments would amend the Certificate of
Incorporation of the Corporation by deleting Article 12 thereof in its
entirety and be redesignating Articles 13 and 14 thereof as Articles 12 and
13, respectively.
FOURTH: That said amendments were duly adopted in accordance with
the provisions of Section 242 of the General Corporation Law of the State
of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this certificate
to be signed by its President and Chief Executive Officer and attested by
its Secretary this 16th day of September, 1976.
SUNSHINE BISCUITS, INC.
By:______________________________________
Edward J. Jennings, Jr.
President and Chief Executive
Officer
Attest:
By:_____________________________
Reuben Herman, Secretary
Exhibit 3.18
SUNSHINE BISCUITS, INC.
BY-LAWS
ARTICLE I
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meeting and Notice. Meetings of the stockholders
of the Corporation shall be held at such place either within or without the
State of Delaware as the Board of Directors may determine.
Section 2. Annual and Special Meetings. Annual meetings of
stockholders shall be held, at a date, time and place fixed by the Board of
Directors and stated in the notice of meeting, to elect a Board of Directors and
to transact such other business as may properly come before the meeting. Special
meetings of the stockholders may be called by the President for any purpose and
shall be called by the President or Secretary if directed by the Board of
Directors or requested in writing by the holders of not less than 25% of the
capital stock of the Corporation. Each such stockholder request shall state the
purpose of the proposed meeting.
Section 3. Notice. Except as otherwise provided by law, at least 10
and not more than 60 days before each meeting of stockholders, written notice of
the time, date and place of the meeting, and, in the case of a special meeting,
the purpose or purposes for which the meeting is called, shall be given to each
stockholder.
Section 4. Quorum. At any meeting of stockholders, the holders of
record, present in person or by proxy, of a majority of the Corporation's issued
and outstanding capital stock shall constitute a quorum for the transaction of
business, except as otherwise provided by law. In the absence of a quorum, any
officer entitled to preside at or to act as secretary of the meeting shall have
power to adjourn the meeting from time to time until a quorum is present.
Section 5. Voting. Except as otherwise provided by law, all matters
submitted to a meeting of stockholders shall be decided by vote of the holders
of record, present in person or by proxy, of a majority of the Corporation's
issued and outstanding capital stock.
<PAGE>
2
ARTICLE II
DIRECTORS
Section 1. Number, Election and Removal of Directors. The number of
Directors that shall constitute the Board of Directors shall not be less than
one or more than fifteen. The first Board of Directors shall consist of two
Directors. Thereafter, within the limits specified above, the number of
Directors shall be determined by the Board of Directors or the stockholders. The
Directors shall be elected by stockholders at their annual meeting. Vacancies
and newly created directorships resulting from any increase in the number of
Directors may be filled by a majority of the Directors then in office, although
less than a quorum, or by the sole remaining Director or by the stockholders. A
Director may be removed with or without cause by the stockholders.
Section 2. Meetings. Regular meetings of the Board of Directors
shall be held at such times and places as may from time to time be fixed by the
Board of Directors or as may be specified in a notice of meeting.
Section 3. Quorum. One-third of the total number of Directors shall
constitute a quorum for the transaction of business. If a quorum is not present
at any meeting of the Board of Directors, the Directors present may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until such a quorum is present. Except as otherwise provided by law,
the Certificate of Incorporation of the Corporation, these By-Laws or any
contract or agreement to which the Corporation is a party, the act of a majority
of the Directors present at any meeting at which there is a quorum shall be the
act of the Board of Directors.
Section 4. Committees. The Board of Directors may, by resolution
adopted by a majority of the whole Board, designate one or more committees,
including, without limitation, an Executive Committee, to have and exercise such
power and authority as the Board of Directors shall specify. In the absence or
disqualification of a member of a 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 Director to act at the
absent or disqualified member.
<PAGE>
3
ARTICLE III
OFFICERS
The officers of the Corporation shall consist of a President, a Vice
President, a Secretary, a Treasurer and such other additional officers with such
titles as the Board of Directors shall determine, all of which shall be chosen
by and shall serve at the pleasure of the Board of Directors. Such officers
shall have the usual powers and shall perform all the usual duties incident to
their respective offices. All officers shall be subject to the supervision and
direction of the Board of Directors. The authority, duties or responsibilities
of any officer of the Corporation may be suspended by the President with or
without cause. Any officer elected or appointed by the Board of Directors may be
removed by the Board of Directors with or without cause.
ARTICLE IV
INDEMNIFICATION
To the fullest extent permitted by the Delaware General Corporation
Law, the corporation shall indemnify any current or former Director or officer
of the Corporation and may, at the discretion of the Board of Directors,
indemnify any current or former employee or agent of the Corporation against all
expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with any threatened, pending or
completed action, suit or proceeding brought by or in the right of the
Corporation or otherwise, to which he was or is a party by reason of his current
or former position with the Corporation or by reason of the fact that he is or
was serving, at the request of the Corporation, as a director, officer, partner,
trustee, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise.
Expenses incurred by a person who is or was a director or officer of
the Corporation in appearing at, participating in or defending any such action,
suit or proceeding shall be paid by the Corporation at reasonable intervals in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of the director or officer to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the Corporation as authorized by this Article. If a claim under
this Article is not paid in full by the Corporation within ninety days after a
written claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be paid
also the expense of prosecuting such claim. It shall be a defense to any such
action (other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition
<PAGE>
4
where the required undertaking, if any is required, has been tendered to the
Corporation) that the claimant has not met the standards of conduct which make
it permissible under the Delaware General Corporation Law or other applicable
law for the corporation to indemnify the claimant for the amount claimed, but
the burden of proving such defense shall be on the Corporation. Neither the
failure of the Corporation (including its board of directors, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he has met the applicable standard of conduct set
forth in the Delaware General Corporation Law or other applicable law, nor an
actual determination by the Corporation (including its board of directors,
independent legal counsel, or its stockholders) that the claimant has not met
the applicable standard of conduct, shall be a defense to the action or create a
presumption that the claimant has not met the applicable standard of conduct.
ARTICLE V
GENERAL PROVISIONS
Section 1. Notices. Whenever any statute, the Certificate of
Incorporation or these By-Laws require notice to be given to any Director or
stockholder, such notice may be given in writing by mail, addressed to such
Director or stockholder at his address as it appears in the records of the
Corporation, with postage thereon prepaid. Such notice shall be deemed to have
been given when it is deposited in the United States mail. Notice to Directors
may also be given by telegram.
Section 2. Fiscal Year. The fiscal year of the Corporation shall be
fixed by the Board of Directors.
Exhibit 3.19
ARTICLES OF INCORPORATION
OF
STEAMBOAT CORPORATION
1.
The name of the Corporation is STEAMBOAT CORPORATION.
2.
The Corporation shall have perpetual duration.
3.
The purposes for which the Corporation is organized are to purchase, own
and lease real and personal property and to conduct any other businesses and
engage in any other activities not specifically prohibited to corporations for
profit under the laws of the State of Georgia, and the corporation shall have
all powers necessary to conduct such businesses and engage in such activities,
including, but not limited to, the powers enumerated in the Georgia Business
Corporation Code or any amendment thereto.
4.
The aggregate number of shares which the Corporation shall have authority
to issue is 10,000, all of which shall be common shares of $1.00 par value per
share.
5.
Shares of the Corporation may be issued by the Corporation for such
consideration, not less than the par value thereof, as shall be fixed from time
to time by the Board of Directors.
6.
No shareholder shall have any preemptive right to subscribe for or to
purchase any shares or other securities issued by the Corporation.
7.
Subject to the provisions of ss. 22-512 of the Georgia Business Corporation
Code, the Board of Directors shall have the power to distribute a portion of the
assets of the Corporation, in cash or in property, to holders of shares of the
Corporation out of the capital surplus of the Corporation.
<PAGE>
8.
The initial Board of Directors of the Corporation shall consist of three
members, whose names and addresses are as follows:
Donald L. Fuchs
55 Broad Street
New York, New York 10004
Berdine Croel
55 Broad Street
New York, New York 10004
Charles D. Svenson
55 Broad Street
New York, New York 10004
9.
The Corporation shall have the full power to purchase and otherwise
acquire, and dispose of, its own shares and securities granted by the laws of
the State of Georgia and shall have the right to purchase its shares out of its
unreserved and unrestricted capital surplus available therefor as well as out of
its unreserved and unrestricted earned surplus available therefor.
10.
The address of the initial registered office of the Corporation shall be
1000 Fulton Federal Building, Atlanta, Georgia 30303. The initial registered
agent of the Corporation at such address shall be The Prentice-Hall Corporation
System, Inc.
11.
The Corporation shall not commence business until it shall have received
not less than $500 in payment for the issuance of its shares.
12.
The name and address of the Incorporator is Henry Hall Ware, III, 2500
Trust Company of Georgia Building, Atlanta, Georgia 30303.
IN WITNESS WHEREOF, the undersigned has executed these Articles of
Incorporation.
-----------------
Incorporator
<PAGE>
STATE OF GEORGIA
COUNTY OF FULTON
TO THE SUPERIOR COURT OF SAID COURT:
The petition of Henry Hall Ware, III, whose address is 2500 Trust Company
of Georgia Building, Atlanta, Georgia 30303 (hereinafter referred to as
"Incorporator"), respectfully shows:
1.
The Articles of Incorporation of STEAMBOAT CORPORATION, executed by the
Incorporator, are attached hereto.
2.
The initial registered office of STEAMBOAT CORPORATION is to be located in
Fulton County, Georgia.
3.
Incorporator exhibits herewith a Certificate of the Secretary of State of
Georgia that the name "Steamboat Corporation" is available.
WHEREFORE, Incorporator prays that the incorporation of STEAMBOAT
CORPORATION be granted, pursuant to the attached Articles of Incorporation.
--------------------------
Attorney for Incorporators
KING & SPAULDING
2500 Trust Company of
Georgia Building
Atlanta, Georgia 30303
404-658-1350
<PAGE>
O R D E R
The Articles of Incorporation of STEAMBOAT CORPORATION and the certificate
of the Secretary of State of Georgia that such name is available in accordance
with ss. 22-301 of the Georgia Business Corporation Code having been examined
and found to be lawful;
IT IS HEREBY ORDERED that the incorporation of STEAMBOAT CORPORATION be,
and it hereby is, granted under the laws of the State of Georgia, pursuant to
the attached Articles of Incorporation.
This 10th day of December, 1973.
---------------------
Judge, Superior Court
Fulton County, Georgia
Exhibit 3.20
BY-LAWS OF
STEAMBOAT CORPORATION
ARTICLE I
SHAREHOLDERS
Section 1. Annual Meeting. The annual meeting of the shareholders
for the election of Directors and for the transaction of such other business as
may properly come before the meeting shall be held at such place, either within
or without the State of Georgia, on such date and at such time as the Board of
Directors may by resolution provide, or if the Board of Directors fails to
provide, then such meeting shall be held at the principal office of the
Corporation at 10:00 A.M. on the fourth Tuesday in April of each year, or, if
such date is a legal holiday, on the next succeeding business day. The Board of
Directors may specify by resolution prior to any special meeting of shareholders
held within the year that such meeting shall be in lieu of the annual meeting.
Section 2. Special Meeting; Call and Notice of Meetings. Special
meetings of the shareholders may be called at any time by the Board of
Directors, the President or upon written request of the holders of at least
twenty-five (25%) per cent of the outstanding common stock. Such meetings shall
be held at such place, either within or without the State of Georgia, as is
stated in the call and notice thereof. Written notice of each meeting of
shareholders, stating the time and place of the meeting, and the purpose of any
special meeting, shall be mailed
<PAGE>
2
to each shareholder entitled to vote at or to notice of such meeting at his
address shown on the books of the Corporation not less than ten (10) nor more
than fifty (50) days prior to such meeting unless such shareholder waives notice
of the meeting. Any shareholder may execute a waiver of notice, in person or by
proxy, either before or after any meeting, and shall be deemed to have waived
notice if he is present at such meeting in person or by proxy. Neither the
business transacted at, nor the purpose of, any meeting need be stated in the
waiver of notice of such meeting.
Notice of any meeting may be given by the President, the Secretary
or by the person or persons calling such meeting. No notice need be given of the
time and place of reconvening of any adjourned meeting, if the time and place to
which the meeting is adjourned are announced at the adjourned meeting.
Section 3. Quorum; Required Shareholder Vote. A quorum for the
transaction of business at any annual or special meeting of shareholders shall
exist when the holders of a majority of the outstanding stares entitled to vote
are represented either in person or by proxy at such meeting. If a quorum is
present, the affirmative vote of the majority of the shares represented at the
meeting and entitled to vote on the subject matter shall be the act of the
shareholders, unless a greater vote is required by law, by the Articles of
Incorporation or by these By-Laws. When a quorum is once present to organize a
meeting, the shareholders present may continue to do business at the meeting or
at any adjournment thereof notwithstanding the withdrawal of enough shareholders
to leave less than a quorum. The holders of a majority of the voting shares
represented at a
<PAGE>
3
meeting, whether or not a quorum is present, may adjourn such meeting from time
to time.
Section 4. Proxies. A shareholder may vote either in person or by a
proxy which he has duly executed in writing. No proxy shall be valid after
eleven (11) months from the date of its execution unless a longer period is
expressly provided in the proxy.
Section 5. Action of Shareholders Without Meeting. Any action
required to be, or which may be, taken at a meeting of the shareholders, may be
taken without a meeting if written consent, setting forth the actions so taken,
shall be signed by all of the shareholders entitled to vote with respect to the
subject matter thereof. Such consent shall have the same force and effect as a
unanimous affirmative vote of the shareholders and shall be filed with the
minutes of the proceedings of the shareholders.
ARTICLE II
DIRECTORS
Section 1. Power of Directors. The Board of Directors shall manage
the business of the Corporation and may exercise all the powers of the
Corporation, subject to any restrictions imposed by law, by the Articles of
Incorporation or by these By-Laws.
Section 2. Composition of the Board. The Board of Directors of the
Corporation shall consist of not less than three (3) nor more than nine (9)
natural persons of the age of twenty-one years or over, except that if all of
the shares of the
<PAGE>
4
Corporation are owned beneficially and of record by less than three
shareholders, the number of Directors may be less than three but not less than
the number of shareholders. Directors need not be residents of the State of
Georgia or shareholders of the Corporation. At each annual meeting the
shareholders shall fix the number of Directors and elect the Directors, who
shall serve until their successors are elected and qualified; provided that the
shareholders may, by the affirmative vote of the holders of a majority of the
shares entitled to vote at an election of Directors, increase or reduce the
number of Directors and add or remove Directors with or without cause at any
time.
Section 3. Meetings of the Board, Notice of Meetings; Waiver of
Notice. The annual meeting of the Board of Directors for the purpose of electing
officers and transacting such other business as may be brought before the
meeting shall be held each year immediately following the annual meeting of
shareholders. The Board of Directors may by resolution provide for the time and
place of other regular meetings and no notice of such regular meetings need be
given, except as provided in Article 7 of these By-Laws with respect to proposed
amendments to the By-Laws, in which case notice shall be given. Special meetings
of the Board of Directors may be called by the President or by any two
Directors, and written notice of the time and place of such meetings shall be
given to each Director by first class or air mail at least four days before the
meeting or by telephone, telegraph, cablegram or in person at least two days
before the meeting. Any Director may execute a waiver of notice, either
<PAGE>
5
before or after any meeting, and shall be deemed to have waived notice if he is
present at such meeting. Neither the business to be transacted at, nor the
purpose of, any meeting of the Board of Directors need be stated in the notice
or waiver of notice of such meeting. Any meeting may be held at any place within
or without the State of Georgia.
Section 4. Quorum; Vote Requirement. A majority of the Directors in
office at any time shall constitute a quorum for the transaction of business at
any meeting. When a quorum is present, the vote of a majority of the Directors
present shall be the act of the Board of Directors, unless a greater vote is
required by law, by the Articles of Incorporation or by these By-Laws.
Section 5. Action of Board Without Meeting. Any action required or
permitted to be taken at a meeting of the Board of Directors or any committee
thereof may be taken without a meeting if written consent, setting forth the
action so taken, is signed by all of the Directors or committee members and
filed with the minutes of the proceedings of the Board of Directors or
committee. Such consent shall have the same force and effect as a unanimous
affirmative vote of the Board of Directors or committee, as the case may be.
Section 6. Committees. The Board of Directors, by resolution adopted
by a majority of all of the Directors, may designate from among its members an
Executive Committee, and/or other committees, each composed of three or more
Directors, which may exercise such authority as is delegated by the Board of
<PAGE>
6
Directors, provided that no committee shall have the authority of the Board of
Directors in reference to (1) an amendment to the Articles of Incorporation or
By-Laws of the Corporation, (2) the adoption of a plan of merger or
consolidation, (3) the sale, lease, exchange or other disposition of all or
substantially all of the property and assets of the Corporation; or (4) a
voluntary dissolution of the Corporation or a revocation thereof.
Section 7. Vacancies. A vacancy occurring in the Board of Directors
by reason of the removal of a Director by the shareholders shall be filled by
the shareholders, or, if authorized by the shareholders, by the remaining
Directors. Any other vacancy occurring in the Board of Directors may be filled
by the affirmative vote of a majority of the remaining Directors though less
than a quorum of the Board of Directors, or by the sole remaining Director, as
the case may be, or, if the vacancy is not so filled, or if no director remains,
by the shareholders. A Director elected to fill a vacancy shall serve for the
unexpired term of his predecessor in office.
ARTICLE III
OFFICERS
Section 1. Executive Structure of the Corporation. The officers of
the Corporation shall consist of a President, a Secretary, a Treasurer and such
other officers or assistant officers, including Vice Presidents, as may be
elected by the Board of Directors. Each officer shall hold office for the term
for which he has been elected and until he is removed or his successor has been
elected and qualified. Any two or more
<PAGE>
7
offices may be held by the same person, except that the same person shall not be
both President and Secretary. The Board of Directors may designate a Vice
President as an Executive Vice President and may designate the order in which
other Vice Presidents may act.
Section 2. President. The President shall be the chief executive
officer of the Corporation and shall give general supervision and direction to
the affairs of the Corporation, subject, to the direction of the Board of
Directors. He shall preside at all meetings of the shareholders.
Section 3. Vice President. The Vice President shall act in the case
of the absence or disability of the President.
Section 4. Secretary. The Secretary shall keep the minutes of the
proceedings of the shareholders and of the Board of Directors, and shall have
custody of and attest the seal of the Corporation.
Section 5. Treasurer. The Treasurer shall be responsible for the
maintenance of proper financial books and records of the Corporation.
Section 6. Other Duties and Authority. Each officer, employee and
agent of the Corporation shall have such other duties and authority as may be
conferred upon him by the Board of Directors or delegated to him by the
President.
Section 7. Removal of Officers. Any officer may be removed at any
time by the Board of Directors, and such vacancy may be filled by the Board of
Directors. This provision shall not prevent the making of a contract of
employment for a definite
<PAGE>
8
term with any officer and shall have no effect upon any cause of action which
any officer may have as a result of removal in breach of a contract of
employment.
Section 8. Compensation. The salaries of the officers shall be fixed
from time to time by the Board of Directors. No officer shall be prevented from
receiving such salary by reason of the fact that he is also a Director of the
Corporation.
ARTICLE IV
STOCK
Section 1. Stock Certificates. The shares of stock of the
Corporation shall be represented by certificates in such form as may be approved
by the Board of Directors, which certificates shall be issued to the
shareholders of the Corporation in numerical order from the stock book of the
Corporation, and each of which shall bear the name of the shareholder, the
number of shares represented, and the date of issue; and which shall be signed
by the President or a Vice President and the Secretary or an Assistant Secretary
of the Corporation; and which shall be sealed with the seal of the Corporation.
No share certificate shall be issued until the consideration for the shares
represented thereby has been fully paid.
Section 2. Transfer of Stock. Shares of stock of the Corporation
shall be transferred only on the books of the Corporation upon surrender to the
Corporation of the certificate or certificates representing the shares to be
transferred accompanied by an assignment in writing of such shares properly
executed by the shareholder of record or his duly authorized
<PAGE>
9
attorney-in-fact and with all taxes on the transfer having been paid. The
Corporation may refuse any requested transfer until furnished evidence
satisfactory to it that such transfer is proper. Upon the surrender of a
certificate for transfer of stock, such certificate shall at once be
conspicuously marked on its face "Cancelled" and filed with the permanent stock
records of the Corporation. The Board of Directors may make such additional
rules concerning the issuance, transfer and registration of stock and
requirements regarding the establishment of lost, destroyed or wrongfully taken
stock certificates (including any requirement of an indemnity bond prior to
issuance of any replacement certificate) as it deems appropriate.
Section 3. Registered Shareholders. The Corporation may deem and
treat the holder of record of any stock as the absolute owner thereof for all
purposes and shall not be required to take any notice of any right or claim of
right of any other person.
Section 4. Record Date. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or entitled to receive payment of any dividend, or in order
to make a determination of shareholders for any other purpose, the Board of
Directors of the Corporation may fix in advance a date as the record date for
any such determination of shareholders, such date in any case to be not more
than 50 days and, in the case of a meeting of shareholders, not less than 10
days prior to the date
<PAGE>
10
on which the particular action, requiring such determination of shareholders, is
to be taken.
ARTICLE V
DEPOSITORIES, SIGNATURES AND SEAL
Section 1. Depositories. All funds of the Corporation shall be
deposited in the name of the Corporation in such bank, banks, or other financial
institutions as the Board of Directors may from time to time designate and shall
be drawn out on checks, drafts or other orders signed on behalf of the
Corporation by such person or persons as the Board of Directors may from time to
time designate.
Section 2. Contracts and Deeds. All contracts, deeds and other
instruments shall be signed on behalf of the Corporation by the President or by
such other officer, officers, agent or agents as the Board of Directors may from
time to time by resolution provide.
Section 3. Seal. The seal of the Corporation shall be as follows:
If the seal is affixed to a document, the signature of the Secretary
or an Assistant Secretary shall attest the seal. The seal and its attestation
may be lithographed or otherwise printed on any document and shall have, to the
extent permitted by law, the same force and effect as if it had been affixed and
attested manually.
<PAGE>
11
ARTICLE VI
INDEMNITY
Any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (including any action by or in
the right of the Corporation), by reason of the fact that he is or was a
Director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
shall be indemnified by the Corporation against expenses (including reasonable
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding,
if he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation (and with respect to any
criminal action or proceeding, if he had no reasonable cause to believe his
conduct was unlawful), to the maximum extent permitted by, and in the manner
provided by, the Georgia Business Corporation Code.
ARTICLE VII
AMENDMENT OF BY-LAWS
The Board of Directors shall have the power to alter, amend or
repeal the By-Laws or adopt new by-laws, but any by-laws adopted by the Board of
Directors may be altered, amended or repealed and new bylaws adopted by the
shareholders. The shareholders may prescribe that any by-law or by-laws adopted
by
<PAGE>
12
them shall not be altered, amended or repealed by the Board of Directors. Action
by the Directors with respect to the By-Laws shall be taken by an affirmative
vote of a majority of all of the Directors then in office. Action by the
shareholders with respect to the By-Laws shall be taken by an affirmative vote
of a majority of all shares outstanding and entitled to vote.
Exhibit 3.21
CERTIFICATE OF INCORPORATION
OF
WARNIVOL, INC.
* * * * *
FIRST. The name of the corporation is
WARNIVOL, INC.
SECOND. Its principal office in the State of Delaware is located at No. 100
West Tenth Street, in the City of Wilmington 99, County of New Castle. The name
and address of its resident agent is The Corporation Trust Company, No. 100 West
Tenth Street, Wilmington 99, Delaware.
THIRD. The nature of the business, or objects or purposes to be transacted,
promoted or carried on are:
To manufacture, produce, purchase, or otherwise acquire, use, distribute,
sell at wholesale or retail, import, export, and otherwise dispose of and deal
in, biscuits, crackers, breads, pastries, confections, and all other similar and
allied foodstuffs and the component parts thereof.
To manufacturers or otherwise produce, import, export, buy, sell and in
every way deal with and in, either as principal or agent or otherwise, goods,
wares and merchandise and personal property or every kind and description.
The business or purpose of the Corporation is from time to time to do any
or more of the acts and things hereinabove set forth, and it shall have power be
conduct and carry on in said business, or any part thereof, and to have one or
more offices, and to exercise all or any of its corporate powers and rights, in
the State of Delaware and in the various other states, territories, colonies and
dependencies of the United States, in the District of Columbia, and in all or
any foreign countries.
FOURTH. The total number of shares of stock which the corporation shall
have authority to issue is ten (10) and the par value of each of such shares is
One Hundred Dollars ($100.00) amounting in the aggregate to One Thousand Dollars
($1,000.00).
FIFTH. The minimum amount of capital with which the corporation will
commence business is One Thousand Dollars ($1,000.00).
SIXTH. The names and places of residence of the incorporators are as
follows:
NAMES RESIDENCES
----- ----------
A. D. Atwell Wilmington, Delaware
F. J. Obara, Jr. Wilmington, Delaware
A. D. Grier Wilmington, Delaware
SEVENTH. The corporation is to have perpetual existence.
EIGHTH. The private property of the stockholders shall not be subject to
the payment of corporate debts to any extent whatever.
<PAGE>
NINTH. In furtherance and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized:
To make, alter or repeal the by-laws of the corporation.
To authorize and cause to be executed mortgages and liens upon the
real and personal property of the corporation.
To set apart out of any of the funds of the corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any
such reserve in the manner in which it was created.
By resolution passed by a majority of the whole board, to designate one or
more committees, each committee to consist of two or more of the directors of
the corporation, which, to the extent provided in the resolution or in the
by-laws of the corporation, shall have and may exercise the powers of the board
of directors in the management of the business and affairs of the corporation,
and may authorize the seal of the corporation to be affixed to all papers which
may require it. Such committee or committees shall have such name or names as
may be stated in the by-laws of the corporation or as may be determined from
time to time by resolution adopted by the board of directors.
When and as authorized by the affirmative vote of the holders of a majority
of the stock and issued and outstanding having voting power given at a
stockholders' meeting duly called for that purpose, or when authorized by the
written consent of the holders of a majority of the voting stock issued and
outstanding, to sell, lease or exchange all of the property and assets of the
corporation, including its good will and its corporate franchises, upon such
terms and conditions and for such consideration, which may be in whole or in
part shares of stock in, and/or other securities of, any other corporation or
corporations, as its board of directors shall deem expedient and for the best
interests of the corporation.
TENTH. Meetings of stockholders may be held outside the State of Delaware,
if the by-laws so provide. The books of the corporation may be kept (subject to
any provision contained in the statutes) outside the State of Delaware at such
time by the board of directors or in the by-laws of the corporation. Elections
of directors need not be by ballot unless the by-laws of the corporation shall
so provide.
ELEVENTH. The corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate of incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
TWELFTH. In the absence of fraud, no contract or other transaction between
this corporation and any other corporation or any partnership or association
shall be affected or invalidated by the fact that any director or officer of
this corporation is pecuniarily or otherwise interested in or is a director,
member or officer of such other corporation or of such firm, association or
partnership or is a party to or is pecuniarily or otherwise interested in such
contract or other transaction or in any way connected with any person or
persons, firm, association, partnership or corporation pecuniarily or otherwise
interested therein; any director may be counted in determining the existence of
a quorum at any meeting of the board of directors of this corporation for the
<PAGE>
purpose of authorizing any such contract or transaction with like force and
effect as if he were not so interested, or were not a director, member or
officer of such other corporation, firm, association or partnership.
THIRTEENTH. The corporation shall indemnify any and all of its directors or
officers or former directors or officers or any person who may have served at
its request as a director or officer of another corporation in which it owns
shares of capital stock or of which it is a creditor against expenses actually
and necessarily incurred by them in connection with the defense of any action,
suit or proceeding in which they, or any of them, are made parties, or a party,
by reason of being or having been directors or officers or a director or officer
of the corporation, or of such other corporation, except in relation to matters
as to which any such director or officer or former director or officer or person
shall be adjudged in such action, suit or proceeding to be liable for negligence
or misconduct in the performance of duty. Such indemnification shall not be
deemed exclusive of any other rights to which those indemnified may be entitled,
under any by-law, agreement, vote of stockholders, or otherwise.
WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named,
for the purpose of forming a corporation pursuant to the General Corporation Law
of the State of Delaware, do make this certificate, hereby declaring and
certifying that the facts herein stated are true, and accordingly have hereunto
set our hands and seals this 12th day of May, A.D. 1965.
______________________(SEAL)
______________________(SEAL
______________________(SEAL)
<PAGE>
STATE OF DELAWARE )
) ss:
COUNTY OF NEW CASTLE )
BE IT REMEMBERED that on this 12th day of May, A.D. 1965, personally came
before me, a Notary Public for the State of Delaware, A. D. Atwell, F. J. Obara,
Jr. and A. D. Grier, all of the parties to the foregoing certificate of
incorporation, known to me personally to be such, and severally acknowledged the
said certificate to be the act and deed of the signers respectively and that the
facts therein stated are truly set forth.
GIVEN under my hand and seal of office the day and year aforesaid.
-------------------------
Notary Public
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
-o-O-o-
WARNIVOL, INC., a corporation organized and existing under and by virtue of
the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation, by the unanimous
written consent of its members, filed with the minutes of the board, adopted
resolutions proposing and declaring advisable the following amendments to the
Certificate of Incorporation of said corporation:
RESOLVED, that the Certificate of Incorporation of this corporation be
amended by changing the Article thereof numbered "FIRST" so that, as amended,
said Article shall be and read as follows:
FIRST. The name of the corporation is ILLINOIS BAKING CORPORATION."
FURTHER RESOLVED, that the first paragraph of Article THIRD be amended so
that, as amended, said first paragraph of Article THIRD shall be and read as
follows:
"THIRD. The nature of the business or objects or purposes to be
transacted, promoted or carried on are:
"To manufacture, produce, purchase, or otherwise acquire, use,
distribute, sell at wholesale or retail, import, export, and otherwise
dispose of and deal in, biscuits, crackers, breads, pastries, confections
and any type or form of edible containers for frozen dairy products such as
ice cream, ice milk and custards, and all other similar and allied
foodstuffs and the component parts thereof."
SECOND: That the said amendment has been consented to and authorized by the
holders of all the issued and outstanding stock, entitled to vote, by a written
consent given in accordance with the provisions of Section 228 of The General
Corporation Law of Delaware, and filed with the corporation.
THIRD: That the aforesaid amendment was duly adopted in accordance with the
applicable provisions of Sections 242 and 228 of The General Corporation Law of
Delaware.
FOURTH: That the capital of said corporation will not be reduced under or
by reason of said amendment.
IN WITNESS WHEREOF, said WARNIVOL, INC. has caused its corporate seal to be
hereunto affixed and this certificate to be signed by J. R. Broadway, its
President, and F. L. Ungerott, its Secretary, this fourteenth day of May, 1965.
WARNIVOL, INC.
By___________________________
President
By___________________________
Secretary
<PAGE>
STATE OF ILLINOIS )
) ss.
COUNTY OF COOK )
BE IT REMEMBERED that on this fourteenth day of May, A. D. 1965, personally
came before me, D. T. Witter, a Notary Public in and for the County and State
aforesaid, J. R. Broadway, President of WARNIVOL, INC., a corporation of the
State of Delaware, the corporation described in and which executed the foregoing
certificate, known to me personally to be such, and he, the said J. R. Broadway,
as such President, duly executed said certificate before me and acknowledged the
said certificate to be his act and deed and the act and deed of said
corporation; that the signatures of the said President and of the Secretary of
said corporation to said foregoing certificate are in the handwriting of the
said President and Secretary of said corporation, respectively, and that the
seal affixed to said certificate is the common or corporate seal of said
corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and seal of office the day
and year aforesaid.
-----------------------------
Notary Public
Exhibit 3.22
ILLINOIS BAKING CORPORATION
BY-LAWS
ARTICLE I
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meeting and Notice. Meetings of the stockholders
of the Corporation shall be held at such place either within or without the
State of Delaware as the Board of Directors may determine.
Section 2. Annual and Special Meetings. Annual meetings of
stockholders shall be held, at a date, time and place fixed by the Board of
Directors and stated in the notice of meeting, to elect a Board of Directors and
to transact such other business as may properly come before the meeting. Special
meetings of the stockholders may be called by the President for any purpose and
shall be called by the President or Secretary if directed by the Board of
Directors or requested in writing by the holders of not less than 25% of the
capital stock of the Corporation. Each such stockholder request shall state the
purpose of the proposed meeting.
Section 3. Notice. Except as otherwise provided by law, at least 10
and not more than 60 days before each meeting of stockholders, written notice of
the time, date and place of the meeting, and, in the case of a special meeting,
the purpose or purposes for which the meeting is called, shall be given to each
stockholder.
Section 4. Quorum. At any meeting of stockholders, the holders of
record, present in person or by proxy, of a majority of the Corporation's issued
and outstanding capital stock shall constitute a quorum for the transaction of
business, except as otherwise provided by law. In the absence of a quorum, any
officer entitled to preside at or to act as secretary of the meeting shall have
power to adjourn the meeting from time to time until a quorum is present.
Section 5. Voting. Except as otherwise provided by law, all matters
submitted to a meeting of stockholders shall be decided by vote of the holders
of record, present in person or by proxy, of a majority of the Corporation's
issued and outstanding capital stock.
<PAGE>
2
ARTICLE II
DIRECTORS
Section 1. Number, Election and Removal of Directors. The number of
Directors that shall constitute the Board of Directors shall not be less than
one or more than fifteen. The first Board of Directors shall consist of two
Directors. Thereafter, within the limits specified above, the number of
Directors shall be determined by the Board of Directors or the stockholders. The
Directors shall be elected by stockholders at their annual meeting. Vacancies
and newly created directorships resulting from any increase in the number of
Directors may be filled by a majority of the Directors then in office, although
less than a quorum, or by the sole remaining Director or by the stockholders. A
Director may be removed with or without cause by the stockholders.
Section 2. Meetings. Regular meetings of the Board of Directors
shall be held at such times and places as may from time to time be fixed by the
Board of Directors or as may be specified in a notice of meeting.
Section 3. Quorum. One-third of the total number of Directors shall
constitute a quorum for the transaction of business. If a quorum is not present
at any meeting of the Board of Directors, the Directors present may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until such a quorum is present. Except as otherwise provided by law,
the Certificate of Incorporation of the Corporation, these By-Laws or any
contract or agreement to which the Corporation is a party, the act of a majority
of the Directors present at any meeting at which there is a quorum shall be the
act of the Board of Directors.
Section 4. Committees. The Board of Directors may, by resolution
adopted by a majority of the whole Board, designate one or more committees,
including, without limitation, an Executive Committee, to have and exercise such
power and authority as the Board of Directors shall specify. In the absence or
disqualification of a member of a 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 Director to act at the
absent or disqualified member.
<PAGE>
3
ARTICLE III
OFFICERS
The officers of the Corporation shall consist of a President, a Vice
President, a Secretary, a Treasurer and such other additional officers with such
titles as the Board of Directors shall determine, all of which shall be chosen
by and shall serve at the pleasure of the Board of Directors. Such officers
shall have the usual powers and shall perform all the usual duties incident to
their respective offices. All officers shall be subject to the supervision and
direction of the Board of Directors. The authority, duties or responsibilities
of any officer of the Corporation may be suspended by the President with or
without cause. Any officer elected or appointed by the Board of Directors may be
removed by the Board of Directors with or without cause.
ARTICLE IV
INDEMNIFICATION
To the fullest extent permitted by the Delaware General Corporation
Law, the corporation shall indemnify any current or former Director or officer
of the Corporation and may, at the discretion of the Board of Directors,
indemnify any current or former employee or agent of the Corporation against all
expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with any threatened, pending or
completed action, suit or proceeding brought by or in the right of the
Corporation or otherwise, to which he was or is a party by reason of his current
or former position with the Corporation or by reason of the fact that he is or
was serving, at the request of the Corporation, as a director, officer, partner,
trustee, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise.
Expenses incurred by a person who is or was a director or officer of
the Corporation in appearing at, participating in or defending any such action,
suit or proceeding shall be paid by the Corporation at reasonable intervals in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of the director or officer to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the Corporation as authorized by this Article. If a claim under
this Article is not paid in full by the Corporation within ninety days after a
written claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be paid
also the expense of prosecuting such claim. It shall be a defense to any such
action (other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition
<PAGE>
4
where the required undertaking, if any is required, has been tendered to the
Corporation) that the claimant has not met the standards of conduct which make
it permissible under the Delaware General Corporation Law or other applicable
law for the corporation to indemnify the claimant for the amount claimed, but
the burden of proving such defense shall be on the Corporation. Neither the
failure of the Corporation (including its board of directors, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he has met the applicable standard of conduct set
forth in the Delaware General Corporation Law or other applicable law, nor an
actual determination by the Corporation (including its board of directors,
independent legal counsel, or its stockholders) that the claimant has not met
the applicable standard of conduct, shall be a defense to the action or create a
presumption that the claimant has not met the applicable standard of conduct.
ARTICLE V
GENERAL PROVISIONS
Section 1. Notices. Whenever any statute, the Certificate of
Incorporation or these By-Laws require notice to be given to any Director or
stockholder, such notice may be given in writing by mail, addressed to such
Director or stockholder at his address as it appears in the records of the
Corporation, with postage thereon prepaid. Such notice shall be deemed to have
been given when it is deposited in the United States mail. Notice to Directors
may also be given by telegram.
Section 2. Fiscal Year. The fiscal year of the Corporation shall be
fixed by the Board of Directors.
Exhibit 3.23
ARTICLES OF INCORPORATION
OF
KEEBLER COMPANY
* * * * *
FIRST. The name of the corporation is
KEEBLER COMPANY
SECOND. Its principal office in the State of Nevada is located at No. One
East First Street, Reno, Washoe County, Nevada. The name and address of its
resident agent is The Corporation Trust Company of Nevada, No. One East First
Street, Reno, Nevada 89505.
THIRD. The nature of the business, or objects or purposes proposed to be
transacted, promoted or carried on are:
To manufacture, produce, purchase, or otherwise acquire, use,
distribute, sell at wholesale or retail, import, export, and otherwise
dispose of and deal in, biscuits, crackers, breads, pastries, confections,
and all other similar and allied foodstuffs and the component parts
thereof.
To manufacture or otherwise produce, import, export, buy, sell and in
every way deal with and in, either as principal or agent or otherwise,
goods, wares and merchandise and personal property of every kind and
description.
To engage in any lawful activity and to manufacture, purchase or
otherwise acquire, invest in, own, mortgage, pledge, sell, assign and
transfer or otherwise dispose of, trade, deal in and deal with goods, wares
and merchandise and personal property of every class and description.
To hold, purchase and convey real and personal estate and to mortgage
or lease any such real and personal estate with its franchises and to take
the same by devise or bequest.
To acquire, and pay for in cash, stock or bonds of this corporation or
otherwise, the good will, rights, assets and property, and to undertake or
assume the whole or any part of the obligations or liabilities of any
person, firm, association or corporation.
To acquire, hold, use, sell, assign, lease, grant licenses in respect
of, mortgage, or otherwise dispose of letters patent of the United States
or any foreign country, patent rights, licenses and privileges, invention,
improvements and processes, copyrights, trade-marks and trade names,
relating to or useful in connection with any business of this corporation.
To guarantee, purchase, hold, sell, assign, transfer, mortgage, pledge
or otherwise dispose of the shares of the capital stock of or any bonds,
securities or evidences of the indebtedness created by any other
corporation or corporations of this state, or any other state of
government, and, while owner of such stock, to exercise all the rights,
powers and privileges of ownership, including the right to vote thereon.
To borrow money and contract debts when necessary for the transaction
of its business, or for the exercise of its corporate rights, privileges or
awareness, or for any other lawful purpose of its incorporation; to issue
bonds, promissory notes, bills of exchange, debentures, and other
obligations and evidences of indebtedness, payable at specified time or
times, or payable
<PAGE>
upon the happening of a specified event or events, whether secured by
mortgage, pledge, or otherwise, or unsecured, for money borrowed, or in
payment for property purchased, or acquired, or for any other lawful
objects.
To purchase, hold, sell and transfer shares of its own capital stock,
and use therefor its capital, capital surplus, surplus, or other property
or funds; provided it shall not use its funds or property for the purchase
of its own shares of capital stock when such use would cause any impairment
of its capital; and provided further, that shares of its own capital stock
belonging to it shall not be voted upon, directly or indirectly, nor
counted as outstanding, for the purpose of computing any stockholders'
quorum or vote.
To conduct business, have one or more offices, and hold, purchase,
mortgage and convey real and personal property in this state, and in any of
the several states, territories, possessions and dependencies of the United
States, the District of Columbia, and in any foreign countries.
To do all and everything necessary and proper for the accomplishment
of the objects hereinbefore enumerated or necessary or incidental to the
protection and benefit of the corporation, and, in general, to carry on any
lawful business necessary or incidental to the attainment of the objects of
the corporation, whether or not such business is similar in nature to the
objects hereinbefore set forth.
The objects and purposes specified in the foregoing clauses shall,
except where otherwise expressed, be in nowise limited or restricted by
reference to or inference from the terms of any other clause in these
articles of incorporation, but the objects and purposes specified in each
of the foregoing clauses of this article shall be regarded as independent
objects and purposes.
FOURTH. The amount of the total authorized capital stock of the corporation
is One Thousand Dollars ($1,000.00) consisting of Ten (10) shares of stock of
the par value of One Hundred Dollars ($100.00) each.
FIFTH. The governing board of this corporation shall be known as directors,
and the number of directors may from time to time be increased or decreased in
such manner as shall be provided by the by-laws of this corporation, provided
that the number of directors shall not be reduced to less than three (3).
The names and post-office addresses of the first board of directors, which
shall be three (3) in number, are as follows:
NAME POST-OFFICE ADDRESS
---- -------------------
F. L. Ungerott 208 South LaSalle Street
Chicago, Illinois
D. L. Hannum 208 South LaSalle Street
Chicago, Illinois
J. R. Broadway 208 South LaSalle Street
Chicago, Illinois
Directors and officers shall exercise their powers in good faith, and with
a view to the interests of the corporation.
<PAGE>
SIXTH. The capital stock, after the amount of the subscription price, or
par value, has been paid in shall not be subject to assessment to pay the debts
of the corporation.
SEVENTH. The name and post-office address of each of the incorporators
signing the articles of incorporation are as follows:
NAME POST-OFFICE ADDRESS
---- -------------------
F. L. Ungerott 208 South LaSalle Street
Chicago, Illinois
D. L. Hannum 208 South LaSalle Street
Chicago, Illinois
E. N. Sajewski 208 South LaSalle Street
Chicago, Illinois
EIGHTH. The corporation is to have perpetual existence.
NINTH. In furtherance and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized:
Subject to the by-laws, if any, adopted by the stockholders, to make,
alter or amend the by-laws of the corporation.
To fix the amount to be reserved as working capital over and above its
capital stock paid in, to authorize and cause to be executed mortgages and
liens upon the real and personal property of this corporation.
By resolution passed by a majority of the whole board, to designate
one (1) or more committees, each committee to consist of two (2) or more of
the directors of the corporation, which, to the extent provided in the
resolution or in the by-laws of the corporation, shall have and may
exercise the powers of the board of directors in the management of the
business and affairs of the corporation, and may authorize the seal of the
corporation to be affixed to all papers which may require it. Such
committee or committees shall have such name or names as may be stated in
the by-laws of the corporation or as may be determined from time to time by
resolution adopted by the board of directors.
When and as authorized by the affirmative vote of stockholders holding
stock entitling them to exercise at least a majority of the voting power
given at a stockholders' meeting called for that purpose, or when
authorized by the written consent of the holders of at least a majority of
the voting stock issued and outstanding, the board of directors shall have
power and authority at any meeting to sell, lease or exchange all of the
property and assets of the corporation, including its good will and its
corporate franchises, upon such terms and conditions as its board of
directors deem expedient and for the best interests of the corporation.
TENTH. Meetings of stockholders may be held outside the State of Nevada, if
the by-laws so provide. The books of the corporation may be kept (subject to any
provision contained in the statutes) outside the State of Nevada at such place
or places as may be designated from time to time by the board of directors or in
the by-laws of the corporation.
<PAGE>
ELEVENTH. This corporation reserves the right to amend, alter, change or
repeal any provision contained in the articles of incorporation, in the manner
now or hereafter prescribed by statute, or by the articles of incorporation, and
all rights conferred upon stockholders herein are granted subject to this
reservation.
WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named for
the purpose of forming a corporation pursuant to the General Corporation Law of
the State of Nevada, do make and file these articles of incorporation, hereby
declaring and certifying that the facts herein stated are true, and accordingly
have hereunto set our hands this 13th day of May 1965.
-----------------------------
-----------------------------
-----------------------------
<PAGE>
STATE OF ILLINOIS )
) ss.:
COUNTY OF COOK )
On this 13th day of May, 1965, before me, the undersigned, a Notary Public
in and for the county and state aforesaid personally appeared F. L. Ungerott, D.
L. Hannum and F. N. Sajewski known to me to be the persons described in and who
executed the foregoing instrument and who acknowledged to me that they executed
the same freely and voluntarily and for the uses and purposes therein mentioned.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
-----------------------------
<PAGE>
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
* * * *
KEEBLER COMPANY, a corporation organized under the laws of the State of
Nevada, by its president and secretary does hereby certify:
1. That the board of directors of said corporation at a meeting duly
convened and held on the 21st day of May, 1971, passed a resolution declaring
that the following change and amendment in the articles of incorporation is
advisable.
RESOLVED that article FIRST of said articles of incorporation be amended to
read as follows: "The name of the corporation is KEEBLER COOKIE AND CRACKER
COMPANY."
2. That the number of shares of the corporation outstanding and entitled to
vote on an amendment to the articles of incorporation is ten; that the said
change and amendment has been consented to and authorized by the written consent
of stockholders holding at least a majority of each class of stock outstanding
and entitled to vote thereon.
IN WITNESS WHEREOF, the said KEEBLER COMPANY has caused this certificate to
be signed by its president and its secretary and its corporate seal to be hereto
affixed this 21st day of May, 1971.
KEEBLER COMPANY
By___________________________
B. F. Thomas, President
By___________________________
W. S. Maker, Secretary
(SEAL)
<PAGE>
STATE OF ILLINOIS )
) ss.:
COUNTY OF DUPAGE )
On May 21, 1971 personally appeared before me, a Notary Public, B. F.
Thomas and W. S. Maker, who acknowledged that they executed the above
instrument.
-----------------------------
(Notary Public)
(SEAL)
Exhibit 3.24
KEEBLER COMPANY
* * * *
B Y L A W S
* * * *
ARTICLE I
OFFICES
Section 1. The principal office shall be in the City of Reno, County
of Washoe, State of Nevada.
Section 2. The corporation may also have offices at such other
places both within and without the State of Nevada as the board of directors may
from time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All annual meetings of the stockholders shall be held at
___________________, in the City of Chicago, State of Illinois. Special meetings
of the stockholders may be held at such time and place within or without the
State of Nevada as shall be stated in the notice of the meeting, or in a duly
executed waiver of notice thereof.
Section 2. Annual meetings of stockholders, commencing with the year
1966, shall be held on the second Tuesday in May, if not a legal holiday, and if
a legal holiday, then on the next secular day following at which they shall
elect by a plurality vote a board of directors, and transact such other business
as may properly be brought before the meeting.
<PAGE>
2
Section 3. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the articles of
incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the board of
directors, or at the request in writing of stockholders owning a majority in
amount of the entire capital stock of the corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
Section 4. Notices of meetings shall be in writing and signed by the
president or a vice president, or the secretary, or an assistant secretary, or
by such other person or persons as the directors shall designate. Such notice
shall state the purpose or purposes for which the meeting is called and the time
when, and the place, which may be within or without this state, where it is to
be held. A copy of such notice shall be either delivered personally to or shall
be mailed, postage prepaid, to each stockholder of record entitled to vote at
such meeting not less than ten nor more than sixty days before such meeting. If
mailed, it shall be directed to a stockholder at his address as it appears upon
the records of the corporation and upon such mailing of and such notice, the
service thereof shall be complete, and the time of the notice shall begin to run
from the date upon which such notice is deposited in the mail for transmission
to such stockholder. Personal delivery of any such notice to any officer of a
corporation or association, or to any member of a partnership shall constitute
delivery of such notice
<PAGE>
3
to such corporation, association or partnership. In the event of the transfer of
stock after delivery or mailing of the notice of and prior to the holding of the
meeting it shall not be necessary to deliver or mail notice of the meeting to
the transferee.
Section 5. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the notice.
Section 6. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
articles of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified.
Section 7. When a quorum is present or represented at any meeting,
the vote of the holders of a majority of the stock having voting power present
in person or represented by proxy shall decide any question brought before such
meeting, unless the question is one upon which by express provision of the
statutes or of the articles of incorporation, a different vote is required
<PAGE>
4
in which case such express provision shall govern and control the decision of
such question.
Section 8. Every stockholder of record of the corporation shall be
entitled at each meeting of stockholders to one vote for each share of stock
standing in his name on the books of the corporation.
Section 9. At any meeting of the stockholders, any stockholder may
be represented and vote by a proxy or proxies appointed by an instrument in
writing. In the event that any such instrument in writing shall designate two or
more persons to act as proxies, a majority of such persons present at the
meeting, or, if only one shall be present, then that one shall have and may
exercise all of the powers conferred by such written instrument upon all of the
persons so designated unless the instrument shall otherwise provide. No such
proxy shall be valid after the expiration of six months from the date of its
execution, unless coupled with an interest, or unless the person executing it
specifies therein the length of time for which it is to continue to force, which
in no case shall exceed seven years from the date of its execution. Subject to
the above, any proxy duly executed is not revoked and continues in full force
and effect until an instrument revoking it or a duly executed proxy bearing a
later date is filed with the secretary of the corporation.
Section 10. Any action, except election of directors, which may be
taken by the vote of the stockholders at a meeting, may be taken without a
meeting if authorized by the written
<PAGE>
5
consent of stockholders holding at least a majority of the voting power, unless
the provisions of the statutes or of the articles of incorporation require a
greater proportion of voting power to authorize such action in which case such
greater proportion of written consents shall be required.
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the whole
board shall be two. The directors shall be elected at the annual meeting of the
stockholders, and except as provided in Section 2 of this article, each director
elected shall hold office until his successor is elected and qualified.
Directors need not be stockholders.
Section 2. Vacancies, including those caused by an increase in the
number of directors, may be filled by a majority of the remaining directors
though less than a quorum. When one or more directors shall give notice of his
or their resignation to the board, effective at a future date, the board shall
have power to fill such vacancy or vacancies to take effect when such
resignation or resignations shall become effective, each director so appointed
to hold office during the remainder of the term of office of the resigning
director or directors.
Section 3. The business of the corporation shall be managed by its
board of directors which may exercise all such powers of the corporation and do
all such lawful acts and things as are not by statute or by the articles of
incorporation or by
<PAGE>
6
these by-laws directed or required to be exercised or done by the stockholders.
Section 4. The board of directors of the corporation may hold
meetings, both regular and special, either within or without the State of
Nevada.
MEETING OF THE BOARD OF DIRECTORS
Section 5. The first meeting of each newly elected board of
directors shall be held at such time and place as shall be fixed by the vote of
the stockholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event of the failure of the
stockholders to fix the time or place of such first meeting of the newly elected
board of directors, or in the event such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the board of directors, or as shall be specified in a
written waiver signed by all of the directors.
Section 6. Regular meetings of the board of directors may be held
without notice at such time and place as shall from time to time be determined
by the board.
Section 7. Special meetings of the board of directors may be called
by the president or secretary on the written request of two directors. Written
notice of special meetings of the board of directors shall be given to each
director at least one day before the date of the meeting.
<PAGE>
7
Section 8. A majority of the board of directors, at a meeting duly
assembled, shall be necessary to constitute a quorum for the transaction of
business and the act of a majority of the directors present at any meeting at
which a quorum is present shall be the act of the board of directors, except as
may be otherwise specifically provided by statute or by the articles of
incorporation. Any action required or permitted to be taken at a meeting of the
directors may be taken without a meeting if a consent in writing, setting forth
the action so taken, shall be signed by all of the directors entitled to vote
with respect to the subject matter thereof.
COMMITTEES OF DIRECTORS
Section 9. The board of directors may, by resolution passed by a
majority of the whole board, designate one or more committees, each committee to
consist of one or more of the directors of the corporation, which, to the extent
provided in the resolution, shall have and may exercise the powers of the board
of directors in the management of the business and affairs of the corporation,
and may have power to authorize the seal of the corporation to be affixed to all
papers which may require it. Such committee or committees shall have such name
or names as may be determined from time to time by resolution adopted by the
board of directors.
Section 10. The committees shall keep regular minutes of their
proceedings and report the same to the board when required.
COMPENSATION OF DIRECTORS
<PAGE>
8
Section 11. The directors may be paid their expenses, if any, of
attendance at each meeting of the board of directors and may be paid a fixed sum
for attendance at each meeting of the board of directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefore. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
ARTICLE IV
NOTICES
Section 1. Notices to directors and stockholders shall be in writing
and delivered personally or mailed to the directors or stockholders at their
addresses appearing on the books of the corporation. Notice by mail shall be
deemed to be given at the time when the same shall be mailed. Notice to
directors may also be given by telegram.
Section 2. Whenever all parties entitled to vote at any meeting,
whether of directors or stockholders, consent, either by a writing on the
records of the meeting or filed with the secretary, or by presence at such
meeting and oral consent entered on the minutes, or by taking part in the
deliberations at such meeting without objection, the doings of such meetings
shall be as valid as if had at a meeting regularly called and noticed, and at
such meeting any business may be transacted which is not excepted from the
written consent or to the consideration of which no objection for want of notice
is made at the time, and if any meeting be irregular for want of notice or of
such consent,
<PAGE>
9
provided a quorum was present at such meeting, the proceedings of said meeting
may be ratified and approved and rendered likewise valid and the irregularity or
defect therein waived by a writing signed by all parties having the right to
vote at such meetings; and such consent or approval of stockholders may be by
proxy or attorney, but all such proxies and powers of attorney must be in
writing.
Section 3. Whenever any notice whatever is required to be given
under the provisions of the statutes, of the articles of incorporation or of
these by-laws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the
board of directors and shall be a president, a vice president, a secretary and a
treasurer. Any person may hold two or more offices.
Section 2. The board of directors at its first meeting after each
annual meeting of stockholders shall choose a president from among the
directors, and shall choose a vice president, a secretary and a treasurer, none
of whom need be a member of the board.
Section 3. The board of directors may appoint additional vice
presidents, and assistant secretaries and assistant treasurers and such other
officers and agents as it
<PAGE>
10
shall deem necessary who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined from time to
time by the board.
Section 4. The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officer elected or appointed by the
board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
corporation by death, resignation, removal or otherwise shall be filled by the
board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the stockholders and the board of
directors, shall have general and active management of the business of the
corporation, and shall see that all orders and resolutions of the board of
directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation.
THE VICE PRESIDENT
<PAGE>
11
Section 8. The vice president shall, in the absence or disability of
the president, perform the duties and exercise the powers of the president and
shall perform such other duties as the board of directors may from time to time
prescribe.
THE SECRETARY
Section 9. The secretary stall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He shall keep in safe custody
the seal of the corporation and, when authorized by the board of directors,
affix the same to any instrument requiring it and, when so affixed, it shall be
attested by his signature or by the signature of the treasurer or an assistant
secretary.
THE TREASURER
Section 10. The treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation
<PAGE>
12
in such depositories as may be designated by the board of directors.
Section 11. He shall disburse the funds of the corporation as may be
ordered by the board of directors taking proper vouchers for such disbursements,
and shall render to the president and the board of directors, at the regular
meetings of the board, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 12. If required by the board of directors, he shall give the
corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of his office and for the restoration to the corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the corporation.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Every stockholder shall be entitled to have a
certificate, signed by the president or a vice president and the treasurer or an
assistant treasurer, or the secretary or an assistant secretary of the
corporation, certifying the number of shares owned by him in the corporation. If
the corporation shall be authorized to issue more than one class of stock or
more than one series of any class, the designations, preferences and
<PAGE>
13
relative, participating, optional or other special rights of the various classes
of stock or series thereof and the qualifications, limitations or restrictions
of such rights, shall be set forth in full or summarized on the face or back of
the certificate which the corporation shall issue to represent such stock, and,
if the corporation shall be authorized to issue only special sock, such
certificate shall set forth in full or summarize the rights of the holders of
such stock.
Section 2. Whenever any certificate is countersigned or otherwise
authenticated by a transfer agent or transfer clerk, and by a registrar, then a
facsimile of the signatures of the officers or agents of the corporation may be
printed or lithographed upon such certificate in lieu of the actual signatures.
In case any officer or officers who shall have signed, or whose facsimile
signature or signatures shall have been used on, any such certificate or
certificates shall cease to be such officer or officers of the corporation,
whether because of death, resignation or otherwise, before such certificate or
certificates shall nave been delivered by the corporation, such certificate or
certificates may nevertheless be adopted by the corporation and be issued and
delivered as though the person or persons who signed such certificate or
certificates, or whose facsimile signature or signatures shall have been used
thereon, had not ceased to be the officer of officers of such corporation.
LOST CERTIFICATES
<PAGE>
14
Section 3. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost or destroyed,
upon the making of an affidavit of that fact by the person claiming the
certificate of stock to be lost or destroyed. When authorizing such issue of a
new certificate or certificates, the board of directors may, in its discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost or destroyed certificate or certificates, or his legal representative, to
advertise the same in such manner as it shall require and/or give the
corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the corporation with respect to the certificate alleged
to have been lost or destroyed.
TRANSFER OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent
of the corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession) assignment or authority to transfer, it shall be
the duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
CLOSING OF TRANSFER BOOKS
Section 5. The directors may prescribe a period not exceeding sixty
days prior to any meeting of the stockholders during which no transfer of stock
on the books of the corporation
<PAGE>
15
may be made, or may fix a day not more than sixty days prior to the holding of
any such meeting as the day as of which stockholders entitled to notice of and
to vote at such meeting shall be determined; and only stockholders of record on
such day shall be entitled to notice or to vote at such meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Nevada.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation,
subject to the provisions of the articles of incorporation, if any, may be
declared by the board of directors at any regular or special meeting, pursuant
to law. Dividends may be paid in cash, in property, or in shares of the capital
stock, subject to the provisions of the articles of incorporation.
<PAGE>
16
Section 2. Before payment of any dividend, there may be set aside
out of any funds of the corporation available for dividends such sum or sums as
the directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
SEAL
Section 5. The corporate seal shall have inscribed thereon the name
of the corporation, the year of its incorporation and the words "Corporate Seal,
Nevada."
ARTICLE VIII
AMENDMENTS
Section 1. These by-laws may be altered or repealed at any regular
meeting of the stockholders or of the board of
<PAGE>
17
directors or at any special meeting of the stockholders or of the board of
directors if notice of such alteration or repeal be contained in the notice of
such special meeting.
Exhibit 3.25
CERTIFICATE OF INCORPORATION
OF
BISCUITS, INC.
-o-O-o-
FIRST. The name of the corporation is
BISCUITS, INC.
SECOND. Its principal office in the State of Delaware is located at No. 100
West Tenth Street, in the City of Wilmington, County of New Castle. The name and
address of its resident agent is The Corporation Trust Company, No. 100 West
Tenth Street, Wilmington, Delaware.
THIRD. The nature of the business, or objects or purposes to be transacted,
promoted or carried on are
To manufacture, produce, purchase, or otherwise acquire, use,
distribute, sell at wholesale or retail, import, export, and otherwise
dispose of and deal in, biscuits, crackers, breads, pastries, confections,
and all other similar and allied foodstuffs and the component parts
thereof.
To build, purchase, lease as lessee or otherwise acquire, own, hold,
use, improve, equip and maintain, mortgage, convey in trust, or otherwise
encumber, sell, convey, assign, lease or lessor, and otherwise dispose of
factories, shops, laboratories, offices, warehouses, and any and all
buildings and structures which may be necessary or useful in connection
with the transaction of the business of this corporation and the tools,
machinery, equipment and supplies used in connection therewith.
To manufacture, purchase or otherwise acquire, invest in, own,
mortgage, pledge, sell, assign and transfer or otherwise dispose of, trade,
deal in and deal with goods, wares and merchandise and personal property of
every class and description.
To acquire, and pay for in cash, stock, or bonds of this corporation
or otherwise, the good will, rights, assets and property, and to undertake
or assume the whole or any part of the obligations or liabilities of any
person, fire, association or corporation.
To acquire, hold, use, sell, assign, lease, grant licenses in respect
of, mortgage or otherwise dispose of letters patent of the United States or
any foreign country, patent rights, licenses and privileges, invention,
improvements and processes, copyrights, trademarks and trade names,
relating to or useful in connection with any business of this corporation.
To acquire by purchase, subscription or otherwise, and to receive,
hold, own, guarantee, sell, assign, exchange, transfer, mortgage, pledge or
otherwise dispose of or deal in and with any of the shares of the capital
stock, or any voting trust certificates in respect of the shares of capital
stock, scrip, warrants, rights, bonds, debentures, notes, trust receipts,
and other securities, obligations, chooses in action and evidences of
indebtedness or interest issued or created by any corporations, joint stock
companies, syndicates, associations, firms, trusts or persons, public or
private, or by the
<PAGE>
government of the United States of America, or by any foreign government,
or by any state, territory, province, municipality or other political
subdivision or by any governmental agency, and as owner thereof to posses
and exercise all the rights, powers and privileges or ownership, including
the right to execute consents and vote thereon, and to do any and all acts
and things necessary or advisable for the preservation, protection,
improvement and enhancement in value thereof.
To enter into, make and perform contracts of every kind and
description with any person, firm, association, corporation, municipality,
county, state, body politic or government or colony or dependency thereof.
To borrow or raise moneys for any of the purposes of the corporation
and, from time to time, without limit as to amount to draw, make, accept,
endorse, execute and issue promissory notes, drafts, bills of exchange,
warrants, bonds, debentures and other negotiable or nonnegotiable
instruments and evidences of indebtedness, and to secure the payment of any
thereof and of the interest thereon by mortgage upon pledge, conveyance or
assignment in trust of the whole or any part of the property of the
corporation, whether at the time owned or thereafter acquired, and to sell,
pledge or otherwise dispose of such bonds or other obligations of the
corporation for its corporate purposes.
To loan to any person, firm or corporation any of its surplus funds,
either with or without security.
To purchase, hold, sell and transfer the shares of its own capital
stock; provided it shall not use its funds or property for the purchase of
its own shares of capital stock when such use would cause any impairment of
its capital except as otherwise permitted by law, and provided further that
shares of its own capital stock belonging to it shall not be voted upon
directly or indirectly.
To have one or more offices, to carry on all or any of its operations
and business and without restriction or limit as to amount to purchase or
otherwise acquire, hold, own, mortgage, sell, convey, or otherwise dispose
of real and personal property of every class and description in any of the
States, Districts, Territories or Colonies of the United States, and in any
and all foreign countries, subject to the laws of such State, District,
Territory, Colony or Country.
In general, to carry on any other business in connection with the
foregoing, and to have and exercise all the powers conferred by the laws of
Delaware upon corporations formed under the General Corporation Law of the
State of Delaware, and to do any or all the things hereinbefore set forth
to the same extent as natural persons might or could do.
The objects and purposes specified in the foregoing clauses shall,
except where otherwise expressed, be in nowise limited or restricted by
reference to, or inference from, the terms of any other clause in this
certificate of incorporation, but the objects and purposes specified in
each of the foregoing clauses of this article shall be regarded as
independent objects and purposes.
<PAGE>
FOURTH. The total number of shares of stock which the corporation shall
have authority to issue is one hundred (100) and the par value of each of such
shares is One Hundred Dollars ($100.00) amounting in the aggregate to Ten
Thousand Dollars ($10,000.00).
FIFTH. The minimum amount of capital with which the corporation will
commence business is One Thousand Dollars ($1,000.00).
SIXTH. The names and places of residence of the incorporations are as
follows:
NAMES RESIDENCE
C. S. Peabbles Wilmington, Delaware
S. M. Brown Wilmington, Delaware
W. T. Cunningham Wilmington, Delaware
SEVENTH. The corporation is to have perpetual existence.
EIGHTH. The private property of the stockholders shall not be subject to
the payment of corporate debts to any extent whatever.
NINTH. In furtherance and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized:
To make, alter, amend or repeal the by-laws of the corporation.
To authorize and cause to be executed mortgages and liens upon the
real and personal property of the corporation.
To set apart out of any of the funds of the corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any
such reserve in the manner in which it was created.
By resolution or resolutions passed by a majority of the whole board,
to designate one or more committees, each committee to consist of two or
more of the directors of the corporation, which, to the extent provided in
said resolution or resolutions or in the by-laws of the corporation, shall
have and may exercise the powers of the board of directors in the
management of the business and affairs of the corporation, and may have
power to authorize the seal of the corporation to be affixed to all papers
which may require it. Such committee or committees shall have such name or
names as may be stated in the by-laws of the corporation or as may be
determined from time to time by resolution adopted by the board of
directors.
When and as authorized by the affirmative vote of the holders of a
majority of the stock issued and outstanding having voting power given a
stockholders' meeting duly called for that purpose, or when authorized by
the written consent of the holders of a majority of the voting stock issued
and outstanding, to sell, lease or exchange all of the property and assets
of the corporation, including its good will and its corporate franchises,
upon such terms and conditions and for such
<PAGE>
consideration, which may be in whole or in part shares of stock in, and/or
other securities of, any other corporation or corporations, as its board of
directors shall deem expedient and for the best interests of the
corporation.
TENTH. Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholders thereof, or on the
application of any receiver or receivers appointed for this corporation under
the provisions of Section 3883 of the Revised Code of 1915 of said State, or on
the application of trustees in dissolution or of any receiver or receivers
appointed for this corporation under the provisions of Section 43 of the General
Corporation Law of the State of Delaware, order a meeting of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, to be summoned in such manner as the said Court
directs. If a majority in number representing three-fourths in value of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of this corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of this corporation as consequence of such
compromise or arrangement, the said reorganization shall, if mentioned by the
Court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this corporation, as the case may be, and also on this
corporation.
ELEVENTH. Meetings of stockholders may be held without the State of
Delaware, if the by-laws so provide. The books of the corporation may be kept
(subject to any provision contained in the statutes) outside of the State of
Delaware at such place or places as may be from time to time designated by the
board of directors or in the by-laws of the corporation. Elections of directors
need not be by ballot unless the by-laws of the corporation shall so provide.
TWELFTH. The corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate of incorporation, in the
manner now or hereafter presented by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named for
the purpose of forming a corporation in pursuance of the General Corporation Law
of the state of Delaware, do make this certificate, hereby declaring and
certifying that the facts herein stated are true, and accordingly have hereunto
set our hands and seals this 9th day of March, A. D. 1950.
-----------------------------
-----------------------------
-----------------------------
<PAGE>
STATE OF DELAWARE )
) ss.:
COUNTY OF NEW CASTLE )
BE IT REMEMBERED, That on this 9th day of March A. D. 1950, personally came
before me, a Notary Public for the State of Delaware, C. S. Peabbles, S. M.
Brown and W. T. Cunningham, all of the parties to the foregoing certificate of
incorporation, known to me personally to be such, and severally acknowledged the
said certificate to be the act and deed of the signors respectively and that the
facts therein stated are truly set forth.
GIVEN under my hand and seal of office the day and year aforesaid.
-----------------------------
Notary Public
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
* * * * *
BISCUITS, INC., a corporation organized and existing under and by virtue of
the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY.
FIRST: That the Board of Directors of said corporation, at a meeting duly
held, adopted a resolution proposing and declaring advisable the following
amendment to the Certificate of Incorporation of said corporation:
RESOLVED, that the Certificate of Incorporation of this corporation be
amended by changing the Article thereof numbered "FIRST" so that, as
amended, said Article shall be and read as follows:
"The name of the corporation is OLD WORLD BAKING COMPANY."
SECOND: That the said amendment has been consented to and authorized by the
holders of all the issued and outstanding stock, entitled to vote, by a written
consent in accordance with the provisions of Section 228 of The General
Corporation Law of Delaware, and filed with the corporation.
THIRD: That the aforesaid amendment was duly adopted in accordance with the
applicable provisions of Sections 242 and 228 of The General Corporation Law of
Delaware.
IN WITNESS WHEREOF, said BISCUITS, INC. has caused its corporate seal to be
hereunto affixed and this certificate to be signed by W. J. Brouder, its
President, and E. K. Vincek, its Assistant Secretary, this 26th day of
September, 1963.
BISCUITS, INC.
By___________________________
President
By____________________________
Assistant Secretary
<PAGE>
STATE OF ILLINOIS )
) ss.:
COUNTY OF COOK )
BE IT REMEMBERED that on this 26th day of September, A.D. 1963, personally
came before me, John M. Connery, Jr., a Notary Public in and for the County and
State aforesaid, W. J. Brouder, President of BISCUITS, INC., a corporation of
the State of Delaware, the corporation described in and which executed the
foregoing certificate, known to me personally to be such, and he, the said W. J.
Brouder as such President, duly executed said certificate before me and
acknowledged the said certificate to be his act and deed and the act and deed of
said corporation; that the signatures of the said President and of the Assistant
Secretary of said corporation to said foregoing certificate are in the
handwriting of the said President and Assistant Secretary of said corporation
respectively, and that the seal affixed to said certificate is the common or
corporate seal of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and seal of office the day
and year aforesaid.
-----------------------------
Notary Public
<PAGE>
OLD WORLD BAKING COMPANY
CERTIFICATE OF AMENDMENT
of
CERTIFICATE OF INCORPORATION
Pursuant to Sections 228 and 242 of the General Corporation
Law of the State of Delaware
------------------
OLD WORLD BAKING COMPANY (hereinafter called the "Corporation"), a
corporation organized and existing under and by virtue of the provisions of the
General Corporation Law of the State of Delaware, the Certificate of
Incorporation of which was filed in the office of the Secretary of State of
Delaware and recorded in the office of the Recorder of the County of New Castle,
State of Delaware, on March 9, 1950 hereby certifies:
FIRST: That, in accordance with the provisions of Section 242 of said
General Corporation Law, the Board of Directors of the Corporation duly adopted
a resolution setting forth and declaring the advisability of the amendment of
the Certificate of Incorporation hereinafter set forth; that the written consent
of the holder of all of the issued and outstanding shares of capital stock of
the Corporation was given, in accordance with Section 228 of said General
Corporation Law, to the amendment of the Certificate of Incorporation
hereinafter set forth; that said amendment as it was consented to in writing by
the holder of all of the issued and outstanding shares of capital stock of the
Corporation amended Article FIRST of the Certificate of Incorporation of the
Corporation to read as follows:
"FIRST: The name of the corporation is
HOLLOW TREE COMPANY".
SECOND: That said amendment has been duly adopted in accordance with the
provisions of Sections 228 and 242 of said General Corporation Law.
IN WITNESS WHEREOF, said OLD WORLD BAKING COMPANY has caused its corporate
seal to be hereunto affixed and this Certificate to be signed by B. F. Thomas,
its President, and Walter S. Maker, its Secretary, this 16th day of June, 1972.
---------------------------
President
---------------------------
Secretary
<PAGE>
STATE OF ILLINOIS )
) ss.:
COUNTY OF )
BE IT REMEMBERED, that on this 16th day of June, 1972, personally came
before me, Louis A. Gravelle, Jr. a Notary Public in and for the County and
State aforesaid, duly commissioned and sworn to take acknowledgements or proofs
of deeds, B. F. Thomas, President of Old World Baking Company, a corporation of
the State of Delaware, the corporation described in the foregoing Certificate,
known to me personally to be such, and he the same B. F. Thomas as such
President, acknowledged the said Certificate to be his act and deed and made on
behalf of said corporation; that the signatures of said President and of the
Secretary of said corporation to the foregoing Certificate are in the
handwriting of the President and Secretary of the corporation, respectively, and
that the seal affixed to said Certificate is the common or corporate seal of
said corporation, and that his act of sealing, executing, acknowledging and
delivery the said Certificate was duly authorized by the directors and
stockholders of the corporation.
IN WITNESS WHEREOF, I have hereunto set my hand, and seal of office the day
and year aforesaid.
-----------------------------
Exhibit 3.26
HOLLOW TREE COMPANY
BY-LAWS
ARTICLE I
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meeting and Notice. Meetings of the stockholders
of the Corporation shall be held at such place either within or without the
State of Delaware as the Board of Directors may determine.
Section 2. Annual and Special Meetings. Annual meetings of
stockholders shall be held, at a date, time and place fixed by the Board of
Directors and stated in the notice of meeting, to elect a Board of Directors and
to transact such other business as may properly come before the meeting. Special
meetings of the stockholders may be called by the President for any purpose and
shall be called by the President or Secretary if directed by the Board of
Directors or requested in writing by the holders of not less than 25% of the
capital stock of the Corporation. Each such stockholder request shall state the
purpose of the proposed meeting.
Section 3. Notice. Except as otherwise provided by law, at least 10
and not more than 60 days before each meeting of stockholders, written notice of
the time, date and place of the meeting, and, in the case of a special meeting,
the purpose or purposes for which the meeting is called, shall be given to each
stockholder.
Section 4. Quorum. At any meeting of stockholders, the holders of
record, present in person or by proxy, of a majority of the Corporation's issued
and outstanding capital stock shall constitute a quorum for the transaction of
business, except as otherwise provided by law. In the absence of a quorum, any
officer entitled to preside at or to act as secretary of the meeting shall have
power to adjourn the meeting from time to time until a quorum is present.
Section 5. Voting. Except as otherwise provided by law, all matters
submitted to a meeting of stockholders shall be decided by vote of the holders
of record, present in person or by proxy, of a majority of the Corporation's
issued and outstanding capital stock.
<PAGE>
2
ARTICLE II
DIRECTORS
Section 1. Number, Election and Removal of Directors. The number of
Directors that shall constitute the Board of Directors shall not be less than
one or more than fifteen. The first Board of Directors shall consist of two
Directors. Thereafter, within the limits specified above, the number of
Directors shall be determined by the Board of Directors or the stockholders. The
Directors shall be elected by stockholders at their annual meeting. Vacancies
and newly created directorships resulting from any increase in the number of
Directors may be filled by a majority of the Directors then in office, although
less than a quorum, or by the sole remaining Director or by the stockholders. A
Director may be removed with or without cause by the stockholders.
Section 2. Meetings. Regular meetings of the Board of Directors
shall be held at such times and places as may from time to time be fixed by the
Board of Directors or as may be specified in a notice of meeting.
Section 3. Quorum. One-third of the total number of Directors shall
constitute a quorum for the transaction of business. If a quorum is not present
at any meeting of the Board of Directors, the Directors present may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until such a quorum is present. Except as otherwise provided by law,
the Certificate of Incorporation of the Corporation, these By-Laws or any
contract or agreement to which the Corporation is a party, the act of a majority
of the Directors present at any meeting at which there is a quorum shall be the
act of the Board of Directors.
Section 4. Committees. The Board of Directors may, by resolution
adopted by a majority of the whole Board, designate one or more committees,
including, without limitation, an Executive Committee, to have and exercise such
power and authority as the Board of Directors shall specify. In the absence or
disqualification of a member of a 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 Director to act at the
absent or disqualified member.
<PAGE>
3
ARTICLE III
OFFICERS
The officers of the Corporation shall consist of a President, a Vice
President, a Secretary, a Treasurer and such other additional officers with such
titles as the Board of Directors shall determine, all of which shall be chosen
by and shall serve at the pleasure of the Board of Directors. Such officers
shall have the usual powers and shall perform all the usual duties incident to
their respective offices. All officers shall be subject to the supervision and
direction of the Board of Directors. The authority, duties or responsibilities
of any officer of the Corporation may be suspended by the President with or
without cause. Any officer elected or appointed by the Board of Directors may be
removed by the Board of Directors with or without cause.
ARTICLE IV
INDEMNIFICATION
To the fullest extent permitted by the Delaware General Corporation
Law, the corporation shall indemnify any current or former Director or officer
of the Corporation and may, at the discretion of the Board of Directors,
indemnify any current or former employee or agent of the Corporation against all
expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with any threatened, pending or
completed action, suit or proceeding brought by or in the right of the
Corporation or otherwise, to which he was or is a party by reason of his current
or former position with the Corporation or by reason of the fact that he is or
was serving, at the request of the Corporation, as a director, officer, partner,
trustee, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise.
Expenses incurred by a person who is or was a director or officer of
the Corporation in appearing at, participating in or defending any such action,
suit or proceeding shall be paid by the Corporation at reasonable intervals in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of the director or officer to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the Corporation as authorized by this Article. If a claim under
this Article is not paid in full by the Corporation within ninety days after a
written claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be paid
also the expense of prosecuting such claim. It shall be a defense to any such
action (other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition
<PAGE>
4
where the required undertaking, if any is required, has been tendered to the
Corporation) that the claimant has not met the standards of conduct which make
it permissible under the Delaware General Corporation Law or other applicable
law for the corporation to indemnify the claimant for the amount claimed, but
the burden of proving such defense shall be on the Corporation. Neither the
failure of the Corporation (including its board of directors, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he has met the applicable standard of conduct set
forth in the Delaware General Corporation Law or other applicable law, nor an
actual determination by the Corporation (including its board of directors,
independent legal counsel, or its stockholders) that the claimant has not met
the applicable standard of conduct, shall be a defense to the action or create a
presumption that the claimant has not met the applicable standard of conduct.
ARTICLE V
GENERAL PROVISIONS
Section 1. Notices. Whenever any statute, the Certificate of
Incorporation or these By-Laws require notice to be given to any Director or
stockholder, such notice may be given in writing by mail, addressed to such
Director or stockholder at his address as it appears in the records of the
Corporation, with postage thereon prepaid. Such notice shall be deemed to have
been given when it is deposited in the United States mail. Notice to Directors
may also be given by telegram.
Section 2. Fiscal Year. The fiscal year of the Corporation shall be
fixed by the Board of Directors.
Exhibit 3.27
CERTIFICATE OF INCORPORATION
OF
KEEBLER COMPANY/PUERTO RICO, INC.
* * * *
1. The name of the corporation is
KEEBLER COMPANY/PUERTO RICO, INC.
2. The address of its registered office in the State of Delaware is No. 100
West Tenth Street, in the City of Wilmington, County of New Castle. The name of
its registered agent at such address is The Corporation Trust Company.
3. The nature of the business or purposes to be conducted or promoted is:
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
To manufacture, purchase or otherwise acquire, invest in, own,
mortgage, pledge, sell, assign and transfer or otherwise dispose of, trade,
deal in and deal with goods, wares and merchandise and personal property of
every class and description.
To acquire, and pay for in cash, stock or bonds of this corporation or
otherwise, the good will, rights, assets and property, and to undertake or
assume the whole or any part of the obligations or liabilities of any
person, firm, association or corporation.
To acquire, hold, use, sell, assign, lease, grant licenses in respect
of, mortgage or otherwise dispose of letters patent of the United States or
any foreign country, patent rights, licenses and privileges, inventions,
improvements and processes, copyrights, trade-marks and trade names,
relating to or useful in connection with any business of this corporation.
To acquire by purchase, subscription or otherwise, and to receive,
hold, own, guarantee, sell, assign, exchange, transfer, mortgage, pledge or
otherwise dispose of or deal in and with any of the shares of the capital
stock, or any voting trust certificates in respect of the shares of capital
stock, scrip, warrants, rights, bonds, debentures, notes, trust receipts,
and other securities, obligations, choses in action and evidences of
indebtedness or interest issued or erected by any corporations, joint stock
companies, syndicates, associations, firms, trusts or persons, public or
private, or by the government of the United States of America, or by any
foreign government, or by any state, territory, province, municipality or
other political subdivision or by any governmental agency, and as owner
thereof to possess and exercise all the rights, powers and
<PAGE>
privileges of ownership, including the right to execute consents and vote
thereon, and to do any and all acts and things necessary or advisable for
the preservation, protection, improvement and enhancement in value thereof.
To borrow or raise moneys for any of the purposes of the corporation
and, from time to time without limit as to amount, to draw, make, accept,
endorse, execute and issue promissory notes, drafts, bills of exchange,
warrants, bonds, debentures and other negotiable or non-negotiable
instruments and evidences of indebtedness, and to secure the payment of any
thereof and of the instrument thereon by mortgage upon or pledge,
conveyance or assignment in trust of the whole or any part of the property
of the corporation, whether at the time owned or thereafter acquired, and
to sell, pledge or otherwise dispose of such bonds or other obligations of
the corporation for its corporate purposes.
To purchase, receive, take by grant, gift, devise, bequest or
otherwise, lease, or otherwise acquire, own, hold, improve, employ, use and
otherwise deal in and with real or personal property, or any interest
therein, wherever situated and to sell, convey, lease, exchange, transfer
or otherwise dispose of, or mortgage or pledge, all or any of the
corporation's property and assets, or any interest therein, wherever
situated.
In general, to possess and exercise all the powers and privileges
granted by the General Corporation Law of Delaware or by any other law of
Delaware or by this certificate of incorporation together with any powers
incidental thereto, so far as such powers and privileges are necessary or
convenient to the conduct, promotion or attainment of the business or
purposes of the corporation.
The business and purposes specified in the foregoing clauses shall, except
where otherwise expressed, be in nowise limited or restricted by reference to,
or inference from, the terms of any other clause in this certificate of
incorporation, but the business and purposes specified in each of the foregoing
clauses of this article shall be regarded as independent business and purposes.
4. The total number of shares of stock which the corporation shall have
authority to issue is one thousand (1,000) and the par value of each of such
shares is One Hundred Dollars ($100.00) amounting in the aggregate to One
Hundred Thousand Dollars ($100,000.00).
5. The name and mailing address of each incorporator is as follows:
NAME MAILING ADDRESS
---- ---------------
C.A. Coyle 100 West Tenth Street
Wilmington, Delaware 19899
F.J. Obara, Jr. 100 West Tenth Street Wilmington, Delaware 19899
<PAGE>
W.J. Reif 100 West Tenth Street Wilmington, Delaware 19899
6. The corporation is to have perpetual existence.
7. In furtherance and not in limitation of the powers conferred by statute,
the board of directors is expressly authorized:
To make, alter or repeal the by-laws of the corporation.
To authorize and cause to be executed mortgages and liens upon the
real and personal property of the corporation.
To set apart out of any of the funds of the corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any
such reserve in the manner in which it was created.
By a majority of the whole board, to designate one or more committees,
each committee to consist of one or more of the directors of the
corporation. The board may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member
at any meeting of the committee. The by-laws may provide that in the
absence or disqualification of a member of a 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 the place
of any such absent or disqualified member. Any such committee, to the
extent provided in the resolution of the board of directors, or in the
by-laws of the corporation, shall have and may exercise all the powers and
authority of the board of directors in the management of the business and
affairs of the corporation, and may authorize the seal of the corporation
to be affixed to all papers which may require it; but no such committee
shall have the power or authority in reference to amending the certificate
of incorporation, adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange of all or
substantially all of the corporation's property and assets, recommending to
the stockholders a dissolution of the corporation or a revocation of a
dissolution, or amending the by-laws of the corporation; and, unless the
resolution or by-laws, expressly so provide, no such committee shall have
the power or authority to declare a dividend or to authorize the issuance
of stock.
When and as authorized by the stockholders in accordance with statute,
to sell, lease or exchange all or substantially all of the property and
assets of the corporation, including its good will and its corporate
franchises, upon such terms and conditions and for such consideration,
which may consist in whole or in part of money or property including shares
of stock in, and/or other securities of, any other corporation or
corporations, as its board of directors shall deem expedient and for the
best interests of the corporation.
<PAGE>
8. Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this corporation under
the provisions of section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this corporation under the provisions of section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this corporation, as the case may be,
and also on this corporation.
9. Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws may provide. The books of the corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
board of directors or in the by-laws of the corporation. Elections of directors
need not be by written ballot unless the by-laws of the corporation shall so
provide.
10. The corporation reserves the right to amend, alter, change or repeal
any provision contained in this certificate of incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named,
for the purpose of forming a corporation pursuant to the General Corporation Law
of the State of Delaware, do make this certificate, hereby declaring and
certifying that this is our act and deed and the facts herein stated are true,
and accordingly have hereunto set our hands this 29th day of July, 1969.
-------------------------------------
-------------------------------------
-------------------------------------
<PAGE>
STATE OF DELAWARE )
)
COUNTY OF NEW CASTLE )
BE IT REMEMBERED that on this 29th day of July, 1969, personally came
before me, a Notary Public for the State of Delaware, C. A. Coyle, F. J. Obara,
Jr. and W. J. Reif, all of the parties to the foregoing certificates of
incorporation, known to me personally to be such, and severally acknowledged the
said certificate to be the act and deed of the signers respectively and that the
facts stated therein are true.
GIVEN under my hand and seal of office the day and year aforesaid.
------------------
Notary Public
Exhibit 3.28
KEEBLER COMPANY/PUERTO RICO, INC.
BY-LAWS
ARTICLE I
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meeting and Notice. Meetings of the stockholders
of the Corporation shall be held at such place either within or without the
State of Delaware as the Board of Directors may determine.
Section 2. Annual and Special Meetings. Annual meetings of
stockholders shall be held, at a date, time and place fixed by the Board of
Directors and stated in the notice of meeting, to elect a Board of Directors and
to transact such other business as may properly come before the meeting. Special
meetings of the stockholders may be called by the President for any purpose and
shall be called by the President or Secretary if directed by the Board of
Directors or requested in writing by the holders of not less than 25% of the
capital stock of the Corporation. Each such stockholder request shall state the
purpose of the proposed meeting.
Section 3. Notice. Except as otherwise provided by law, at least 10
and not more than 60 days before each meeting of stockholders, written notice of
the time, date and place of the meeting, and, in the case of a special meeting,
the purpose or purposes for which the meeting is called, shall be given to each
stockholder.
Section 4. Quorum. At any meeting of stockholders, the holders of
record, present in person or by proxy, of a majority of the Corporation's issued
and outstanding capital stock shall constitute a quorum for the transaction of
business, except as otherwise provided by law. In the absence of a quorum, any
officer entitled to preside at or to act as secretary of the meeting shall have
power to adjourn the meeting from time to time until a quorum is present.
Section 5. Voting. Except as otherwise provided by law, all matters
submitted to a meeting of stockholders shall be decided by vote of the holders
of record, present in person or by proxy, of a majority of the Corporation's
issued and outstanding capital stock.
<PAGE>
2
ARTICLE II
DIRECTORS
Section 1. Number, Election and Removal of Directors. The number of
Directors that shall constitute the Board of Directors shall not be less than
one or more than fifteen. The first Board of Directors shall consist of two
Directors. Thereafter, within the limits specified above, the number of
Directors shall be determined by the Board of Directors or the stockholders. The
Directors shall be elected by stockholders at their annual meeting. Vacancies
and newly created directorships resulting from any increase in the number of
Directors may be filled by a majority of the Directors then in office, although
less than a quorum, or by the sole remaining Director or by the stockholders. A
Director may be removed with or without cause by the stockholders.
Section 2. Meetings. Regular meetings of the Board of Directors
shall be held at such times and places as may from time to time be fixed by the
Board of Directors or as may be specified in a notice of meeting.
Section 3. Quorum. One-third of the total number of Directors shall
constitute a quorum for the transaction of business. If a quorum is not present
at any meeting of the Board of Directors, the Directors present may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until such a quorum is present. Except as otherwise provided by law,
the Certificate of Incorporation of the Corporation, these By-Laws or any
contract or agreement to which the Corporation is a party, the act of a majority
of the Directors present at any meeting at which there is a quorum shall be the
act of the Board of Directors.
Section 4. Committees. The Board of Directors may, by resolution
adopted by a majority of the whole Board, designate one or more committees,
including, without limitation, an Executive Committee, to have and exercise such
power and authority as the Board of Directors shall specify. In the absence or
disqualification of a member of a 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 Director to act at the
absent or disqualified member.
<PAGE>
3
ARTICLE III
OFFICERS
The officers of the Corporation shall consist of a President, a Vice
President, a Secretary, a Treasurer and such other additional officers with such
titles as the Board of Directors shall determine, all of which shall be chosen
by and shall serve at the pleasure of the Board of Directors. Such officers
shall have the usual powers and shall perform all the usual duties incident to
their respective offices. All officers shall be subject to the supervision and
direction of the Board of Directors. The authority, duties or responsibilities
of any officer of the Corporation may be suspended by the President with or
without cause. Any officer elected or appointed by the Board of Directors may be
removed by the Board of Directors with or without cause.
ARTICLE IV
INDEMNIFICATION
To the fullest extent permitted by the Delaware General Corporation
Law, the corporation shall indemnify any current or former Director or officer
of the Corporation and may, at the discretion of the Board of Directors,
indemnify any current or former employee or agent of the Corporation against all
expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with any threatened, pending or
completed action, suit or proceeding brought by or in the right of the
Corporation or otherwise, to which he was or is a party by reason of his current
or former position with the Corporation or by reason of the fact that he is or
was serving, at the request of the Corporation, as a director, officer, partner,
trustee, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise.
Expenses incurred by a person who is or was a director or officer of
the Corporation in appearing at, participating in or defending any such action,
suit or proceeding shall be paid by the Corporation at reasonable intervals in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of the director or officer to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the Corporation as authorized by this Article. If a claim under
this Article is not paid in full by the Corporation within ninety days after a
written claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be paid
also the expense of prosecuting such claim. It shall be a defense to any such
action (other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition
<PAGE>
4
where the required undertaking, if any is required, has been tendered to the
Corporation) that the claimant has not met the standards of conduct which make
it permissible under the Delaware General Corporation Law or other applicable
law for the corporation to indemnify the claimant for the amount claimed, but
the burden of proving such defense shall be on the Corporation. Neither the
failure of the Corporation (including its board of directors, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he has met the applicable standard of conduct set
forth in the Delaware General Corporation Law or other applicable law, nor an
actual determination by the Corporation (including its board of directors,
independent legal counsel, or its stockholders) that the claimant has not met
the applicable standard of conduct, shall be a defense to the action or create a
presumption that the claimant has not met the applicable standard of conduct.
ARTICLE V
GENERAL PROVISIONS
Section 1. Notices. Whenever any statute, the Certificate of
Incorporation or these By-Laws require notice to be given to any Director or
stockholder, such notice may be given in writing by mail, addressed to such
Director or stockholder at his address as it appears in the records of the
Corporation, with postage thereon prepaid. Such notice shall be deemed to have
been given when it is deposited in the United States mail. Notice to Directors
may also be given by telegram.
Section 2. Fiscal Year. The fiscal year of the Corporation shall be
fixed by the Board of Directors.
Exhibit 3.29
SCA-2.10 (Rev. Jul. 1984)
Submit in Duplicate
- -----------------------------------------
Payment must be made by Certified
Check, Cashiers' Check or a Money
Order, payable to "Secretary of State".
DO NOT SEND CASH!
- -----------------------------------------
JIM EDGAR
Secretary of State
State of Illinois
ARTICLES OF INCORPORATION
FILE #
------------------------------------------
This Space For Use By
Secretary of State
Date 2-6-91
License Fee $
Franchise Tax $25.00
Filing Fee $75.00
Clerk 100.00
------------------------------------------
Pursuant to the provisions of "The Business Corporation Act of 1983", the
undersigned incorporator(s) hereby adopt the following Articles of
Incorporation.
ARTICLE ONE The name of the corporation is Keebler H.C., Inc. PAID
-------------------------------------
(Shall contain the word "corporation", "company", "incorporated")
--------------------------------------------------------------------
("limited", or an abbreviation thereof)
ARTICLE TWO The name and address of the initial registered agent and its
registered office are:
Registered Agent C T CORPORATION SYSTEM
----------------------------------------------------------
First Name Middle Name Last Name
Registered Office c/o C T CORPORATION SYSTEM, 208 S. La Salle Street
------------------------------------------------------------
Number Street Suite o (A.P.O. Box alone is not acceptable)
Chicago 60604 Cook
------------------------------------------------------------
City Zip Code County
ARTICLE THREE The purpose or purposes for which the corporation is organized
are:
If not sufficient space to cover this point, add one
or more sheets of this size.
The transaction of any or all lawful businesses for which corporations may be
incorporated under the Illinois Business Corporation Act.
ARTICLE FOUR Paragraph 1: The authorized shares shall be:
Class *Par Value per share Number of shares authorized
--------------------------------------------------------------------
Common One Dollar One Thousand
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
Paragraph 2: The preferences, qualifications, limitations,
restrictions and the special or relative rights in respect of the
shares of each class are:
If not sufficient space to cover this point, add one or more sheets
of this size.
ARTICLE FIVE The number of shares to be issued initially, and the consideration
to be received by the corporation therefor, are:
*Par Value Number of shares Consideration to be
Class per share proposed to be Issued received therefor
----- --------- --------------------- -----------------
Common One Dollar One Thousand $ 1,000.00
$
----------------------------------------------------------------
$
----------------------------------------------------------------
$
----------------------------------------------------------------
TOTAL $ 1,000.00
-----------------
*A declaration as to a "per value" is optional. This space may be marked "n/a"
when no reference to a par value is desired.
<PAGE>
ARTICLE SIX OPTIONAL
The number of directors constituting the initial board of directors of the
corporation is 3, and the names and addresses of the persons who are to
serve as directors until the first annual meeting of shareholders or until
their successors be elected and qualify are:
Name Residential Address
---- -------------------
C. A. Gerber 1308 Forest Wheaton, Illinois 60187
Frank A. Nassi 1251 Ashley Lane Addison, Illinois 60101
Craig S. Stevens 1374 Green Trails Dr. Naperville, Illinois 60540
ARTICLE SEVEN OPTIONAL
(a) It is estimated that the value of all property to be owned by the
corporation for the following year wherever located will be: $
35,000.000
(b) It is estimated that the value of the property to be located within
the State of Illinois during the following year will be: $ 35,000.000
(c) It is estimated that the gross amount of business which will be
transacted by the corporation during the following year will be: $___
(d) It is estimated that the gross amount of business which will be
transacted from places of business in the State of Illinois during the
following year will be: $_____
ARTICLE EIGHT OTHER PROVISIONS
Attach a separate sheet of this size for any other provision to be included
in the Articles of Incorporation, e.g., authorizing pre-emptive rights;
denying cumulative voting; regulating internal affairs; voting majority
requirements; fixing a duration other than perpetual; etc.
NAMES & ADDRESSES OF INCORPORATORS
The undersigned incorporator(s) hereby declare(s), under penalties of
perjury, that the statements made in the foregoing Articles of Incorporation are
true.
Dated: January 29, 1991
Signatures and Names Post-Office Address
1. Robert C. McBride 1. 677 Larch Avenue
----------------------------------- ----------------------------
Signature Street
Robert C. McBride Elmhurst, Illinois 60126
----------------------------------- ----------------------------
Name (please print) City/Town State Zip
2. 2.
----------------------------------- ----------------------------
Signature Street
----------------------------------- ----------------------------
Name (please print) City/Town State Zip
3. 3.
----------------------------------- ----------------------------
Signature Street
----------------------------------- ----------------------------
Name (please print) City/Town State Zip
(Signatures must be in ink on original document. Carbon copy, zerox or rubber
stamp signatures may only be used on conformed copies)
NOTE: If a corporation acts as incorporator, the name of the corporation and the
state of incorporation shall be shown and the execution shall be by its
President or Vice-President and verified by him, and attested by its Secretary
or an Assistant Secretary.
<PAGE>
KEEBLER H.C., INC.
Articles of Incorporation
(continued)
ARTICLE EIGHT: Directors' Indemnification
Suits by Third Parties. The corporation shall indemnify any person who was or is
made a party, or is threatened to be made a party, to any threatened, pending or
completed action, suit or proceedings, whether civil, criminal, administrative
or investigative (other than an action by, or in the right of, the corporation)
by reason of the fact that the person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if the person
acted in good faith and in a manner the person reasonably believed to be in, or
not opposed to, the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe the conduct
was unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which the person reasonably believed to be in,
or not opposed to, the best interests of the corporation and, with respect to
any criminal action or proceeding, had reasonable cause to believe that the
conduct was unlawful.
Derivative Suits. The corporation shall indemnify any person who was or is made
a party, or is threatened to be made a party, to any threatened, pending or
completed action or suit by, or in the right of, the corporation to procure a
judgment in its favor by reason of the fact that the person is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees) actually and reasonably incurred by
the person in connection with the defense
<PAGE>
or settlement of such action or suit if the person acted in good faith and in a
manner the person reasonably believed to be in, or not opposed to, the best
interests of the corporation, except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable for negligence or misconduct in the performance of his or
her duty, to the extent that the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability,
but in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses as the shall deem proper.
Indemnification as of Right. To the extent that a director, officer, employee or
agent of the corporation has been successful on the merits, or otherwise, in
defense of any action, suit or proceeding referred to in the preceding
paragraphs of this Article EIGHT, or in defense of any claim issue or matter
therein, the person shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by the person in connection therewith.
Advance of Funds. Expenses incurred by any such person in defending a civil,
criminal, administrative or investigative action, suit or proceeding, or threat
thereof, shall be paid by the corporation in advance of the final disposition of
such action, suit or proceeding as authorized by the Board of Directors in the
specific case, upon receipt of an undertaking by, or on behalf of, the director,
officer, employee or agent to repay such amount unless it shall ultimately be
determined that the person is not entitled to be indemnified by the corporation
as authorized in this Article EIGHT.
ARTICLE NINE: Directors' Liability - Limitations
No director of the corporation shall be liable to the corporation or its
stockholders for monetary damages for breach of his or her fiduciary duty as a
director, provided that nothing contained in this Article NINE shall eliminate
or limit the liability of a director (i) for any breach of the director's duty
of loyalty to the corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of the law, or (iii) for any transaction from which the director derived an
improper personal benefit. No amendment, modification or repeal of this Article
NINE shall apply to, or have any effect on, the liability or the alleged
liability of any director of the corporation for, or with respect to, any acts
or omissions of such director occurring prior to such amendment, modification or
repeal.
<PAGE>
0633.0631
STATEMENT OF CORRECTION
--------------------------
FILED
OCT 30 1992
GEORGE H. RYAN
SECRETARY OF STATE
--------------------------
Form BCA-1.15 PAID
(Rev. Jan. 1991) NOV 2, 1992
File #
- -------------------------------------------------------------------------------
George H. Ryan SUBMIT IN DUPLICATE
Secretary of State ------------------------------
Department of Business Services This space for use by
Springfield, IL 62756 Secretary of State
Telephone (217) 785-2237 Date 10/30/92
License Fee $
Franchise Tax $
- ------------------------------------- Filing Fee $ 25.00
Remit payment in check or money order, Penalty $
payable to Secretary of State.* Interest $
Approved: TIA
- -------------------------------------------------------------------------------
1. CORPORATE NAME: Keebler H.C., Inc.
2. STATE OR COUNTRY OF INCORPORATION: Illinois
---------------------------------------------------------------------
3X
3. Title of document to be corrected: Articles of Incorporation
4. Date erroneous document was filed by Secretary of State: February 6,
1991
5. Inaccuracy, error or defect:
(Briefly identity the error and explain how it occurred. Use reverse
side or add one or more sheets of this size if necessary.)
The original allocation factor established in Article Seven of
the subject document was erroneous due to a clerical oversight.
The consideration received for the initial issuance of common
shares was also misstated due to the omission of Paid-in Surplus.
6. Corrected portion(s) of the document in corrected form:
(if there is not sufficient space to cover this point, use reverse
side or add one or more sheets of this size.)
Article Seven
a) $53,918,960
b) - 0 -
c) 3,202,540
d) - 0 -
Article Five
The Consideration to be Received therefore is $50,716,419.88
7. The undersigned corporation has caused this statement to be signed by
its duly authorized officers, each of whom affirms, under penalties of
perjury, that the facts stated herein are true.
Dated April 15, 1992 Keebler H.C., Inc.
--------------------------- ---------------------------------
(Exact Name of Corporation)
attested by _____________________ by_______________________________
(Signature of Secretary (Signature of President
or Assistant Secretary) or Vice President)
<PAGE>
Craig S. Stevens, Secretary C.A. Gerber, President
----------------------------------- ----------------------------------
(Type or Print Name and Title) (Type or Print Name and Title)
<PAGE>
FORM BCA-2.10
File No. _____________
- ----------------------------------------
ARTICLES OF
INCORPORATION
FILED
FEB 6 1991
GEORGE H. RYAN
SECRETARY OF STATE
FEE SCHEDULE
The following fees are required to be
paid at the time of issuing the
Certificate of Incorporation: FILING FEE
$75.00; INITIAL LICENSE FEE of 1/20th of
1% of the consideration to be received
for Initial Issued shares (see Art 3),
MINIMUM 8.50; INITIAL FRANCHISE TAX of
1/10th of 1% of the consideration to be
received for Initial Issued shares (see
Art 3), MINIMUM $25.00.
EXAMPLES OF TOTAL DUE
Consideration to TOTAL
be Received DUE*
========================================
up to $1,000 $100.50
- ----------------------------------------
$ 8,000 $102.50
- ----------------------------------------
$ 10,000 $106.00
- ----------------------------------------
$ 25,000 $112.50
- ----------------------------------------
$ 50,000 $150.00
- ----------------------------------------
$100,000 $225.00
- ----------------------------------------
*Includes Filing Fee o License Fee o
Franchise Tax
RETURN TO:
Corporation Department
Secretary of State
Springfield, Illinois 62756
Telephone (217) 782-6961
========================================
Exhibit 3.30
KEEBLER H.C., INC.
* * * * *
B Y - L A W S
* * * * *
ARTICLE I
OFFICES
Section 1. The registered office shall be located in Chicago,
Illinois.
Section 2. The corporation may also have offices at such other
places both within and without the State of Illinois as the board of directors
may from time to time determine or the business of the corporation may require.
ARTICLE II
ANNUAL MEETINGS OF SHAREHOLDERS
Section 1. All meetings of shareholders for the election of
directors shall be held in Elmhurst, State of Illinois, at such place as may be
fixed from time to time by the board of directors.
Section 2. Annual meetings of shareholders, commencing with the year
1992, shall be held on the First Wednesday in September if not a legal holiday,
and if a legal holiday, then on the next secular day following, at 10:00 A.M.,
at which they shall elect by a plurality vote a board of directors, and transact
such other business as may properly be brought before the meeting.
<PAGE>
2
Section 3. Written or printed notice of the annual meeting stating
the place, day and hour of the meeting shall be delivered not less than ten nor
more than sixty days before the date of the meeting, either personally or by
mail, by or at the direction of the president, or the secretary, or the officer
or persons calling the meeting, to each shareholder of record entitled to vote
at such meeting.
ARTICLE III
SPECIAL MEETINGS OF SHAREHOLDERS
Section 1. Special meetings of shareholders for any purpose other
than the election of directors may be held at such time and place within or
without the State of Illinois as shall be stated in the notice of the meeting or
in a duly executed waiver of notice thereof.
Section 2. Special meetings of the shareholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the articles of
incorporation, may be called by the president, the board of directors, or the
holders of not less than one-fifth of all the shares entitled to vote at the
meeting.
Section 3. Written or printed notice of a special meeting stating
the place, day and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be delivered not less than ten nor more than sixty days
before the date of the meeting, either personally or by mail, by or at the
direction of the president, or the secretary, or the officer or
<PAGE>
3
persons calling the meeting, to each shareholder of record entitled to vote at
such meeting.
Section 4. The business transacted at any special meeting of
shareholders shall be limited to the purposes stated in the notice.
ARTICLE IV
QUORUM AND VOTING OF STOCK
Section 1. The holders of a majority of the shares of stock issued
and outstanding and entitled to vote, represented in person or by proxy, shall
constitute a quorum at all meetings of the shareholders for the transaction of
business except as otherwise provided by statute or by the articles of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the shareholders, the shareholders present in person or
represented by proxy shall have power to adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum shall be
present or represented. At such adjourned meeting at which a quorum shall be
present or represented any business may be transacted which might have been
transacted at the meeting as originally notified.
Section 2. If a quorum is present, the affirmative vote of a
majority of the shares of stock represented at the meeting shall be the act of
the shareholders unless the vote of a greater number of shares of stock is
required by law or the articles of incorporation.
Section 3. Each outstanding share of stock, having voting power,
shall be entitled to one vote on each matter
<PAGE>
4
submitted to a vote at a meeting of shareholders. A shareholder may vote either
in person or by proxy executed in writing by the shareholder or by his duly
authorized attorney-in-fact.
In all elections for directors every shareholder, entitled to vote,
shall have the right to vote, in person or by proxy, the number of shares of
stock owned by him, for as many persons as there are directors to be elected, or
to cumulate the vote of said shares, and give one candidate as many votes as the
number of directors multiplied by the number of his shares of stock shall equal,
or to distribute the votes on the same principle among as many candidates as he
may see fit.
ARTICLE V
DIRECTORS
Section 1. The number of directors which shall constitute the whole
board shall be 2. Thereafter, within the limits above specified, the number of
directors shall be determined by a resolution of the board of directors or by
the shareholders. The directors, other than the first board of directors, shall
be elected at the annual meeting of shareholders, and each director elected
shall serve until the next succeeding annual meeting and until his successor
shall have been elected and qualified. The first board of directors shall hold
office until the first annual meeting of shareholders.
Section 2. Vacancies and newly created directorships resulting from
any increase in the number of directors may be filled by election at an annual
meeting or at a special meeting of shareholders called for that purpose. A
majority of directors
<PAGE>
5
then in office, though less than a quorum, may fill one or more vacancies in the
board of directors arising between meetings of shareholders by reason of an
increase in the number of directors or otherwise. A director appointed to fill a
vacancy, or a newly created directorship, shall hold office until the next
succeeding annual meeting of shareholders and until his successor shall have
been elected and qualified.
Section 3. The business affairs of the corporation shall be managed
by its board of directors which may exercise all such powers of the corporation
and do all such lawful acts and things as are not by statute or by the articles
of incorporation or by these by-laws directed or required to be exercised or
done by the shareholders.
Section 4. The directors may keep the books of the corporation,
except such as are required by law to be kept within the state, outside of the
State of Illinois, at such place or places as the directors may from time to
time determine.
Section 5. The board of directors, by the affirmative vote of a
majority of the directors then in office, and irrespective of any personal
interest of any of its members, shall have authority to establish reasonable
compensation of all directors for services to the corporation as directors,
officers or otherwise.
<PAGE>
6
ARTICLE VI
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Meetings of the board of directors, regular or special,
may be held either within or without the State of Illinois.
Section 2. The first meeting of each newly elected board of
directors shall be held at such time and place as shall be fixed by the vote of
the shareholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present, or it may convene at such place and
time as shall be fixed by the consent in writing of all the directors.
Section 3. Regular meetings of the board of directors may be held
upon such notice, or without notice, and at such time and at such place as shall
from time to time be determined by the board.
Section 4. Special meetings of the board of directors may be called
by the president on one (1) days' notice to each director, either personally or
by mail or by telegram; special meetings shall be called by the president or
secretary in like manner and on like notice on the written request of two
directors.
Section 5. Attendance of a director at any meeting shall constitute
a waiver of notice of such meeting, except where a director attends for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully
<PAGE>
7
called or convened. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the board of directors need be specified
in the notice or waiver of notice of such meeting.
Section 6. A majority of the directors shall constitute a quorum for
the transaction of business unless a greater number is required by law or by the
articles of incorporation. The act of a majority of the directors present at any
meeting at which a quorum is present shall be the act of the board of directors,
unless the act of a greater number is required by statute or by the articles of
incorporation. If a quorum shall not be present at any meeting of directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 7. Unless specifically prohibited by the articles of
incorporation or these by-laws, any action required to be taken at a meeting of
the board of directors of a corporation, or any other action which may be taken
at a meeting of the board of directors or a committee thereof, may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all of the directors entitled to vote with respect to the
subject matter thereof, or by all the members of such committee, as the case may
be.
<PAGE>
8
ARTICLE VII
COMMITTEES OF DIRECTORS
Section 1. The board of directors, by resolution adopted by a
majority of the number of directors may create one or more committees and
appoint members of the board to serve on the committee or committees. To the
extent provided in such resolution, each committee shall have and exercise all
of the authority of the board of directors in the management of the corporation,
except as otherwise required by law. Each committee shall have two or more
members, who serve at the pleasure of the board. The committees shall keep
regular minutes of its proceedings and report the same to the board when
required.
ARTICLE VIII
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
articles of incorporation or of these by-laws, notice is required to be given to
any director or shareholder, it shall not be construed to mean personal notice,
but such notice may be given in writing, by mail, addressed to such director or
shareholder, at his address as it appears on the records of the corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Notice to
directors may also be given by telegram.
Section 2. Whenever any notice whatever is required to be given
under the provisions of the statutes or under the
<PAGE>
9
provisions of the articles of incorporation or these by-laws, a waiver thereof
in writing signed by the person or persons entitled to such notice, whether
before or after the time stated therein, shall be deemed equivalent to the
giving of such notice.
ARTICLE IX
OFFICERS
Section 1. The officers of the corporation shall be chosen by the
board of directors and shall be a president, a vice-president, a secretary and a
treasurer. The board of directors may also choose additional vice-presidents,
and one or more assistant secretaries and assistant treasurers.
Section 2. The board of directors at its first meeting after each
annual meeting of shareholders shall choose a president, one or more
vice-presidents, a secretary and a treasurer, none of whom need be a member of
the board.
Section 3. The board of directors may appoint such other officers
and agents as it shall deem necessary who shall hold their offices for such
terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the board of directors.
Section 4. The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officer elected or appointed by the
board of directors may be removed at any time by the affirmative vote of a
majority of the
<PAGE>
10
board of directors. Any vacancy occurring in any office of the corporation shall
be filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the shareholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation.
THE VICE-PRESIDENTS
Section 8. The vice-president, or if there shall be more than one,
the vice-presidents in the order determined by the board of directors, shall, in
the absence or disability of the president, perform the duties and exercise the
powers of the president and shall perform such other duties and have such other
powers as the board of directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the shareholders and record all the proceedings of
the meetings of the corporation and
<PAGE>
11
of the board of directors in a book to be kept for that purpose and shall
perform like duties for the standing committees when required. He shall give, or
cause to be given, notice of all meetings of the shareholders and special
meetings of the board of directors, and shall perform such other duties as may
be prescribed by the board of directors or president, under whose supervision he
shall be. He shall have custody of the corporate seal of the corporation and he,
or an assistant secretary, shall have authority to affix the same to any
instrument requiring it and when so affixed, it may be attested by his signature
or by the signature of such assistant secretary. The board of directors may give
general authority to any other officer to affix the seal of the corporation and
to attest the affixing by his signature.
Section 10. The assistant secretary, or if there be more than one,
the assistant secretaries in the order determined by the board of directors,
shall, in the absence or disability of the secretary, perform the duties and
exercise the powers of the secretary and shall perform such other duties and
have such other powers as the board of directors may from time to time
prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the
<PAGE>
12
corporation in such depositories as may be designated by the board of directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of his office and for the restoration to the corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the corporation.
Section 14. The assistant treasurer, or, if there shall be more than
one, the assistant treasurers in the order determined by the board of directors,
shall, in the absence or disability of the treasurer, perform the duties and
exercise the powers of the treasurer and shall perform such other duties and
have such other powers as the board of directors may from time to time
prescribe.
<PAGE>
13
ARTICLE X
CERTIFICATES FOR SHARES
Section 1. The shares of the corporation shall be represented by a
certificate or shall be uncertificated. Certificates shall be signed by the
president or a vice-president and the secretary or an assistant secretary of the
corporation, and may be sealed with the seal of the corporation or a facsimile
thereof.
When the corporation is authorized to issue shares of more than one
class there shall be set forth upon the face or back of the certificate, or the
certificate shall have a statement that the corporation will furnish to any
shareholder upon request and without charge, a full or summary statement of the
designations, preferences, limitations, and relative rights of the shares of
each class authorized to be issued and, if the corporation is authorized to
issue any preferred or special class in series, the variations in the relative
rights and preferences between the shares of each such series so far as the same
have been fixed and determined and the authority of the board of directors to
fix and determine the relative rights and preferences of subsequent series.
Within a reasonable time after the issuance or transfer of
uncertificated shares, the corporation shall send to the registered owner
thereof a written notice containing the information required to be set forth or
stated on certificates pursuant to statute.
<PAGE>
14
Section 2. The signatures of the officers of the corporation upon a
certificate may be facsimiles if the certificate is countersigned by a transfer
agent, or registered by a registrar, other than the corporation itself or an
employee of the corporation. In case any officer who has signed or whose
facsimile signature has been placed upon 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 its
issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate to be
issued in place of any certificate theretofore issued by the corporation alleged
to have been lost or destroyed. When authorizing such issue of a new
certificate, the board of directors, in its discretion and as a condition
precedent to the issuance thereof, may prescribe such terms and conditions as it
deems expedient, and may require such indemnities as it deems adequate, to
protect the corporation from any claim that may be made against it with respect
to any such certificate alleged to have been lost or destroyed.
TRANSFERS OF SHARES
Section 4. Upon surrender to the corporation or the transfer agent
of the corporation of a certificate representing shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, a new certificate shall be issued to the person entitled thereto, and
<PAGE>
15
the old certificate cancelled and the transaction recorded upon the books of the
corporation.
CLOSING OF TRANSFER BOOKS
Section 5. For the purpose of determining shareholders entitled to
notice of or to vote at any meeting of shareholders, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the board of directors of a
corporation may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not more than sixty
days and, for a meeting of shareholders, not less than ten days, or in the case
of a merger, consolidation, share exchange, dissolution or sale, lease or
exchange of assets, not less than twenty days, immediately preceding such
meeting. If no record date is fixed for the determination of shareholders
entitled to notice of or to vote at a meeting of shareholders, or shareholders
entitled to receive payment of a dividend, the date on which notice of the
meeting is mailed or the date on which the resolution of the board of directors
declaring such dividend is adopted, as the case may be, shall be the record date
for such determination of shareholders. When a determination of shareholders
entitled to vote at any meeting of shareholders has been made as provided in
this Section, such determination shall apply to any adjournment thereof.
<PAGE>
16
REGISTERED SHAREHOLDERS
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Illinois.
LIST OF SHAREHOLDERS
Section 7. The officer or agent having charge of the transfer books
for shares shall make, within twenty days after the record date for a meeting of
shareholders or ten days before such meeting, whichever is earlier, a complete
list of the shareholders entitled to vote at such meeting, arranged in
alphabetical order, with the address of each and the number of shares held by
each, which list, for a period of ten days prior to such meeting, shall be kept
on file at the registered office of the corporation and shall be subject to
inspection by any shareholder at any time during usual business hours. Such list
shall also be produced and kept open at the time and place of the meeting and
shall be subject to the inspection of any shareholder during the whole time of
the meeting. The original share ledger or transfer book, or a duplicate thereof,
shall be prima facie evidence as to who are the shareholders entitled to examine
such
<PAGE>
17
list or share ledger or transfer book or to vote at any meeting of the
shareholders.
ARTICLE XI
GENERAL PROVISIONS
DIVIDENDS
Section 1. Subject to the provisions of the articles of
incorporation relating thereto, if any, dividends may be declared by the board
of directors at any regular or special meeting, pursuant to law. Dividends may
be paid in cash, in property or in shares of the capital stock, subject to any
provisions of the articles of incorporation.
Section 2. Before payment of any dividend, there may be set aside
out of any funds of the corporation available for dividends such sum or sums as
the directors from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate.
<PAGE>
18
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
SEAL
Section 5. The corporate seal shall have inscribed thereon the name
of the corporation, the year of its organization and the words "Corporate Seal,
Illinois". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any manner reproduced.
ARTICLE XII
AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed by the
shareholders or the board of directors, but no by-law adopted by the
shareholders may be altered, amended or repealed by the board of directors if
the by-laws so provide.
Exhibit 3.31
ARTICLES OF INCORPORATION
OF
KEEBLER-GEORGIA, INC.
1.
The name of the corporation is:
KEEBLER-GEORGIA, INC.
2.
The corporation shall have perpetual duration.
3.
The purpose of the corporation shall be to acquire, own, lease and sublease
real and personal property and any and all interests therein; and to
manufacture, produce, purchase or otherwise acquire, use, distribute, sell at
wholesale or retail, import, export, and otherwise dispose of and deliver
biscuits, crackers, breads, pastries, confections and all other similar and
allied foodstuffs and the component parts thereof; to manufacture or otherwise
produce, import, export, buy, sell and in every way deal with and in, either as
principal or agent or otherwise, goods, wares and merchandise and personal
property of every kind and description; and to conduct any other businesses and
engage in any other activities not specifically prohibited to corporations for
profit under the laws of the State of Georgia, and the corporation shall have
all powers necessary to conduct such businesses and engage in such activities,
including, but not limited to, the powers enumerated in the Georgia Business
Corporation Code or any amendment thereto.
4.
The corporation shall have authority to issue 100,000 shares of common
stock of $1.00 par value per share.
5.
Shares of stock of the corporation may be issued by the corporation for
such consideration, not less than the par value thereof, as shall be fixed from
time to time by the Board of Directors.
6.
<PAGE>
No shareholder shall have any preemptive right to subscribe for or to
purchase any shares of stock or other securities issued by the corporation.
7.
Subject to the provisions of ss. 22-512 of the Georgia Business Corporation
Code, the Board of Directors shall have the power to distribute a portion of the
assets of the corporation, in cash or in property, to holders of shares of stock
of the corporation out of the capital surplus of the corporation.
8.
The initial Board of Directors of the corporation shall consist of three
members, whose names and addresses are as follows:
Thomas S. Garvin 677 Larch Avenue
Elmhurst, Illinois 60126
Walter S. Mann 677 Larch Avenue
Elmhurst, Illinois 60126
Ernest O. Tungate, Jr. 677 Larch Avenue
Elmhurst, Illinois 60126
9.
The corporation shall have the full power to purchase and otherwise
acquire, and dispose of, its own shares and securities granted by the lows of
the State of Georgia and shall have the right to purchase its shares out of its
unreserved and unrestricted capital surplus available therefor, as well as out
of its unreserved and unrestricted earned surplus available therefor.
10.
The corporation shall not commence business until it shall have received
not less than $500 in payment for the issuance of shares of its stock.
11.
The address of the initial registered office of the corporation shall be
The First National Bank Tower, Atlanta, Georgia 30303. The initial registered
agent of the corporation at such address shall be C T Corporation System.
12.
<PAGE>
The name and address of the Incorporator is Nathaniel G. Slaughter, III,
2500 Trust Company of Georgia Building, Atlanta, Georgia 30303.
IN WITNESS WHEREOF, the undersigned executes these Articles of
Incorporation.
-----------------
Incorporator
<PAGE>
STATE OF GEORGIA
COUNTY OF FULTON
TO THE SUPERIOR COURT OF SAID COUNTY:
The petition of Nathaniel G. Slaughter, III whose address is 2500 Trust
Company of Georgia Building, Atlanta, Georgia 30303 (hereinafter referred to as
"Incorporator"), respectfully shows:
1.
The Articles of Incorporation of Keebler-Georgia, Inc., executed by the
Incorporator, are attached hereto.
2.
The initial registered office of Keebler-Georgia, Inc. is to be located in
Fulton County, Georgia.
3.
In accordance with ss. 22.803 of the Georgia Business Corporation Code,
Incorporator exhibits herewith a Certificate of the Secretary of State of
Georgia that the name "Keebler-Georgia, Inc." is available in accordance with
ss. 22.801 of the said Code.
WHEREFORE, Incorporator prays that the incorporation of Keebler-Georgia,
Inc. be granted, with all of the rights, powers, privileges and immunities set
forth in the attached Articles of Incorporation and such additional rights,
powers, privileges and immunities as are accorded to corporations for profit
under the laws of the State of Georgia as they now exist or may hereafter exist.
---------------
Incorporator
KING & SPAULDING
2500 Trust Company of
Georgia Building
Atlanta, Georgia 30303
Telephone: 404-577-5350
<PAGE>
O R D E R
The Articles of Incorporation of Keebler-Georgia, Inc. and the certificate
of the Secretary of State of Georgia that the name "Keebler-Georgia, Inc." is
available in accordance with ss. 22.301 of the Georgia Business Corporation Code
having been examined and found to be lawful;
IT IS HEREBY ORDERED that the incorporation of Keebler-Georgia, Inc. be,
and it hereby is, granted under the laws of the State of Georgia.
This ___ day of September, 1972.
---------------------
Judge, Superior Court
Fulton County, Georgia
Exhibit 3.32
BY-LAWS OF
KEEBLER-GEORGIA, INC.
ARTICLE I
SHAREHOLDERS
Section 1. Annual Meeting. The annual meeting of the shareholders
for the election of Directors and for the transaction of such other business as
may properly come before the meeting shall be held at such place, either within
or without the State of Georgia, on such date and at such time as the Board of
Directors may by resolution provide, or if the Board of Directors fails to
provide, then such meeting shall be held at the principal office of the
Corporation at 10:00 A.M. on the fourth Tuesday in April of each year, or, if
such date is a legal holiday, on the next succeeding business day. The Board of
Directors may specify by resolution prior to any special meeting of shareholders
held within the year that such meeting shall be in lieu of the annual meeting.
Section 2. Special Meeting; Call and Notice of Meetings. Special
meetings of the shareholders may be called at any time by the Board of
Directors, the President or by the holders of at least twenty-five (25%) per
cent of the outstanding common stock. Such meetings shall be held at such place,
either within or without the State of Georgia, as is stated in the call and
notice thereof. Written notice of each meeting of shareholders, stating the time
and place of the meeting, and the purpose of any special meeting, shall be
mailed to each
<PAGE>
2
shareholder at his address shown on the books of the Corporation not less than
ten (10) nor more than fifty (50) days prior to such meeting unless such
shareholder waives notice of the meeting. Any shareholder present at a meeting
in person or represented by proxy shall be deemed to have waived notice thereof.
Notice of any meeting may be given by the Secretary or by the person or persons
calling such meeting. No notice need be given of the time and place of
reconvening of any adjourned meeting, if the time and place to which the meeting
is adjourned are announced at the adjourned meeting.
Section 3. Quorum; Required Shareholder Vote. A quorum for the
transaction of business at any annual or special meeting of shareholders shall
exist when the holders of a majority of the outstanding shares entitled to vote
are represented either in person or by proxy at such meeting. If a quorum is
present, the affirmative vote of the majority of the shares represented at the
meeting and entitled to vote on the subject matter shall be the act of the
shareholders, unless a greater vote is required by law, by the Articles of
Incorporation or by these By-Laws.
Section 4. Proxies. A shareholder may vote either in person or by a
proxy which he has duly executed in writing. No proxy shall be valid after
eleven (11) months from the date of its execution unless a longer period is
expressly provided in the proxy.
Section 5. Action of Shareholders Without Meeting. Any action
required to be, or which may be, taken at a meeting of the shareholders may be
taken without a meeting if written consent, setting forth the actions so taken,
shall be signed by
<PAGE>
3
all the shareholders entitled to vote with respect to the subject matter
thereof. Such consent shall have the same force and effect as a unanimous
affirmative vote of the shareholders and shall be filed with the minutes of the
proceedings of the shareholders.
ARTICLE II
DIRECTORS
Section 1. Power of Directors. The Board of Directors shall manage
the business of the Corporation and, subject to any restrictions imposed by law,
by the Articles of Incorporation or by these By-Laws, may exercise all the
powers of the Corporation.
Section 2. Composition of the Board. The number of directors which
shall constitute the whole board shall be two (2). Directors need not be
residents of the State of Georgia or shareholders of the Corporation. At each
annual meeting the shareholders shall fix the number of Directors, and elect the
Directors, who shall serve until their successors are elected and qualified,
provided that the shareholders may increase or reduce the number of Directors
and add or remove Directors with or without cause at any time.
Section 3. Meetings of the Board. The annual meeting of the Board of
Directors for the purpose of electing officers and transacting such other
business as may be brought before the meeting shall be held each year
immediately following the annual meeting of shareholders. The Board of Directors
may by
<PAGE>
4
resolution provide for the time and place of other regular meetings and no
notice of such regular meetings need be given. Special meetings of the Board of
Directors may be called by the President or by any two Directors, and written
notice of the time and place of such meetings shall be given to each Director by
first class or air mail at least four days before the meeting or by telephone,
telegraph, cablegram or in person at least two days before the meeting. Any
Director may execute a waiver of notice, either before or after any meeting, and
shall be deemed to have waived notice if he is present at such meeting. Neither
the business to be transacted at, nor the purpose of, any meeting of the Board
of Directors need be stated in the notice or waiver of notice of such meeting.
Any meeting may be held at any place within or without the State of Georgia. A
majority of the Directors in office at any time shall constitute a quorum for
the transaction of business at any meeting. When a quorum is present, the vote
of a majority of the Directors present shall be the act of the Board of
Directors.
<PAGE>
5
Section 4. Action of Board Without Meeting. Any action required or
permitted to be taken at a meeting of the Board of Directors or any committee
thereof may be taken without a meeting if written consent, setting forth the
action so taken, is signed by all of the Directors or committee members and
filed with the minutes of the proceedings of the Board of Directors or
committee. Such consent shall have the same force and effect as a unanimous
affirmative vote of the Board of Directors or committee, as the case may be.
Section 5. Committees. The Board of Directors, by resolution adopted
by a majority of all of the Directors, may designate from its members an
Executive Committee, and/ or other committees, which may exercise such authority
as is delegated by the Board of Directors, provided that no committee shall have
the authority of the Board of Directors in reference to (1) amending the
Articles of Incorporation or By-Laws of the Corporation, (2) adopting a plan of
merger or consolidation, (3) the sale, lease, exchange or other disposition of
all or substantially all of the property and assets of the Corporation or (4) a
voluntary dissolution of the Corporation or a revocation thereof.
ARTICLE III
OFFICERS
Section 1. Executive Structure of the Corporation. The officers of
the Corporation shall consist of a President, a Secretary, a Treasurer and such
other officers or assistant officers, including Vice Presidents, as may be
elected by the
<PAGE>
6
Board of Directors. Any two or more offices may be held by the same person,
except that the same person shall not be both President and Secretary. The Board
of Directors may designate a Vice President as an Executive Vice President and
may designate the order in which other Vice Presidents may act.
Section 2. President. The President shall be the chief executive
officer of the Corporation and shall give general supervision and direction to
the affairs of the Corporation, subject to the direction of the Board of
Directors. He shall preside at all meetings of the shareholders.
Section 3. Vice President. The Vice President shall act in the case
of the absence or disability of the President.
Section 4. Secretary. The Secretary shall keep the minutes of the
proceedings of the shareholders and of the Board of Directors and shall have
custody of and attest the seal of the Corporation.
Section 5. Treasurer. The Treasurer shall be responsible for the
maintenance of proper financial books and records of the Corporation.
Section 6. Other Duties and Authority. Each officer, employee and
agent of the Corporation shall have such other duties and authority as may be
conferred upon him by the Board of Directors or delegated to him by the
President.
Section 7. Removal of Officers. Any officer may be removed at any
time by the Board of Directors. This provision shall not prevent the making of a
contract of employment for a definite term with any officer and shall have no
effect upon any
<PAGE>
7
cause of action which any officer may have as a result of removal in breach of a
contract of employment.
ARTICLE IV
STOCK
Section 1. Stock Certificates. The shares of stock of the
Corporation shall be represented by certificates in such form as may be approved
by the Board of Directors, which shall be issued to the shareholders of the
Corporation in numerical order from the stock book of the Corporation and each
of which shall bear the name of the shareholder and the number of shares
represented, and shall be signed by the President or a Vice President and the
Secretary or an Assistant Secretary of the Corporation and shall be sealed with
the seal of the Corporation.
Section 2. Transfer of Stock. Shares of stock of the Corporation
shall be transferred only on the books of the Corporation upon surrender to the
Corporation of the certificate or certificates representing the shares to be
transferred accompanied by an assignment in writing of such shares properly
executed by the shareholder of record or his duly authorized attorney-in-fact
and with all taxes on the transfer having been paid. The Corporation may refuse
any requested transfer until furnished evidence satisfactory to it that such
transfer is proper. Upon the surrender of a certificate for transfer of stock,
such certificate shall at once be conspicuously marked on its face "Cancelled"
and attached securely to the stock book of the Corporation to which it was
attached prior to its issuance.
<PAGE>
8
The Board of Directors may make such additional rules concerning the issuance,
transfer and registration of stock and requirements regarding the establishment
of lost, destroyed or wrongfully taken stock certificates (including any
requirement of an indemnity bond prior to issuance of any replacement
certificate) as it deems appropriate.
Section 3. Registered Shareholders. The Corporation may deem and
treat the holder of record of any stock the absolute owner thereof for all
purposes and shall not be required to take any notice of any right or claim of
right of any other person.
ARTICLE V
DEPOSITORIES, SIGNATURES AND SEAL
Section 1. Depositories. All funds of the Corporation shall be
deposited in the name of the Corporation in such bank, banks, or other financial
institutions as the Board of Directors may from time to time designate and shall
be drawn out on checks, drafts or other orders signed on behalf of the
Corporation by such person or persons as the Board of Directors may from time to
time designate.
Section 2. Contracts and Deeds. All contracts, deeds and other
instruments shall be signed on behalf of the Corporation by the President or by
such other officer, officers, agent or agents as the Board of Directors may from
time to time by resolution provide.
Section 3. Seal. The seal of the Corporation shall be as follows:
<PAGE>
9
If the seal is affixed to a document, the signature of the Secretary
or an Assistant Secretary shall attest the seal. The seal and its attestation
may be lithographed or otherwise printed on any document and shall have, to the
extent permitted by law, the same force and effect as if it had been affixed and
attested manually.
ARTICLE VI
INDEMNITY
Any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (including any action by or in
the right of the Corporation) by reason of the fact that he is or was a
Director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise shall
be indemnified by the Corporation against expenses (including reasonable
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation, and with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful, to the maximum extent permitted by, and in the manner provided by,
the Georgia Business Corporation Code.
<PAGE>
10
ARTICLE VII
AMENDMENT OF BY-LAWS
The Board of Directors shall have the power to alter, amend or
repeal the By-Laws or adopt new by-laws, but any by-laws adopted by the Board of
Directors may be altered, amended or repealed and new by-laws adopted, by the
shareholders. The shareholders may prescribe that any by-law or by-laws adopted
by them shall not be altered, amended or repealed by the Board of Directors.
Action by the Directors with respect to the By-Laws shall be taken by an
affirmative vote of a majority of all of the Directors then in office. Action by
the shareholders with respect to the By-Laws shall be taken by an affirmative
vote of a majority of all shares outstanding and entitled to vote.
Exhibit 4.1
- --------------------------------------------------------------------------------
KEEBLER CORPORATION,
THE GUARANTORS PARTY HERETO
AND
U.S. TRUST COMPANY OF NEW YORK, Trustee
Indenture
Dated as of June 15, 1996
-----------------
$125,000,000
SENIOR SUBORDINATED NOTES DUE 2006
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.1 Certain Terms Defined................................... 1
ARTICLE II
ISSUE, EXECUTION, FORM AND
REGISTRATION OF SECURITIES
SECTION 2.1 Authentication and Delivery of Securities............... 27
SECTION 2.2 Execution of Securities................................. 27
SECTION 2.3 Certificate of Authentication........................... 28
SECTION 2.4 Form, Denomination and Date of Securities;
Payments of Interest......................... 28
SECTION 2.5 Registration, Transfer and Exchange..................... 31
SECTION 2.6 Mutilated, Defaced, Destroyed, Lost and
Stolen Securities............................ 36
SECTION 2.7 Cancellation of Securities;
Destruction Thereof.......................... 37
SECTION 2.8 Temporary Securities; Global Securities................. 37
SECTION 2.9 Effective Registration.................................. 39
ARTICLE III
COVENANTS OF
THE COMPANY
SECTION 3.1 Payment of Principal and Interest....................... 39
SECTION 3.2 Offices for Payments, Etc............................... 40
SECTION 3.3 Appointment to Fill a Vacancy in
Office of Trustee............................ 40
SECTION 3.4 Paying Agents........................................... 40
SECTION 3.5 Certificate to Trustee.................................. 41
SECTION 3.6 Securityholders' Lists.................................. 42
SECTION 3.7 Commission Reports...................................... 42
SECTION 3.8 Limitation on Indebtedness.............................. 43
SECTION 3.9 Limitation on Restricted Payments....................... 45
SECTION 3.10 Restrictions on Sales of Assets
and Subsidiary Stock......................... 50
(i)
<PAGE>
SECTION 3.11 Limitation on Restrictions on
Distributions from
Restricted Subsidiaries...................... 54
SECTION 3.12 Limitation on Sale of Capital Stock
of Restricted Subsidiaries................... 55
SECTION 3.13 Limitation on Liens.................................... 55
SECTION 3.14 Limitations on Affiliate Transactions.................. 57
SECTION 3.15 Change of Control...................................... 58
SECTION 3.16 Compliance with Registration
Rights Agreement............................. 60
SECTION 3.17 Limitation on Lines of Business........................ 60
SECTION 3.18 Payments for Consent................................... 60
SECTION 3.19 Waiver of Stay, Extension or Usury Laws................ 60
ARTICLE IV
DEFAULTS AND REMEDIES.
SECTION 4.1 Event of Default Defined;
Acceleration of Maturity..................... 61
SECTION 4.2 Acceleration............................................ 64
SECTION 4.3 Other Remedies.......................................... 64
SECTION 4.4 Waiver of Past Defaults................................. 65
SECTION 4.5 Control by Majority..................................... 65
SECTION 4.6 Limitation on Suits..................................... 65
SECTION 4.7 Rights of Holders to Receive Payment.................... 66
SECTION 4.8 Collection Suit by Trustee.............................. 66
SECTION 4.9 Trustee may File Proofs of Claim........................ 66
SECTION 4.10 Priorities.............................................. 67
SECTION 4.11 Undertaking for Costs................................... 67
ARTICLE V
CONCERNING THE TRUSTEE
SECTION 5.1 Duties and Responsibilities of the
Trustee; During Default;
Prior to Default............................. 68
SECTION 5.2 Certain Rights of the Trustee........................... 69
SECTION 5.3 Trustee Not Responsible for Recitals,
Disposition of Securities or
Application of Proceeds Thereof.............. 71
SECTION 5.4 Trustee and Agents May Hold Securities;
Collections, etc............................. 71
SECTION 5.5 Moneys Held by Trustee.................................. 71
SECTION 5.6 Compensation and Indemnification of
Trustee and Its Prior Claim.................. 71
(ii)
<PAGE>
SECTION 5.7 Right of Trustee to Rely on Officers'
Certificate, Etc............................. 72
SECTION 5.8 Persons Eligible for Appointment
as Trustee................................... 73
SECTION 5.9 Resignation and Removal; Appointment of
Successor Trustee............................ 73
SECTION 5.10 Acceptance of Appointment by
Successor Trustee............................ 74
SECTION 5.11 Merger, Conversion, Consolidation or
Succession to Business of Trustee............ 75
SECTION 5.13 Reports by the Trustee.................................. 76
ARTICLE VI
CONCERNING THE SECURITYHOLDERS
SECTION 6.1 Evidence of Action Taken by
Securityholders.............................. 76
SECTION 6.2 Proof of Execution of Instruments and of
Holding of Securities; Record Date........... 77
SECTION 6.3 Holders to be Treated as Owners......................... 77
SECTION 6.4 Securities Owned by Company Deemed
Not Outstanding.............................. 78
SECTION 6.5 Right of Revocation of Action Taken..................... 78
ARTICLE VII
AMENDMENTS.
SECTION 7.1 Without Consent of Holders.............................. 79
SECTION 7.2 With Consent of Holders................................. 80
SECTION 7.3 Compliance with Trust Indenture Act..................... 81
SECTION 7.4 Revocation and Effect of Consents
and Waivers.................................. 81
SECTION 7.5 Notation on or Exchange of Securities................... 82
SECTION 7.6 Trustee To Sign Amendments.............................. 82
ARTICLE VIII
MERGER AND CONSOLIDATION
SECTION 8.1 When Company May Merge, Etc............................. 82
SECTION 8.2 Successor Corporation Substituted....................... 83
(iii)
<PAGE>
ARTICLE IX
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 9.1 Discharge of Liability on Securities;
Defeasance................................... 84
SECTION 9.2 Conditions to Defeasance................................ 86
SECTION 9.3 Application of Trust Money.............................. 87
SECTION 9.4 Repayment to Company.................................... 88
SECTION 9.5 Indemnity for U.S. Government Obligations............... 88
SECTION 9.6 Reinstatement........................................... 88
ARTICLE X
SUBORDINATION
SECTION 10.1 Agreement to Subordinate............................... 89
SECTION 10.2 Liquidation, Dissolution, Bankruptcy................... 89
SECTION 10.3 Default on Senior Indebtedness......................... 90
SECTION 10.4 Acceleration of Payment of Securities.................. 91
SECTION 10.5 When Distribution Must Be Paid Over.................... 91
SECTION 10.6 Subrogation............................................ 91
SECTION 10.7 Relative Rights........................................ 92
SECTION 10.8 Subordination May Not Be Impaired
by Company................................... 92
SECTION 10.9 Rights of Trustee and Paying Agent..................... 92
SECTION 10.10 Distribution or Notice to
Representative............................... 93
SECTION 10.11 Article X Not To Prevent Events of
Default or Limit Right To Accelerate......... 93
SECTION 10.12 Trust Moneys Not Subordinated.......................... 93
SECTION 10.13 Trustee Entitled To Rely............................... 93
SECTION 10.14 Trustee To Effectuate Subordination.................... 94
SECTION 10.15 Trustee Not Fiduciary for Holders of
Senior Indebtedness.......................... 94
SECTION 10.16 Reliance by Holders of Senior
Indebtedness on Subordination
Provisions................................... 94
Section 10.17 Miscellaneous Subordination Provisions................. 95
ARTICLE XI
SUBSIDIARY GUARANTEE
SECTION 11.1 Subsidiary Guarantee................................... 96
SECTION 11.2 Limitation on Liability................................ 98
SECTION 11.3 Successors and Assigns................................. 99
SECTION 11.4 No Waiver.............................................. 99
(iv)
<PAGE>
SECTION 11.5 Modification........................................... 99
ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 12.1 Incorporators, Stockholders, Officers
and Directors of Company Exempt
from Individual Liability....................100
SECTION 12.2 Provisions of Indenture for the Sole
Benefit of Parties and
Securityholders..............................100
SECTION 12.3 Successors and Assigns of Company Bound
by Indenture.................................100
SECTION 12.4 Notices and Demands on Company, Trustee
and Securityholders..........................100
SECTION 12.5 Officers' Certificates and Opinions of
Counsel; Statements to Be
Contained Therein............................101
SECTION 12.6 Payments Due on Saturdays, Sundays
and Holidays.................................103
SECTION 12.7 Conflict of Any Provision of Indenture
with Trust Indenture Act.....................103
SECTION 12.8 NEW YORK LAW TO GOVERN.................................103
SECTION 12.9 Counterparts...........................................103
SECTION 12.10 Effect of Headings.....................................103
ARTICLE XIII
REDEMPTION OF SECURITIES
SECTION 13.1 Right of Optional Redemption; Prices...................103
SECTION 13.2 Applicability of Article...............................104
SECTION 13.3 Election to Redeem; Notice to Trustee..................104
SECTION 13.5 Payment of Securities Called
for Redemption...............................106
SECTION 13.6 Exclusion of Certain Securities from
Eligibility for Selection
for Redemption...............................107
EXHIBITS
EXHIBIT A - FORM OF INITIAL NOTE
EXHIBIT B - FORM OF EXCHANGE NOTE
EXHIBIT C - FORM OF TRANSFEROR CERTIFICATE FOR
(v)
<PAGE>
TRANSFER FROM RESTRICTED GLOBAL
SECURITY OR RESTRICTED SECURITY TO
RESTRICTED SECURITY
EXHIBIT D - FORM OF ACCREDITED INVESTOR TRANSFEREE
CERTIFICATE
EXHIBIT E - FORM OF LEGEL OPINION ON TRANSFER
EXHIBIT F - FORM OF TRANSFER CERTIFICATE FOR TRANSFER
FROM RESTRICTED SECURITY TO RESTRICTED
GLOBAL SECURITY
EXHIBIT G - ASSIGNMENT FORM
(vi)
<PAGE>
THIS INDENTURE, dated as of June 15, 1996 is entered into among
Keebler Corporation, a Delaware corporation (the "Company"), the Guarantors
party hereto (the "Guarantors") and United States Trust Company of New York, a
New York corporation (the "Trustee").
W I T N E S S E T H :
WHEREAS, the Company has duly authorized the issue of its % Senior
Subordinated Notes due 2006 (the "Initial Notes") and, if and when issued in
exchange for Initial Notes as provided in the Registration Rights Agreement (as
defined herein), the Company's 10 3/4% Senior Subordinated Notes due 2006 (the
"Exchange Notes" and together with the Initial Notes, the "Securities"), and to
provide, among other things, for the authentication, delivery and administration
thereof, the Company has duly authorized the execution and delivery of this
Indenture; and
WHEREAS, all things necessary to make the Securities, when executed
by the Company and authenticated and delivered by the Trustee as in this
Indenture provided, the valid, binding and legal obligations of the Company, and
to constitute these presents a valid indenture and agreement according to its
terms, have been done;
NOW, THEREFORE:
In consideration of the premises and the purchases of the Securities
by the holders thereof, the Company, the Guarantors and the Trustee mutually
covenant and agree for the equal and proportionate benefit of the respective
holders from time to time of the Securities as follows:
ARTICLE I
DEFINITIONS.
SECTION 1.1 Certain Terms Defined. The following terms (except as
otherwise expressly provided or unless the context otherwise clearly requires)
for all purposes of this Indenture and of any indenture supplemental hereto
shall have the respective meanings specified in this Section. All other terms
used in this Indenture which are defined in the Trust Indenture Act (as defined
herein), or the definitions of which in the Securities Act (as defined herein)
are
<PAGE>
referred to in the Trust Indenture Act (except as herein otherwise expressly
provided or unless the context otherwise clearly requires), shall have the
meanings assigned to such terms in the Trust Indenture Act and in the Securities
Act as in force at the date of this Indenture. All accounting terms used herein
and not expressly defined shall have the meanings given to them in accordance
with GAAP (as defined herein). The words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision. The terms defined in this
Article include the plural as well as the singular.
"Account" means any account (as that term is defined in Section
9-106 of the Uniform Commercial Code as in effect from time to time in the State
of New York) of the Company or any of its Subsidiaries arising from the sale or
lease of goods or rendering of services.
"Acquired Indebtedness" means Indebtedness of a Person (i) existing
at the time such Person becomes a Restricted Subsidiary or (ii) assumed by the
Company or a Restricted Subsidiary in connection with the acquisition of assets
from such Person. Acquired Indebtedness shall be deemed to be incurred on the
date of the related acquisition of assets from any Person or the date the
acquired Person becomes a Restricted Subsidiary.
"Additional Assets" mean (i) any property or assets (other than
Indebtedness and Capital Stock) to be used by the Company or a Restricted
Subsidiary in a Related Business or (ii) the Capital Stock of a Person that
becomes a Restricted Subsidiary as a result of the acquisition of such Capital
Stock by the Company or another Restricted Subsidiary; provided, however, that
in the case of clause (ii) such Person is primarily engaged in a Related
Business.
"Affiliate" of any specified Person means (i) any other Person,
directly or indirectly, controlling or controlled by or under direct or indirect
common control with such specified Person or (ii) any Person who is a director
or officer (a) of such Person, (b) of any Subsidiary of such Person or (c) of
any Person described in clause (i) above. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
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"controlling" and "controlled" have meanings correlative to the foregoing. For
purposes of Sections 3.9, 3.10, and 3.14, "Affiliate" shall also mean any
beneficial owner of shares representing 5% or more of the total voting power of
the outstanding voting shares of Capital Stock of the Company on a fully diluted
basis or of rights or warrants to purchase such voting shares (whether or not
currently exercisable) and any Person who would be an Affiliate of any such
beneficial owner pursuant to the first sentence hereof.
"Affiliate Transaction" has the meaning specified in Section 3.14(a)
"Agent Members" has the meaning specified in Section 2.4(c).
"ARTAL" means Artal Luxembourg S.A., a corporation organized under
the laws of Luxembourg.
"Asset Disposition" means any sale, lease, transfer, issuance or
other disposition (or series of related sales, leases, transfers, issuances or
dispositions that are part of a common plan) of shares of Capital Stock of a
Restricted Subsidiary (other than directors' qualifying shares), property or
other assets (each referred to for the purposes of this definition as a
"disposition") by the Company or any of its Restricted Subsidiaries (including
any disposition by means of a merger, consolidation or similar transaction)
other than (i) a disposition by a Restricted Subsidiary to the Company or by the
Company or a Restricted Subsidiary to a Restricted Subsidiary, (ii) a
disposition of inventory in the ordinary course of business, (iii) a disposition
of obsolete or worn out equipment or equipment that is no longer useful in the
conduct of the business of the Company and its Restricted Subsidiaries and that
is disposed of in each case in the ordinary course of business, (iv) a transfer
involving assets with a Fair Market Value not in excess of $1,000,000, (v) any
sale of equity interests in, or Indebtedness or other securities of, an
Unrestricted Subsidiary, (vi) a disposition of all or substantially all of the
assets of the Company in a manner permitted pursuant to Article VIII, and (vii)
a disposition of Accounts pursuant to a Permitted Receivables Transaction.
"Average Life" means, as of the date of determination, with respect
to any Indebtedness or Preferred Stock, the quotient obtained by dividing (i)
the sum of the products of the numbers of years from the date of determina-
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tion to the dates of each successive scheduled principal payment of such
Indebtedness or redemption or similar payment with respect to Preferred Stock
multiplied by the amount of such payment by (ii) the sum of all such payments.
"Bankruptcy Law" has the meaning specified in Section 4.1.
"Blockage Notice" has the meaning specified in Section 10.3.
"Board of Directors" means either the Board of Directors of the
Company or any committee of such Board of Directors duly authorized to act
hereunder.
"Business Day" means a day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required by law
to close.
"Capital Stock" means (i) any and all shares, interests,
participations or other equivalents of or interests in (however designated)
corporate stock, including, without limitation, shares of preferred or
preference stock, (ii) all partnership interests (whether general or limited) in
any Person which is a partnership, (iii) all membership interests or limited
liability company interests in any limited liability company, and (iv) all
equity or ownership interests in any Person of any other type.
"Capitalized Lease Obligations" means, without duplication, all
monetary obligations of the Company or any of its Restricted Subsidiaries under
any leasing or similar arrangement which, in accordance with GAAP, would be
classified as capitalized leases and, for purposes of this Indenture, the amount
of such obligations shall be the capitalized amount thereof, determined in
accordance with GAAP, and the stated maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment of a
penalty.
"Change of Control" means the occurrence of any of the following
events:
(i) the failure of the Sponsors, collectively, to own, free and clear of
all Liens or other encumbrances, an
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aggregate of at least 40% of the outstanding voting shares of Capital Stock of
the Parent on a fully diluted basis;
(ii) the failure of one of either the Permitted ARTAL Investor Group or
Flowers, as the case may be, to own, directly or indirectly through wholly owned
Subsidiaries, free and clear of all Liens, at least 25% of the outstanding
voting shares of Capital Stock of the Parent on a fully diluted basis;
(iii) any "person" or "group" (as such terms are used in Rule 13d-5 under
the Exchange Act, and Sections 13(d) and 14(d) of the Exchange Act) of persons
becomes, directly or indirectly, in a single transaction or in a related series
of transactions by way of merger, consolidation, or other business combination
or otherwise, the "beneficial owner" (as such term is used in Rule 13d-3 of the
Exchange Act) of voting shares of Capital Stock of the Parent representing a
percentage of the outstanding voting shares of Capital Stock of the Parent on a
fully-diluted basis that is equal to or higher than the highest percentage of
such outstanding voting shares of Capital Stock then owned, individually, by
either the Permitted ARTAL Investor Group or Flowers, as the case may be;
(iv) the failure of the Parent to own, free and clear of all Liens (other
than Liens to secure any Senior Indebtedness), 100% of the outstanding voting
shares of Capital Stock of the Company on a fully diluted basis other than as a
consequence of a merger of the Company with or into the Parent; or
(v) during any period of 24 consecutive months, individuals who at the
beginning of such period constituted the Board of Directors of the Parent
(together with any new directors whose election to such Board or whose
nomination for election by the stockholders of the Parent was approved by a vote
of a majority of the directors then still in office who were either directors at
the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors of the Parent then in office.
For purposes of clauses (i), (ii), (iii) and (v) of this definition, the term
Parent shall include the Company from and after the date of the merger, if any,
of the Parent with or into the Company.
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"Change of Control Offer" has the meaning set forth in Section 3.15.
"Change of Control Purchase Date" has the meaning specified in
Section 3.15.
"Change of Control Purchase Price" has the meaning specified in
Section 3.15.
"Code" means the Internal Revenue Code of 1986, as amended.
"Covenant defeasance option" has the meaning specified in Section
9.1(b).
"Commission" means the Securities and Exchange Commission.
"Commodity Hedging Obligations" means, with respect to any Person,
all liabilities of such Person under commodity hedging agreements, and all other
agreements or arrangements designed to protect such Person against fluctuations
in the cost and supply of critical commodities, including flour, sugar and
packaging materials, required in a Related Business of the Company and its
Restricted Subsidiaries.
"Company" means Keebler Corporation, a Delaware corporation, and,
subject to Article VIII, its successors and assigns.
"Consolidated Cash Flow" for any period means the Consolidated Net
Income of the Company and its consolidated Restricted Subsidiaries for such
period, plus the following to the extent deducted in calculating such
Consolidated Net Income: (i) income tax expense; (ii) Consolidated Interest
Expense; (iii) depreciation expense; (iv) amortization expense; and (v) non-cash
expenses related to employee benefits, in each case for such period.
"Consolidated Coverage Ratio," as of any date of determination,
means the ratio of (i) the aggregate amount of Consolidated Cash Flow for the
period consisting of the most recent four consecutive fiscal quarters ending
prior to the date of such determination to (ii) Consolidated Interest Expense
for such period; provided, however, that (1) if the Company or any of its
Restricted Subsidiaries has incurred any Indebtedness since the beginning of
such period that
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remains outstanding or if the transaction giving rise to the need to calculate
the Consolidated Coverage Ratio is an incurrence of Indebtedness, or both,
Consolidated Cash Flow and Consolidated Interest Expense for such period shall
be calculated after giving effect on a pro forma basis to such Indebtedness as
if such Indebtedness had been incurred on the first day of such period and the
discharge of any other Indebtedness repaid, repurchased, defeased or otherwise
discharged with the proceeds of such new Indebtedness as if such discharge had
occurred on the first day of such period, (2) if since the beginning of such
period the Company or any of its Restricted Subsidiaries shall have made any
Asset Disposition, Consolidated Cash Flow for such period shall be reduced by an
amount equal to the Consolidated Cash Flow (if positive) attributable to the
assets which are the subject of such Asset Disposition for such period or
increased by an amount equal to the Consolidated Cash Flow (if negative)
attributable thereto for such period, and Consolidated Interest Expense for such
period shall be reduced by an amount equal to the Consolidated Interest Expense
attributable to any Indebtedness of the Company or any of its Restricted
Subsidiaries repaid, repurchased, defeased or otherwise discharged with respect
to the Company and its continuing Restricted Subsidiaries in connection with
such Asset Disposition for such period (or, if the Capital Stock of any
Restricted Subsidiary of the Company is sold, the Consolidated Interest Expense
for such period directly attributable to the Indebtedness of such Restricted
Subsidiary to the extent the Company and its continuing Restricted Subsidiaries
are no longer liable for such Indebtedness after such sale), (3) if since the
beginning of such period the Company or any of its Restricted Subsidiaries (by
merger or otherwise) shall have made an Investment in any Restricted Subsidiary
of the Company (or any Person which becomes a Restricted Subsidiary of the
Company) or an acquisition of assets, including any Investment in a Restricted
Subsidiary of the Company or any acquisition of assets occurring in connection
with a transaction causing a calculation to be made hereunder, which constitutes
all or substantially all of an operating unit of a business, Consolidated Cash
Flow and Consolidated Interest Expense for such period shall be calculated after
giving pro forma effect thereto (including the incurrence of any Indebtedness)
as if such Investment or acquisition occurred on the first day of such period,
and (4) if since the beginning of such period any Person (that subsequently
became a Restricted Subsidiary of the Company or was merged with or into the
Company or any Restricted Subsidiary of the
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Company since the beginning of such period) shall have made any Asset
Disposition or any Investment or acquisition of assets that would have required
an adjustment pursuant to clause (2) or (3) above if made by the Company or a
Restricted Subsidiary of the Company during such period, Consolidated Cash Flow
and Consolidated Interest Expense for such period shall be calculated after
giving pro forma effect thereto as if such Asset Disposition, Investment or
acquisition occurred on the first day of such period. For purposes of this
definition, whenever pro forma effect is to be given to an acquisition of
assets, the amount of income or earnings relating thereto and the amount of
Consolidated Interest Expense associated with any Indebtedness incurred in
connection therewith, the pro forma calculations shall be determined in good
faith by a responsible financial or accounting Officer of the Company. If any
Indebtedness bears a floating rate of interest and is being given pro forma
effect, the interest expense on such Indebtedness shall be calculated as if the
rate in effect on the date of determination had been the applicable rate for the
entire period (taking into account any Interest Rate Agreement applicable to
such Indebtedness if such Interest Rate Agreement has a remaining term in excess
of 12 months).
"Consolidated Current Liabilities," as of the date of determination,
means the aggregate amount of liabilities of the Company and its Restricted
Subsidiaries which may properly be classified as current liabilities (including
taxes accrued as estimated), after eliminating (i) all inter-company items
between the Company and any Subsidiary and (ii) all current maturities of
long-term Indebtedness, all as determined in accordance with GAAP.
"Consolidated Interest Expense" means, for any period, the total
interest expense of the Company and its Restricted Subsidiaries, plus, to the
extent not included in such interest expense, (i) interest expense attributable
to Capitalized Lease Obligations, (ii) amortization of debt discount and debt
issuance cost, (iii) capitalized interest, (iv) non-cash interest expense, (v)
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing, (vi) interest actually paid by the
Company or any such Restricted Subsidiary under any Guarantee of Indebtedness or
other obligation of any other Person, (vii) net costs associated with Currency
Agreements and Interest Rate Agreements (including amortization of fees), (viii)
interest (or other fees in the nature of interest or discount accrued and paid
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<PAGE>
or payable in cash) in respect of the Permitted Receivables Transaction, and
(ix) the product of (a) all Preferred Stock dividends in respect of all
Preferred Stock of Restricted Subsidiaries of the Company and Disqualified
Capital Stock of the Company held by Persons other than the Company or a
Restricted Subsidiary multiplied by (b) a fraction, the numerator of which is
one and the denominator of which is one minus the then current combined federal,
state and local statutory tax rate of the Company, expressed as a decimal, in
each case, determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, for any period, the net income
(loss) of the Company and its consolidated Restricted Subsidiaries; provided,
however, that there shall not be included in such Consolidated Net Income: (i)
any net income (loss) of any Person if such Person is not a Restricted
Subsidiary, except that (A) subject to the limitations contained in clause (iv)
below, the Company's equity in the net income of any such Person for such period
shall be included in such Consolidated Net Income up to the aggregate amount of
cash actually distributed by such Person during such period to the Company or a
Restricted Subsidiary as a dividend or other distribution (subject, in the case
of a dividend or other distribution to a Restricted Subsidiary, to the
limitations contained in clause (iii) below) and (B) the Company's equity in a
net loss of any such Person for such period shall be included in determining
such Consolidated Net Income; (ii) any net income (loss) of any person acquired
by the Company or a Restricted Subsidiary in a pooling of interests transaction
for any period prior to the date of such acquisition; (iii) any net income
(loss) of any Restricted Subsidiary if such Restricted Subsidiary is subject to
restrictions, directly or indirectly, on the payment of dividends or the making
of distributions by such Restricted Subsidiary, directly or indirectly, to the
Company, except that (A) subject to the limitations contained in (iv) below, the
Company's equity in the net income of any such Restricted Subsidiary for such
period shall be included in such Consolidated Net Income up to the aggregate
amount of cash that could have been distributed by such Restricted Subsidiary
during such period to the Company or another Restricted Subsidiary as a dividend
(subject, in the case of a dividend that could have been made to another
Restricted Subsidiary, to the limitation contained in this clause) and (B) the
Company's equity in a net loss of any such Restricted Subsidiary for such period
shall be included in determining such Consolidated Net Income; (iv) any gain
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<PAGE>
or loss realized upon the sale or other disposition of any assets of the Company
or its consolidated Restricted Subsidiaries which are not sold or otherwise
disposed of in the ordinary course of business and any gain or loss realized
upon the sale or other disposition of any Capital Stock of any Person; (v) any
extraordinary gain or loss; and (vi) the cumulative effect of a change in
accounting principles.
"Consolidated Net Tangible Assets" means, as of any date of
determination, as applied to the Company, the total amount of assets (less
accumulated depreciation or amortization, allowances for doubtful receivables,
other applicable reserves and other properly deductible items) which would
appear on a consolidated balance sheet of the Company and its Restricted
Subsidiaries, determined on a consolidated basis in accordance with GAAP, and
after giving effect to purchase accounting and after deducting therefrom, to the
extent otherwise included, the amounts of: (i) Consolidated Current Liabilities;
(ii) minority interests in Subsidiaries held by any entity other than the
Company or a Restricted Subsidiary; (iii) excess of cost over fair value of
assets of businesses acquired, as determined in good faith by the Board of
Directors; (iv) any revaluation or other write-up in value of assets subsequent
to January 26, 1996 as a result of a change in the method of valuation in
accordance with GAAP; (v) unamortized debt discount and expenses and other
unamortized deferred charges, goodwill, patents, trademarks, service marks,
trade names, copyrights, licenses, organization or developmental expenses and
other intangible items; (vi) treasury stock; and (vii) any cash set apart and
held in a sinking or other analogous fund established for the purpose of
redemption or other retirement of Capital Stock to the extent such obligation is
not reflected in Consolidated Current Liabilities.
"Consolidated Net Worth" means the total of the amounts shown on the
balance sheet of the Company and its consolidated Restricted Subsidiaries,
determined on a consolidated basis in accordance with GAAP, as of the end of the
most recent fiscal quarter of the Company ending prior to the taking of any
action for the purpose of which the determination is being made as (i) the par
or stated value of all outstanding Capital Stock of the Company plus (ii)
paid-in capital or capital surplus relating to such Capital Stock plus (iii) any
retained earnings or earned surplus less (A) any accumulated deficit and (B) any
amounts attributable to Disqualified Capital Stock.
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"Corporate Trust Office" means the office of the Trustee at which
the corporate trust business of the Trustee shall, at any particular time, be
administered, which office is, at the date as of which this Indenture is dated,
located at 114 West 47th Street, New York, New York 10036.
"Credit Agent" means The Bank of Nova Scotia, in its capacity as
Administrative Agent for the lenders party to the Credit Agreement, or any
successor or successors thereto.
"Credit Agreement" means, collectively, the Amended and Restated
Credit Agreement, dated as of June 4, 1996, by and among the Company, the
lenders named therein, the co-agents named therein and The Bank of Nova Scotia
as Administrative Agent for the lenders, including any related notes,
guarantees, collateral documents, instruments and agreements executed in
connection therewith, as such credit agreement and/or related documents may be
amended, restated, supplemented, renewed, replaced or otherwise modified from
time to time whether or not with the same agent or lenders and irrespective of
any changes in the terms and conditions thereof. Without limiting the generality
of the foregoing, the term "Credit Agreement" shall include any amendment,
amendment and restatement, renewal, extension, restructuring, supplement or
modification to the Credit Agreement and all refundings, refinancing and
replacements of any facility provided for therein, including any agreement or
agreements, (i) extending the maturity of any Indebtedness incurred thereunder
or contemplated thereby, (ii) adding or deleting borrowers or guarantors
thereunder or (iii) increasing the amount of Indebtedness incurred thereunder or
available to be borrowed thereunder to the extent permitted under this
Indenture.
"Currency Agreement" means, in respect of a Person, any foreign
exchange contract, currency swap agreement or other similar agreement as to
which such Person is a party or a beneficiary.
"Custodian" has the meaning specified in Section 4.1.
"Default" means any event that is or, with the passage of time or
the giving of notice or both, would be an Event of Default.
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"Depository" shall mean the Depository Trust Company, its nominees,
and their respective successors.
"Designated Senior Indebtedness" means (i) the Credit Agreement and
(ii) any other Senior Indebtedness which, at the date of determination, has an
aggregate principal amount outstanding of, or under which, at the date of
determination, the holders thereof are committed to lend up to, at least
$10,000,000 and is specifically designated by the Company in the instrument
evidencing or governing such Senior Indebtedness as "Designated Senior
Indebtedness" for purposes of this Indenture.
"Designated Subsidiary" means, individually, Keebler International
Prep Track & Field Invitational Foundation, an Illinois not-for-profit
corporation, Keebler Company Foundation, an Illinois not-for-profit corporation,
and Keebler Foreign Sales Corporation, a U.S. Virgin Islands corporation and
collectively, means all such corporations.
"Disqualified Capital Stock" means, with respect to any Person, any
Capital Stock of such Person which by its terms (or by the terms of any security
into which it is convertible or for which it is exchangeable) or upon the
happening of any event (i) matures or is mandatorily redeemable pursuant to a
sinking fund obligation or otherwise, (ii) is convertible or exchangeable for
Indebtedness or Disqualified Capital Stock or (iii) is redeemable at the option
of the holder thereof, in whole or in part, in each case on or prior to the
first anniversary of the final Stated Maturity of the Securities.
"Effective Registration" means that the Company shall have (i)
commenced a Registered Exchange Offer for the Initial Notes pursuant to an
effective registration statement under the Securities Act or (ii) filed and
caused to become effective a Notes Shelf Registration under the Securities Act
for the sale of Securities by the Holders.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Event of Default" means any event or condition specified as such in
Section 4.1 which shall have continued for the period of time, if any, therein
designated.
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"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Notes" has the meaning specified in the Recitals.
"Fair Market Value" means, with respect to any asset or property,
the sale value that would be obtained in an arm's-length transaction between an
informed and willing seller under no compulsion to sell and an informed and
willing buyer under no compulsion to buy as determined by the Board of Directors
in good faith and evidenced by a resolution of the Board of Directors.
"Flowers" means Flowers Industries, Inc., a Georgia corporation.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time, including those set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession. All ratios and computations based on GAAP contained in
this Indenture shall be computed in conformity with GAAP as in effect on the
date of this Indenture.
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness of any other Person
and any obligation, direct or indirect, contingent or otherwise, of such Person
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation of any other Person (whether arising
by virtue of partnership arrangements, or by agreement to keep-well, to purchase
assets, goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Indebtedness of the payment thereof or
to protect such obligee against loss in respect thereof (in whole or in part);
provided, however, 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.
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"Guarantor" means (i) each of the Company's Restricted Subsidiaries
existing on the date hereof and (ii) each other Person that executes a guarantee
of the obligations of the Company under the Securities and this Indenture from
time to time, and their respective successors and assigns; provided, however,
that "Guarantor" shall not include any Person that is released from its
Guarantee of the obligations of the Company under the Securities and this
Indenture.
"Holder", "holder of Securities", "Securityholder" or other similar
terms means the registered holder of any Security.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication), (i) the principal of and premium (if any)
in respect of indebtedness of such Person for borrowed money, (ii) the principal
of and premium (if any) in respect of obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii) all obligations of
such Person in respect of letters of credit or other similar instruments
(including reimbursement obligations with respect thereto) (other than
obligations with respect to letters of credit securing obligations (other than
obligations described in clauses (i), (ii) and (v)) entered into in the ordinary
course of business of such Person to the extent that such letters of credit are
not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed
no later than the third business day following receipt by such Person of a
demand for reimbursement following payment on the letter of credit), (iv) all
obligations of such Person to pay the deferred and unpaid purchase price of
property or services (other than accounts payable to trade creditors arising in
the ordinary course of business), which purchase price is due more than six
months after the date of placing such property in service or taking delivery and
title thereto or the completion of such services, (v) all Capitalized Lease
Obligations of such Person, (vi) all Indebtedness of other Persons secured by a
Lien on any asset of such Person, whether or not such Indebtedness is assumed by
such Person; provided, however, that the amount of Indebtedness of such Person
shall be the lesser of (A) the Fair Market Value of such asset at such date of
determination or (B) the amount of such Indebtedness of such other Persons,
(vii) all Indebtedness of other Persons to the extent Guaranteed by such Person,
(viii) the amount of all obligations of such Person with respect to the
redemption, repayment or other
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repurchase of any Disqualified Capital Stock or, with respect to any Restricted
Subsidiary of the Company, any Preferred Stock (but excluding, in each case, any
accrued dividends) and (ix) to the extent not otherwise included in this
definition, obligations of such Person under Currency Agreements, Interest Rate
Agreements and Commodity Hedging Obligations. The amount of Indebtedness of any
Person at any date shall be the outstanding balance at such date of all
unconditional obligations as described above and the maximum liability, upon the
occurrence of the contingency giving rise to the obligation, of any contingent
obligations at such date.
"Indenture" means this instrument as originally executed and
delivered or, if amended or supplemented as herein provided, as so amended or
supplemented.
"Initial Notes" has the meaning specified in the Recitals.
"Institutional Accredited Investor" shall mean an institution that
is an "accredited investor" as that term is defined in Rule 501(a)(1), (2), (3)
or (7) under the Securities Act.
"Interest Differential" has the meaning specified in the definition
of "Reorganization Securities."
"Interest Rate Agreement" means with respect to any Person any
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement as to which such Person is party or a
beneficiary.
"Investment" in any Person means any direct or indirect advance,
loan (other than advances to customers in the ordinary course of business that
are recorded as accounts receivable on the balance sheet of such Person) or
other extension of credit (including by way of Guarantee or similar arrangement,
but excluding any debt or extension of credit represented by a bank deposit
other than a time deposit) or capital contribution to (by means of any transfer
of cash or other property to others or any payment for property or services for
the account or use of others), or any purchase or acquisition of Capital Stock,
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Indebtedness or other similar instruments issued by such Person.
"Issue Date" means the date on which the Securities are originally
issued.
"legal defeasance option" has the meaning specified in Section
9.1(b).
"Lien" means any security interest, mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
charge against or interest in property, or any filing or recording of any
instrument or document in respect of the foregoing, to secure payment of a debt
or performance of an obligation or other priority or preferential arrangement of
any kind or nature whatsoever.
"Material Subsidiary" means (i) any Subsidiary of the Company which
is a "significant subsidiary" as defined in Rule 1-02(v) of Regulation S-X under
the Securities Act and the Exchange Act (as such Regulation is in effect on the
date hereof), and (ii) any other Subsidiary of the Company which is material to
the business, earnings, prospects, assets or condition, financial or otherwise,
of the Company and its Subsidiaries taken as a whole.
"Net Available Cash" from an Asset Disposition means cash payments
received (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise, but only as
and when received, but excluding any other consideration received in the form of
assumption by the acquiring Person of Indebtedness or other obligations relating
to the properties or assets that are the subject of such Asset Disposition or
received in any other noncash form) therefrom, in each case net of (i) all
legal, title and recording tax expenses, commissions and other fees and expenses
incurred, and all federal, state, foreign and local taxes required to be paid or
accrued as a liability under GAAP, as a consequence of such Asset Disposition,
(ii) all payments made on any Indebtedness which is secured by any assets
subject to such Asset Disposition, in accordance with the terms of any Lien upon
such assets, or which must by its terms, or in order to obtain a necessary
consent to such Asset Disposition, or by applicable law, be repaid out of the
proceeds from such Asset Disposition, (iii) all distributions and other payments
required to be made to any
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Person owning a beneficial interest in assets subject to sale or minority
interest holders in Subsidiaries or joint ventures as a result of such Asset
Disposition and (iv) the deduction of appropriate amounts to be provided by the
seller as a reserve, in accordance with GAAP, against any liabilities associated
with the assets disposed of in such Asset Disposition and retained by the
Company or any Restricted Subsidiary of the Company after such Asset
Disposition.
"Net Cash Proceeds," with respect to any issuance or sale of Capital
Stock, means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result of such issuance or sale.
"Non-Global Purchaser" has the meaning specified in Section 2.4(d).
"Note Obligations" has the meaning specified in Section 10.1.
"Notes Shelf Registration" shall have meaning the given such term in
the Registration Rights Agreement.
"Offer" has the meaning specified in Section 3.10(a)(iii)(D).
"Offer Amount" has the meaning specified in Section 3.10(c)(ii).
"Offer Period" has the meaning specified in 3.10(c)(ii).
"Officer" means the Chairman of the Board of Directors, the Vice
Chairman, the President, any Vice President (whether or not designated by a
number or numbers or a word or words added before or after the title "Vice
President"), the Treasurer, the Secretary or the Assistant
Secretary of the Company.
"Officers' Certificate" means a certificate signed by the Chairman
of the Board of Directors, the Vice Chairman or the President or any Vice
President (whether or not designated by a number or numbers or a word or words
added
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before or after the title "Vice President") and by the Treasurer or the
Secretary or any Assistant Secretary of the Company and delivered to the
Trustee. Each such certificate shall comply with Section 314 of the Trust
Indenture Act and include the statements provided for in Section 12.5.
"Opinion of Counsel" means an opinion in writing signed by legal
counsel who may be an employee of or counsel to the Company or who may be other
counsel satisfactory to the Trustee. Each such opinion shall comply with Section
314 of the Trust Indenture Act and include the statements provided for in
Section 12.5, if and to the extent required hereby.
"outstanding" when used with reference to Securities, shall, subject
to the provisions of Section 6.4, mean, as of any particular time, all
Securities authenticated and delivered by the Trustee under this Indenture,
except:
(a) Securities theretofore cancelled by the
Trustee or delivered to the Trustee for cancellation;
(b) Securities, or portions thereof, for the payment or redemption
of which moneys in the necessary amount shall have been deposited in trust
with the Trustee or with any paying agent (other than the Company) or
shall have been set aside, segregated and held in trust by the Company (if
the Company shall act as its own paying agent), provided that if such
Securities are to be redeemed prior to the maturity thereof, notice of
such redemption shall have been given as herein provided, or provision
satisfactory to the Trustee shall have been made for giving such notice;
and
(c) Securities in substitution for which other Securities shall have
been authenticated and delivered, or which shall have been paid, pursuant
to the terms of Section 2.6 (unless proof satisfactory to the Trustee is
presented that any of such Securities is held by a person in whose hands
such Security is a legal, valid and binding obligation of the Company).
"Parent" means INFLO Holdings Corporation, a Delaware corporation.
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"Payment Blockage Period" has the meaning specified in Section 10.3.
"Permitted ARTAL Investor Group" means ARTAL or any of its direct or
indirect wholly owned Subsidiaries and ARTAL Group S.A., a Luxembourg
corporation or any of its direct or indirect wholly owned Subsidiaries.
"Permitted Investment" means an Investment by the Company or any of
its Subsidiaries in (i) a Restricted Subsidiary of the Company or a Person which
will, upon making such Investment, become a Restricted Subsidiary; provided,
however, that the primary business of such Subsidiary is a Related Business;
(ii) another Person if as a result of such Investment such other Person is
merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company or a Subsidiary of the Company;
provided, however, that such Person's primary business is a Related Business;
(iii) Temporary Cash Investments; (iv) receivables owing to the Company or any
of its Subsidiaries, if created or acquired in the ordinary course of business
and payable or dischargeable in accordance with customary trade terms; (v)
payroll, travel and similar advances to cover matters that are expected at the
time of such advances ultimately to be treated as expenses for accounting
purposes and that are made in the ordinary course of business; (vi) loans or
advances to employees made in the ordinary course of business not in excess of
$2,500,000 outstanding at any time; (vii) stock, obligations or securities
received in settlement of debts created in the ordinary course of business and
owing to the Company or any of its Subsidiaries or in satisfaction of judgments
or claims; (viii) Currency Agreements, Interest Rate Agreements, Commodity
Hedging Obligations which are entered into by the Company for bona fide hedging
purposes (as determined in good faith by the Board of Directors or senior
management of the Company) with respect to Indebtedness of the Company incurred
without violation of this Indenture or to customary commercial transactions of
the Company entered into in the ordinary course of business; (ix) any Investment
(other than a Temporary Cash Investment) evidenced by securities or other assets
received in connection with an Asset Disposition pursuant to Section 3.10; (x)
any Investment that is permitted by and made in accordance with Section 3.14(b)
(except transactions described in clause (i) of such paragraph); or (xi)
Investments, the payment for which consists exclusively of Equity Interests
(exclusive of Disqualified Capital Stock) in the Company.
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"Permitted Receivables Transaction" means any transaction providing
for the sale or financing of Accounts to the extent (i) the aggregate principal
amount outstanding of such financing (whether pursuant to a sale or a financing)
does not exceed at any time $145,000,000 and (ii) recourse at any time to the
Company and its Subsidiaries for credit losses (i.e. defaults) on account of
sold Accounts shall not exceed $35,000,000.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision hereof or any other entity.
"Preferred Stock," as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated)
which is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"principal" of a Security means the principal of the Security plus
the premium, if any, payable on the Security which is due or overdue or is to
become due at the relevant time.
"property" of any Person means all types of real, personal,
tangible, intangible or mixed property owned by such Person whether or not
included in the most recent consolidated balance sheet of such Person under
GAAP.
"Public Equity Offering" means an underwritten primary public
offering for the account of the Company (which term shall be deemed for the
purpose of this definition to include the Parent if, in connection with or in
anticipation of such public offering, the Company shall have been merged with
and into the Parent) of Capital Stock (or other voting shares or voting
interests) of the Company pursuant to an effective registration statement (other
than a registration statement on Form S-4, S-8 or any successor or similar
forms) under the Securities Act.
"Purchase Agreement" means the Purchase Agreement dated June 20,
1996, between the Company, the Guarantors, Nomura Securities International, Inc.
and Morgan Stanley & Co. Incorporated relating to the Securities.
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"Purchase Date" has the meaning specified in Section 3.10(c)
"QIB" shall mean a "qualified institutional buyer" as defined in
Rule 144A under the Securities Act.
"Receivables Co." means any special purpose, bankruptcy-remote,
wholly-owned Subsidiary of the Company organized after the date hereof (or such
other Person designated by the Company) that purchases Accounts generated by the
Company or any of its Subsidiaries in connection with a Permitted Receivables
Transaction.
"Receivables Proceeds" means, with respect to a Permitted
Receivables Transaction, the proceeds received from such Permitted Receivables
Transaction.
"Record date" has the meaning specified in Section 2.4(a).
"Refinanced Indebtedness" has the meaning specified in Section
3.8(b)(xi).
"Refinancing Indebtedness" means Indebtedness issued in exchange
for, or the proceeds of which are used to extend, refinance, renew, replace or
refund any Indebtedness permitted to be incurred pursuant to Section 3.8.
"Registered Exchange Offer" shall have the meaning given such term
in the Registration Rights Agreement.
"Registration Rights Agreement" means the Exchange and Registration
Rights Agreement dated June 25, 1996, between the Company, the Guarantors,
Nomura Securities International, Inc. and Morgan Stanley & Co. Incorporated with
respect to the Securities.
"Related Business" means the business in which the Company and its
Subsidiaries are engaged on the date of this Indenture and any business which is
incidental, similar or related thereto.
"Reorganization Securities" means, with respect to any
reorganization, composition, arrangement, adjustment or readjustment of the
Company or any Guarantor or of their respective securities, securities of the
Company or such Guarantor as reorganized or readjusted that are subordinated, at
least to the same extent as the Securities, to the
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payment of all outstanding Senior Indebtedness after giving effect to such plan
of reorganization or readjustment; provided, however, that (a) in the case of
debt securities, (i) such securities shall not provide for amortization
(including sinking fund and mandatory prepayment provisions) commencing prior to
six months following the final scheduled maturity of all Senior Indebtedness of
the Company or such Guarantor (as modified by such plan of reorganization or
readjustment), as the case may be, (ii) if the rate of interest on such
securities is fixed, such rate of interest shall not exceed the greater of (A)
the rate of interest on the Securities and (B) the sum of (x) the weighted
average rate of interest on the Indebtedness under the Credit Agreement on the
effective date of such plan of reorganization or readjustment and (y) the
difference (such difference, the "Interest Differential") between the rate of
interest on the Securities and the weighted average rate of interest on
Indebtedness under the Credit Agreement, in each case immediately prior to the
commencement of such reorganization, composition, arrangement, adjustment or
readjustment, (iii) if the rate of interest on such securities floats, such
interest rate shall not exceed at any time the sum of the weighted average
interest rate on Indebtedness under the Credit Agreement at such time and the
Interest Differential, and (iv) such securities shall not have covenants or
default provisions materially more beneficial to the holders of the Securities
than those in effect with respect to the Securities on their issue date and (b)
in the case of all securities (including debt securities), the distribution of
such securities was authorized by an order or decree of a court of competent
jurisdiction and such order gives effect to (and states in such order or decree
that effect has been given to) the subordination of such securities to all
Senior Indebtedness of the Company or such Guarantor not paid in full in cash in
connection with such reorganization; provided that all such Senior Indebtedness
is assumed by the reorganized corporation, and the rights of the holders of any
such Senior Indebtedness are not, without the consent of such holders, altered
by such reorganization, which consent shall be deemed to have been given if the
holders of such Senior Indebtedness, individually or as a class, shall have
approved such reorganization.
"Representative" for any issue of Indebtedness shall mean the Person
acting as agent, trustee or in a similar representative capacity for the holders
of such Indebtedness, provided that if, and for so long as, any
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issue of Indebtedness lacks such a representative, then the Representative for
such issue of Indebtedness shall at all such times constitute the holders of a
majority in outstanding principal amount of the respective issue of
Indebtedness.
"Restricted Global Security" has the meaning specified in Section
2.4(b).
"Restricted Payments" has the meaning specified in Section
3.9(a)(iv).
"Restricted Securities" has the meaning specified in Section 2.4(d).
"Restricted Securities Legend" has the meaning specified in Section
2.4.
"Restricted Subsidiary" shall mean any Subsidiary other than an
Unrestricted Subsidiary.
"Rule 144A" has the meaning specified in Section 2.4(b).
"Secured Indebtedness" means any Indebtedness of the Company secured
by a Lien.
"Security" or "Securities" means collectively, the Initial Notes and
the Exchange Notes.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Indebtedness" means the principal of, premium (if any) and
interest (including interest accruing on or after the filing of any petitions in
bankruptcy or for reorganization relating to the Company regardless of whether
an allowed claim in such proceeding) on, and fees and other amounts owing in
respect of, the Credit Agreement and other Indebtedness of the Company or a
Guarantor which is permitted under this Indenture and whether outstanding on the
Issue Date or thereafter issued, unless, in the instrument creating or
evidencing the same or pursuant to which it is outstanding, it is provided that
the obligations of the Company or such Guarantor in respect of such Indebtedness
are not superior in right of payment to the Securities; provided, however, that
Senior Indebtedness will not include (i) any obligation of the Company or any
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Guarantor to any Subsidiary of the Company or the Company, or (ii) any Senior
Subordinated Indebtedness or Subordinated Indebtedness.
"Senior Subordinated Indebtedness" means the Securities and any
other Indebtedness of the Company that specifically provides that such
Indebtedness is to rank pari passu with the Securities in right of payment and
is not subordinated by its terms in right of payment to any Indebtedness or
other obligation of the Company that is not Senior Indebtedness.
"Sponsors" means the Permitted ARTAL Investor Group and Flowers.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the payment of principal
of such security is due and payable, including pursuant to any mandatory
redemption provision.
"Subordinated Indebtedness" means any Indebtedness of the Company
(whether outstanding on the Issue Date or thereafter incurred) that is
subordinate or junior in right of payment to the Securities pursuant to a
written agreement.
"Subsidiary" of any Person means any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other interests (including partnership
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by (i) such Person, (ii) such
Person and one or more Subsidiaries of such Person or (iii) one or more
Subsidiaries of such Person. Unless otherwise specified herein, each reference
to a Subsidiary shall refer to a Subsidiary of the Company.
"Subsidiary Guarantee" has the meaning specified in Section 11.1.
"Successor Company" has the meaning specified in Section 8.1(a).
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"Temporary Cash Investments" means any of the following: (i) any
Investment in direct obligations of the United States of America or any agency
thereof or obligations Guaranteed by the United States of America or any agency
thereof, (ii) Investments in time deposit accounts, certificates of deposit and
money market deposits maturing within 180 days of the date of acquisition
thereof issued by a bank or trust company which is organized under the laws of
the United States of America, any state thereof or any foreign country
recognized by the United States of America having capital, surplus and undivided
profits aggregating in excess of $500,000,000 (or the foreign currency
equivalent thereof) and whose long-term debt, or whose parent holding company's
long-term debt, is rated "A" (or such similar equivalent rating) or higher by at
least one nationally recognized statistical rating organization (as defined in
Rule 436 under the Securities Act), (iii) repurchase obligations with a term of
not more than seven days for underlying securities of the types described in
clause (i) above entered into with a bank meeting the qualifications described
in clause (ii) above, or (iv) Investments in commercial paper, maturing not more
than 180 days after the date of acquisition, issued by a corporation (other than
an Affiliate of the Company) organized and in existence under the laws of the
United States of America or any foreign country recognized by the United States
of America with a rating at the time as of which any investment therein is made
of "P-1" (or higher) according to Moody's Investors Service, Inc. or "A-1" (or
higher) according to Standard and Poor's Ratings Group.
"Trust Indenture Act" means the Trust Indenture Act as in force at
the date as of which this Indenture was originally executed, except until
qualification of this Indenture under the Trust Indenture Act, then as of the
date of such qualification, and except to the extent that any subsequent
amendment of the Trust Indenture Act shall apply retroactively to this
Indenture.
"Trust Officer" means the Chairman of the Board, the President or
any other officer or assistant officer of the Trustee assigned by the Trustee to
administer its corporate trust matters.
"Trustee" means the entity identified as "Trustee" in the first
paragraph hereof and, subject to the provisions of Article V, shall also include
any successor trustee.
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"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the issuer's option.
"Unrestricted Subsidiary" means (i) Receivables Co., (ii) the
Designated Subsidiaries, and (iii) any Subsidiary (other than a Subsidiary which
would constitute a Material Subsidiary) that at the time of determination shall
have been designated an Unrestricted Subsidiary by the Board of Directors of the
Company in the manner provided below and which remains so designated at the time
of determination. The Board of Directors of the Company may, by a Board
resolution delivered to the Trustee, designate any Restricted Subsidiary of the
Company (other than a Material Subsidiary) (including any newly acquired or
newly formed Subsidiary of the Company) to be an Unrestricted Subsidiary unless
such Restricted Subsidiary owns any Capital Stock of, or owns or holds any Lien
on any property of, the Company or any Restricted Subsidiary, and provided that
no Default or Event of Default shall have occurred and be continuing at the time
of or after giving effect to such designation. The Board of Directors of the
Company may designate any Unrestricted Subsidiary to be a Restricted Subsidiary
of the Company, provided that (i) no Default or Event of Default shall have
occurred and be continuing at the time of or after giving effect to such
designation and (ii) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately following such designation would, if incurred at such
time, have been permitted to be incurred for all purposes of this Indenture. Any
designation by the Board of Directors of the Company pursuant to this Indenture
shall be evidenced to the Trustee by promptly filing with the Trustee a copy of
the Board resolutions giving effect to such designation and an Officer's
Certificate certifying that such designation complied with the foregoing
provisions.
"voting shares" of a Person means all classes of Capital Stock of
such Person then outstanding and normally entitled to vote in the election of
directors or managers.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness or Disqualified Capital Stock, as the case may be, at any date, the
number of years obtained by dividing (a) the sum of the products obtained by
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multiplying (x) the amount of each then remaining installment, sinking fund,
serial maturity or other required payments of principal, including payment at
final maturity, in respect thereof, by (y) the number of years (calculated to
the nearest one-twelfth) that will elapse between such date and the making of
such payment, by (b) the then outstanding principal amount or liquidation
preference, as applicable, of such Indebtedness or Disqualified Capital Stock,
as the case may be.
ARTICLE II
ISSUE, EXECUTION, FORM AND
REGISTRATION OF SECURITIES.
SECTION 2.1 Authentication and Delivery of Securities. Upon the
execution and delivery of this Indenture, or from time to time thereafter,
Securities in an aggregate principal amount not to exceed $125,000,000 (except
as otherwise provided in Section 2.6) may be executed by the Company and
delivered to the Trustee for authentication, and the Trustee shall thereupon
authenticate and deliver said Securities to or upon the written order of the
Company, signed by both (a) its Chairman of the Board of Directors, or any Vice
Chairman of the Board of Directors, or its President or any Vice President
(whether or not designated by a number or numbers or a word or words added
before or after the title "Vice President") and (b) by its Treasurer or any
Assistant Treasurer or its Secretary or any Assistant Secretary without any
further action by the Company.
SECTION 2.2 Execution of Securities. The Securities shall be signed
on behalf of the Company by both (a) its Chairman of the Board of Directors or
any Vice Chairman of the Board of Directors or its President or any Vice
President (whether or not designated by a number or numbers or a word or words
added before or after the title "Vice President") and (b) by its Treasurer or
any Assistant Treasurer or its Secretary or any Assistant Secretary, under its
corporate seal. Such signatures may be the manual or facsimile signatures of the
present or any future such officers. The corporate seal of the Company may be in
the form of a facsimile thereof and may be impressed, affixed, imprinted or
otherwise reproduced on the Securities and may, but need not, be attested.
Typographical and other minor errors or defects in any such reproduction of the
seal or
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any such signature shall not affect the validity or enforceability of any
Security which has been duly authenticated and delivered by the Trustee.
In case any officer of the Company who shall have signed any of the
Securities shall cease to be such officer before the Security so signed shall be
authenticated and delivered by the Trustee or disposed of by the Company, such
Security nevertheless may be authenticated and delivered or disposed of as
though the person who signed such Security had not ceased to be such officer of
the Company; and any Security may be signed on behalf of the Company by such
persons as, at the actual date of the execution of such Security, shall be the
proper officers of the Company, although at the date of the execution and
delivery of this Indenture any such person was not such officer.
SECTION 2.3 Certificate of Authentication. Only such Securities as
shall bear thereon a certificate of authentication substantially in the form
hereinbefore recited, executed by the Trustee by manual signature of one of its
authorized officers, shall be entitled to the benefits of this Indenture or be
valid or obligatory for any purpose. Such certificate by the Trustee upon any
Security executed by the Company shall be conclusive evidence that the Security
so authenticated has been duly authenticated and delivered hereunder and that
the holder is entitled to the benefits of this Indenture.
SECTION 2.4 Form, Denomination and Date of Securities; Payments of
Interest. (a) The Initial Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto, and the Exchange Notes
and the Trustee's certificate of authentication shall be in substantially the
form of Exhibit B hereto, each of which is part of this Indenture. The
Securities shall be numbered, lettered, or otherwise distinguished in such
manner or in accordance with such plans as the officers of the Company executing
the same may determine with the approval of the Trustee. Any of the Securities
may be issued with appropriate insertions, omissions, substitutions and
variations, and may have imprinted or otherwise reproduced thereon such legend
or legends, not inconsistent with the provisions of this Indenture, as may be
required to comply with any law or with any rules or regulations pursuant
thereto, or with the rules of any securities market in which the Securities are
admitted to trading, or to conform to general usage. All Securities shall be
otherwise
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substantially identical expect as to denomination and as provided herein.
Each Security shall be dated the date of its authentication, shall
bear interest from the applicable date and shall be payable on the dates
specified on the face of the form of Security recited above.
The Person in whose name any Security is registered at the close of
business on any record date with respect to any interest payment date shall be
entitled to receive the interest, if any, payable on such interest payment date
notwithstanding any transfer or exchange of such Security subsequent to the
record date and prior to such interest payment date, except if and to the extent
that the Company shall default in the payment of the interest due on such
interest payment date, in which case such defaulted interest shall be paid to
the Persons in whose names outstanding Securities are registered at the close of
business on a subsequent record date (which shall be not less than five business
days prior to the date of payment of such defaulted interest) established by
notice given by mail by or on behalf of the Company to the holders of Securities
not less than 15 days preceding such subsequent record date. The term "record
date" as used with respect to any interest payment date (except a date for
payment of defaulted interest) shall mean if such interest payment date is the
first day of a calendar month, the fifteenth day of the next preceding calendar
month and shall mean, if such interest payment date is the fifteenth day of a
calendar month, the first day of such calendar month, whether or not such record
date is a business day.
(b) The Initial Notes are being offered and sold by the Company
pursuant to the Purchase Agreement. The Initial Notes offered and sold to QIBs
in reliance on Rule 144A under the Securities Act ("Rule 144A"), except as
provided in Section 2.4(d) hereof, shall be issued initially in the form of one
or more, permanent global Securities in definitive, fully registered form
without interest coupons with the Global Securities Legend and Restricted
Securities Legend set forth in the form of Initial Notes (the "Restricted Global
Security") deposited with the Trustee, at its New York office, as custodian for
and registered in the name of the Depository or a nominee of the Depository,
duly executed by the Company and authenticated by the Trustee as hereinafter
provided. The aggregate principal amount of the Restricted Global Security may
from time to time be
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increased or decreased by adjustments made on the records of the Trustee and the
Depository or its nominee as hereinafter provided.
(c) This Section 2.4(c) shall apply only to the Restricted Global
Security deposited with or on behalf of the Depository.
Members of, or participants in, the Depository (the "Agent Members")
shall have no rights under this Indenture with respect to any Restricted Global
Security held on their behalf by the Depository or under the Restricted Global
Security, and the Depository may be treated by the Company, the Trustee, and any
agent of the Company or the Trustee as the absolute owner of the Restricted
Global Security for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Trustee, or any agent of the
Company or the Trustee, from giving effect to any written certification, proxy
or other authorization furnished by the Depository or impair, as between the
Depository and its Agent Members, the operation of customary practices governing
the exercise of the rights of a holder of any Security.
(d) Except as provided in this Section 2.4(d) and Section 2.8,
owners of beneficial interests in the Restricted Global Security will not be
entitled to receive physical delivery of certificated Initial Notes. Purchasers
of Initial Notes who are not QIBs or QIB's who elect to receive certificated
Initial Notes instead of holding their interest through the Restricted Global
Security (collectively, the "Non-Global Purchasers") will receive certificated
Initial Notes bearing the Restricted Securities Legend (the "Restricted
Securities"); provided, however, that upon transfer to a QIB of any such
certificated Initial Notes initially issued to a Non-Global Purchaser, such
certificated Initial Notes will, unless the transferee requests otherwise or the
Restricted Global Security has previously been exchanged in whole for Restricted
Securities, be exchanged for an interest in the Restricted Global Security
pursuant to the provisions of Section 2.5. Restricted Securities will bear the
Restricted Securities Legend unless removed in accordance with Section 2.5.
Upon the occurrence of an Effective Registration involving a Notes
Shelf Registration, all requirements with respect to the Restricted Global
Security and legends on Initial Notes will cease to apply, and certificated
Initial
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Notes without the Restricted Securities Legend will be available to the Holders.
Upon the occurrence of an Effective Registration involving the Registered
Exchange Offer, all requirements with respect to the Restricted Global Security
will cease to apply and certificated Initial Notes with the "Restricted
Securities Legend" will be available to Holders that do not exchange their
Initial Notes for Exchange Notes, and certificated Exchange Notes without any
legends will be available to Holders that exchange their Initial Notes for
Exchange Notes.
All certificated Securities shall be issuable in denominations of
$1,000 principal amount and any integral multiple thereof.
SECTION 2.5 Registration, Transfer and Exchange. (a) The Company
will keep at each office or agency to be maintained for the purpose as provided
in Section 3.2 a register or registers in which, subject to such reasonable
regulations as it may prescribe, it will register, and will register the
transfer of, Securities as in this Article provided. Such register shall be in
written form in the English language or in any other form capable of being
converted into such form within a reasonable time. At all reasonable times such
register or registers shall be open for inspection by the Trustee.
Upon due presentation for registration of transfer of any Security
at each such office or agency, the Company shall execute and the Trustee shall
authenticate and deliver in the name of the transferee or transferees a new
Security or Securities in authorized denominations for a like aggregate
principal amount.
Any Security or Securities may be exchanged for a Security or
Securities in other authorized denominations, in an equal aggregate principal
amount. Securities to be exchanged shall be surrendered at each office or agency
to be maintained by the Company for the purpose as provided in Section 3.2, and
the Company shall execute and the Trustee shall authenticate and deliver in
exchange therefor the Security or Securities which the Securityholder making the
exchange shall be entitled to receive, bearing numbers not contemporaneously
outstanding.
All Securities presented for registration of transfer, exchange,
redemption or payment shall (if so required by the Company or the Trustee) be
duly endorsed by,
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or be accompanied by a written instrument or instruments of transfer in form
satisfactory to the Company and the Trustee duly executed by, the holder or his
attorney duly authorized in writing.
The Company may require payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in connection with any exchange
or registration of transfer of Securities. No service charge shall be made for
any such transaction.
The Trustee shall not be required to exchange or register a transfer
of (a) any Securities for a period of 15 days next preceding the first mailing
of notice of redemption of Securities to be redeemed or (b) any Securities
selected, called or being called for redemption except, in the case of any
Security where public notice has been given that such Security is to be redeemed
in part, the portion thereof not so to be redeemed.
All Securities issued upon any transfer or exchange of Securities
shall be valid obligations of the Company, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Securities
surrendered upon such transfer or exchange.
(b) Notwithstanding any provision to the contrary herein, so long as
the Restricted Global Security remains outstanding and is held by or on behalf
of the Depository, transfers of the Restricted Global Security, in whole or in
part, shall only be made in accordance with Section 2.4(d) and this Section 2.5
as set forth below.
(i) Subject to clauses (ii) through (iv) below, transfers
of the Restricted Global Security shall be limited to transfers of the
Restricted Global Security in whole, but not in part, to nominees of the
Depository or to a successor of the Depository or such successor's
nominee.
(ii) Restricted Global Security to Restricted Security. If
a holder of a beneficial interest in the Restricted Global Security
deposited with the Depository wishes at any time to transfer its interest
therein to a Person who wishes to take delivery thereof in the form of a
Restricted Security, such holder may, subject to the rules and procedures
of the Depository, cause the exchange of such interest for one or more
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Restricted Securities of any authorized denomination or denominations and
of the same aggregate principal amount. Upon receipt by the Trustee at its
Corporate Trust Office of (1) instructions from the Depository directing
the Trustee to authenticate and deliver one or more Restricted Securities
of the same aggregate principal amount as the beneficial interest in the
Restricted Global Security to be exchanged, such instructions to contain
the name or names of the designated transferee or transferees, the
authorized denomination or denominations of the Restricted Securities to
be so issued and appropriate delivery instructions, (2) a certificate in
the form of Exhibit C attached hereto given by the holder of such
beneficial interest and stating that the Person transferring such interest
in the Restricted Global Security reasonably believes that the Person
acquiring the Restricted Securities for which such interest is being
exchanged is an Institutional Accredited Investor and is acquiring such
Restricted Securities for its own account or for one or more accounts as
to which the transferee exercises sole investment discretion, (3) a
certificate in the form of Exhibit D attached hereto given by the Person
acquiring the Restricted Securities for which such interest is being
exchanged, to the effect set forth therein, and (4) an opinion of counsel
to the holder of such beneficial interest in the form of Exhibit E
attached hereto, to the effect set forth therein, then the Trustee will
instruct the Depository to reduce the Restricted Global Security by the
aggregate principal amount of the beneficial interest therein to be
exchanged, and concurrently with such reduction the Company shall execute,
and the Trustee shall authenticate and deliver, one or more Restricted
Securities of the same aggregate principal amount, in accordance with the
instructions referred to above.
(iii) Restricted Security to Restricted Global Security. If
a holder of a Restricted Security wishes at any time to transfer such
Restricted Security to a Person who wishes to take delivery thereof in the
form of an interest in the Restricted Global Security, such holder may,
subject to the rules and procedures of the Depository, cause the exchange
of such Restricted Security for an equivalent beneficial interest in the
Restricted Global Security. Upon receipt by the Trustee at its Corporate
Trust Office of (1) such Restricted Security, duly endorsed as provided
herein,
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(2) instructions from such holder directing the Trustee to credit or cause
to be credited a beneficial interest in the Restricted Global Security
equal to the principal amount of the Restricted Security to be exchanged,
such instructions to contain information regarding the participant account
with the Depository to be credited with such interest and (3) a
certificate in the form of Exhibit F attached hereto, then the Trustee
shall cancel or cause to be cancelled such Restricted Security and shall
instruct the Depository to credit or cause to be credited to the account
of the Person specified in such instructions a beneficial interest in the
Restricted Global Security equal to the principal amount of the Restricted
Security so cancelled.
(iv) Restricted Security to Restricted Security. If a
holder of a Restricted Security wishes at any time to transfer such
Restricted Security to a Person who wishes to take delivery thereof in the
form of a Restricted Security, such holder may, subject to the
restrictions on transfer set forth herein and in such Restricted Security,
cause the exchange of such Restricted Securities for one or more
Restricted Securities of any authorized denomination or denominations and
of the same aggregate principal amount. Upon receipt by the Trustee at its
Corporate Trust Office of (1) such Restricted Security, duly endorsed as
provided herein, (2) instructions from such holder directing the Trustee
to authenticate and deliver one or more Restricted Securities of the same
aggregate principal amount as the Restricted Security to be exchanged,
such instructions to contain the name or names of the designated
transferee or transferees, the authorized denomination or denominations of
the Restricted Securities to be so issued and appropriate delivery
instructions, (3) a certificate from the holder of the Restricted Security
to be exchanged in the form of Exhibit C attached hereto (in the event
that the transfer is being made to an Institutional Accredited Investor
otherwise than pursuant to Rule 144A), (4) a certificate in the form of
Exhibit D attached hereto (in the event the transfer is being made to an
Institutional Accredited Investor otherwise than pursuant to Rule 144A)
given by the Person acquiring the Restricted Securities for which such
interest is being exchanged, to the effect set forth therein, and (5) an
opinion of counsel to the
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transferor of such Restricted Security in the form of Exhibit E hereto, to
the effect set forth therein, then the Trustee shall cancel or cause to be
cancelled such Restricted Security and, concurrently therewith, the
Company shall execute, and the Trustee shall authenticate and deliver, one
or more Restricted Securities of the same aggregate principal amount, in
accordance with the instructions referred to above.
(v) Other Exchanges. In the event that the Restricted
Global Security is exchanged pursuant to Section 2.8 for Securities in
definitive registered form without interest coupons, prior to an Effective
Registration such Initial Notes may be exchanged for one another only in
accordance with those procedures that are substantially consistent with
the provisions of clauses (i) through (iv) above (including the
certification requirements thereof intended to insure that such transfers
comply with the Securities Act) and which may be from time to time adopted
by the Company and the Trustee.
If Initial Notes are issued upon the transfer, exchange or
replacement of Initial Notes bearing the Restricted Securities Legend, or if a
request is made to remove such Restricted Securities Legend on Initial Notes,
the Initial Notes so issued shall bear the Restricted Securities Legend, or the
Restricted Securities Legend shall not be removed, as the case may be, unless
(i) there is delivered to the Company such satisfactory evidence, which may
include an opinion of counsel licensed to practice law in the State of New York,
as may be reasonably required by the Company that neither the legend nor the
restrictions on transfer set forth therein are required to ensure that transfers
thereof comply with the provisions of the Securities Act or, with respect to
Restricted Securities, that such Initial Notes are not "restricted" within the
meaning of Rule 144 under the Securities Act or (ii) there is an Effective
Registration involving the Notes Shelf Registration with respect to the Initial
Notes then in effect or the Initial Note as to which the Restricted Securities
Legend is sought to be removed has been disposed of in accordance with the Notes
Shelf Registration. Upon (i) provision of such satisfactory evidence, or (ii)
notification by the Company to the Trustee of an Effective Registration with
respect to the Initial Notes, the Trustee, at the direction of the Company,
shall
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authenticate and deliver Initial Notes that do not bear the Restricted
Securities Legend.
SECTION 2.6 Mutilated, Defaced, Destroyed, Lost and Stolen
Securities. In case any temporary or definitive Security shall become mutilated,
defaced or be apparently destroyed, lost or stolen, the Company in its
discretion may execute, and upon the written request of any officer of the
Company, the Trustee shall authenticate and deliver, a new Security, bearing a
number not contemporaneously outstanding, in exchange and substitution for the
mutilated or defaced Security, or in lieu of and substitution for the Security
so apparently destroyed, lost or stolen. In every case the applicant for a
substitute Security shall furnish to the Company and to the Trustee and any
agent of the Company or the Trustee such security or indemnity as may be
required by them to indemnify and defend and to save each of them harmless and,
in every case of destruction, loss or theft evidence to their satisfaction of
the apparent destruction, loss or theft of such Security and of the ownership
thereof.
Upon the issuance of any substitute Security, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith. In case any Security
which has matured or is about to mature, or has been called for redemption in
full, shall become mutilated or defaced or be apparently destroyed, lost or
stolen, the Company may, instead of issuing a substitute Security, pay or
authorize the payment of the same (without surrender thereof except in the case
of a mutilated or defaced Security), if the applicant for such payment shall
furnish to the Company and to the Trustee and any agent of the Company or the
Trustee such security or indemnity as any of them may require to save each of
them harmless from all risks, however remote, and, in every case of apparent
destruction, loss or theft, the applicant shall also furnish to the Company and
the Trustee and any agent of the Company or the Trustee evidence to their
satisfaction of the apparent destruction, loss or theft of such Security and of
the ownership thereof.
Every substitute Security issued pursuant to the provisions of this
Section by virtue of the fact that any Security is apparently destroyed, lost or
stolen shall constitute an additional contractual obligation of the
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Company, whether or not the apparently destroyed, lost or stolen Security shall
be at any time enforceable by anyone and shall be entitled to all the benefits
of (but shall be subject to all the limitations of rights set forth in) this
Indenture equally and proportionately with any and all other Securities duly
authenticated and delivered hereunder. All Securities shall be held and owned
upon the express condition that, to the extent permitted by law, the foregoing
provisions are exclusive with respect to the replacement or payment of
mutilated, defaced, or apparently destroyed, lost or stolen Securities and shall
preclude any and all other rights or remedies notwithstanding any law or statute
existing or hereafter enacted to the contrary with respect to the replacement or
payment of negotiable instruments or other securities without their surrender.
SECTION 2.7 Cancellation of Securities; Destruction Thereof. All
Securities surrendered for payment, redemption, registration of transfer or
exchange, if surrendered to the Company or any agent of the Company or the
Trustee, shall be delivered to the Trustee for cancellation or, if surrendered
to the Trustee, shall be cancelled by it; and no Securities shall be issued in
lieu thereof except as expressly permitted by any of the provisions of this
Indenture. The Trustee shall deliver cancelled Securities held by it to the
Company. If the Company shall acquire any of the Securities, such acquisition
shall not operate as a redemption or satisfaction of the indebtedness
represented by such Securities unless and until the same are delivered to the
Trustee for cancellation.
SECTION 2.8 Temporary Securities; Global Securities. Pending the
preparation of definitive Securities, the Company may execute and the Trustee
shall authenticate and deliver temporary Securities (printed, lithographed,
typewritten or otherwise reproduced, in each case in form satisfactory to the
Trustee). Temporary Securities shall be issuable as registered Securities
without coupons, of any authorized denomination, and substantially in the form
of the definitive Securities but with such omissions, insertions and variations
as may be appropriate for temporary Securities, all as may be determined by the
Company with the concurrence of the Trustee. Temporary Securities may contain
such reference to any provisions of this Indenture as may be appropriate. Every
temporary Security shall be executed by the Company and be authenticated by the
Trustee upon the same conditions
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and in substantially the same manner, and with like effect, as the definitive
Securities. Without unreasonable delay the Company shall execute and shall
furnish definitive Securities and thereupon temporary Securities may be
surrendered in exchange therefor without charge at each office or agency to be
maintained by the Company for the purpose pursuant to Section 3.2, and the
Trustee shall authenticate and deliver in exchange for such temporary Securities
a like aggregate principal amount of definitive Securities of authorized
denominations. Until so exchanged the temporary Securities shall be entitled to
the same benefits under this Indenture as definitive Securities.
The Restricted Global Security deposited with the Depository
pursuant to Section 2.4 shall be transferred to the beneficial owners thereof
only if such transfer complies with Section 2.5(b) of this Indenture and (i) the
Depository notifies the Company that it is unwilling or unable to continue as
Depository for the Restricted Global Security or if at any time such Depository
ceases to be a "clearing agency" registered under the Exchange Act and a
successor depositary is not appointed by the Company within 90 days of such
notice, (ii) the Company executes and delivers to the Trustee an Officer's
Certificate stating that such Global Restricted Security shall be exchangeable,
or (iii) an Event of Default has occurred and is continuing with respect to the
Securities.
Any Restricted Global Security that is transferable to the
beneficial owners thereof pursuant to this Section 2.8 shall be surrendered by
the Depository to the Trustee at its Corporate Trust Office, to be so
transferred, in whole or from time to time in part, without charge, and the
Trustee shall authenticate and deliver, upon such transfer of each portion of
such Restricted Global Security, an equal aggregate principal amount of
Restricted Securities of authorized denominations. Any portion of the Restricted
Global Security transferred pursuant to this Section 2.8 shall be executed,
authenticated and delivered only in denominations of $1,000 and any integral
multiple thereof and registered in such names as the Depository shall direct.
Any Initial Note delivered in exchange for an interest in the Restricted Global
Security shall, except as otherwise provided by Section 2.5, bear the Restricted
Securities Legend.
Subject to the foregoing provisions of this Section 2.8, the
registered Holder of a Global Security may
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grant proxies and otherwise authorize any Person, including Agent Members and
Persons that may hold interests through Agent Members, to take any action which
a Holder is entitled to take under this Indenture or the Securities.
In the event of the occurrence of either of the events specified in
the second paragraph of this Section 2.8, the Company will promptly make
available to the Trustee a reasonable supply of certificated Securities in
definitive, fully registered form without interest coupons.
SECTION 2.9 Effective Registration. In the event the Company has an
Effective Registration, the Company shall notify the Trustee thereof within two
Business Days after the effective date of such Effective Registration. If the
Effective Registration involves a Notes Shelf Registration, the Company shall
promptly cause to be delivered to the Trustee certificates for Initial Notes
without legends and the Trustee shall authenticate and deliver certificated
Initial Notes without legends to Holders presenting their certificated Initial
Notes for exchange or to Holders of interests in the Restricted Global Security
in the names and denominations specified by the Depository or to transferees of
Initial Notes covered by the Notes Shelf Registration. If the Effective
Registration is with respect to a Registered Exchange Offer for the Initial
Notes, the Trustee shall notify the Holders of receipt of such notice and, after
receipt of a written order of the Company (signed as specified in Section 2.1)
for the authentication and delivery of Exchange Notes and a properly completed
letter of transmittal or other requested documents from a Holder as specified in
the exchange offer documents, shall exchange such Holder's Initial Notes for
Exchange Notes upon the terms set forth in the exchange offer documents.
ARTICLE III
COVENANTS OF
THE COMPANY.
SECTION 3.1 Payment of Principal and Interest. The Company covenants
and agrees that it will duly and punctually pay or cause to be paid the
principal of, and interest (including additional interest, if any, required to
be paid pursuant to the Registration Rights Agreement) on, each of the
Securities at the place or places, at the respective times and in the manner
provided in the
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Securities. Each installment of interest on the Securities may be paid by
mailing checks for such interest payable to or upon the written order of the
holders of Securities entitled thereto as they shall appear on the registry
books of the Company.
SECTION 3.2 Offices for Payments, Etc. So long as any of the
Securities remain outstanding, the Company will maintain in the City of New York
the following: (a) an office or agency where the Securities may be presented for
payment, (b) an office or agency where the Securities may be presented for
registration of transfer and for exchange as in this Indenture provided and (c)
an office or agency where notices and demands to or upon the Company in respect
of the Securities or of this Indenture may be served. The Company will give to
the Trustee written notice of the location of any such office or agency and of
any change of location thereof. The Company hereby initially designates the
office of the Trustee at 114 West 47th Street, New York, New York 10036, or such
other location as the Company may designate upon notice from the Trustee, as the
office or agency for each such purpose. In case the Company shall fail to
maintain any such office or agency or shall fail to give such notice of the
location or of any change in the location thereof, presentations and demands may
be made and notices may be served at the Corporate Trust Office.
SECTION 3.3 Appointment to Fill a Vacancy in Office of Trustee. The
Company, whenever necessary to avoid or fill a vacancy in the office of Trustee,
will appoint, in the manner provided in Section 5.9, a Trustee, so that there
shall at all times be a Trustee hereunder.
SECTION 3.4 Paying Agents. The paying agent will initially be the
Trustee. Whenever the Company shall appoint a paying agent other than the
Trustee, it will cause such paying agent to execute and deliver to the Trustee
an instrument in which such agent shall agree with the Trustee, subject to the
provisions of this Section,
(a) that it will hold all sums received by it as such agent for the
payment of the principal of or interest on the Securities (whether such
sums have been paid to it by the Company or by any other obligor on the
Securities) in trust for the benefit of the holders of the Securities or
of the Trustee,
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(b) that it will give the Trustee notice of any failure by the
Company (or by any other obligor on the Securities) to make any payment of
the principal of or interest on the Securities when the same shall be due
and payable, and
(c) pay any such sums so held in trust by it to the Trustee upon the
Trustee's written request at any time during the continuance of the
failure referred to in clause (b) above.
The Company will, prior to each due date of the principal of or
interest on the Securities, deposit with the paying agent a sum sufficient to
pay such principal or interest, and (unless such paying agent is the Trustee)
the Company will promptly notify the Trustee of any failure to take such action.
If the Company shall act as its own paying agent, it will, on or
before each due date of the principal of or interest on the Securities, set
aside, segregate and hold in trust for the benefit of the holders of the
Securities a sum sufficient to pay such principal or interest so becoming due.
The Company will promptly notify the Trustee of any failure to take such action.
Anything in this Section to the contrary notwithstanding, the
Company may at any time, for the purpose of obtaining a satisfaction and
discharge of this Indenture or for any other reason, pay or cause to be paid to
the Trustee all sums held in trust by the Company or any paying agent hereunder,
as required by this Section, such sums to be held by the Trustee upon the trusts
herein contained. Upon such payment to the Trustee, the relevant paying agent,
if any, shall be released from any liability with respect to such sums.
Anything in this Section to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section are subject to the
provisions of Sections 9.4 and 9.6.
SECTION 3.5 Certificate to Trustee. The Company will furnish to the
Trustee, on or before 120 days after the end of each fiscal year of the Company
ending after the date hereof, an Officer's Certificate from the principal
executive, financial or accounting officer of the Company as to his or her
knowledge of the Company's compliance with all
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conditions and covenants under this Indenture (such compliance to be determined
without regard to any period of grace or requirement of notice provided under
this Indenture).
SECTION 3.6 Securityholders' Lists. If and so long as the Trustee
shall not be the Security registrar, the Company will furnish or cause to be
furnished to the Trustee a list in such form as the Trustee may reasonably
require of the names and addresses of the holders of the Securities pursuant to
Section 312 of the Trust Indenture Act (a) semi-annually not more than 15 days
after each record date for the payment of semi-annual interest on the
Securities, as hereinabove specified, as of such record date, and (b) at such
other times as the Trustee may request in writing, within 30 days after receipt
by the Company of any such request as of a date not more than 15 days prior to
the time such information is furnished.
SECTION 3.7 Commission Reports. Notwithstanding that the Company may
not be subject to the reporting requirements of Sections 13 or 15(d) of the
Exchange Act, so long as any Securities are outstanding, the Company will
furnish to the Trustee and the holders of Securities (i) within 45 days after
the end of each of the first three fiscal quarters of each fiscal year and 90
days of the end of each fiscal year all quarterly and annual financial
information, as the case may be, that would be required to be contained in a
filing with the Commission on Forms 10-Q and 10-K if the Company were required
to file such Forms, including a "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and, with respect to the annual
information only, a report thereon by the Company's certified independent
accountants and (ii) all current reports that would be required to be filed with
the Commission on Form 8-K if the Company were required to file such reports. In
addition, whether or not required by the rules and regulations of the
Commission, the Company will file a copy of all such information and reports
with the Commission for public availability (unless the Commission will not
accept such a filing) and make such information available to securities analysts
and prospective investors upon request. Furthermore, for so long as any of the
Securities remain outstanding, the Company shall make available to any
prospective purchaser of the Securities or beneficial owner of the Securities,
in connection with any sale thereof, the information required by Rule 144(d)(4)
under the Securities Act.
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SECTION 3.8 Limitation on Indebtedness. (a) The Company shall not,
and shall not permit any of its Restricted Subsidiaries to, incur any
Indebtedness; provided, however, that the Company may incur Indebtedness
(including through the issuance of Disqualified Capital Stock) if on the date of
such incurrence the Consolidated Coverage Ratio would be greater than (i)
2.00:1, if such Indebtedness is incurred prior to the expiration of 24 months
after the Issue Date, and (ii) 2.50:1, if such Indebtedness is incurred on or
subsequent to the expiration of 24 months after the Issue Date.
(b) Notwithstanding Section 3.8(a), the Company and its Restricted
Subsidiaries may incur Indebtedness to the extent set forth below: (i)
Indebtedness of the Company incurred pursuant to the Credit Agreement in an
amount, at any one time outstanding, not to exceed the sum of (x) $155,000,000
pursuant to a revolving credit, swing line and/or letter of credit facility;
provided, however, that on the Business Day on which any Permitted Receivables
Transaction is consummated, the amount of Indebtedness permitted to be
outstanding under the Credit Agreement pursuant to this clause (x) shall be
reduced by an amount equal to the Receivables Proceeds with respect to such
Permitted Receivables Transaction, and (y) the aggregate principal amount of the
term loans under the Credit Agreement as in effect as of the date hereof less
the amount of any principal payments made on account of such term loans; (ii)
Indebtedness (x) of the Company to any Restricted Subsidiary and (y) of any
Restricted Subsidiary to the Company or any other Restricted Subsidiary; (iii)
Indebtedness of the Company represented by the Securities; (iv) any Indebtedness
of the Company (other than the Indebtedness described in clauses (i) and (ii)
above) outstanding on the date of this Indenture; (v) Indebtedness represented
by the Guarantees of the Securities and Guarantees of Indebtedness incurred
pursuant to clause (i) above; (vi) Indebtedness of the Company or any Restricted
Subsidiary under Currency Agreements, Interest Rate Agreements and Commodity
Hedging Obligations that are entered into by the Company or such Restricted
Subsidiary for bona fide hedging purposes (as determined in good faith by the
Board of Directors or senior management of the Company or such Restricted
Subsidiary) with respect to Indebtedness of the Company or such Restricted
Subsidiary incurred without violation of this Indenture or with respect to
customary commercial transactions of the Company or such Restricted Subsidiary
entered into in the ordinary course of
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business; (vii) Indebtedness (including Capitalized Lease Obligations) incurred
by the Company or any Restricted Subsidiary to finance the purchase, lease or
improvement of property (real or personal) or equipment (whether through the
direct purchase of assets or the Capital Stock of any Person owning such assets)
in an aggregate principal amount which, when aggregated with the principal
amount of all other Indebtedness then outstanding and incurred pursuant to this
clause (vii), does not exceed 10% of Consolidated Net Tangible Assets; (viii)
Indebtedness incurred by the Company or any Restricted Subsidiary constituting
reimbursement obligations with respect to letters of credit issued in the
ordinary course of business, including, without limitation, letters of credit in
respect of workers' compensation claims or self-insurance, or other Indebtedness
with respect to reimbursement type obligations regarding workers' compensation
claims; provided, that upon the drawing of such letters of credit or the
incurrence of such Indebtedness, such obligations are reimbursed within 30 days
following such incurrence; (ix) Acquired Indebtedness; provided, however, that
such Indebtedness is not incurred in contemplation of such acquisition or
merger; and provided, further that the Company would have been able to incur
such Indebtedness at the time of the incurrence thereof pursuant to clause (a)
above, determined on a pro forma basis as if such transaction had occurred at
the beginning of such four-quarter period and such Indebtedness and the
operating results of such merged or acquired entity had been included for all
purposes in such pro forma calculation as if such entity had been a Restricted
Subsidiary at the beginning of such four-quarter period; (x) obligations in
respect of performance and surety bonds and completion guarantees provided by
the Company or any Restricted Subsidiary in the ordinary course of business;
(xi) additional indebtedness in an aggregate amount not to exceed $50,000,000 at
any one time outstanding; and (xii) Refinancing Indebtedness; provided, however,
that (A) the principal amount of such Refinancing Indebtedness shall not exceed
the principal or accreted amount (in the case of any Indebtedness issued with
original issue discount, as such) of Indebtedness so extended, refinanced,
renewed, replaced, substituted or refunded (the "Refinanced Indebtedness"), (B)
the Refinancing Indebtedness shall have a Weighted Average Life to Maturity of
not less than the stated maturity of the Refinanced Indebtedness and (C) the
Refinancing Indebtedness shall rank in right of payment relative to the
Securities on terms at least as favorable to the holders of Securities as
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those contained in the documentation governing the Refinanced Indebtedness.
(c) Notwithstanding any other provision of this Section 3.8, neither
the Company nor any Restricted Subsidiary shall incur any Indebtedness (i)
pursuant to Section 3.8(b), if the proceeds thereof are used, directly or
indirectly, to repay, prepay, redeem, defease, retire, refund or refinance any
Subordinated Indebtedness unless such Indebtedness shall be subordinated to the
Securities to at least the same extent as such Subordinated Indebtedness or (ii)
pursuant to Section 3.8(a) or Section 3.8(b) if such Indebtedness is subordinate
or junior in ranking in any respect to any Senior Indebtedness unless such
Indebtedness is Senior Subordinated Indebtedness or is expressly subordinated in
right of payment to Senior Subordinated Indebtedness.
(d) The Company shall not incur any Secured Indebtedness that is not
Senior Indebtedness unless contemporaneously therewith effective provision is
made to secure the Securities equally and ratably with such Secured Indebtedness
for so long as such Secured Indebtedness is secured by a Lien.
SECTION 3.9 Limitation on Restricted Payments. (a) The Company shall
not, and shall not permit any Restricted Subsidiary to, directly or indirectly:
(i) declare or pay any dividend on, or make any distribution
to holders of, any shares of its Capital Stock (other than dividends or
distributions payable solely in shares of its Capital Stock (other than
Disqualified Capital Stock) or in options, warrants or other rights to
acquire such Capital Stock and other than dividends and distributions paid
by a Restricted Subsidiary to the Company or to another Restricted
Subsidiary),
(ii) purchase, redeem or otherwise acquire or retire for
value, directly or indirectly, any shares of the Capital Stock of the
Company or any Restricted Subsidiary or options, warrants or other rights
to acquire such Capital Stock,
(iii) make any principal payment on, or repurchase, redeem,
defease, retire or otherwise acquire for value, prior to the relevant
scheduled
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principal payment, sinking fund or maturity, any Subordinated Indebtedness,
or
(iv) make any Investment in any Person, including, without
limitation, any Unrestricted Subsidiary (other than a Permitted
Investment)
(the foregoing actions described in clauses (i) through (iv) above being
hereinafter collectively referred to as "Restricted Payments") unless
after giving effect to the proposed Restricted Payment, (A) no Default or
Event of Default shall have occurred and be continuing and such Restricted
Payment shall not cause or constitute a Default or an Event of Default;
(B) immediately before and immediately after giving effect to such
transaction on a pro forma basis, the Company could incur $1.00 of
additional Indebtedness pursuant to Section 3.8(a); and (C) the aggregate
amount of all such Restricted Payments (the amount of any such Restricted
Payment, if other than cash, to be determined in good faith by the Board
of Directors of the Company, whose determination shall be conclusive and
evidenced by a resolution of the Board of Directors) declared or made
after the Issue Date (including such Restricted Payment) does not exceed
the sum of:
(1) 50% of the aggregate cumulative Consolidated Net Income
(or, if such aggregate cumulative Consolidated Net Income shall be a
loss, minus 100% of such loss) of the Company accrued on a
cumulative basis during the period (taken as one accounting period)
from the fiscal quarter that first begins after the Issue Date to
the end of the Company's most recently ended fiscal quarter for
which internal financial statements are available at the time of
such Restricted Payment;
(2) the aggregate Net Cash Proceeds received after the Issue
Date by the Company from the issuance or sale (other than to any of
its Subsidiaries) of its shares of Capital Stock (other than
Disqualified Capital Stock) or any options, warrants or rights to
purchase such shares of Capital Stock (other than Disqualified
Capital Stock) or other cash contributions to its
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capital (excluding amounts used pursuant to clauses (ii) or (iii) of
Section 3.9(b));
(3) the aggregate Net Cash Proceeds received after the Issue
Date by the Company (other than from any of its Subsidiaries) upon
the exercise of any options, warrants or rights to purchase shares
of Capital Stock (other than Disqualified Capital
Stock) of the Company;
(4) the aggregate Net Cash Proceeds received after the Issue
Date by the Company from Indebtedness of the Company or Disqualified
Capital Stock of the Company that has been converted into or
exchanged for Capital Stock (other than Disqualified Capital Stock)
of the Company or options, warrants or rights to acquire such
Capital Stock, to the extent such Indebtedness of the Company or
Disqualified Capital Stock of the Company was originally incurred or
issued for cash, plus the aggregate Net Cash Proceeds received by
the Company at the time of such conversion or exchange;
(5) to the extent not included in Consolidated Net Income, the
net reduction (received by the Company or any Restricted Subsidiary
in cash) in Investments (other than Permitted Investments) made by
the Company and the Restricted Subsidiaries since the Issue Date,
not to exceed, in the case of any Investments in any Person, the
amount of Investments (other than Permitted Investments) made by the
Company and the Restricted Subsidiaries in such Person since the
Issue Date.
(b) Notwithstanding Section 3.9(a) and in the case of clauses (v),
(vii), (viii)(x) and (x) below, so long as there is no Default or Event of
Default continuing, the following actions shall not be prohibited:
(i) the payment of any dividend within 60 days after the date
of declaration thereof, if at such date of declaration such payment would
be permitted by the provisions of Section 3.9(a) (such payment being
deemed to have been paid on such date of declaration for purposes of the
calculation required by this Section 3.9);
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(ii) the repurchase, redemption, or other acquisition or
retirement of any shares of any class of Capital Stock of the Company or
warrants, options or other rights to acquire such stock in exchange for,
or out of the Net Cash Proceeds of a substantially concurrent issue and
sale (other than to a Subsidiary) for cash of, any Capital Stock (other
than Disqualified Capital Stock) of the Company or warrants, options or
other rights to acquire such Capital Stock;
(iii) any repurchase, redemption, defeasance, retirement,
refinancing or acquisition for value or payment of principal of any
Subordinated Indebtedness in exchange for, or out of the net proceeds of a
substantially concurrent issuance and sale (other than to a Subsidiary)
for cash of, any Capital Stock (other than Disqualified Capital Stock) of
the Company or warrants, options or other rights to acquire such Capital
Stock;
(iv) the repurchase, redemption, defeasance, retirement or
other acquisition for value or payment of principal of any Subordinated
Indebtedness through the issuance of Refinancing Indebtedness;
(v) the repurchase, redemption, acquisition or retirement of
shares of Capital Stock of the Parent or options, warrants or other rights
to purchase such shares held by officers or employees or former officers
or employees of the Parent, the Company or any of their Subsidiaries (or
their estates or beneficiaries), or dividends to the Parent for such
purpose, upon death, disability, retirement, or termination of employment,
pursuant to the terms of any employee stock option or stock purchase plan
or agreement or management equity plan or other agreement, for an
aggregate amount in any fiscal year of the Company ending subsequent to
the Issue Date not to exceed $2,500,000 (plus, in the case of the
repurchase of Capital Stock held by the estate of a deceased officer or
employee, a sum equal to the net cash proceeds, if any, received by the
Company under any policy or policies of key man insurance on the life of
such officer or employee); provided, however, that, to the extent that the
aggregate amount so paid in any fiscal year of the Company is less than
$2,500,000, a sum equal to the difference between $2,500,000 and the
aggregate amounts paid pursuant to this clause (v) in such fiscal year
shall be added to
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the amount otherwise permitted to be paid in any subsequent fiscal year,
but in no event shall the aggregate amount so paid in any fiscal year
exceed the sum of $5,000,000 (plus the net cash proceeds of any key man
life insurance policies as aforesaid);
(vi) the payment of any dividend or distributions by the
Company to the Parent pursuant to the terms of any bona fide tax sharing
agreement among the Company, the Parent and other members of the
consolidated group of corporations of which the Company is a member;
(vii) the payment of management, consulting and advisory fees
and related expenses to the Sponsors not to exceed $1,500,000 in any
fiscal year of the Company;
(viii) any Investment in (x) Unrestricted Subsidiaries
(excluding Receivables Co.) having an aggregate fair market value, taken
together with all other Investments made pursuant to this subclause (x)
that are at that time outstanding, not to exceed $15,000,000 at the time
of such Investment (with the fair market value of each Investment being
measured at the time made and without giving effect to subsequent changes
in value) and (y) Receivables Co. in connection with a Permitted
Receivables Transaction;
(ix) the payment of dividends or distributions to the Parent
for the purpose of enabling the Parent to pay its franchise taxes and
other fees required to maintain its legal existence and to provide for
operating costs of up to $100,000 per fiscal year;
(x) the payment of any cash dividend on the Capital Stock of
the Company following a Public Equity Offering; provided that the
aggregate amount of all such dividends so paid in any fiscal year of the
Company pursuant to this clause (x) shall not exceed 6% of the Net Cash
Proceeds received by the Company in such Public Equity Offering;
(xi) other Restricted Payments not to exceed $15,000,000 in
the aggregate; and
(xii) the repurchase of Equity Interests deemed to occur upon
the exercise of stock options if
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such Equity Interests represent a portion of the exercise price of such
options.
The actions described in clauses (i), (v), (vii), (x) and (xi) of this Section
3.9(b) shall be Restricted Payments that shall be permitted to be taken in
accordance with this Section 3.9(b) but shall reduce the amount that would
otherwise be available for Restricted Payments under Section 3.9(a)(C) (provided
that any dividend paid pursuant to clause (i) of this Section 3.9(b) shall
reduce the amount that would otherwise be available under Section 3.9(a)(C) when
declared, but not also when paid pursuant to such clause (i)) and the actions
described in clauses (ii), (iii), (iv), (vi), (viii), (ix) and (xii) of this
Section 3.9(b) shall be permitted to be taken in accordance with this Section
3.9 and shall not reduce the amount that would otherwise be available for
Restricted Payments under Section 3.9(a)(C).
SECTION 3.10 Restrictions on Sales of Assets and Subsidiary Stock.
(a) The Company shall not, and shall not permit any Restricted Subsidiary to,
make any Asset Disposition unless (i) the Company or such Restricted Subsidiary
receives consideration (including by way of relief from, or by any other Person
assuming sole responsibility for, any liabilities, contingent or otherwise) at
the time of such Asset Disposition at least equal to the Fair Market Value of
the shares or assets that are the subject matter of such Asset Disposition, (ii)
at least 80% of the consideration therefor received by the Company or such
Restricted Subsidiary is in the form of cash (provided, however, that, in the
case of any Asset Disposition or group of related Asset Dispositions involving
total consideration of not more than $20,000,000, at least 50% of the
consideration therefor received by the Company or such Restricted Subsidiary is
in the form of cash; provided, further, however, that the foregoing exception
shall be available only in respect of Asset Dispositions, whether or not
related, involving cumulative aggregate consideration not to exceed
$50,000,000); and (iii) an amount equal to 100% of the Net Available Cash from
such Asset Disposition is applied by the Company (or such Restricted Subsidiary,
as the case may be) (A) first, to the extent the Company elects (or is required
by the terms of any Senior Indebtedness or any Indebtedness (other than
Preferred Stock) of a Restricted Subsidiary), to prepay, repay or purchase such
Senior Indebtedness or such Indebtedness (other than Preferred Stock) of a
Restricted Subsidiary (in each case
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other than Indebtedness owed to the Company or an Affiliate of the Company)
within one year after the later of the date of such Asset Disposition or the
receipt of such Net Available Cash, (B) second, to the extent of the balance of
Net Available Cash after application in accordance with clause (A), to the
extent the Company elects, to secure letter of credit obligations to the extent
such related letters of credit have not been drawn upon or returned undrawn; (C)
third, to the extent of the balance of Net Available Cash after application in
accordance with clauses (A) and (B), to the extent the Company or such
Restricted Subsidiary elects, within one year from the later of the date of such
Asset Disposition or the receipt of such Net Available Cash, to reinvest in
Additional Assets (including by means of an Investment in Additional Assets by a
Restricted Subsidiary with Net Available Cash received by the Company or another
Restricted Subsidiary or apply against restructuring expenses, not to exceed
$30,000,000 in cumulative aggregate amount, incurred in connection with the
restructuring reserves established from time to time on the Company's balance
sheet; and (D) fourth, to the extent of the balance of such Net Available Cash
after application in accordance with clauses (A), (B) and (C), to make an offer
(the "Offer") to purchase Securities pursuant and subject to the conditions of
this Indenture to the holders of the Securities at a purchase price of 100% of
the principal amount thereof plus accrued and unpaid interest to the purchase
date; provided, however, that, in connection with any prepayment, repayment or
purchase of Indebtedness pursuant to clause (A) or (B) above, the Company or
such Restricted Subsidiary shall retire such Indebtedness and shall cause the
related loan commitment (if any) to be permanently reduced in an amount equal to
the principal amount so prepaid, repaid or purchased. The Company shall not be
required to make an offer for Securities pursuant to this Section 3.10 if the
Net Available Cash available therefor (after application of the proceeds as
provided in clauses (A), (B) and (C)) is less than $10,000,000 (which lesser
amount shall be carried forward for purposes of determining whether an offer is
required with respect to the Net Available Cash from any subsequent Asset
Disposition).
For the purposes of Section 3.10(a)(ii), the following will be
deemed to be cash: (x) the assumption of Indebtedness (other than Disqualified
Capital Stock) of the Company or any Restricted Subsidiary and the release of
the Company or such Restricted Subsidiary from all liability on such
Indebtedness in connection with such Asset Disposition
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and (y) securities received by the Company or any Restricted Subsidiary of the
Company from the transferee that are promptly converted by the Company or such
Restricted Subsidiary into cash.
(b) In the event of an Asset Disposition that requires the purchase
of Securities pursuant to clause (iii)(D) of Section 3.10(a), the Company will
be required to purchase Securities tendered pursuant to an offer by the Company
for the Securities at a purchase price of 100% of their principal amount plus
accrued interest to the purchase date in accordance with the procedures
(including prorating in the event of oversubscription) set forth in Section
3.10(c).
(c) (i) Promptly, and in any event within 10 days after the Company
is required to make an Offer, the Company shall deliver to the Trustee and send,
by first-class mail to each Holder, a written notice stating that the Holder may
elect to have his or her Securities purchased by the Company either in whole or
in part (subject to prorating as hereinafter described in the event the Offer is
oversubscribed) in integral multiples of $1,000 of principal amount, at the
applicable purchase price. The notice shall specify a purchase date not less
than 30 days nor more than 60 days after the date of such notice (the "Purchase
Date").
(ii) Not later than the date upon which such written notice of
an Offer is delivered to the Trustee and the Holders, the Company shall
deliver to the Trustee an Officers' Certificate setting forth (A) the
amount of the Offer (the "Offer Amount"), (B) the allocation of the Net
Available Cash from the Asset Dispositions as a result of which such Offer
is being made and (C) the compliance of such allocation with the
provisions of Section 3.10(a). Upon the expiration of the period (the
"Offer Period") for which the Offer remains open, the Company shall
deliver to the Trustee for cancellation the Securities or portions thereof
which have been properly tendered to and are to be accepted by the
Company. The Trustee shall, on the Purchase Date, mail or deliver payment
to each tendering Holder in the amount of the purchase price of the
Securities tendered by such Holder to the extent such funds are available
to the Trustee.
(iii) Holders electing to have a Security purchased will be
required to surrender the Security,
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with an appropriate form duly completed, to the Company at the address
specified in the notice prior to the expiration of the Offer Period. Each
Holder will be entitled to withdraw its election if the Trustee or the
Company receives, not later than one Business Day prior to the expiration
of the Offer Period, a telegram, telex, facsimile transmission or letter
from such Holder setting forth the name of such Holder, the principal
amount of the Security or Securities which were delivered for purchase by
such Holder and a statement that such Holder is withdrawing its election
to have such Security or Securities purchased. If at the expiration of the
Offer Period the aggregate principal amount of Securities surrendered by
Holders exceeds the Offer Amount, the Company shall select the Securities
to be purchased on a pro rata basis (with such adjustments as may be
deemed appropriate by the Company so that only Securities in denominations
of $1,000, or integral multiples thereof, shall be purchased). Holders
whose Securities are purchased only in part will be issued new Securities
equal in principal amount to the unpurchased portion of the Securities
surrendered.
(d) The Company shall comply with the applicable tender offer rules,
including Rule 14e-1 under the Exchange Act, and any other securities laws or
regulations in connection with the repurchase of Securities pursuant to this
Section 3.10.
To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 3.10, the Company will
comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under this Indenture by virtue thereof.
SECTION 3.11 Limitation on Restrictions on Distributions from
Restricted Subsidiaries. The Company shall not, and shall not permit any
Restricted Subsidiary to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary (a) to pay dividends or make any other distributions on
its Capital Stock or pay any Indebtedness owed to the Company or any Restricted
Subsidiary, (b) to make any loans or advances to the Company or any Restricted
Subsidiary or (c) to transfer any of its property or assets to the Company or
any Restricted Sub-
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sidiary, except: (i) any encumbrance or restriction pursuant to an agreement in
effect at or entered into on the Issue Date; (ii) any encumbrance or restriction
with respect to a Restricted Subsidiary pursuant to an agreement relating to any
Indebtedness incurred by such Restricted Subsidiary on or prior to the date on
which such Restricted Subsidiary was acquired by the Company (other than
Indebtedness incurred as consideration in, or to provide all or any portion of
the funds or credit support utilized to consummate, the transaction or series of
related transactions pursuant to which such Restricted Subsidiary became a
Restricted Subsidiary or was acquired by the Company) and outstanding on such
date; (iii) any encumbrance or restriction pursuant to an agreement effecting a
refinancing of Indebtedness incurred pursuant to an agreement referred to in
clause (i) or (ii) of this Section 3.11 or contained in any amendment to an
agreement referred to in clause (i) or (ii) of this Section 3.11; provided,
however, that the encumbrances and restrictions with respect to such Restricted
Subsidiary contained in any such refinancing agreement or amendment are no less
favorable in any material respect to the holders of the Securities than
encumbrances and restrictions with respect to such Restricted Subsidiary
contained in such agreements; (iv) in the case of Section 3.11(c), any
encumbrance or restriction (A) that restricts in a customary manner the
subletting, assignment or transfer of any property or asset that is a lease,
license, conveyance or contract or similar property or asset that is the subject
of such encumbrance or restriction, (B) existing by virtue of any transfer of,
agreement to transfer, option or right with respect to, or Lien on, any property
or assets of the Company or any Restricted Subsidiary not otherwise prohibited
by this Indenture or (C) arising or agreed to in the ordinary course of
business, not relating to any Indebtedness, and that do not, individually or in
the aggregate, detract from the value of property or assets of the Company or
any Restricted Subsidiary in any manner material to the Company or any
Restricted Subsidiary; provided that, in each case, such encumbrance or
restriction relates to, and restricts dealings with, only the property or asset
that is the subject of such encumbrance or restriction; and provided further,
that such encumbrance or restriction does not prohibit, limit or otherwise
restrict the making or payment of any dividend or other distribution to the
Company or any Restricted Subsidiary; (v) any restriction with respect to a
Restricted Subsidiary imposed pursuant to an agreement entered into for the sale
or disposition of all or substantially all the Capital Stock or assets of such
Restricted
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Subsidiary pending the closing of such sale or disposition or pursuant to a
Permitted Receivables Transaction; and (vi) any restrictions on cash or other
deposits or net worth imposed by customers under contracts entered into in the
ordinary course of business.
SECTION 3.12 Limitation on Sale of Capital Stock of Restricted
Subsidiaries. The Company (i) shall not, and shall not permit any Restricted
Subsidiary to, transfer, convey, sell or otherwise dispose of any Capital Stock
of any Restricted Subsidiary to any Person (other than to the Company or a
Restricted Subsidiary) and (ii) shall not permit any Restricted Subsidiary to
issue any of its Capital Stock to any Person other than to the Company or a
Restricted Subsidiary; provided, however, that this Section 3.12 shall not
prohibit the transfer, conveyance, sale or other disposition of all of the
Capital Stock of a Restricted Subsidiary if the net cash proceeds from such
transfer, conveyance, sale or other disposition are applied in accordance with
Section 3.10.
SECTION 3.13 Limitation on Liens. The Company shall not, and shall
not permit any Restricted Subsidiary to, directly or indirectly, incur, assume
or suffer to exist any Lien of any kind upon any of its property or assets
(including any shares of Capital Stock or Indebtedness of any Restricted
Subsidiary), whether owned on the Issue Date or acquired after the Issue Date,
or any income or profits therefrom, except if the Securities (or the Guarantee
of the Securities, in the case of Liens on properties or assets of any
Guarantor) and all other amounts due under this Indenture are directly secured
equally and ratably with (or prior to in the case of Liens with respect to
Subordinated Indebtedness) the obligation or liability secured by such Lien,
excluding, however, from the operation of the foregoing any of the following:
(a) any Lien existing as of the Issue Date;
(b) any Lien arising by reason of (i) any judgment, decree or order
of any court, so long as such Lien is in existence less than 30 days after the
entry thereof or adequately bonded or the payment of such judgment, decree or
order is covered (subject to a customary deductible) by insurance maintained
with responsible insurance companies; (ii) taxes, assessments or other
governmental charges that are not yet delinquent or are being contested in good
faith; (iii) security for payment of workers' compensation or other
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insurance; (iv) good faith deposits in connection with tenders, leases or
contracts (other than contracts for the payment of borrowed money); (v) zoning
restrictions, easements, licenses, reservations, provisions, covenants,
conditions, waivers, restrictions on the use of property or minor irregularities
of title (and with respect to leasehold interests, mortgages, obligations, liens
and other encumbrances incurred, created, assumed or permitted to exist and
arising by, through or under a landlord or owner of the leased property, with or
without consent of the lessee), none of which materially impairs the use of any
property or assets material to the operation of the business of the Company or
any Restricted Subsidiary or the value of such property or assets for the
purpose of such business; (vi) deposits to secure public or statutory
obligations, or in lieu of surety or appeal bonds with respect to matters not
yet finally determined and being contested in good faith by negotiations or by
appropriate proceedings that suspend the collection thereof; or (vii) operation
of law in favor of mechanics, materialmen, laborers, employees or suppliers,
incurred in the ordinary course of business for sums that are not yet delinquent
or are being contested in good faith by negotiations or by appropriate
proceedings that suspend the collection thereof;
(c) any Lien now or hereafter existing on property or assets of the
Company or any Guarantor securing Senior Indebtedness of such Person;
(d) any Lien securing Acquired Indebtedness created prior to (and
not created in connection with, or in contemplation of) the incurrence of such
Indebtedness by the Company or a Restricted Subsidiary; provided that any such
Lien extends only to the assets that were subject to such Lien securing such
Acquired Indebtedness prior to the related acquisition;
(e) leases or subleases granted by the Company or any of its
Subsidiaries to any other Person in the ordinary course of business;
(f) Liens in the nature of trustees' Liens granted pursuant to any
indenture governing any indebtedness permitted by Section 3.8, in each case in
favor of the trustee under such indenture and securing only obligations to pay
any compensation to such trustee, to reimburse its expenses and to indemnify it
under the terms thereof; and
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(g) any extension, renewal, refinancing or replacement, in whole or
in part, of any Lien described in the foregoing clauses (a) through (f) so long
as the amount of property or assets subject to such Lien is not increased
thereby.
SECTION 3.14 Limitations on Affiliate Transactions. (a) The Company
shall not, and shall not permit any Restricted Subsidiary to, directly or
indirectly, enter into or conduct any transaction (including the purchase, sale,
lease or exchange of any property or the rendering of any service) with any
Affiliate of the Company (an "Affiliate Transaction") unless: (i) the terms of
such Affiliate Transaction are no less favorable to the Company or such
Restricted Subsidiary, as the case may be, than those that could be obtained at
the time of such transaction in arms'-length dealings with a Person who is not
such an Affiliate; (ii) in the event such Affiliate Transaction involves an
aggregate amount in excess of $5,000,000, either (A) the terms of such
transaction have been approved by a majority of the members of the Board of
Directors of the Company and by a majority of the disinterested members of such
Board, if any (and such majority or majorities, as the case may be, determines
that such Affiliate Transaction satisfies the criteria in (i) above) or (B) the
Company has received a written opinion from an independent investment banking
firm of nationally recognized standing that such Affiliate Transaction is fair
to the Company or such Subsidiary, as the case may be, from a financial point of
view; and (iii) in the event such Affiliate Transaction involves the purchase or
sale of Equity Interests, or the purchase, sale or lease of assets (other than
sales of inventory to an Affiliate by the Company or a Restricted Subsidiary or
purchases of raw materials from an Affiliate by the Company or such Restricted
Subsidiary, pursuant to a continuing commercial agreement entered into between
the Company or such Restricted Subsidiary and such Affiliate in the ordinary
course, and in furtherance of the business of the Company or such Restricted
Subsidiary), in each case, in an aggregate amount in excess of $20,000,000, the
Company has received a written opinion from an independent investment banking
firm of nationally recognized standing that such Affiliate Transaction is fair
to the Company or such Restricted Subsidiary, as the case may be, from a
financial point of view.
(b) The provisions of Section 3.14(a) will not prohibit (i) any
Restricted Payment permitted to be paid or
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made pursuant to Section 3.9, (ii) the performance of the Company's or a
Restricted Subsidiary's obligations under any employment contract, collective
bargaining agreement, employee benefit plan, related trust agreement or any
other similar arrangement heretofore or hereafter entered into in the ordinary
course of business, (iii) payment of compensation to employees, officers,
directors or consultants in the ordinary course of business, (iv) maintenance in
the ordinary course of business of benefit programs or arrangements for
employees, officers or directors, including vacation plans, health and life
insurance plans, deferred compensation plans, and retirement or savings plans
and similar plans, (v) any transaction between the Company and a Restricted
Subsidiary or between Restricted Subsidiaries, (vi) any agreement in effect as
of the Issue Date or any amendment thereto or any transaction contemplated
thereby, or (vii) the payment of management, consulting and advisory fees and
related expenses to the Sponsors not to exceed $1,500,000 in any fiscal year of
the Company.
SECTION 3.15 Change of Control. (a) If a Change of Control shall
occur at any time, then each holder of Securities shall have the right to
require that the Company purchase such holder's Securities in whole or in part
in any integral multiple of $1,000, for a cash purchase price (the "Change of
Control Purchase Price") equal to 101% of the principal amount of such
Securities, plus accrued and unpaid interest, if any, on such Securities to the
date of purchase (the "Change of Control Purchase Date"), pursuant to an offer
(the "Change of Control Offer"), made in conformity with the procedures set
forth in Sections 3.15(b), (c) and (d).
(b) Within 15 days following any Change of Control, the Company
shall notify the Trustee thereof and give written notice of such Change of
Control to each holder of Securities by first-class mail, postage prepaid, at
his address appearing in the security register, stating:
(i) that a Change of Control has occurred and that such Holder
has the right to require the Company to purchase such Holder's Securities,
in whole or in part, at the Change of Control Purchase Price;
(ii) the Change of Control Purchase Price and the Change of
Control Purchase Date, which shall be a Business Day no earlier than 30
days nor later than 60 days from the date such notice is mailed, or such
later
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date as is necessary to comply with requirements under the Exchange Act;
(iii) that any Security not tendered for purchase will
continue to accrue interest;
(iv) that, unless the Company defaults in the payment of the
Change of Control Purchase Price, any Securities accepted for payment
pursuant to the Change of Control Offer shall cease to accrue interest
after the Change of Control Purchase Date; and
(v) the procedures that a Holder must follow to accept a
Change of Control Offer or to withdraw such acceptance.
(c) Holders electing to have Securities purchased will be required
to surrender such Securities, together with the execution form provided for on
Exhibit G duly executed, to the Company at the address specified in the notice
at least 10 Business Days prior to the Change of Control Purchase Date. Holders
will be entitled to withdraw their election if the Company receives, not later
than three Business Days prior to the Change of Control Purchase Date, a
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Securities delivered for purchase by the Holder as to
which his election is to be withdrawn and a statement that such Holder is
withdrawing his election to have such Securities purchased. Holders whose
Securities are purchased only in part will be issued new Securities equal in
principal amount to the unpurchased portion of the Securities surrendered.
(d) The Company will comply with any applicable tender offer rules,
including Rule 14e-1 under the Exchange Act, and any other applicable securities
laws or regulations in connection with a Change of Control Offer. To the extent
that the provisions of any securities laws or regulations conflict with
provisions of this Section, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under this Section by virtue thereof.
(e) The Company will not, and will not permit any Subsidiary to,
create or permit to exist or become effective any restriction (other than
restrictions in effect on the Issue Date with respect to Indebtedness
outstanding on the Issue Date and refinancings thereof and customary default
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provisions) that would materially impair the ability of the Company to make a
Change of Control Offer to purchase the Securities or, if such Change of Control
Offer is made, to pay for the Securities tendered for purchase.
SECTION 3.16 Compliance with Registration Rights Agreement. The
Company shall comply in all material respects with the terms and conditions of
Section 6 of the Registration Rights Agreement.
SECTION 3.17 Limitation on Lines of Business. The Company shall not,
and shall not permit its Restricted Subsidiaries to, engage in any business
other than those engaged in on the date of this Indenture and lines of business
incidental, similar or related thereto.
SECTION 3.18 Payments for Consent. Neither the Company nor any
Subsidiary shall, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder of
the Securities for or as an inducement to any consent, waiver or amendment of
any terms or provisions of the Securities unless such consideration is offered
to be paid or agreed to be paid to all Holders of the Securities who so consent,
waive or agree in the time frame set forth in the solicitation documents
relating to such consent, waiver or agreement.
SECTION 3.19 Waiver of Stay, Extension or Usury Laws. The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, plead, or in any manner whatsoever claim, and will resist any
and all efforts to be compelled to take the benefit or advantage of, any stay or
extension law or any usury law or other law that would prohibit or forgive the
Company from paying all or any portion of the principal of or interest on the
Securities as contemplated herein, wherever enacted, now or at any time
hereafter in force, or which may affect the covenants or the performance of this
Indenture; and (to the extent that it may lawfully do so) the Company hereby
waives all benefit or advantage of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
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ARTICLE IV
DEFAULTS AND REMEDIES.
SECTION 4.1 Event of Default Defined; Acceleration of Maturity. An
"Event of Default" occurs if:
(a) the Company defaults in any payment of interest on any Security
when the same becomes due and payable, whether or not such payment shall be
prohibited by Article X, and such default continues for a period of 30 days;
(b) the Company defaults in the payment of the principal of any
Security when the same becomes due and payable at its Stated Maturity, upon
optional redemption, upon required repurchase, upon declaration or otherwise,
whether or not such payment shall be prohibited by Article X;
(c) the Company fails to comply with Section 8.1;
(d) the Company fails to comply with Section 3.7, 3.8, 3.9, 3.10,
3.11, 3.12, 3.13, 3.14, 3.15 or 3.17 (in each case other than a failure to
repurchase Securities when required pursuant to Section 3.10 or 3.15, which
failure shall constitute an Event of Default under Section 4.1(b)) and such
failure continues for 30 days after the notice specified below;
(e) the Company fails to comply with any covenant, condition or
agreement in this Indenture or the Securities (other than those referred to in
clauses (a), (b), (c) and (d) above) and such failure continues for 60 days
after the notice specified below;
(f) Indebtedness of the Company or any Restricted Subsidiary is not
paid within any applicable grace period after final maturity or is accelerated
by the holders thereof because of a default and the total amount of such unpaid
or accelerated Indebtedness exceeds $10,000,000 or its foreign currency
equivalent at the time;
(g) the Company or a Material Subsidiary pursuant
to or within the meaning of any Bankruptcy Law:
(i) commences a voluntary case:
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(ii) consents to the entry of an order for relief against it
in an involuntary case;
(iii) consents to the appointment of a Custodian of it or for
any substantial part of its property; or
(iv) makes a general assignment for the benefit of its
creditors;
or takes any comparable action under any foreign laws relating to insolvency;
(h) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(i) is for relief against the Company or any Material
Subsidiary in an involuntary case;
(ii) appoints a Custodian of the Company or any Material
Subsidiary or for any substantial part of its property; or
(iii) orders the winding up or liquidation of the Company or
any Material Subsidiary;
or any similar relief is granted under any foreign laws and the order, decree or
relief remains unstayed and in effect for 60 days;
(i) any judgment or decree for the payment of money in excess of
$10,000,000 or its foreign currency equivalent at the time (to the extent not
covered by insurance) is entered against the Company or any Material Subsidiary
and is not discharged and either (A) an enforcement proceeding has been
commenced by any creditor upon such judgment or decree and is not promptly
stayed or (B) there is a period of 60 days following the entry of such judgment
or decree during which such judgment or decree is not discharged or the
execution thereof stayed; or
(j) the failure of any Subsidiary Guarantee to be in full force and
effect (except as contemplated by the terms thereof) or the denial or
disaffirmation by any Subsidiary Guarantor of its obligations hereunder or any
Subsidiary Guarantee if such failure is not cured, or such denial or
disaffirmation is not rescinded or revoked, within 10 days.
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The foregoing will constitute Events of Default whatever the reason
for any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body.
The term "Bankruptcy Law" means Title 11, United States Code, or any
similar Federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator, custodian or similar official
under any Bankruptcy Law.
Notwithstanding the foregoing, a Default under Section 4.1(d) or
Section 4.1(e) will not constitute an Event of Default until the Trustee or the
Holders of at least 25% in principal amount of the outstanding Securities notify
the Company of the Default and the Company does not cure such Default within the
time specified in said Section 4.1(d) or (e) after receipt of such notice. Such
notice must specify the Default, demand that it be remedied and state that such
notice is a "Notice of Default."
An Event of Default specified in Section 4.1(e) and all consequences
thereof (including without limitation, any acceleration or resulting payment
default) shall be annulled, waived and rescinded, automatically and without any
action by the Trustee or the Holders of the Securities, if within 20 days after
the occurrence of such Event of Default, (i) the holders of the Indebtedness to
which such Event of Default relates have rescinded or waived the acceleration,
notice or action (as the case may be) giving rise to such Event of Default, or
(ii) the default that is the basis for such Event of Default has been cured.
The Company shall deliver to the Trustee: (i) within 30 days after
the occurrence thereof, written notice in the form of an Officers' Certificate
of any Event of Default under clause (f) and any event which with the giving of
notice or the lapse of time would become an Event of Default under clause (d),
(e) or (i), its status and what action the Company is taking or proposes to take
with respect thereto; and (ii) within 120 days after the end of each fiscal
year, written notice in the form of an Officer's Certificate indicating whether
the Officers signing such Officer's Certificate knew or were aware of any
Default that occurred during such previous fiscal year.
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SECTION 4.2 Acceleration. If an Event of Default (other than an
Event of Default specified in Section 4.1(g) or (h) with respect to the Company)
occurs and is continuing, the Trustee, by notice to the Company, or the Holders
of at least 25% in outstanding principal amount of the Securities, by notice to
the Company and the Trustee, may declare the principal of, and accrued and
unpaid interest on, all the Securities to be due and payable. Upon such a
declaration, such principal and interest shall be due and payable (i) if no
Indebtedness is outstanding under the Credit Agreement, immediately, and (ii) if
any Indebtedness is outstanding under the Credit Agreement, upon the first to
occur of (x) the acceleration of any such Indebtedness or (y) the fifth Business
Day after receipt by the Company and the Credit Agent of such written notice of
acceleration. If an Event of Default specified in Section 4.1(g) or (h) with
respect to the Company occurs and is continuing, the principal of, and accrued
and unpaid interest on, all the Securities shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holders. The Holders of a majority in principal amount of the
Securities, by notice to the Trustee, may rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of
acceleration. No such rescission shall affect any subsequent Default or Event of
Default or impair any right consequent thereto.
SECTION 4.3 Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of or interest on the Securities or to enforce the performance of
any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Securities or does not produce any of them in the proceeding. A delay
or omission by the Trustee or any Holder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy shall
be deemed exclusive of any other remedy and all available remedies shall be
cumulative.
SECTION 4.4 Waiver of Past Defaults. The Holders of a majority in
outstanding principal amount of the
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Securities, by notice to the Trustee, may waive an existing Default or Event of
Default and its consequences except (i) a Default or Event of Default in the
payment of the principal of or interest on a Security or (ii) a Default or Event
of Default in respect of a provision that under Section 7.2 cannot be amended
without the consent of each Holder affected. When a Default or Event of Default
is waived, it is deemed cured, but no such waiver shall extend to any subsequent
or other Default or Event of Default or impair any consequent right.
SECTION 4.5 Control by Majority. The Holders of a majority in
outstanding principal amount of the Securities may direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 5.1, that the Trustee determines is unduly prejudicial to the
rights of other Holders (it being understood that, subject to Section 5.1, the
Trustee shall have no duty to ascertain whether or not such actions or
forebearances are unduly prejudicial to such Holders) or would subject the
Trustee to personal liability; provided, however, that the Trustee may take any
other action deemed proper by the Trustee that is not inconsistent with such
direction. Prior to taking or refraining from taking any such action hereunder,
the Trustee shall be entitled to indemnification satisfactory to it in its sole
discretion against all losses and expenses caused by its taking or refraining
from taking such action.
SECTION 4.6 Limitation on Suits. A Holder may not pursue any remedy
with respect to this Indenture or the Securities unless:
(a) the Holder gives to the Trustee written notice stating that an
Event of Default is continuing;
(b) the Holders of at least 25% in outstanding principal amount of
the Securities make a written request to the Trustee to pursue the remedy;
(c) such Holder or Holders offer to the Trustee reasonable security
or indemnity against any loss, liability or expense;
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(d) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of security or indemnity; and
(e) the Holders of a majority in principal amount of the Securities
do not give the Trustee a direction inconsistent with the request during such
60-day period.
A Holder may not use this Indenture to prejudice the rights of
another Holder or to obtain a preference or priority over another Holder.
SECTION 4.7 Rights of Holders to Receive Payment. Notwithstanding
any other provision of this Indenture, the right of any Holder to receive
payment of the principal of and interest on the Securities held by such Holder
on or after the respective due dates expressed in the Securities, or to bring
suit for the enforcement of any such payment on or after such respective dates,
shall not be impaired or affected without the consent of such Holder.
SECTION 4.8 Collection Suit by Trustee. If an Event of Default
specified in Section 4.1(a) or (b) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company for the whole amount then due and owing (together with interest on any
unpaid interest to the extent lawful) and the amounts provided for in Section
5.6.
SECTION 4.9 Trustee may File Proofs of Claim. The Trustee may file
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Holders allowed in
any judicial proceedings relative to the Company, its Subsidiaries or their
respective creditors or properties and, unless prohibited by law or applicable
regulations, may vote on behalf of the Holders in any election of a trustee in
bankruptcy or other Person performing similar functions, and any Custodian in
any such judicial proceeding is hereby authorized by each Holder to make
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and its counsel, and any other amounts due
the Trustee under Section 5.6.
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SECTION 4.10 Priorities. if the Trustee collects any money or
property pursuant to this Article IV, it shall pay out the money or property in
the following order:
FIRST: Costs and expenses of collection, including all sums paid or
advanced by the Trustee hereunder and the reasonable compensation,
expenses and disbursements of the Trustee, its agents, and counsel and all
other amounts due to the Trustee under Section 5.6;
SECOND: To holders of Senior Indebtedness to the extent required by
Article X;
THIRD: To Holders for amounts due and unpaid on the Securities for
principal and interest, without preference or priority of any kind,
according to the amounts due and payable on the Securities for principal
and interest, respectively; and
FOURTH: To the Company.
The Trustee may fix a record date and payment date for any payment
to Holders pursuant to this Section 4.10. At least 15 days before such record
date, the Company shall mail to each Holder and the Trustee a notice that states
the record date, the payment date and the amount to be paid.
SECTION 4.11 Undertaking for Costs. In any suit for the enforcement
of any right or remedy under this Indenture or in any suit against the Trustee
for any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section 4.11 does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 4.7 or a suit by Holders of more
than 10% in outstanding principal amount of the Securities.
ARTICLE V
CONCERNING THE TRUSTEE.
SECTION 5.1 Duties and Responsibilities of the Trustee; During
Default; Prior to Default. The Trustee,
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prior to the occurrence of an Event of Default and after the curing or waiving
of all Events of Default that may have occurred, undertakes to perform such
duties and only such duties as are specifically set forth in this Indenture. In
case an Event of Default has occurred that has not been cured or waived, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs. The Trustee shall not be charged with knowledge of the existence of
an Event of Default, other than with respect to a payment default, unless and
until the Trustee has actual knowledge of such Event of Default or the Trustee
shall have received notice thereof in writing from the Company or from the
holders of a majority in principal amount of the Securities.
No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own wilful misconduct, except that
(a) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(i) the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Indenture, and the
Trustee shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture against
the Trustee; and
(ii) in the absence of bad faith on the part of the Trustee,
the Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon any statements,
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture; but in the case of any such statements,
certificates or opinions that are specifically required by any provision
hereof to be furnished to the Trustee, the Trustee shall be under a duty
to examine the same to determine whether or not they conform to the
requirements of this Indenture;
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(b) the Trustee shall not be liable for any error of judgment made
in good faith by a responsible officer or responsible officers of the Trustee,
unless it shall be proved that the Trustee was negligent in ascertaining the
pertinent facts; and
(c) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction of
the holders of not less than a majority in principal amount of the Securities at
the time outstanding relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred upon the Trustee, under this Indenture.
None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if there shall be reasonable ground for believing that the
repayment of such funds or adequate indemnity against such liability is not
reasonably assured to it.
This Section 5.1 is in furtherance of and subject to Sections 315
and 316 of the Trust Indenture Act.
SECTION 5.2 Certain Rights of the Trustee. In furtherance of and
subject to the Trust Indenture Act, and subject to Section 5.1:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate or any other
certificate, statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture, note, coupon, security or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
party or parties;
(b) any request, direction, order or demand of the Company mentioned
herein shall be sufficiently evidenced by an Officers' Certificate (unless other
evidence in respect thereof be herein specifically prescribed); and any
resolution of the Board of Directors may be evidenced to the Trustee by a copy
thereof certified by the secretary or an assistant secretary of the Company;
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(c) the Trustee may consult with counsel and any advice or Opinion
of Counsel shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted to be taken by it hereunder in good faith
and in reliance on such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of the
trusts or powers vested in it by this Indenture at the request, order or
direction of any of the Securityholders pursuant to the provisions of this
Indenture, unless such Securityholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which might be incurred therein or thereby;
(e) the Trustee shall not be liable for any action taken or omitted
by it in good faith and believed by it to be authorized or within the
discretion, rights or powers conferred upon it by this Indenture;
(f) prior to the occurrence of an Event of Default hereunder and
after the curing or waiving of all Events of Default, the Trustee shall not be
bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, appraisal, bond, debenture, note, coupon,
security, or other paper or document unless requested in writing so to do by the
holders of not less than a majority in aggregate principal amount of the
Securities then outstanding; provided that, if the payment within a reasonable
time to the Trustee of the costs, expenses or liabilities likely to be incurred
by it in the making of such investigation is, in the opinion of the Trustee, not
reasonably assured to the Trustee by the security afforded to it by the terms of
this Indenture, the Trustee may require reasonable indemnity against such costs,
expenses or liabilities as a condition to proceeding; the reasonable expenses of
every such examination shall be paid by the Company or, if paid by the Trustee
or any predecessor trustee, shall be repaid by the Company upon demand; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys not regularly in its employ and the Trustee shall not be responsible
for any misconduct or negligence on the part of any such agent or attorney
appointed with due care by it hereunder.
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SECTION 5.3 Trustee Not Responsible for Recitals, Disposition of
Securities or Application of Proceeds Thereof. The recitals contained herein and
in the Securities, except the Trustee's certificates of authentication, shall be
taken as the statements of the Company, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representation as to the validity or sufficiency of this Indenture or of the
Securities. The Trustee shall not be accountable for the use or application by
the Company of any of the Securities or of the proceeds thereof.
SECTION 5.4 Trustee and Agents May Hold Securities; Collections,
etc. The Trustee or any agent of the Company or the Trustee, in its individual
or any other capacity, may become the owner or pledgee of Securities with the
same rights it would have if it were not the Trustee or such agent and may
otherwise deal with the Company and receive, collect, hold and retain
collections from the Company with the same rights it would have if it were not
the Trustee or such agent.
SECTION 5.5 Moneys Held by Trustee. Subject to the provisions of
Section 9.6, all moneys received by the Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for which they were received,
but need not be segregated from other funds except to the extent required by
mandatory provisions of law. Neither the Trustee nor any agent of the Company or
the Trustee shall be under any liability for interest on any moneys received by
it hereunder.
SECTION 5.6 Compensation and Indemnification of Trustee and Its
Prior Claim. The Company covenants and agrees to pay to the Trustee from time to
time, and the Trustee shall be entitled to, reasonable compensation (which shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust) and the Company covenants and agrees to pay or
reimburse the Trustee and each predecessor trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by or on behalf
of it in accordance with any of the provisions of this Indenture (including the
reasonable compensation and the expenses and disbursements of its counsel and of
all agents and other persons not regularly in its employ) except any such
expense, disbursement or advance as may arise from its negligence or bad faith.
The Company also covenants to indemnify the Trustee and each predecessor
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trustee for, and to hold it harmless against, any loss, liability or expense
incurred without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of this Indenture or the trusts
hereunder and its duties hereunder, including the costs and expenses of
enforcing this Indenture against the Company (including this Section 5.6) and of
defending itself against or investigating any claim (whether asserted by a
Holder or the Company) of liability in the premises. The obligations of the
Company under this Section to compensate and indemnify the Trustee and each
predecessor trustee and to pay or reimburse the Trustee and each predecessor
trustee for expenses, disbursements and advances shall constitute additional
indebtedness hereunder and shall survive the satisfaction and discharge of this
Indenture. Such additional indebtedness shall be a senior claim to that of the
Securities upon all property and funds held or collected by the Trustee as such,
except funds held in trust for the benefit of the holders of particular
Securities, and the Securities are hereby subordinated to such senior claim.
SECTION 5.7 Right of Trustee to Rely on Officers' Certificate, Etc.
Subject to Sections 5.1 and 5.2, whenever in the administration of the trusts of
this Indenture the Trustee shall deem it necessary or desirable that a matter be
proved or established prior to taking or suffering or omitting any action
hereunder, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of negligence or bad faith on the
part of the Trustee, be deemed to be conclusively proved and established by an
Officers' Certificate delivered to the Trustee, and such certificate, in the
absence of negligence or bad faith on the part of the Trustee, shall be full
warrant to the Trustee for any action taken, suffered or omitted by it under the
provisions of this Indenture upon the faith thereof.
SECTION 5.8 Persons Eligible for Appointment as Trustee. The Trustee
hereunder shall at all times be a corporation having a combined capital and
surplus of at least $50,000,000, and which is eligible in accordance with the
provisions of Section 310(a) of the Trust Indenture Act. If such corporation
publishes reports of condition at least annually, pursuant to law or to the
requirements of a Federal, State or District of Columbia supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such corporation shall
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be deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published.
SECTION 5.9 Resignation and Removal; Appointment of Successor
Trustee. (a) The Trustee may at any time resign by giving written notice of
resignation to the Company and by mailing notice thereof by first-class mail to
holders of Securities at their last addresses as they shall appear on the
Security register. Upon receiving such notice of resignation, the Company shall
promptly appoint a successor trustee by written instrument in duplicate,
executed by authority of the Board of Directors, one copy of which instrument
shall be delivered to the resigning Trustee and one copy to the successor
trustee. If no successor trustee shall have been so appointed and have accepted
appointment within 30 days after the mailing of such notice of resignation, the
resigning trustee may petition any court of competent jurisdiction for the
appointment of a successor trustee, or any Securityholder who has been a bona
fide holder of a Security or Securities for at least six months may, on behalf
of himself and all others similarly situated, petition any such court for the
appointment of a successor trustee. Such court may thereupon, after such notice,
if any, as it may deem proper, prescribe and appoint a successor trustee.
(b) In case at any time any of the following shall occur:
(i) the Trustee shall fail to comply with the provisions of
Section 310(b) of the Trust Indenture Act, after written request therefor
by the Company or by any Securityholder who has been a bona fide holder of
a Security or Securities for at least six months; or
(ii) the Trustee shall cease to be eligible in accordance with
the provisions of Section 5.8 and shall fail to resign after written
request therefor by the Company or by any such Securityholder; or
(iii) the Trustee shall become incapable of acting, or shall
be adjudged a bankrupt or insolvent, or a receiver or liquidator of the
Trustee or of its property shall be appointed, or any public officer shall
take charge or control of the Trustee or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation;
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then, in any such case, the Company may remove the Trustee and appoint a
successor trustee by written instrument, in duplicate, executed by order of the
Board of Directors of the Company, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor trustee, or,
subject to Section 315(e) of the Trust Indenture Act, any Securityholder who has
been a bona fide holder of a Security or Securities for at least six months may
on behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor trustee. Such court may thereupon, after such notice, if any, as it
may deem proper and prescribe, remove the Trustee and appoint a successor
trustee.
(c) The holders of a majority in aggregate principal amount of the
Securities at the time outstanding may at any time remove the Trustee and
appoint a successor trustee by delivering to the Trustee so removed, to the
successor trustee so appointed and to the Company the evidence provided for in
Section 6.1 of the action in that regard taken by the Securityholders.
(d) Any resignation or removal of the Trustee and any appointment of
a successor trustee pursuant to any of the provisions of this Section 5.9 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 5.10.
SECTION 5.10 Acceptance of Appointment by Successor Trustee. Any
successor trustee appointed as provided in Section 5.9 shall execute and deliver
to the Company and to its predecessor trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become vested with all rights,
powers, duties and obligations of its predecessor hereunder, with like effect as
if originally named as trustee herein; but, nevertheless, on the written request
of the Company or of the successor trustee, upon payment of its charges then
unpaid, the trustee ceasing to act shall, subject to Section 9.6, pay over to
the successor trustee all moneys at the time held by it hereunder and shall
execute and deliver an instrument transferring to such successor trustee all
such rights, powers, duties and obligations. Upon request of any such successor
trustee, the Company shall execute any and all instruments in writing
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for more fully and certainly vesting in and confirming to such successor trustee
all such rights and powers. Any trustee ceasing to act shall, nevertheless,
retain a prior claim upon all property or funds held or collected by such
trustee to secure any amounts then due it pursuant to the provisions of Section
5.6.
Upon acceptance of appointment by a successor trustee as provided in
this Section 5.10, the Company shall mail notice thereof by first-class mail to
the holders of Securities at their last addresses as they shall appear in the
Security register. If the acceptance of appointment is substantially
contemporaneous with the resignation, then the notice called for by the
preceding sentence may be combined with the notice called for by Section 5.9. If
the Company fails to mail such notice within 10 days after acceptance of
appointment by the successor trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Company.
SECTION 5.11 Merger, Conversion, Consolidation or Succession to
Business of Trustee. Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided that such
corporation shall be eligible under the provisions of Section 5.8, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.
In case at the time such successor to the Trustee shall succeed to
the trusts created by this Indenture any of the Securities shall have been
authenticated but not delivered, any such successor to the Trustee may adopt the
certificate of authentication of any predecessor trustee and deliver such
Securities so authenticated; and, in case at that time any of the Securities
shall not have been authenticated, any successor to the Trustee may authenticate
such Securities either in the name of any predecessor hereunder or in the name
of the successor Trustee; and in all such cases such certificate shall have the
full force which it is anywhere in the Securities or in this Indenture provided
that the certificate of the Trustee shall have; provided, that the right to
adopt the certificate of authentication of any predecessor trustee or to
authenticate
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Securities in the name of any predecessor trustee shall apply only to its
successor or successors by merger, conversion or consolidation.
SECTION 5.12 Notice of Defaults. If a Default or Event of Default
occurs and is continuing and if a Trust Officer has actual knowledge thereof,
the Trustee shall mail to each Holder notice of the Default or Event of Default
within 90 days after it occurs. Except in the case of a Default or Event of
Default in payment of principal of, or interest on, any Security (including
payments pursuant to the optional redemption or required repurchase provisions
of such Security, if any), the Trustee may withhold the notice if and so long as
its board of directors, the Executive Committee of its board of directors or a
committee of its Trust Officers in good faith determines that withholding the
notice is in the interests of Securityholders.
SECTION 5.13 Reports by the Trustee. The Trustee shall transmit to
the Holders all reports required under Section 313(a) of the Trust Indenture
Act.
ARTICLE VI
CONCERNING THE SECURITYHOLDERS.
SECTION 6.1 Evidence of Action Taken by Securityholders. Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by Securityholders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Securityholders in person or by agent duly appointed in
writing; and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Trustee. Proof of execution of any instrument or of a writing appointing any
such agent shall be sufficient for any purpose of this Indenture and (subject to
Sections 5.1 and 5.2) conclusive in favor of the Trustee and the Company, if
made in the manner provided in this Article.
SECTION 6.2 Proof of Execution of Instruments and of Holding of
Securities; Record Date. Subject to Sections 5.1 and 5.2, the execution of any
instrument by a Securityholder or his agent or proxy may be proved in accordance
with such reasonable rules and regulations as may
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be prescribed by the Trustee or in such manner as shall be satisfactory to the
Trustee. The holding of Securities shall be proved by the Security register or
by a certificate of the registrar thereof. The Company may set a record date for
purposes of determining the identity of holders of Securities entitled to vote
or consent to any action referred to in Section 6.1, which record date may be
set at any time or from time to time by notice to the Trustee, for any date or
dates (in the case of any adjournment or resolicitation) not more than 60 days
nor less than five days prior to the proposed date of such vote or consent, and
thereafter, notwithstanding any other provisions hereof, only holders of
Securities of record on such record date shall be entitled to so vote or give
such consent or to withdraw such vote or consent.
SECTION 6.3 Holders to be Treated as Owners. The Company, the
Trustee and any agent of the Company or the Trustee may deem and treat the
person in whose name any Security shall be registered upon the Security register
as the absolute owner of such Security (whether or not such Security shall be
overdue and notwithstanding any notation of ownership or other writing thereon)
for the purpose of receiving payment of or on account of the principal of and,
subject to the provisions of this Indenture, interest on such Security and for
all other purposes; and neither the Company nor the Trustee nor any agent of the
Company or the Trustee shall be affected by any notice to the contrary;
provided, however, that the Depository, or its nominee, shall be deemed the
owner of the Restricted Global Security, and owners of beneficial interests in
the Restricted Global Security will not be considered the owners of any
Securities. All such payments so made to any such person, or upon his order,
shall be valid, and, to the extent of the sum or sums so paid, effectual to
satisfy and discharge the liability for moneys payable upon any such Security.
SECTION 6.4 Securities Owned by Company Deemed Not Outstanding. In
determining whether the holders of the requisite aggregate principal amount of
Securities have concurred in any direction, consent or waiver under this
Indenture, Securities which are owned by the Company or any other obligor on the
Securities or by any person directly or indirectly controlling or controlled by
or under direct or indirect common control with the Company or any other obligor
on the Securities shall be disregarded and deemed not to be outstanding for the
purpose of any such determination, except that for the purpose of determining
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whether the Trustee shall be protected in relying on any such direction, consent
or waiver only Securities which the Trustee knows are so owned shall be so
disregarded. Securities so owned which have been pledged in good faith may be
regarded as outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities and that
the pledgee is not the Company or any other obligor upon the Securities or any
person directly or indirectly controlling or controlled by or under direct or
indirect common control with the Company or any other obligor on the Securities.
In case of a dispute as to such right, the advice of counsel shall be full
protection in respect of any decision made by the Trustee in accordance with
such advice. Upon request of the Trustee, the Company shall furnish to the
Trustee promptly an Officers' Certificate listing and identifying all
Securities, if any, known by the Company to be owned or held by or for the
account of any of the above-described persons; and, subject to Sections 5.1 and
5.2, the Trustee shall be entitled to accept such Officers' Certificate as
conclusive evidence of the facts therein set forth and of the fact that all
Securities not listed therein are outstanding for the purpose of any such
determination.
SECTION 6.5 Right of Revocation of Action Taken. At any time prior
to (but not after) the evidencing to the Trustee, as provided in Section 6.1, of
the taking of any action by the holders of the percentage in aggregate principal
amount of the Securities specified in this Indenture in connection with such
action, any holder of a Security the serial number of which is shown by the
evidence to be included among the serial numbers of the Securities the holders
of which have consented to such action may, by filing written notice at the
Corporate Trust Office and upon proof of holding as provided in this Article,
revoke such action so far as concerns such Security. Except as aforesaid any
such action taken by the holder of any Security shall be conclusive and binding
upon such holder and upon all future holders and owners of such Security and of
any Securities issued in exchange or substitution therefor, irrespective of
whether or not any notation in regard thereto is made upon any such Security.
Any action taken by the holders of the percentage in aggregate principal amount
of the Securities specified in this Indenture in connection with such action
shall be conclusively binding upon the Company, the Trustee and the holders of
all the Securities.
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ARTICLE VII
AMENDMENTS.
SECTION 7.1 Without Consent of Holders. The Company and the Trustee
may amend this Indenture or the Securities without notice to or consent of any
Holder:
(a) to cure any ambiguity, omission, defect or inconsistency;
(b) to comply with Article VIII;
(c) to provide for uncertificated Securities in addition to or in
place of certificated Securities; provided, however, that the uncertificated
Securities are issued in registered form for purposes of Section 163(f) of the
Code or in a manner such that the uncertificated Securities are described in
Section 163(f)(2)(B) of the Code;
(d) to make any change in Article X that would limit or terminate
the benefits available to any holder of Senior Indebtedness (or Representatives
therefor) under
Article X;
(e) to add Guarantees with respect to the Securities or to secure
the Securities;
(f) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the Company;
(g) to comply with any requirements of the Commission in connection
with qualifying this Indenture under the Trust Indenture Act;
(h) to make any change that does not adversely affect the rights of
any Holder; or
(i) to provide for the issuance of the Exchange Notes, which will
have terms substantially identical in all material respects to the Initial Notes
(except that the transfer restrictions contained in the Initial Notes will be
modified or eliminated, as appropriate), and which will be treated, together
with any outstanding Initial Notes, as a single issue of securities.
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An amendment under this Section 7.1 may not make any change that
adversely affects the rights under Article X of any holder of Senior
Indebtedness then outstanding unless the holders of such Senior Indebtedness (or
any group or representative thereof authorized to give a consent) consent to
such change.
After an amendment under this Section 7.1 becomes effective, the
Company shall mail to each Holder a notice briefly describing such amendment.
The failure to give such notice to all Holders, or any defect therein, shall not
impair or affect the validity of an amendment under this Section 7.1.
SECTION 7.2 With Consent of Holders. The Company and the Trustee may
amend this Indenture or the Securities without notice to any Holder but with the
written consent of the Holders of at least a majority in principal amount of the
Securities. However, without the consent of each Holder affected, an amendment
may not:
(a) reduce the amount of Securities whose Holders must consent to an
amendment;
(b) reduce the rate of or extend the time for payment of interest on
any Security;
(c) reduce the principal of or extend the Stated Maturity of any
Security;
(d) reduce the premium payable upon the redemption or repurchase of
any Security or change the time at which any Security may or shall be redeemed
or repurchased in accordance with this Indenture;
(e) make any Security payable in money other than that stated in the
Security;
(f) modify or affect in any manner adverse to the Holders, the terms
and conditions of the obligation of the Company for the due and punctual payment
of the principal of or interest on Securities; or
(g) make any change in Section 4.4 or 4.7 or the second sentence of
this Section 7.2.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of
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any proposed amendment, but it shall be sufficient if such consent approves the
substance thereof.
An amendment under this Section 7.2 may not make any change that
adversely affects the rights under Article X of any holder of Senior
Indebtedness then outstanding unless the holders of such Senior Indebtedness (or
any group or representative thereof authorized to give a consent) consent to
such change.
After an amendment under this Section 7.2 becomes effective, the
Company shall mail to Holders a notice briefly describing such amendment. The
failure to give such notice to all Holders, or any defect therein, shall not
impair or affect the validity of an amendment under this Section 7.2.
SECTION 7.3 Compliance with Trust Indenture Act. Every amendment to
this Indenture or the Securities shall comply with the Trust Indenture Act as
then in effect.
SECTION 7.4 Revocation and Effect of Consents and Waivers. A consent
to an amendment or a waiver by a Holder of a Security shall bind the Holder and
every subsequent Holder of that Security or portion of the Security that
evidences the same debt as the consenting Holder's Security, even if notation of
the consent or waiver is not made on the Security. However, any such Holder or
subsequent Holder may revoke the consent or waiver as to such Holder's Security
or portion of Security if the Trustee receives the notice of revocation before
the date the amendment or waiver becomes effective. After an amendment or waiver
becomes effective, it shall bind every Holder.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders entitled to give their consent or
take any other action described above or required or permitted to be taken
pursuant to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Holders at such record
date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any such action, whether or not such Persons continue to be Holders after
such record date. No such consent shall become valid or effective more than 120
days after such record date.
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SECTION 7.5 Notation on or Exchange of Securities. If an amendment
changes the terms of a Security, the Trustee may require the Holder of the
Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Company or the Trustee so determines, the Company
in exchange for the Security shall issue and the Trustee shall authenticate a
new Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.
SECTION 7.6 Trustee To Sign Amendments. The Trustee shall sign any
amendment authorized pursuant to this Article VII if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive, and (subject to Section 7.1) shall be fully protected in relying
upon, an Officer's Certificate and an Opinion of Counsel stating that such
amendment is authorized or permitted by this Indenture.
ARTICLE VIII
MERGER AND CONSOLIDATION.
SECTION 8.1 When Company May Merge, Etc. The Company shall not
consolidate with or merge with or into, or convey, transfer or lease all or
substantially all its assets to, any Person, unless: (i) the resulting,
surviving or transferee Person (the "Successor Company") shall be a Person
organized and existing under the laws of the United States of America, any state
thereof or the District of Columbia and the Successor Company (if not the
Company) shall expressly assume, by an indenture supplemental to this Indenture,
executed and delivered to the Trustee, in form reasonably satisfactory to the
Trustee, all the obligations of the Company under the Securities and this
Indenture; (ii) immediately after giving effect to such transaction (and
treating any Indebtedness which becomes an obligation of the Successor Company
or any Restricted Subsidiary as a result of such transaction as having been
incurred by such Successor Company or such Restricted Subsidiary at the time of
such transaction), no Event of Default shall have occurred and be continuing;
(iii) immediately after giving
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effect to such transaction, the Consolidated Coverage Ratio of the Successor
Company is at least 1.00:1; provided, however, that, if the Consolidated
Coverage Ratio of the Company before giving effect to such transaction is within
a range set forth in column (A) below, then the Consolidated Coverage Ratio of
the Successor Company shall be at least equal to the lesser of (1) the ratio
determined by multiplying the relevant percentage set forth in column (B) below
by the Consolidated Coverage Ratio prior to such transaction and (2) the
relevant ratio set forth in column (C) below:
(A) (B) (C)
----------------- --------- -----------
1.00:1 to 1.99:1 100% 1.60:1
2.00:1 to 2.99:1 90% 2.10:1
3.00:1 to 3.99:1 80% 2.40:1
4.00:1 to greater 70% 2.50:1;
(iv) immediately after giving effect to such transaction, the Successor Company
shall have Consolidated Net Worth in an amount which is not less than the
Consolidated Net Worth of the Company prior to such transaction; and (v) the
Company shall have delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that such consolidation, merger or transfer and
such supplemental indenture (if any) comply with this Indenture.
SECTION 8.2 Successor Corporation Substituted. The Successor Company
shall be the successor of the Company and shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under this
Indenture, but the predecessor Company in the case of a conveyance, transfer or
lease shall not be released from the obligation to pay the principal of and
interest on the Securities.
Such Successor Company may cause to be signed, and may issue either
in its own name or in the name of the Company prior to such succession any or
all of the Securities issuable hereunder which theretofore shall not have been
signed by the Company and delivered to the Trustee; and, upon the order of such
successor corporation, instead of the Company, and subject to all the terms,
conditions and limitations in this Indenture prescribed, the Trustee shall
authenticate and shall deliver any Securities which previously shall have been
signed and delivered by the officers of the Company to the Trustee for
authentication,
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and any Securities which such successor corporation thereafter shall cause to be
signed and delivered to the Trustee for that purpose. All of the Securities so
issued shall in all respects have the same legal rank and benefit under this
Indenture as the Securities theretofore or thereafter issued in accordance with
the terms of this Indenture as though all of such Securities had been issued at
the date of the execution hereof.
In case of any such consolidation, merger, sale, lease or conveyance
such changes in phraseology and form (but not in substance) may be made in the
Securities thereafter to be issued as may be appropriate.
In the event of any such sale or conveyance (other than a conveyance
by way of lease) the Company or any Successor Company which shall theretofore
have become such in the manner described in this Article shall be discharged
from all obligations and covenants under this Indenture and the Securities and
may be liquidated and dissolved.
ARTICLE IX
DISCHARGE OF INDENTURE; DEFEASANCE.
SECTION 9.1 Discharge of Liability on Securities; Defeasance. (a)
When (i) the Company delivers to the Trustee all outstanding Securities (other
than Securities replaced pursuant to Section 2.6) for cancellation or (ii) all
outstanding Securities have become due and payable, whether at maturity or as a
result of the mailing of a notice of redemption pursuant to Article XIII and the
Company irrevocably deposits with the Trustee funds sufficient to pay at
maturity or upon redemption all outstanding Securities (other than Securities
replaced pursuant to Section 2.6), including interest thereon to maturity or
such redemption date, and if in either case the Company pays all other sums
payable hereunder by the Company, then this Indenture shall, subject to Section
9.1(c), cease to be of further effect. The Trustee shall acknowledge
satisfaction and discharge of this Indenture on demand of the Company
(accompanied by an Officers' Certificate and an Opinion of Counsel stating that
all conditions precedent specified herein relating to the satisfaction and
discharge of this Indenture have been complied with) and at the cost and expense
of the Company.
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(b) Subject to Sections 9.1(c) and 9.2, the Company at any time may
terminate (i) all its obligations under the Securities and this Indenture and
all obligations of the Subsidiary Guarantors under the Subsidiary Guarantee and
this Indenture ("legal defeasance option") or (ii) its obligations under
Sections 3.5, 3.7 through 3.18, 8.1(iii) and 8.1(iv) and the operation of
Sections 4.1(d), 4.1(e), 4.1(f), 4.1(g) (but only with respect to a Material
Subsidiary), 4.1(h) (but only with respect to a Material Subsidiary) and 4.1(i)
("covenant defeasance option"); provided, however, no deposit under this Article
IX shall be effective to terminate the obligations of the Company under the
Securities or this Indenture prior to 123 days following any such deposit. The
Company may exercise its legal defeasance option notwithstanding its prior
exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment of the
Securities may not be accelerated because of an Event of Default. If the Company
exercises its covenant defeasance option, payment of the Securities may not be
accelerated because of an Event of Default specified in Sections 4.1(d), (e),
(f), (g) (but only with respect to a Material Subsidiary), 4.1(h) (but only with
respect to a Material Subsidiary) and 4.1(i) or because of the failure of the
Company to comply with Section 8.1(iii) and Section 8.1(iv).
Upon satisfaction of the conditions set forth herein and upon
request of the Company, the Trustee shall acknowledge in writing the discharge
of those obligations that the Company terminates.
(c) Notwithstanding the provisions of Sections 9.1(a) and (b), the
Company's obligations in Article II, Sections 5.6, 5.9, 9.4, 9.5 and 9.6 shall
survive until the Securities have been paid in full. Thereafter, the Company's
obligations in Sections 5.6, 9.4 and 9.5 shall survive.
SECTION 9.2 Conditions to Defeasance. The Company may exercise its
legal defeasance option or its covenant defeasance option only if:
(a) the Company irrevocably deposits in trust with the Trustee money
or U.S. Government Obligations for the payment of principal of and interest on
the Securities to maturity or redemption, as the case may be;
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(b) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their opinion
that the payments of principal and interest when due and without reinvestment of
the deposited U.S. Government Obligations plus any deposited money without
investment will provide cash at such times and in such amounts as will be
sufficient to pay principal and interest when due on all the Securities to
maturity or redemption, as the case may be;
(c) no Event of Default shall have occurred or be continuing on the
date of such deposit and (B) 123 days pass after the deposit is made and during
the 123-day period no Default specified in Section 4.1(g) or 4.1(h) with respect
to the Company occurs which is continuing at the end of such period;
(d) the deposit does not constitute a default under any other
agreement binding on the Company and is not prohibited by Article X;
(e) the Company delivers to the Trustee an Opinion of Counsel to the
effect that the trust resulting from the deposit does not constitute, or is
qualified as, a regulated investment company under the Investment Company Act of
1940;
(f) in the case of the legal defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel stating that (A) the Company
has received from, or there has been published by, the Internal Revenue Service
a ruling, or (B) since the date hereof there has been a change in the applicable
Federal income tax law, in either case to the effect that, and based thereon
such Opinion of Counsel shall confirm that, the Holders will not recognize
income, gain or loss for Federal income tax purposes as a result of such
defeasance and will be subject to Federal income tax purposes on the same
amounts, in the same manner and at the same times as would have been the case if
such legal defeasance had not occurred;
(g) in the case of the covenant defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Holders will not recognize income, gain or loss for Federal income tax purposes
as a result of such covenant defeasance and will be subject to Federal income
tax on the same amounts, in the same manner and at the same times as would have
been the case if such covenant defeasance had not occurred;
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(h) The Holders shall have a perfected security interest under
applicable law in the cash or U.S. Government Obligations deposited pursuant to
Section 9.2(a);
(i) The Company shall have delivered to the Trustee an Opinion of
Counsel, in form and substance reasonably satisfactory to the Trustee, to the
effect that, after the passage of 123 days following the deposit, the trust
funds will not be subject to any applicable bankruptcy, insolvency,
reorganization or similar law affecting creditors' rights generally;
(j) such defeasance shall not cause the Trustee to have a
conflicting interest with respect to any securities of the Company; and
(k) the Company delivers to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions precedent to the
defeasance and discharge of the Securities and this Indenture as contemplated by
this Article IX have been complied with.
Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article III.
SECTION 9.3 Application of Trust Money. The Trustee shall hold in
trust money or U.S. Government Obligations deposited with it pursuant to this
Article IX. It shall apply the deposited money and the money from U.S.
Government Obligations through the paying agent and in accordance with this
Indenture to the payment of principal of and interest on the Securities. Money
and securities so held in trust are not subject to Article X.
SECTION 9.4 Repayment to Company. The Trustee and the paying agent
shall promptly turn over to the Company upon request any excess money or
securities held by them upon payment of all the obligations under this
Indenture.
Subject to any applicable abandoned property law, the Trustee and
the paying agent shall pay to the Company upon request any money held by them
for the payment of principal of or interest on the Securities that remains
unclaimed for two years, and, thereafter, Holders entitled to the money must
look to the Company for payment as general creditors.
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SECTION 9.5 Indemnity for U.S. Government Obligations. The Company
shall pay and shall indemnify the Trustee against any tax, fee or other charge
imposed on or assessed against deposited U.S. Government Obligations or the
principal and interest received on such U.S. Government Obligations.
SECTION 9.6 Reinstatement. If the Trustee or paying agent is unable
to apply any money or U.S. Government Obligations in accordance with this
Article IX by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the obligations of the Company and the
Subsidiary Guarantors under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to this Article IX
until such time as the Trustee or paying agent is permitted to apply all such
money or U.S. Government Obligations in accordance with this Article IX;
provided, however, that, if the Company has made any payment of interest on or
principal of any Securities because of the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Securities to
receive such payment from the money or U.S. Government Obligations held by the
Trustee or paying agent.
ARTICLE X
SUBORDINATION.
SECTION 10.1 Agreement to Subordinate. The Company agrees, and each
Securityholder by accepting a Security agrees, that the payment of the principal
of and interest on the Securities, the payment of all other obligations relating
to the Securities (including prepayment premiums, liquidated damages, fees,
costs, expenses, indemnities and rescission or damage claims) and the payment of
any obligation in respect of any Guarantee of obligations relating to the
Securities (all of the foregoing being collectively referred to as the "Note
Obligations") are subordinate in right of payment, to the extent and in the
manner provided in this Article X, to the prior payment in full of all Senior
Indebtedness and that the subordination is for the benefit of and enforceable by
the holders of Senior Indebtedness. The Securities shall in all respects rank
pari passu with all other Senior Subordinated Indebtedness of the Company and
only Indebtedness of the Company
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that is Senior Indebtedness shall rank senior to the Securities in accordance
with the provisions set forth herein. All provisions of this Article X shall be
subject to Section 10.12. For purposes of this Article X, "payment in full"
means payment in cash.
SECTION 10.2 Liquidation, Dissolution, Bankruptcy. Upon any payment,
distribution or other transfer of the assets of the Company or any Guarantor (or
any other payment, distribution or other transfer on behalf of the Company or
any Guarantor from any source) of any kind or character, whether direct or
indirect, by set-off or otherwise, or whether in cash, property or securities
(other than Reorganization Securities) upon any dissolution, winding up, total
or partial liquidation or reorganization of the Company or any Guarantor
(whether voluntary or involuntary, including in bankruptcy, insolvency or
receivership proceedings or upon any assignment for the benefit of creditors or
any other marshalling of the Company's or any Guarantor's assets and
liabilities):
(a) holders of Senior Indebtedness shall be entitled to
receive payment in full of all Senior Indebtedness before Securityholders
shall be entitled to receive any payment or any distribution of cash,
securities or other property with respect to the Note Obligations (other
than Reorganization Securities); and
(b) until the Senior Indebtedness is paid in full, any
payment, distribution or other transfer of assets of the Company or any
Guarantor of any kind or character, whether direct or indirect, by set-off
or otherwise, and whether in cash, securities or property (other than
Reorganization Securities), to which Securityholders would be entitled but
for this Article X shall be made to holders of Senior Indebtedness as
their interests may appear.
SECTION 10.3 Default on Senior Indebtedness. The Company may not,
and will not permit any Guarantor to, make any payment, distribution or other
transfer of the assets of the Company or such Guarantor (or any other payment,
distribution or other transfer on behalf of the Company or any Guarantor from
any source) of any kind, or character, whether direct or indirect, by set-off or
otherwise, and whether in cash, property or securities (other than
Reorganization Securities) in respect of the Note Obligations, or make any
deposit pursuant to Section 9.1 and
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may not, directly or indirectly, repurchase, redeem or otherwise retire any
Securities, whether pursuant to the terms of the Securities or upon acceleration
or otherwise (collectively, "pay the Securities") if (i) all or any portion of
the principal (including any reimbursement obligation) of, premium, if any, or
interest, commitment fee or letter of credit fee on or relating to, any
Designated Senior Indebtedness is not paid when due or (ii) any other default on
Designated Senior Indebtedness occurs and the maturity of such Designated Senior
Indebtedness is accelerated in accordance with its terms unless, in either case,
(x) the default has been cured or waived and any such acceleration has been
rescinded or (y) such Designated Senior Indebtedness has been paid in full;
provided, however, that the Company may pay the Securities without regard to the
foregoing if the Company and the Trustee receive written notice approving such
payment from the Representatives of all Designated Senior Indebtedness with
respect to which either of the events set forth in clause (i) or (ii) of the
immediately preceding sentence has occurred and is continuing. During the
continuance of any default (other than a default described in clause (i) or (ii)
of the preceding sentence) with respect to any Designated Senior Indebtedness
pursuant to which the maturity thereof may be accelerated immediately without
further notice (except such notice as may be required to effect such
acceleration) or the expiration of any applicable grace periods, neither the
Company nor any other Person may pay the Securities for a period (a "Payment
Blockage Period") commencing upon the receipt by the Trustee (with a copy to the
Company) of written notice (a "Blockage Notice") of such default from the
Representative of any Designated Senior Indebtedness specifying an election to
effect a Payment Blockage Period and ending 179 days thereafter (or earlier if
such Payment Blockage Period is terminated (i) by written notice to the Trustee
and the Company from the Person or Persons who gave such Blockage Notice, (ii)
because the default giving rise to such Blockage Notice is no longer continuing,
or (iii) by repayment in full of such Designated Senior Indebtedness); provided,
however, that so long as there shall remain outstanding any Senior Indebtedness
under the Credit Agreement, a Blockage Notice may be given only by the Credit
Agent unless otherwise agreed to in writing by the lenders named therein.
Notwithstanding the provisions described in the immediately preceding sentence
(but subject to the provisions contained in the first sentence of this section),
the Company may resume payments on the Securities after such Payment
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Blockage Period. Not more than one Blockage Notice may be given in any
consecutive 360-day period, irrespective of the number of defaults with respect
to Designated Senior Indebtedness during such period.
SECTION 10.4 Acceleration of Payment of Securities. If payment of
the Securities is accelerated because of an Event of Default, the Company or the
Trustee shall promptly notify the holders of the Designated Senior Indebtedness
(or their Representatives) of the acceleration. If any Designated Senior
Indebtedness is outstanding, neither the Company nor any other Person may pay
the Securities until five Business Days after the Representatives of all
Designated Senior Indebtedness receive notice of such acceleration and,
thereafter, may pay the Securities only if such payments are otherwise permitted
pursuant to this Article X at such time.
SECTION 10.5 When Distribution Must Be Paid Over. If a distribution
is made to Securityholders that, because of this Article X, should not have been
made to them, the Securityholders who receive the distribution shall hold it in
trust for holders of Senior Indebtedness and pay it over to them as their
interests may appear.
SECTION 10.6 Subrogation. After all Senior Indebtedness is paid in
full and until the Securities are paid in full, Securityholders shall be
subrogated to the rights of holders of Senior Indebtedness to receive
distributions applicable to Senior Indebtedness. A distribution made under this
Article X to holders of Senior Indebtedness which otherwise would have been made
to Securityholders is not, as between the Company and Security-holders, a
payment by the Company on Senior Indebtedness.
SECTION 10.7 Relative Rights. This Article X defines the relative
rights of Securityholders and holders of Senior Indebtedness. Nothing in this
Indenture shall:
(1) impair, as between the Company and Security-holders, the
obligation of the Company, which is absolute and unconditional, to pay
principal of and interest on the Securities in accordance with their
terms; or
(2) prevent the Trustee or any Securityholder from exercising its
available remedies upon a Default, subject to the rights hereunder of
holders of Senior
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Indebtedness to receive any payment, distribution or transfer otherwise
payable to Securityholders.
SECTION 10.8 Subordination May Not Be Impaired by Company. No right
of any holder of Senior Indebtedness to enforce the subordination of the
Indebtedness evidenced by the Securities shall be impaired by any act or failure
to act by the Company or by its failure to comply with this Indenture.
SECTION 10.9 Rights of Trustee and Paying Agent. Notwithstanding
Section 10.3, the Trustee or paying agent may continue to make payments on the
Securities and shall not be charged with knowledge of the existence of facts
that would prohibit the making of any such payments unless, not less than two
Business Days prior to the date of such payment, a Trust Officer of the Trustee
receives notice that payments may not be made under this Article X. The Company,
the Registrar or co-registrar, the paying agent, a Representative or a holder of
Designated Senior Indebtedness may give such notice; provided, however, that, if
an issue of Designated Senior Indebtedness has a Representative, only the
Representative may give such notice.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness with the same rights it would have if it were not Trustee. The
Registrar and co-registrar and the paying Agent may do the same with like
rights. The Trustee shall be entitled to all the rights set forth in this
Article X with respect to any Senior Indebtedness which may at any time be held
by it, to the same extent as any other holder of Senior Indebtedness; and,
nothing in Article V shall deprive the Trustee of any of its rights as such
holder. Nothing in this Article X shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 5.6.
SECTION 10.10 Distribution or Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of Senior Indebtedness,
the distribution may be made and the notice given to their Representative (if
any).
SECTION 10.11 Article X Not To Prevent Events of Default or Limit
Right To Accelerate. The failure to make a payment pursuant to the Securities by
reason of any provision in this Article X shall not be construed as preventing
the occurrence of a Default. Nothing in this Article X
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shall have any effect on the right of the Securityholders or the Trustee to
accelerate the maturity of the Securities.
SECTION 10.12 Trust Moneys Not Subordinated. Notwithstanding
anything contained herein to the contrary, payments from money or the proceeds
of U.S. Government Obligations held in trust in accordance with Article IX by
the Trustee for the payment of principal of and interest on the Securities shall
not be subordinated to the prior payment of any Senior Indebtedness or subject
to the restrictions set forth in this Article X, and none of the Securityholders
shall be obligated to pay over any such amount to the Company or any holder of
Senior Indebtedness of the Company or any other creditor of the Company.
SECTION 10.13 Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article X, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 10.2
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representatives for the holders of Senior
Indebtedness for the purpose of ascertaining the Persons entitled to participate
in such payment or distribution, the holders of the Senior Indebtedness and
other Indebtedness of the Company or any Guarantor, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article X. In the event that the Trustee
determines, in good faith, that evidence is required with respect to the right
of any Person as a holder of Senior Indebtedness to participate in any payment
or distribution pursuant to this Article X, the Trustee may request such Person
to furnish evidence to the reasonable satisfaction of the Trustee as to the
amount of Senior Indebtedness held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and other
facts pertinent to the rights of such Person under this Article X, and, if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment. The provisions of Sections 5.1 and 5.2 shall be applicable to all
actions or omissions of actions by the Trustee pursuant to this Article X.
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SECTION 10.14 Trustee To Effectuate Subordination. Each
Securityholder by accepting a Security authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Securityholders and the holders of
Senior Indebtedness as provided in this Article X and appoints the Trustee as
attorney-in-fact for any and all such purposes.
SECTION 10.15 Trustee Not Fiduciary for Holders of Senior
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and shall not be liable to any such holders if it
shall mistakenly, in the absence of gross negligence or willful misconduct, pay
over or distribute to Securityholders or the Company or any other Person, money
or assets to which any holders of Senior Indebtedness shall be entitled by
virtue of this Article X or otherwise.
SECTION 10.16 Reliance by Holders of Senior Indebtedness on
Subordination Provisions. Each Securityholder by accepting a Security
acknowledges and agrees that the foregoing subordination provisions are, and are
intended to be, an inducement and a consideration to each holder of any Senior
Indebtedness, whether such Senior Indebtedness was created or acquired before or
after the issuance of the Securities, to acquire and continue to hold, or to
continue to hold, such Senior Indebtedness and such holder of Senior
Indebtedness shall be deemed conclusively to have relied on such subordination
provisions in acquiring and continuing to hold, or in continuing to hold, such
Senior Indebtedness.
Section 10.17 Miscellaneous Subordination Provisions. (a) The
subordination provisions contained herein are solely for the benefit of the
holders from time to time of Senior Indebtedness and their representatives,
assignees and beneficiaries and may not be rescinded, cancelled, amended or
modified in any way other than any amendment or modification that would not
adversely affect the rights of any holder of Senior Indebtedness. No holder of
Subordinated Indebtedness shall subordinate any Subordinated Indebtedness to any
indebtedness or obligation of the Company or any Guarantor other than Senior
Indebtedness.
(b) No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein
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provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or any Guarantor or by any act or
failure to act, in good faith, by any such holder, or by any non-compliance by
the Company or any Guarantor with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
(c) Without in any way limiting the generality of Section 10.17(b),
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the holders of the Securities, without
incurring responsibility to the holders of the Securities and without impairing
or releasing the subordination provided in this Article X or the obligations
hereunder of the holders of the Securities to the holders of Senior
Indebtedness, do any one or more of the following: (i) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, Senior
Indebtedness or any instrument evidencing the same or any agreement under which
Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise
deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (iii) release any Person liable in any manner for the collection
of Senior Indebtedness; and (iv) exercise or refrain from exercising any rights
against the Company and any other Person.
(d) The subordination provisions of this Article X shall, to the
fullest extent permitted by law, continue to be effective or be reinstated, as
the case may be, if at any time payment and performance of the Senior
Indebtedness is, pursuant to applicable law, avoided, recovered, or rescinded or
must otherwise be restored or returned by any holder of Senior Indebtedness,
whether as a "voidable preference," "fraudulent conveyance," "fraudulent
transfer," or otherwise, all as though such payment or performance had not been
made.
(e) If, upon any proceeding referred to in Section 10.2, the Trustee
does not file a claim in such proceeding prior to ten Business Days before the
expiration of the time to file such claim, the holders of the Senior
Indebtedness or their agent may file such claim on behalf of the holders of the
Securities.
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ARTICLE XI
SUBSIDIARY GUARANTEE.
SECTION 11.1 Subsidiary Guarantee. Each Guarantor hereby
unconditionally and irrevocably guarantees (each a "Subsidiary Guarantee") on a
senior subordinated basis to each Holder and to the Trustee and its successors
and assigns all obligations of the Company under this Indenture and the
Securities. The Guarantor further agrees that the obligations of the Company may
be extended or renewed, in whole or in part, without notice or further assent
from such Guarantor, and that such Guarantor will remain bound under this
Article XI notwithstanding any extension or renewal of any such obligation.
Each Guarantor waives presentation to, demand of, payment from and
protest to the Company of any of the Company's obligations and also waives
notice of protest for nonpayment. Each Guarantor waives notice of any default
under the Securities or the Company's obligations. The obligations of any
Guarantor hereunder shall not be affected by (a) the failure of any Holder or
the Trustee to assert any claim or demand or to enforce any right or remedy
against the Company or any other Person under this Indenture, the Securities or
any other agreement or otherwise; (b) any extension or renewal of any thereof;
(c) any rescission, waiver, amendment or modification of any of the terms or
provisions of this Indenture, the Securities or any other agreement; (d) the
release of any security held by any Holder or the trustee for the obligations of
the Company or any of them; (e) the failure of any Holder or Trustee to exercise
any right or remedy against any other guarantor of the obligations of the
Company; or (f) any change in the ownership of such Guarantor.
Each Guarantor further agrees that its Subsidiary Guarantee
constitutes a guarantee of payment, performance and compliance when due (and not
a guarantee of collection) and waives any right to require that any resort be
had by any Holder or the Trustee to any security held for payment of the
obligations of the Company.
Each Guarantor's Subsidiary Guarantee is, to the extent and manner
set forth in Article X, subordinated in right of payment to the prior payment in
full of all Senior Indebtedness of such Guarantor and each such Guarantor's
Subsidiary Guarantee is made subject to such provisions of
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this Indenture. For purposes of this Section 11.1, "payment in full," as used
with respect to Senior Indebtedness means the receipt of cash.
The obligations of each Guarantor hereunder shall not be subject to
any reduction, limitation, impairment or termination for any reason, including
any claim of waiver, release, surrender, alteration or compromise, and shall not
be subject to any defense of set-off, counterclaim, recoupment or termination
whatsoever or by reason of the invalidity, illegality or unenforceability of the
obligations or otherwise. Without limiting the generality of the foregoing, the
obligations of each Guarantor herein shall not be discharged or impaired or
otherwise affected by the failure of any Holder or the Trustee to assert any
claim or demand or to enforce any remedy under this Indenture, the Securities or
any other agreement, by any waiver or modification of any thereof, by any
default, failure or delay, willful or otherwise, in the performance of the
obligations, or by any other act or thing or omission or delay to do any other
act or thing which may or might in any manner or to any extent vary the risk of
such Guarantor or would otherwise operate as a discharge of such Guarantor as a
matter of law or equity.
Each Guarantor further agrees that its Subsidiary Guarantee shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of principal of or interest on any obligation is
rescinded or must otherwise be restored by any Holder or the Trustee upon the
bankruptcy or reorganization of the Company or otherwise.
In furtherance of the foregoing and not in limitation of any other
right that any Holder or the Trustee has at law or in equity against any
Guarantor by virtue hereof, upon the failure of the Company to pay the principal
of or interest on any of the Securities when and as the same shall become due,
whether at maturity, by acceleration, by redemption or otherwise, or to perform
or comply with any other monetary obligation of the Company under this Indenture
or the Securities, each Guarantor hereby promises to and will, upon receipt of
written demand by the Trustee, but subject to Article X forthwith pay, or cause
to be paid, in cash, to the Holders or the Trustee an amount equal to the sum of
(i) the unpaid principal amount of such obligations, (ii) accrued and unpaid
interest on such obligations (but only to the extent not prohibited by law)
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and (iii) all other monetary obligations of the Company to the Holders and the
Trustee.
Each Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations guaranteed
hereby until payment in full of all such obligations. Each Guarantor further
agrees that, as between it, on the one hand, and the Holders and the Trustee, on
the other hand, (x) the maturity of the obligations guaranteed hereby may be
accelerated as provided in Article IV for the purposes of such Guarantor's
Subsidiary Guarantee, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the obligations guaranteed hereby,
and (y) in the event of any declaration of acceleration of such obligations as
provided in Article IV, such obligations (whether or not due and payable) shall
forthwith become due and payable by the Guarantor for the purposes of this
Section.
Each Guarantor also agrees to pay any and all costs and expenses
(including reasonable counsels' fees and expenses) incurred by the Trustee or
any Holder in enforcing any rights under this section with respect to such
Guarantor.
SECTION 11.2 Limitation on Liability. Any term or provision of this
Indenture to the contrary notwithstanding, the maximum, aggregate amount of the
obligations guaranteed hereunder by any Guarantor shall not exceed the maximum
amount that can, after giving effect to all other contingent and fixed
liabilities of such Guarantor be hereby guaranteed without rendering this
Indenture, as it relates to such Guarantor, voidable under applicable law
relating to fraudulent conveyance or fraudulent transfer or similar laws
affecting the rights of creditors generally.
SECTION 11.3 Successors and Assigns. This Article XI shall be
binding upon each Guarantor and its respective successors and assigns and shall
endure to the benefit of the successors and assigns of the Trustee and the
Holders and, in the event of any transferor assignment of rights by any Holder
or the Trustee, the rights and privileges conferred upon that party in this
Indenture and in the Securities shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions of this
Indenture.
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SECTION 11.4 No Waiver. Neither a failure nor a delay on the part of
either the Trustee or the Holders in exercising any right, power or privilege
under this Article XI shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise of any right,
power or privilege. The rights, remedies and benefits of the trustee and the
Holders herein expressly specified are cumulative and not exclusive of any other
rights, remedies or benefits which either may have under this Article XI at law,
in equity, by statute or otherwise.
SECTION 11.5 Modification. No modification, amendment or waiver of
any provision of this Article XI, nor the consent to any departure by any
Guarantor therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Trustee, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice to or demand on any Guarantor in any case shall entitle such Guarantor to
any other or further notice or demand in the same, similar or other
circumstance.
ARTICLE XII
MISCELLANEOUS PROVISIONS.
SECTION 12.1 Incorporators, Stockholders, Officers and Directors of
Company Exempt from Individual Liability. No recourse under or upon any
obligation, covenant or agreement contained in this Indenture, or in any
Security, or because of any indebtedness evidenced thereby, shall be had against
any incorporator, as such or against any past, present or future stockholder,
officer or director, as such, of the Company or of any successor, either
directly or through the Company or any successor, under any rule of law, statute
or constitutional provision or by the enforcement of any assessment or by any
legal or equitable proceeding or otherwise, all such liability being expressly
waived and released by the acceptance of the Securities by the holders thereof
and as part of the consideration for the issue of the Securities.
SECTION 12.2 Provisions of Indenture for the Sole Benefit of Parties
and Securityholders. Nothing in this Indenture or in the Securities, expressed
or implied, shall give or be construed to give to any person, firm or
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corporation, other than the parties hereto and their successors and the holders
of the Securities, any legal or equitable right, remedy or claim under this
Indenture or under any covenant or provision herein contained, all such
covenants and provisions being for the sole benefit of the parties hereto and
their successors and of the holders of the Securities, except that the
provisions of Article X hereof are included herein for the benefit of the
holders of Senior Indebtedness.
SECTION 12.3 Successors and Assigns of Company Bound by Indenture.
All the covenants, stipulations, promises and agreements in this Indenture
contained by or in behalf of the Company shall bind its successors and assigns,
whether so expressed or not.
SECTION 12.4 Notices and Demands on Company, Trustee and
Securityholders. Any notice or demand which by any provision of this Indenture
is required or permitted to be given or served by the Trustee or by the holders
of Securities to or on the Company may be given or served by being deposited
postage prepaid, first-class mail (except as otherwise specifically provided
herein) addressed (until another address of the Company is filed by the Company
with the Trustee) to Keebler Corporation, One Hollow Tree Lane, Elmhurst,
Illinois 60126, Chief Financial Officer. Any notice, direction, request or
demand by the Company or any Securityholder to or upon the Trustee shall be
deemed to have been sufficiently given or made, for all purposes, if given or
made at the Corporate Trust Office.
Where this Indenture provides for notice to Holders, such notice
shall be sufficiently given (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, to each Holder entitled
thereto, at his last address as it appears in the Security register. In any case
where notice to Holders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular Holder shall
affect the sufficiency of such notice with respect to other Holders. Where this
Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Trustee, but such filing shall not be
a condition precedent to the validity of any action taken in reliance upon such
waiver.
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In case, by reason of the suspension of or irregularities in regular
mail service, it shall be impracticable to mail notice to the Company and
Securityholders when such notice is required to be given pursuant to any
provision of this Indenture, then any manner of giving such notice as shall be
satisfactory to the Trustee shall be deemed to be a sufficient giving of such
notice.
SECTION 12.5 Officers' Certificates and Opinions of Counsel;
Statements to Be Contained Therein. Upon any application or demand by the
Company to the Trustee to take any action under any of the provisions of this
Indenture, the Company shall furnish to the Trustee an Officers' Certificate
stating that all conditions precedent provided for in this Indenture relating to
the proposed action have been complied with and an Opinion of Counsel stating
that in the opinion of such counsel all such conditions precedent have been
complied with, except that in the case of any such application or demand as to
which the furnishing of such documents is specifically required by any provision
of this Indenture relating to such particular application or demand, no
additional certificate or opinion need be furnished.
Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or covenant
provided for in this Indenture shall include (a) a statement that the person
making such certificate or opinion has read such covenant or condition, (b) a
brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such certificate or opinion
are based, (c) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with and (d) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
Any certificate, statement or opinion of an officer of the Company
may be based, insofar as it relates to legal matters, upon a certificate or
opinion of or representations by counsel, unless such officer knows that the
certificate or opinion or representations with respect to the matters upon which
his certificate, statement or opinion may be based as aforesaid are erroneous,
or in the exercise of reasonable care should know that the same are
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erroneous. Any certificate, statement or opinion of counsel may be based,
insofar as it relates to factual matters and information in the possession of
the Company, upon the certificate, statement or opinion of or representations by
an officer or officers of the Company, unless such counsel knows that the
certificate, statement or opinion or representations with respect to the matters
upon which his certificate, statement or opinion may be based as aforesaid are
erroneous, or in the exercise of reasonable care should know that the same are
erroneous.
Any certificate, statement or opinion of an officer of the Company
or of counsel may be based, insofar as it relates to accounting matters, upon a
certificate or opinion of or representations by an accountant or firm of
accountants in the employ of the Company, unless such officer or counsel, as the
case may be, knows that the certificate or opinion or representations with
respect to the accounting matters upon which his certificate, statement or
opinion may be based as aforesaid are erroneous, or in the exercise of
reasonable care should know that the same are erroneous.
Any certificate or opinion of any independent firm of public
accountants filed with the Trustee shall contain a statement that such firm is
independent.
SECTION 12.6 Payments Due on Saturdays, Sundays and Holidays. If the
date of maturity of interest on or principal of the Securities or the date fixed
for redemption of any Security shall not be a Business Day, then payment of
interest or principal need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on the date of
maturity or the date fixed for redemption, and no interest shall accrue for the
period after such date.
SECTION 12.7 Conflict of Any Provision of Indenture with Trust
Indenture Act. If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with another provision included in this Indenture by
operation of Sections 310 to 317, inclusive, of the Trust Indenture Act (an
"incorporated provision"), such incorporated provision shall control.
SECTION 12.8 NEW YORK LAW TO GOVERN. THIS INDENTURE AND EACH
SECURITY SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS OF THE STATE OF NEW
YORK, AND FOR ALL
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PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE, WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
SECTION 12.9 Counterparts. This Indenture may be executed in any
number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.
SECTION 12.10 Effect of Headings. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.
ARTICLE XIII
REDEMPTION OF SECURITIES.
SECTION 13.1 Right of Optional Redemption; Prices. (a) The
Securities will be subject to redemption at any time on or after July 1, 2001
(but not prior thereto, except as provided below), at the option of the Company,
in whole or in part, on not less than 30 nor more than 60 days' prior notice in
amounts of $1,000 or an integral multiple thereof at the following redemption
prices (expressed as percentages of the principal amount), if redeemed during
the 12-month period beginning July 1 of the years indicated below:
Redemption
Year Price
----------
2001............................................................104.500%
2002............................................................103.375%
2003............................................................102.250%
2004............................................................101.125%
and thereafter at 100.0% of the principal amount, in each case together with
accrued and unpaid interest, if any, to the redemption date (subject to the
right of holders of record on relevant record dates to receive interest due on
relevant interest payment dates).
(b) In addition, at any time or from time to time prior to July 1,
1999 the Company may redeem Securities
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having a principal amount of up to 35% of the original aggregate principal
amount of the Securities within 60 days following one or more Public Equity
Offerings with the net proceeds of such offerings at a redemption price equal to
110.0% of the principal amount thereof, together with the accrued and unpaid
interest, if any, to the date of redemption (subject to the right of holders of
record on relevant record dates to receive interest due on relevant interest
payment dates); provided that immediately after giving effect to each such
redemption, at least 65% of the original aggregate principal amount of the
Securities remains outstanding.
SECTION 13.2 Applicability of Article. Redemption of Securities at
the election of the Company or otherwise, as permitted or required by any
provision of this Indenture, shall be made in accordance with such provision and
this Article.
SECTION 13.3 Election to Redeem; Notice to Trustee. The election of
the Company to redeem any Securities pursuant to Section 13.1 shall be evidenced
by a resolution of the Board of Directors. In case of any redemption at the
election of the Company, the Company shall, at least 60 days prior to the
redemption date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such redemption date and of
the principal amount of Securities to be redeemed and shall deliver to the
Trustee such documentation and records as shall enable the Trustee to select the
Securities to be redeemed pursuant to Section 13.4(e).
SECTION 13.4 Notice of Redemption; Partial Redemptions. (a) Notice
of redemption to the holders of Securities to be redeemed as a whole or in part
shall be given by mailing notice of such redemption by first class mail, postage
prepaid, at least 30 days and not more than 60 days prior to the date fixed for
redemption to such holders of Securities at their last addresses as they shall
appear upon the registry books. Any notice which is mailed in the manner herein
provided shall be conclusively presumed to have been duly given, whether or not
the holder receives the notice. Failure to give notice by mail, or any defect in
the notice to the holder of any Security designated for redemption as a whole or
in part shall not affect the validity of the proceedings for the redemption of
any other Security.
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(b) The notice of redemption to each such holder shall specify the
principal amount of each Security held by such holder to be redeemed, the date
fixed for redemption, the redemption price, the place or places of payment, that
payment will be made upon presentation and surrender of such Securities, that
such redemption is pursuant to the mandatory or optional sinking fund, or both
if such be the case, that interest accrued to the date fixed for redemption will
be paid as specified in said notice and that on and after said date interest
thereon or on the portions thereof to be redeemed will cease to accrue. In case
any Security is to be redeemed in part only the notice of redemption shall state
the portion of the principal amount thereof to be redeemed and shall state that
on and after the date fixed for redemption, upon surrender of such Security, a
new Security or Securities in principal amount equal to the unredeemed portion
thereof will be issued.
(c) The notice of redemption of Securities to be redeemed at the
option of the Company shall be given by the Company or, at the Company's
request, by the Trustee in the name and at the expense of the Company.
(d) At least one business day prior to the redemption date specified
in the notice of redemption given as provided in this Section, the Company will
deposit with the Trustee or with one or more paying agents (or, if the Company
is acting as its own paying agent, set aside, segregate and hold in trust as
provided in Section 3.4) an amount of money sufficient to redeem on the
redemption date all the Securities so called for redemption at the appropriate
redemption price, together with accrued interest to the date fixed for
redemption. If less than all the outstanding Securities are to be redeemed the
Company will deliver to the Trustee at least 60 days prior to the date fixed for
redemption an Officers' Certificate stating the aggregate principal amount of
Securities to be redeemed.
(e) If less than all the Securities are to be redeemed, the Trustee
shall select the Securities or portions thereof, either pro rata or by such
method as the Trustee shall deem fair and appropriate, securities to be redeemed
in whole or in part. Securities may be redeemed in part in multiples of $1,000
only. The Trustee shall, upon the request of the Company, promptly notify the
Company in writing of the Securities selected for redemption and, in the case of
any Securities selected for partial redemption, the principal amount thereof to
be redeemed. For all
105
<PAGE>
purposes of this Indenture, unless the context otherwise requires, all
provisions relating to the redemption of Securities shall relate, in the case of
any Security redeemed or to be redeemed only in part, to the portion of the
principal amount of such Security which has been or is to be redeemed.
SECTION 13.5 Payment of Securities Called for Redemption. (a) If
notice of redemption has been given as above provided, the Securities or
portions of Securities specified in such notice shall become due and payable on
the date and at the place stated in such notice at the applicable redemption
price, together with interest accrued to the date fixed for redemption, and on
and after said date (unless the Company shall default in the payment of such
Securities at the redemption price, together with interest accrued to said date)
interest on the Securities or portions of Securities so called for redemption
shall cease to accrue and, except as provided in Sections 5.5 and 9.6, such
Securities shall cease from and after the date fixed for redemption to be
entitled to any benefit or security under this Indenture, and the holders
thereof shall have no right in respect of such Securities except the right to
receive the redemption price thereof and unpaid interest to the date fixed for
redemption. On presentation and surrender of such Securities at a place of
payment specified in said notice, said Securities or the specified portions
thereof shall be paid and redeemed by the Company at the applicable redemption
price, together with interest accrued thereon to the date fixed for redemption;
provided that any semi-annual payment of interest becoming due on the date fixed
for redemption shall be payable to the holders of such Securities registered as
such on the relevant record date subject to the terms and provisions of Section
2.4.
(b) If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal shall, until paid or duly
provided for, bear interest from the date fixed for redemption at the rate borne
by the Security.
(c) Upon presentation of any Security redeemed in part only, the
Company shall execute and the Trustee shall authenticate and deliver to or on
the order of the holder thereof, at the expense of the Company, a new Security
or Securities, of authorized denominations, in principal amount equal to the
unredeemed portion of the Security so presented.
106
<PAGE>
SECTION 13.6 Exclusion of Certain Securities from Eligibility for
Selection for Redemption. Securities shall be excluded from eligibility for
selection for redemption if they are identified by registration and certificate
number in a written statement signed by an authorized officer of the Company and
delivered to the Trustee at least 40 days prior to the last date on which notice
of redemption may be given as being owned of record and beneficially by, and not
pledged or hypothecated by either (a) the Company or (b) an entity specifically
identified in such written statement directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company.
107
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of June 15, 1996.
KEEBLER CORPORATION
By: /s/ E. Nichol McCully
-------------------------------------
Title: Vice President and
Chief Financial Officer
KEEBLER LEASING CORPORATION
KEEBLER BISCUIT COMPANY
SHAFFER, CLARKE & CO., INC.
JOHNSTON'S READY-CRUST COMPANY
EMERALD INDUSTRIES, INC.
ATHENS PACKAGING, INC.
STEAMBOAT CORPORATION
ILLINOIS BAKING CORPORATION
KEEBLER COOKIE AND CRACKER COMPANY
HOLLOW TREE COMPANY
KEEBLER COMPANY/PUERTO RICO, INC.
KEEBLER H.C., INC.
KEEBLER-GEORGIA, INC.
SUNSHINE BISCUITS, INC.
By: /s/ E. Nichol McCully
-------------------------------------
Name: E. NICHOL MCCULLY
Title: VICE PRESIDENT
BAKE-LINE PRODUCTS, INC.
By: /s/ E. Nichol McCully
-------------------------------------
Name: E. NICHOL MCCULLY
Title: VICE PRESIDENT
108
<PAGE>
UNITED STATES TRUST COMPANY OF
NEW YORK, as Trustee
By: /s/ [ILLEGIBLE]
-------------------------------------
Title: Vice President
[CORPORATE SEAL]
Attest:
By: /s/ Cynthia Chaney
----------------------------------
Title: Assistant Vice President
109
<PAGE>
STATE OF Illinois ss.
ss.
COUNTY OF Du Page ss.
On the 24th the day of June, 1996 before me personally came
E. Nichol McCully, to me known, who, being by me duly sworn, did depose and say
that he is Vice President and Chief Financial Officer of Keebler Corporation, a
Delaware corporation; and that he signed his name thereto on behalf of such
corporation.
/s/ Joanne Spatz
----------------------------
Notary Public in and for The
State of Illinois
Name: Joanne Spatz
My Commission Expires:
June 1, 1998
----------------------------
110
<PAGE>
STATE OF Illinois ss.
ss.
COUNTY OF Du Page ss.
On the 24th the day of June, 1996 before me personally came
E. Nichol McCully, to me known, who, being by me duly sworn, did depose and say
that he is Vice President of each of Keebler Leasing Corporation, Keebler
Biscuit Company, Shaffer, Clarke & Co., Inc., Johnston's Ready-Crust Company,
Emerald Industries, Inc., Athens Packaging, Inc., Steamboat Corporation,
Illinois Baking Corporation, Keebler Cookie and Cracker Company, Hollow Tree
Company, Keebler Company/Puerto Rico, Inc., Keebler H.C., Inc., Keebler-Georgia,
Inc. and Sunshine Biscuits, Inc.; and that he signed his name thereto on behalf
of each corporation.
/s/ Joanne Spatz
----------------------------
Notary Public in and for The
State of Illinois
Name: Joanne Spatz
My Commission Expires:
June 1, 1998
----------------------------
111
<PAGE>
STATE OF Illinois ss.
ss.
COUNTY OF Du Page ss.
On the 24th the day of June, 1996 before me personally came
E. Nichol McCully, to me known, who, being by me duly sworn, did depose and say
that he is Vice President of Bake-Line Products, Inc.; and that he signed
his name thereto on behalf of such corporation.
/s/ Joanne Spatz
----------------------------
Notary Public in and for The
State of Illinois
Name: Joanne Spatz
My Commission Expires:
June 1, 1998
----------------------------
112
<PAGE>
STATE OF NEW YORK ss.
ss.
COUNTY OF NEW YORK ss.
On the 24th the day of June, 1996 before me personally came
JAMES E LOGAN to me known, who, being by me duly sworn, did depose and say
that he is the Vice President of U.S. Trust Company of New York, a New York
corporation; and that he signed his name thereto on behalf of such corporation.
/s/ Christopher J. Grell
----------------------------
Notary Public in and for The
State of New York
Name: CHRISTOPHER GRELL
My Commission Expires:
______________________________
CHRISTOPHER GRELL
Notary Public, State of New York
No. 01GR5012466
Qualified in New York County
Commission Expires June 15, 1997
113
<PAGE>
Exhibit A
[FORM OF FACE OF INITIAL NOTE]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY ("DTC"), NEW YORK, NEW YORK, TO THE COMPANY OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO.), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[Restricted Securities Legend]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY
NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF,
THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT) (AN "ACCREDITED INSTITUTION") OR (C) IT IS NOT A U.S. PERSON AND
IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION AND (2) AGREES THAT IT
WILL NOT, WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY,
RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO KEEBLER CORPORATION
(THE "COMPANY") OR ANY SUBSIDIARY THEREOF, (B) TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED
<PAGE>
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C)
TO AN ACCREDITED INSTITUTION THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS
FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS
ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE
TRUSTEE), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH REGULATION S UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT. IN
CONNECTION WITH ANY TRANSFER OF THIS SECURITY WITHIN THREE YEARS AFTER THE
ORIGINAL ISSUANCE HEREOF, IF THE PROPOSED TRANSFEREE IS AN ACCREDITED
INSTITUTION, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND
THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER
OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANING GIVEN
TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
CUSIP NO.
No. $
KEEBLER CORPORATION
10 3/4% Senior Subordinated Notes due 2006
Keebler Corporation, a Delaware corporation (the "Company"), for
value received hereby promises to pay to _____________ or registered assigns the
principal sum of ___________________ Dollars on July 1, 2006, in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for the payment of public and private debts, and to pay interest at
a rate per annum equal to 10 3/4%.
The Company shall pay interest on the principal amount of this
Security at the rate per annum shown above, which rate shall be subject to
increase as specified in the Registration Rights Agreement. The Company shall
pay interest (including the additional interest referred to in the Registration
Rights Agreement) semiannually on January 1 and July 1, of each year, commencing
with January 1, 1997. Interest on the Securities will accrue from the most
recent
A-2
<PAGE>
interest payment date to which interest on the Securities has been paid or duly
provided for, unless the date hereof is a date to which interest on the
Securities has been paid or duly provided for, in which case from the date of
this Security, or unless no interest has been paid or duly provided for on the
Securities, in which case from June 25, 1996, until payment of said principal
sum has been made or duly provided for. Notwithstanding the foregoing, if the
date hereof is after December 15 or June 15, as the case may be, and before the
following January 1 or July 1, this Security shall bear interest from such
January 1 or July 1; provided, that if the Company shall default in the payment
of interest due on such January 1 or July 1, then this Security shall bear
interest from the next preceding January 1 or July 1 to which interest on the
Securities has been paid or duly provided for, or, if no interest has been paid
or duly provided for on the Securities since the original issue date of this
Security, from June 25, 1996. The interest so payable on any January 1 or July 1
will, except as otherwise provided in the Indenture referred to on the reverse
hereof, be paid to the person in whose name this Security is registered at the
close of business on the December 15 or June 15 preceding such January 1 or July
1, whether or not such day is a business day; provided that interest may be
paid, at the option of the Company, by mailing a check therefor payable to the
registered holder entitled thereto at his last address as it appears on the
Security register.
Interest on this Security will be calculated on the basis of a
360-day year, consisting of twelve 30-day months.
Reference is made to the further provisions set forth on the reverse
hereof. Such further provisions shall for all purposes have the same effect as
though fully set forth at this place.
This Security shall not be valid or obligatory until the certificate
of authentication hereon shall have been duly signed by the Trustee acting under
the Indenture.
A-3
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.
Dated:
KEEBLER CORPORATION
[Seal]
By: ____________________________
____________________________
A-4
<PAGE>
[FORM OF REVERSE OF INITIAL NOTE]
KEEBLER CORPORATION
10 3/4% Senior Subordinated Notes due 2006
This Security is one of a duly authorized issue of debt securities
of the Company, limited to the aggregate principal amount of $125,000,000
(except as otherwise provided in the Indenture mentioned below), issued or to be
issued pursuant to an Indenture dated as of June 15, 1996 (the "Indenture"),
duly executed and delivered by the Company and the Guarantors to U.S. Trust
Company of New York, Trustee (herein called the "Trustee"). The terms of the
Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as in effect on the
date of the Indenture (the "Trust Indenture Act"). Capitalized terms used herein
and not defined have the meanings ascribed thereto in the Indenture. The
Securities are subject to all such terms and Securityholders are referred to the
Indenture and the Trust Indenture Act for a statement of those terms. The terms
of the Indenture shall govern any inconsistencies between the Indenture and the
Securities.
This Security is one of the Initial Notes referred to in the
Indenture. The Securities include the Initial Notes and any Exchange Notes
issued in exchange for the Initial Notes pursuant to the Indenture and the
Registration Rights Agreement. The Initial Notes and the Exchange Notes are
treated as a single class of securities under the Indenture.
Each Guarantor (on a senior subordinated basis) has jointly and
severally guaranteed, pursuant to Article XI of the Indenture, the due and
punctual payment of the principal of, premium (if any) and interest on the
Securities and all other amounts payable by the Company under the Indenture and
the Securities when and as the same shall be due and payable, whether at
maturity, by acceleration or otherwise, according to the terms of the Securities
and the Indenture.
The Securities are subordinated to Senior Indebtedness. To the
extent provided in the Indenture, Senior Indebtedness must be paid before the
Securities may be paid. The Company, the Guarantors and each Securityholder by
accepting a Security agree to the subordination provisions contained in the
Indenture and
A-5
<PAGE>
authorize the Trustee to give them effect and appoint the Trustee as
attorney-in-fact for such purpose.
The Securities will bear interest at the rate per annum set forth on
the face of this Security, which rate shall be subject to increase as specified
in the Registration Rights Agreement. A copy of the Registration Rights
Agreement referred to on the face of this Security is available from the Company
upon request.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all the Securities may be declared
due and payable, in the manner and with the effect, and subject to the
conditions, provided in the Indenture. The Indenture provides that in certain
events such declaration and its consequences may be waived by the holders of a
majority in aggregate principal amount of the Securities then outstanding and
that, prior to any such declaration, such holders may waive any past default
under the Indenture and its consequences except a default in the payment of
principal of or premium, if any, or interest on any of the Securities. Any such
consent or waiver by the holder of this Security (unless revoked as provided in
the Indenture) shall be conclusive and binding upon such holder and upon all
future holders and owners of this Security and any Security which may be issued
in exchange or substitution herefor, whether or not any notation thereof is made
upon this Security or such other Securities.
Subject to certain exceptions set forth in the Indenture, the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in outstanding principal amount of the
Securities; provided that no such amendment shall (a) reduce the amount of
Securities whose Holders must consent to an amendment; (b) reduce the rate of or
extend the time for payment of interest on any Security; (c) reduce the
principal of or extend the Stated Maturity of any Security; (d) reduce the
premium payable upon the redemption or repurchase of any Security or change the
time at which any Security may or shall be redeemed or repurchased in accordance
with this Indenture; (e) make any Security payable in money other than that
stated in the Security; (f) modify or affect in any manner adverse to the
Holders the terms and conditions of the obligation of the Company for the due
and punctual payment of the principal of or interest on Securities; or (g) make
any change in Section 4.4 or 4.7 of the Indenture or the second sentence of
Section 7.2 of the Indenture,
A-6
<PAGE>
without the consent of each holder of Securities affected by such amendment.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligations of the
Company or the Guarantors, which are absolute and unconditional, to pay the
principal of and premium, if any, and interest on this Security at the place,
times, and rate, and in the currency, herein prescribed.
The Securities are issuable only as registered Securities without
coupons in denominations of $1,000 and any multiple of $1,000.
The Securities may be exchanged for a like aggregate principal
amount of Securities of other authorized denominations in accordance with and
subject to the limitations provided in the Indenture.
Upon due presentment for registration of transfer of this Security,
a new Security or Securities of authorized denominations, for a like aggregate
principal amount, will be issued to the transferee as provided in the Indenture.
No service charge shall be made for any such transfer, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto.
Except as set forth in this paragraph, the Securities may not be
redeemed prior to July 1, 2001. On and after such date, at the option of the
Company, in whole or in part, on not less than 30 nor more than 60 days' prior
notice in amounts of $1,000 or an integral multiple thereof at the following
redemption prices (expressed as percentages of the principal amount), if
redeemed during the 12-month period beginning July 1 of the years indicated
below:
Redemption
Year Price
----------
2001................................................................ 104.500%
2002................................................................ 103.375%
2003................................................................ 102.250%
2004................................................................ 101.125%
and thereafter at 100.0% of the principal amount, in each case together with
accrued and unpaid interest, if any, to
A-7
<PAGE>
the redemption date (subject to the right of holders of record on relevant
record dates to receive interest due on relevant interest payment dates).
In addition, at any time or from time to time prior to July 1, 1999
the Company may redeem Securities having a principal amount of up to 35% of the
original aggregate principal amount of the Securities within 60 days following
one or more Public Equity Offerings with the net proceeds of such offerings at a
redemption price equal to 110.0% of the principal amount thereof, together with
the accrued and unpaid interest, if any, to the date of redemption (subject to
the right of holders of record on relevant record dates to receive interest due
on relevant interest payment dates); provided that immediately after giving
effect to each such redemption, at least 65% of the original aggregate principal
amount of the Securities remains outstanding.
Subject to payment by the Company of a sum sufficient to pay the
amount due on redemption, interest on this Security (or portion hereof if this
Security is redeemed in part) shall cease to accrue upon the date duly fixed for
redemption of this Security (or portion hereof if this Security is redeemed in
part).
The election of the Company to redeem any Securities pursuant to
Section 13.1 of the Indenture shall be evidenced by a resolution of the Board of
Directors. In case of any redemption at the election of the Company, the Company
shall, at least 60 days prior to the redemption date fixed by the Company
(unless a shorter notice shall be satisfactory to the Trustee), notify the
Trustee of such redemption date and of the principal amount of Securities to be
redeemed and shall deliver to the Trustee such documentation and records as
shall enable the Trustee to select the Securities to be redeemed pursuant to
Section 13.4(e) of the Indenture.
In the event of a Change of Control, the Company will make a Change
of Control Offer to purchase all of the Securities outstanding at a price equal
to 101% of the principal amount of the Securities to be repurchased plus accrued
and unpaid interest thereon to the date of purchase, pursuant to an offer made
in conformity with the procedures set forth in Sections 3.15 of the Indenture.
In the event of certain Asset Dispositions, subject to certain
conditions, the Company will make an Offer to purchase an aggregate principal
amount of
A-8
<PAGE>
Securities outstanding equal to the amount of Net Available Cash at a price
equal to 100% of the principal amount of the Securities to be repurchased plus
accrued and unpaid interest thereon to the date of purchase.
The Company, the Trustee, and any authorized agent of the Company or
the Trustee may deem and treat the registered holder hereof as the absolute
owner of this Security (whether or not this Security shall be overdue and
notwithstanding any notation of ownership or other writing hereon made by anyone
other than the Company or the Trustee or any authorized agent of the Company or
the Trustee), for the purpose of receiving payment of, or on account of, the
principal hereof and premium, if any, and, subject to the provisions on the face
hereof, interest hereon and for all other purposes, and neither the Company nor
the Trustee nor any authorized agent of the Company or the Trustee shall be
affected by any notice to the contrary. So long as the Depository, or its
nominee, is the registered holder of the Restricted Global Security for the
Initial Notes, the Depository, or its nominee, will be considered the absolute
owner of the Initial Notes represented by the Restricted Global Security for all
purposes under the Indenture and this Security. Owners of beneficial interests
in the Restricted Global Security will not be considered the owners or Holders
of any Securities.
Each Holder of a Security, by its acceptance thereof, acknowledges
and agrees to the provisions of the Registration Rights Agreement, including
without limitation the obligations of the Holders with respect to the
registration of the Securities under the Securities Act and the indemnification
of the Company in respect thereof, all to the extent provided therein.
The Securities are subject to defeasance as described in the
Indenture.
No recourse shall be had for the payment of the principal of and
premium, if any, or the interest on this Security, for any claim based hereon,
or otherwise in respect hereof, or based on or in respect of the Indenture or
any indenture supplemental thereto, against any incorporator, shareholder,
officer or director, as such, past, present or future, of the Company or of any
successor corporation, either directly or through the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law or by
the enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the
A-9
<PAGE>
consideration for the issue hereof, expressly waived and released.
A-10
<PAGE>
[FORM OF NOTATION ON SECURITY RELATING TO GUARANTEES]
Each Guarantor has unconditionally and irrevocably guaranteed, to
the extent set forth in the Indenture and subject to the provisions in the
Indenture, on a senior subordinated basis to each Holder and to the Trustee and
its successors and assigns all obligations of the Company under this Indenture
and the Securities. Each Guarantor has further agreed that the obligations of
the Company may be extended or renewed, in whole or in part, without notice or
further assent from such Guarantor, and that such Guarantor will remain bound
under Article XI of the Indenture notwithstanding any extension or renewal of
any such obligation.
The obligations of the Guarantors to the holders of Securities and
to the Trustee pursuant to the Subsidiary Guarantees and the Indenture are
expressly set forth in Article XI of the Indenture and reference is hereby made
to the Indenture for the precise terms of the Subsidiary Guarantees.
KEEBER LEASING CORPORATION
KEEBLER BISCUIT COMPANY
SHAFFER, CLARKE & CO., INC.
JOHNSTON'S READY-CRUST COMPANY
EMERALD INDUSTRIES, INC.
ATHENS PACKAGING, INC.
BAKE-LINE PRODUCTS, INC.
STEAMBOAT CORPORATION
ILLINOIS BAKING CORPORATION
KEEBLER COOKIE AND CRACKER COMPANY
HOLLOW TREE COMPANY
KEEBLER COMPANY/PUERTO RICO, INC.
KEEBLER H.C., INC.
KEEBLER-GEORGIA, INC.
SUNSHINE BISCUITS, INC.
By:_______________________________
Name:
Title:
Attest:
By:_______________________________
Name:
Title:
A-11
<PAGE>
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Securities described in the within-mentioned
Indenture.
Dated:
U.S. TRUST COMPANY OF NEW YORK
as Trustee
By:_______________________________
Authorized Signatory
A-12
<PAGE>
[ASSIGNMENT FORM]
For value received ____________________________________________________________
hereby sells, assigns and transfers unto
------------------------------
------------------------------
Please insert social security or
other identifying number of assignee
Please print or typewrite name
and address including zip code
of assignee:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
the within Security and does hereby irrevocably constitute and appoint
______________________________ Attorney to transfer the Security on the books of
the Company with full power of substitution in the premises.
Date:____________ Your Signature:_________________________
(Sign exactly as name
appears on the other side
of this Security)
A-13
<PAGE>
[THE FOLLOWING TO BE INSERTED ON
RESTRICTED SECURITIES CERTIFICATES]
[FORM OF TRANSFER NOTICE]
In connection with any transfer of this Security occurring prior to
the date which is the earlier of the date of an Effective Registration on
__________, 1996, the undersigned confirms that without utilizing any general
solicitation or general advertising that:
[Check One]
[ ] (a) this Security is being transferred in compliance with the exemption from
registration under the Securities Act of 1933, as amended, provided by
Rule 144A thereunder;
or
[ ] (b) this Security is being transferred other than in accordance with (a)
above and documents are being furnished which comply with the conditions
of transfer set forth in this Security and the Indenture.
If none of the foregoing boxes is checked, the Trustee or other Security
Registrar shall not be obligated to register this Security in the name of any
Person other than the Holder hereof unless and until the conditions to any such
transfer of registration set forth herein and in Section 2.5(b) of the Indenture
shall have been satisfied.
Date:___________________________
________________________________
NOTICE: The signature to this
assignment must correspond with
the name as written upon the
face of the within-mentioned
instrument in every particular,
without alteration or any change
whatever.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing
this Security for its own account or an account with respect to which it
exercises sole investment discretion and that
A-14
<PAGE>
it and any such account is a "qualified institutional buyer" within the meaning
of Rule 144A under the Securities Act of 1933, as amended, and is aware that the
sale to it is being made in reliance on Rule 144A and acknowledges that it has
received such information regarding the Company as the undersigned has requested
pursuant to Rule 144A or has determined not to request such information and that
it is aware that the transferor is relying upon the undersigned's foregoing
representations in order to claim the exemption from registration provided by
Rule 144A.
Dated:
[Name of Purchaser]
By: ___________________________________
Name:
Title:
(To be executed by an
executive officer)
A-15
<PAGE>
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF EXCHANGES IN GLOBAL SECURITY
The following exchanges of a part of this Global Security have been
made:
<TABLE>
<CAPTION>
Principal Amount of
Amount of decrease in Amount of increase in this Global Security Signature of authorized
Principal Amount of Principal Amount of following such officer of Trustee or
Date of Exchange this Global Security this Global Security decrease (or increase) Securities Custodian
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
A-16
<PAGE>
Exhibit B
[FORM OF FACE OF EXCHANGE NOTE]
CUSIP NO.
No. $
KEEBLER CORPORATION
10 3/4% Senior Subordinated Notes due 2006
Keebler Corporation, a Delaware corporation (the "Company"), for
value received hereby promises to pay to _______________________ or registered
assigns the principal sum of ________________________ Dollars on July 1, 2006,
in such coin or currency of the United States of America as at the time of
payment shall be legal tender for the payment of public and private debts, and
to pay interest at a rate per annum equal to 10 3/4%.
The Company shall pay interest on the principal amount of this
Security at the rate per annum shown above. The Company shall pay interest
semiannually on January 1 and July 1, of each year, commencing with January 1,
1997. Interest on the Securities will accrue from the most recent interest
payment date to which interest on the Securities has been paid or duly provided
for, unless the date hereof is a date to which interest on the Securities has
been paid or duly provided for, in which case from the date of this Security, or
unless no interest has been paid or duly provided for on the Securities, in
which case from June 25, 1996, until payment of said principal sum has been made
or duly provided for. Notwithstanding the foregoing, if the date hereof is after
December 15 or June 15, as the case may be, and before the following January 1
or July 1, this Security shall bear interest from such January 1 or July 1;
provided, that if the Company shall default in the payment of interest due on
such January 1 or July 1, then this Security shall bear interest from the next
preceding January 1 or July 1 to which interest on the Securities has been paid
or duly provided for, or, if no interest has been paid or duly provided for on
the Securities since the original issue date of this Security, from June 25,
1996. The interest so payable on any January 1 or July 1 will, except as
otherwise provided in the Indenture referred to on the reverse hereof, be paid
to the person in whose name this Security is registered at the close of business
on the December 15 or June 15 preceding such January 1 or July 1, whether or not
such day is a business day; provided that interest may be paid, at the option of
the Company, by mailing a check therefor payable to the
B-1
<PAGE>
registered holder entitled thereto at his last address as it appears on the
Security register.
Interest on this Security will be calculated on the basis of a
360-day year, consisting of twelve 30-day months.
Reference is made to the further provisions set forth on the reverse
hereof. Such further provisions shall for all purposes have the same effect as
though fully set forth at this place.
This Security shall not be valid or obligatory until the certificate
of authentication hereon shall have been duly signed by the Trustee acting under
the Indenture.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.
Dated:
KEEBLER CORPORATION
[Seal]
By: ______________________
______________________
B-2
<PAGE>
[FORM OF REVERSE OF EXCHANGE NOTE]
KEEBLER CORPORATION
10 3/4% Senior Subordinated Notes due 2006
This Security is one of a duly authorized issue of debt securities
of the Company, limited to the aggregate principal amount of $125,000,000
(except as otherwise provided in the Indenture mentioned below), issued or to be
issued pursuant to an Indenture dated as of June 15, 1996 (the "Indenture"),
duly executed and delivered by the Company and the Guarantors to U.S. Trust
Company of New York, Trustee (herein called the "Trustee"). The terms of the
Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as in effect on the
date of the Indenture (the "Trust Indenture Act"). Capitalized terms used herein
and not defined have the meanings ascribed thereto in the Indenture. The
Securities are subject to all such terms and Securityholders are referred to the
Indenture and the Trust Indenture Act for a statement of those terms. The terms
of the Indenture shall govern any inconsistencies between the Indenture and the
Securities.
This Security is one of the Exchange Notes referred to in the
Indenture. The Securities include the Initial Notes and any Exchange Notes
issued in exchange for the Initial Notes pursuant to the Indenture and the
Registration Rights Agreement. The Initial Notes and the Exchange Notes are
treated as a single class of securities under the Indenture.
Each Guarantor (on a senior subordinated basis) has jointly and
severally guaranteed, pursuant to Article XI of the Indenture, the due and
punctual payment of the principal of, premium (if any) and interest on the
Securities and all other amounts payable by the Company under the Indenture and
the Securities when and as the same shall be due and payable, whether at
maturity, by acceleration or otherwise, according to the terms of the Securities
and the Indenture.
The Securities are subordinated to Senior Indebtedness. To the
extent provided in the Indenture, Senior Indebtedness must be paid before the
Securities may be paid. The Company, the Guarantors and each Securityholder by
accepting a Security agree to the subordination provisions contained in the
Indenture and authorize the Trustee to give them effect and appoint the Trustee
as attorney-in-fact for such purpose.
The Securities will bear interest at the rate per annum set forth on
the face of this Security.
B-3
<PAGE>
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all the Securities may be declared
due and payable, in the manner and with the effect, and subject to the
conditions, provided in the Indenture. The Indenture provides that in certain
events such declaration and its consequences may be waived by the holders of a
majority in aggregate principal amount of the Securities then outstanding and
that, prior to any such declaration, such holders may waive any past default
under the Indenture and its consequences except a default in the payment of
principal of or premium, if any, or interest on any of the Securities. Any such
consent or waiver by the holder of this Security (unless revoked as provided in
the Indenture) shall be conclusive and binding upon such holder and upon all
future holders and owners of this Security and any Security which may be issued
in exchange or substitution herefor, whether or not any notation thereof is made
upon this Security or such other Securities.
Subject to certain exceptions set forth in the Indenture, the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in outstanding principal amount of the
Securities; provided that no such amendment shall (a) reduce the amount of
Securities whose Holders must consent to an amendment; (b) reduce the rate of or
extend the time for payment of interest on any Security; (c) reduce the
principal of or extend the Stated Maturity of any Security; (d) reduce the
premium payable upon the redemption or repurchase of any Security or change the
time at which any Security may or shall be redeemed or repurchased in accordance
with this Indenture; (e) make any Security payable in money other than that
stated in the Security; (f) modify or affect in any manner adverse to the
Holders the terms and conditions of the obligation of the Company for the due
and punctual payment of the principal of or interest on Securities; or (g) make
any change in Section 4.4 or 4.7 of the Indenture or the second sentence of
Section 7.2 of the Indenture, without the consent of each holder of Securities
affected by such amendment.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligations of the
Company or the Guarantors, which are absolute and unconditional, to pay the
principal of and premium, if any, and interest on this Security at the place,
times, and rate, and in the currency, herein prescribed.
The Securities are issuable only as registered Securities without
coupons in denominations of $1,000 and any multiple of $1,000.
B-4
<PAGE>
The Securities may be exchanged for a like aggregate principal
amount of Securities of other authorized denominations in accordance with and
subject to the limitations provided in the Indenture.
Upon due presentment for registration of transfer of this Security,
a new Security or Securities of authorized denominations, for a like aggregate
principal amount, will be issued to the transferee as provided in the Indenture.
No service charge shall be made for any such transfer, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto.
Except as set forth in this paragraph, the Securities may not be
redeemed prior to July 1, 2001. On and after such date, at the option of the
Company, in whole or in part, on not less than 30 nor more than 60 days' prior
notice in amounts of $1,000 or an integral multiple thereof at the following
redemption prices (expressed as percentages of the principal amount), if
redeemed during the 12-month period beginning July 1 of the years indicated
below:
Redemption
Year Price
----------
2001............................................................... 104.500%
2002............................................................... 103.375%
2003............................................................... 102.250%
2004............................................................... 101.125%
and thereafter at 100.0% of the principal amount, in each case together with
accrued and unpaid interest, if any, to the redemption date (subject to the
right of holders of record on relevant record dates to receive interest due on
relevant interest payment dates).
In addition, at any time or from time to time prior to July 1, 1999
the Company may redeem Securities having a principal amount of up to 35% of the
original aggregate principal amount of the Securities within 60 days following
one or more Public Equity Offerings with the net proceeds of such offerings at a
redemption price equal to 110.0% of the principal amount thereof, together with
the accrued and unpaid interest, if any, to the date of redemption (subject to
the right of holders of record on relevant record dates to receive interest due
on relevant interest payment dates); provided that immediately after giving
effect to each such redemption, at least 65% of the original aggregate principal
amount of the Securities remains outstanding.
B-5
<PAGE>
Subject to payment by the Company of a sum sufficient to pay the
amount due on redemption, interest on this Security (or portion hereof if this
Security is redeemed in part) shall cease to accrue upon the date duly fixed for
redemption of this Security (or portion hereof if this Security is redeemed in
part).
The election of the Company to redeem any Securities pursuant to
Section 13.1 of the Indenture shall be evidenced by a resolution of the Board of
Directors. In case of any redemption at the election of the Company, the Company
shall, at least 60 days prior to the redemption date fixed by the Company
(unless a shorter notice shall be satisfactory to the Trustee), notify the
Trustee of such redemption date and of the principal amount of Securities to be
redeemed and shall deliver to the Trustee such documentation and records as
shall enable the Trustee to select the Securities to be redeemed pursuant to
Section 13.4(e) of the Indenture.
In the event of a Change of Control, the Company will make a Change
of Control Offer to purchase all of the Securities outstanding at a price equal
to 101% of the principal amount of the Securities to be repurchased plus accrued
and unpaid interest thereon to the date of purchase, pursuant to an offer made
in conformity with the procedures set forth in Section 3.15 of the Indenture.
In the event of certain Asset Dispositions, subject to certain
conditions, the Company will make an Offer to purchase an aggregate principal
amount of Securities outstanding equal to the amount of Net Available Cash at a
price equal to 100% of the principal amount of the Securities to be repurchased
plus accrued and unpaid interest thereon to the date of purchase.
The Company, the Trustee, and any authorized agent of the Company or
the Trustee may deem and treat the registered holder hereof as the absolute
owner of this Security (whether or not this Security shall be overdue and
notwithstanding any notation of ownership or other writing hereon made by anyone
other than the Company or the Trustee or any authorized agent of the Company or
the Trustee), for the purpose of receiving payment of, or on account of, the
principal hereof and premium, if any, and, subject to the provisions on the face
hereof, interest hereon and for all other purposes, and neither the Company nor
the Trustee nor any authorized agent of the Company or the Trustee shall be
affected by any notice to the contrary. So long as the Depository, or its
nominee, is the registered holder of the Restricted Global Security for the
Initial Notes, the Depository, or its nominee, will be considered the absolute
owner of the Initial Notes represented by the Restricted Global
B-6
<PAGE>
Security for all purposes under the Indenture and this Security. Owners of
beneficial interests in the Restricted Global Security will not be considered
the owners or Holders of any Securities.
The Securities are subject to defeasance as described in the
Indenture.
No recourse shall be had for the payment of the principal of and
premium, if any, or the interest on this Security, for any claim based hereon,
or otherwise in respect hereof, or based on or in respect of the Indenture or
any indenture supplemental thereto, against any incorporator, shareholder,
officer or director, as such, past, present or future, of the Company or of any
successor corporation, either directly or through the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law or by
the enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration for the issue
hereof, expressly waived and released.
B-7
<PAGE>
[FORM OF NOTATION ON SECURITY RELATING TO GUARANTEES]
Each Guarantor has unconditionally and irrevocably guaranteed, to
the extent set forth in the Indenture and subject to the provisions in the
Indenture, on a senior subordinated basis to each Holder and to the Trustee and
its successors and assigns all obligations of the Company under this Indenture
and the Securities. Each Guarantor has further agreed that the obligations of
the Company may be extended or renewed, in whole or in part, without notice or
further assent from such Guarantor, and that such Guarantor will remain bound
under Article XI of the Indenture notwithstanding any extension or renewal of
any such obligation.
The obligations of the Guarantors to the holders of Securities and
to the Trustee pursuant to the Subsidiary Guarantees and the Indenture are
expressly set forth in Article XI of the Indenture and reference is hereby made
to the Indenture for the precise terms of the Subsidiary Guarantees.
KEEBER LEASING CORPORATION
KEEBLER BISCUIT COMPANY
SHAFFER, CLARKE & CO., INC.
JOHNSTON'S READY-CRUST COMPANY
EMERALD INDUSTRIES, INC.
ATHENS PACKAGING, INC.
BAKE-LINE PRODUCTS, INC.
STEAMBOAT CORPORATION
ILLINOIS BAKING CORPORATION
KEEBLER COOKIE AND CRACKER COMPANY
HOLLOW TREE COMPANY
KEEBLER COMPANY/PUERTO RICO, INC.
KEEBLER H.C., INC.
KEEBLER-GEORGIA, INC.
SUNSHINE BISCUITS, INC.
By:_______________________________
Name:
Title:
Attest:
By:_______________________________
Name:
Title:
B-8
<PAGE>
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Securities described in the within-mentioned
Indenture.
Dated:
U.S. TRUST COMPANY OF NEW YORK
as Trustee
By:___________________________
Authorized Signatory
B-9
<PAGE>
[ASSIGNMENT FORM]
For value received _____________________________________________________________
hereby sells, assigns and transfers unto
______________________________
______________________________
Please insert social security or
other identifying number of assignee
Please print or typewrite name
and address including zip code
of assignee:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
the within Security and does hereby irrevocably constitute and appoint
______________________________ Attorney to transfer the Security on the books of
the Company with full power of substitution in the premises.
Date:_________________ Your Signature:_________________________
(Sign exactly as name
appears on the other side
of this Security)
B-10
<PAGE>
Exhibit C
FORM OF TRANSFEROR CERTIFICATE FOR
TRANSFER FROM RESTRICTED GLOBAL SECURITY OR
RESTRICTED SECURITY TO RESTRICTED SECURITY
(Transfers Pursuant to ss. 2.5(b)(ii)
or ss. 2.5(b)(iv) of the Indenture)
_______________, 199__
[Trustee]
[Address]
Re: Keebler Corporation
10 3/4% Senior Subordinated Notes
due 2006 (the "Securities")
Reference is hereby made to the Indenture dated as of June 15, 1996
(the "Indenture") among Keebler Corporation, the Guarantors and U.S. Trust
Company of New York, as Trustee. Capitalized terms used but not defined herein
shall have the meanings given them in the Indenture.
This letter relates to $___________ aggregate principal amount of
Securities which are held [in the form of the Restricted Global Security (CUSIP
No._________) with the Depository]* in the name of [name of transferor] (the
"Transferor") to effect the transfer of the Securities.
In connection with such request, and in respect of such Securities,
the Transferor does hereby certify that such Securities are being transferred in
accordance with (i) the transfer restrictions set forth in the Securities and
(ii) to a transferee that the Transferor reasonably believes is an
- --------
*Insert and modify, if appropriate.
C-1
<PAGE>
Institutional Accredited Investor and is acquiring Securities for its own
account or for one or more accounts as to which the transferee exercises sole
investment discretion and (iii) and in accordance with applicable securities
laws of any state of the United States or any other jurisdiction.
[Name of Transferor]
By:____________________________
Name:__________________________
Title:_________________________
Dated:
cc: Keebler Corporation
C-2
<PAGE>
Exhibit D
FORM OF ACCREDITED INVESTOR TRANSFEREE CERTIFICATE
(Transfers Pursuant to ss. 2.5(b)(ii)
and ss. 2.5(b)(iv) of the Indenture
_______________, 199__
[Trustee]
[Address]
Re: Keebler Corporation
10 3/4% Senior Subordinated Notes
due 2006 (the "Securities")
Reference is hereby made to the Indenture dated as of June 15, 1996
(the "Indenture") among Keebler Corporation, the Guarantors and U.S. Trust
Company of New York, as Trustee. Capitalized terms used but not defined herein
shall have the meanings given them in the Indenture.
This letter relates to $___________ aggregate principal amount of
Securities which are held [in the form of the Global Security (CUSIP No.
__________ with the Depository]* in the name of [name of transferor] (the
"Transferor") to effect the transfer of the Securities to the undersigned.
In connection with such request, and in respect of such Securities,
we confirm that:
1. We understand that the offer and sale of the Securities have been
registered under the Securities Act, and that the Securities may not be
offered or sold within the United States or to or for the account or
benefit of U.S. persons, except as permitted in the following sentence. We
agree, on our own behalf and on behalf of any accounts for which we are
acting as hereinafter stated, that if we should sell any Securities, we
will do so only (A) to the Company or any subsidiary thereof, (B) in
accordance with Rule 144A under the Securities Act to a "qualified
institutional buyer" (as defined therein), (C) to an institutional
"accredited investor" (as defined below" that, prior to such transfer,
furnishes (or has furnished on its
- --------
*Insert and modify, if appropriate.
D-1
<PAGE>
behalf by a domestic broker-dealer) to the Trustee (as defined in the
Indenture relating to the Securities), a signed letter containing certain
representations and agreements relating to the restrictions on transfer of
the Securities (the form of which letter can be obtained from the
Trustee), (D) outside the United States in accordance with Regulation S
under the Securities Act (if available), (E) pursuant to the exemption
from registration provided by Rule 144 under the Securities Act (if
available), or (F) pursuant to an effective registration statement under
the Securities Act.
2. We understand that, on any proposed resale of Securities, we will
be required to furnish to the Trustee and the Company such certification,
legal opinions and other information as the Trustee and the Company may
reasonably require to confirm that the proposed sale complies with the
foregoing restrictions.
3. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of our investment in the
Securities, and we and any accounts for which we are acting are each able
to bear the economic risk of our or their investment, as the case may be.
4. We are a corporation, partnership or other entity or person
having such knowledge and experience in financial and business matters as
to be capable of evaluating the merits and risks of an investment in the
Securities, and we are (or any account for which we are purchasing is) an
Institutional Accredited Investor, able to bear the economic risk of
investment in the Securities.
5. We are acquiring the Securities for our own account (or for
accounts as to which we exercise sole investment discretion and have
authority to make, and do make, the statements contained in this letter)
and not with a view to any distribution of the Securities, subject,
nevertheless, to the understanding that the disposition of our property
shall at all times be and remain within our control.
6. We understand that (a) the Securities will be delivered to us in
registered form only and that the certificate delivered to us in respect
of the Securities will bear a legend substantially to the following
effect:
D-2
<PAGE>
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR
FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH BELOW. BY
ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) OR (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS
AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2),
(3) OR (7) UNDER THE SECURITIES ACT) (AN "ACCREDITED INSTITUTION") OR (C)
IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE
TRANSACTION AND (2) AGREES THAT IT WILL NOT, WITHIN THREE YEARS AFTER THE
ORIGINAL ISSUANCE OF THIS SECURITY, RESELL OR OTHERWISE TRANSFER THIS
SECURITY EXCEPT (A) TO KEEBLER CORPORATION (THE "COMPANY") OR ANY
SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE
WITH RULE 144A UNDER THE SECURITIES ACT, (C) TO AN ACCREDITED INSTITUTION
THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY
A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF
THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE),
(D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH REGULATION S UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION
FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT. IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY
WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE HEREOF, IF THE PROPOSED
TRANSFEREE IS AN ACCREDITED INSTITUTION, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY
REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANING GIVEN TO
THEM BY REGULATION S UNDER THE SECURITIES ACT.
and (b) such certificates will be reissued without the foregoing legend
only in the event of a disposition of the Securities in accordance with
the provisions of paragraph 5(b), (d), or (e) below, or at our request at
such times as we would be permitted to dispose of the Securities in
accordance with the paragraph 5(e) below.
D-3
<PAGE>
7. We agree that we will give to each person to whom we transfer
Securities, notice of any restrictions on transfer of Securities.
8. We acknowledge that the Trustee will not be required to accept
for registration of transfer any Securities acquired by us, except upon
presentation of evidence satisfactory to the Company and the Trustee that
the restrictions set forth herein have been complied with.
9. We acknowledge that the Company, the Trustee and others will rely
upon the truth and accuracy of the foregoing acknowledgments,
representations or agreements and agree that if any of the
acknowledgments, representations or agreements deemed to have been made by
our purchase of Notes are no longer accurate, we shall promptly notify the
Company and the Trustee.
The Company and the Trustee are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.
Very truly yours,
[Name of Purchaser]
By:____________________________
Name:__________________________
Title:_________________________
Dated:
cc: Keebler Corporation
D-4
<PAGE>
Exhibit E
FORM OF LEGAL OPINION ON TRANSFER
, 199[ ]
[Trustee]
[Address]
Re: Keebler Corporation
10 3/4% Senior Subordinated Notes due 2006
Ladies and Gentlemen:
This opinion is being furnished to you in connection with the sale
by ______________________ (the "Transferor") to ______________________ (the
"Purchaser") of $__________ aggregate principal amount of 10 3/4% Senior
Subordinated Notes due 2006 of Keebler Corporation (the "Securities").
We have examined such documents and records as we have deemed
appropriate. In our examination of the foregoing, we have assumed the
authenticity of all documents, the genuineness of all signatures and the due
authorization, execution and delivery of the aforementioned by each of the
parties thereto. We have further assumed the accuracy of the representations
contained in the documents set forth above made by the parties executing such
documents. We have also assumed that the sale of the Securities to the
Transferor was exempt from the registration and prospectus delivery requirements
of the Securities Act of 1933, as amended (the "Securities Act").
Based on the foregoing, we are of the opinion that the sale to the
Purchaser of the Securities does not require registration of such Securities
under the Securities Act.
Very truly yours,
E-1
<PAGE>
Exhibit F
FORM OF TRANSFER CERTIFICATE FOR TRANSFER
FROM RESTRICTED SECURITY TO RESTRICTED GLOBAL SECURITY
(Transfers Pursuant to ss. 2.5(b)(iii) of the Indenture)
[Trustee]
[address]
Re: Keebler Corporation
10 3/4% Senior Subordinated Notes
due 2006 (the "Securities")
Reference is hereby made to the Indenture dated as of June 15, 1996
(the "Indenture") among Keebler Corporation, the Guarantors and U.S. Trust
Company of New York, as Trustee. Capitalized terms used but not defined herein
shall have the meanings given them in the Indenture.
This letter relates to $____________ aggregate principal amount of
Securities which are held in the name of [name of transferor] (the "Transferor")
to effect the transfer of the Securities in exchange for an equivalent
beneficial interest in the Restricted Global Security.
In connection with such request, and in respect of such Securities,
the Transferor does hereby certify that such Securities are being transferred in
accordance with (i) the transfer restrictions set forth in the Securities and
(ii) Rule 144A under the Securities Act to a transferee that the Transferor
reasonably believes is purchasing the Securities for its own account or an
account with respect to which the transferee and any such account is a Qualified
Institutional Buyer in a transaction meeting the requirements of Rule 144A and
in accordance with any applicable securities law of any state of the United
States.
[Name of Transferor]
By:____________________________
Name:__________________________
Title:_________________________
Dated:
cc: Keebler Corporation
F-1
<PAGE>
Exhibit G
[ASSIGNMENT FORM]
For value received _____________________________________________________________
hereby sells, assigns and transfers unto
______________________________
______________________________
Please insert social security or
other identifying number of assignee
Please print or typewrite name and
address including zip code
of assignee:
the within Security and do hereby irrevocably constitute and appoint
______________________________ Attorney to transfer the Security on the books of
the Company with full power of substitution in the premises.
Date:_________________ Your Signature:_________________________
(Sign exactly as name
appears on the other side
of this Security)
G-1
Exhibit 10.1
STOCKHOLDERS' AGREEMENT
Dated as of
January 26, 1996
Among
INFLO HOLDINGS CORPORATION,
ARTAL LUXEMBOURG S.A.
and
FLOWERS INDUSTRIES, INC.
<PAGE>
i
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS; CONSTRUCTION ............ 1
1.1 Definitions ............................................ 1
1.2 Actions by the Stockholders ............................ 5
1.3 Representations and Warranties of the Investor
Stockholders ........................................... 5
ARTICLE II
VOTING ARRANGEMENTS ................ 6
2.1 Number of Directors .................................... 6
2.2 Election of Directors .................................. 6
2.3 Covenant to Vote ....................................... 6
2.5 Vacancies .............................................. 7
2.6 Restrictions on Other Agreements ....................... 8
2.7 Fundamental Corporate Actions .......................... 8
2.8 Certificate of Incorporation and By-Laws ............... 10
2.9 Changes Upon Public Offering ........................... 10
ARTICLE III
COVENANTS ..................... 10
3.1 Transfers of Securities ................................ 10
3.2 Liquidity Transactions ................................. 11
3.3 Restrictions on Certain Fees ........................... 14
3.4 Limitation on Public Offering .......................... 14
3.5 Resale of Securities to the Company .................... 14
ARTICLE IV
REGISTRATION RIGHTS ................ 14
ARTICLE V
MISCELLANEOUS .................... 15
5.1 Termination ............................................ 15
5.2 Remedies ............................................... 15
5.3 Legends ................................................ 16
5.4 Consent to Amendments .................................. 16
5.5 Successors and Assigns ................................. 16
5.6 Severability ........................................... 16
5.7 Counterparts ........................................... 17
5.8 Notices ................................................ 17
5.9 Governing Law .......................................... 17
5.10 Further Assurances ..................................... 17
5.11 Jurisdiction; Venue; Process ........................... 18
5.12 MUTUAL WAIVER OF JURY TRIAL ............................ 18
<PAGE>
STOCKHOLDERS' AGREEMENT
STOCKHOLDERS' AGREEMENT (this "Agreement"), dated as of January 26,
1996 among INFLO HOLDINGS CORPORATION, a Delaware corporation (the "Company"),
ARTAL LUXEMBOURG S.A., a Luxembourg corporation ("Artal"), and FLOWERS
INDUSTRIES, INC., a Georgia corporation ("Flowers").
RECITALS
A. On the date hereof, Artal and Flowers capitalized the Company.
B. The Company intends to (or to cause direct or indirect wholly
owned subsidiaries to) acquire certain assets of certain subsidiaries, and all
of the outstanding shares of Common Stock, par value $1.00 per share, of UB
Investments US Inc. pursuant to a Stock Purchase Agreement dated November 5,
1995, as amended on January 26, 1996, between the Company and UB Investments
(Netherlands) B.V.
C. The parties hereto believe it is in their mutual best interest to
enter into this Agreement.
AGREEMENT
NOW, THEREFORE, in exchange of the mutual promises contained herein,
and in order to induce each of Artal and Flowers to acquire Securities of the
Company and for other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS; CONSTRUCTION
1.1 Definitions. Capitalized terms used herein shall have the
meanings set forth below:
"Affiliate" means any Person which, directly or indirectly through
one or more intermediaries, controls, is controlled by, or is under common
control with, another Person. The term "control" includes, without limitation,
the possession, directly or indirectly, of the power to direct the management
and policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
"Agreement" shall have the meaning specified in the first paragraph
hereof.
"Artal" shall have the meaning specified in the first paragraph
hereof.
<PAGE>
2
"Artal Directors" means the directors nominated to the Board by
Artal pursuant to Section 2.2.
"Board" means the Board of Directors of the Company.
"CEO" means the chief executive officer of the Company.
"Common Stock" means the Company's Common Stock, par value $0.01 per
share, and any capital stock of any class of the Company hereafter authorized
which is not limited to a fixed sum or percentage of par or stated value in
respect to the rights of the holders thereof to participate in dividends or in
the distribution of assets upon any liquidation, dissolution or winding up of
the Company.
"Common Stock Equivalents" means (without duplication with any
Common Stock or other Common Stock Equivalents) rights, warrants, options,
convertible securities, or exchangeable securities or indebtedness, or other
rights, exercisable for or convertible or exchangeable into, directly or
indirectly, Common Stock or securities exercisable for or convertible or
exchangeable into Common Stock, whether at the time of issuance or upon the
passage of time or the occurrence of some future event.
"Company" shall have the meaning specified in the first paragraph
hereof.
"Company Sale" means the consummation of a transaction, whether in a
single transaction or in a series of related and substantially contemporaneous
transactions, with any Person or a group of Persons pursuant to which such
Person or Persons (a) acquire (whether by merger, consolidation, or transfer or
issuance of capital stock or otherwise) capital stock of the Company (or any
surviving or resulting corporation) possessing the voting power to elect a
majority of the board of directors of the Company (or such surviving or
resulting corporation) or (b) acquire assets constituting all or substantially
all of the assets of the Company and its Subsidiaries (as determined on a
consolidated basis).
"Corporate Group" means (i) with respect to any Investor Stockholder
other than Artal, (A) such Investor Stockholder together with its direct and
indirect wholly owned subsidiaries or (B) if permitted by each of the agreements
governing material debt of the Company, such Investor Stockholder together with
its Affiliates, and (ii) with respect to Artal, (I) Artal together with its
direct and indirect wholly owned subsidiaries and any entity, directly or
indirectly through wholly owned subsidiaries, wholly owning Artal or (II) if
permitted by each of the agreements governing material debt of the Company,
Artal together with its Affiliates.
<PAGE>
3
"Executive Agreements" means the executive security purchase
agreements to be entered into among the Company and the management stockholders
or other similar executive agreements entered into from time to time, as the
same may be amended, supplemented or otherwise modified from time to time.
"Family Group" means, with respect to any individual, such
individual's spouse and descendants (whether natural or adopted) and any trust
established and maintained solely for the benefit of such individual and/or his
spouse and/or descendants and all of the aforesaid of the grantor of a trust
that is a stockholder of the Company.
"First Liquidity Notice" shall have the meaning specified in Section
3.2
"Flowers" shall have the meaning specified in the first paragraph
hereof.
"Flowers Directors" means the directors nominated to the Board by
Flowers pursuant to Section 2.2.
"Fully Diluted Shares" means, as of any date of determination, the
number of shares of Common Stock outstanding plus (without duplication) all
shares of Common Stock issuable, whether at such time or upon the passage of
time or the occurrence of future events, upon the exercise, conversion or
exchange of all then-outstanding Common Stock Equivalents.
"Investor Directors" means the Artal Directors, the Flowers
Directors and the CEO.
"Investor Joinder" means a joinder agreement, substantially in the
form of Exhibit 3.1(a) hereto, by which a Person becomes an Investor Stockholder
after the date hereof.
"Investor Stockholders" means, collectively, Artal and Flowers, and
any Person who hereafter becomes an Investor Stockholder pursuant to an Investor
Joinder.
"Liquidity Notice" shall have the meaning specified in Section 3.2.
"Liquidity Period" shall have the meaning specified in Section 3.2.
"Liquidity Transaction" shall have the meaning specified in Section
3.2.
"Management Stock Option Plan" means the Company management stock
option plan to be adopted by the Board as of the plan date, as the same may be
amended, supplemented or otherwise modified from time to time.
<PAGE>
4
"Person" means an individual, a partnership, a joint venture, a
corporation, an association, a joint stock company, a limited liability company,
a trust, an unincorporated organization or a governmental entity or any
department, agency or political subdivision thereof.
"Preferred Stock" means any other capital stock of any class of the
Company hereafter authorized that provides for a preference on liquidation or
with respect to dividends over any other class of capital stock of the Company.
"Public Offering" means a public offering of Common Stock pursuant
to a registration statement declared effective under the Securities Act.
"Recapitalization" means any stock split, reverse stock split,
dividend or combination, or any recapitalization, reclassification, merger,
consolidation, exchange or other similar reorganization.
"Requesting Stockholder" shall have the meaning specified in Section
3.2.
"Second Liquidity Notice" shall have the meaning specified in
Section 3.2.
"Securities" means, (a) the Common Stock acquired by any Investor
Stockholder on the date of this Agreement, (b) all Common Stock and Preferred
Stock acquired by any Investor Stockholder after the date hereof, (c) all Common
Stock and Preferred Stock issued in respect thereof, or in substitution thereof,
in connection with a Recapitalization and (d) all Common Stock and Preferred
Stock issued by the Company after the date hereof.
"Securities Act" means the Securities Act of 1933, as amended, and
all rules and regulations promulgated thereunder, as the same may be amended
from time to time.
"Subscription Agreement" means the Subscription Agreement of even
date herewith among the Company, Artal and Flowers, as the same may be amended,
supplemented or otherwise modified from time to time.
"Subsidiary" means any corporation of which the securities having a
majority of the ordinary voting power in electing the board of directors are, at
the time as of which any determination is being made, owned by the Company
either directly or through one or more of its Subsidiaries.
"Third Party" means any Person other than the Investor Stockholders
and their Affiliates.
<PAGE>
5
"Transfer" shall be construed broadly and shall include any transfer
of Securities, including without limitation, by way of issuance, sale,
participation, pledge, gift, bequeath, intestate transfer, distribution,
liquidation, merger or consolidation.
1.2 Actions by the Stockholders. Whenever this Agreement states that
the Investor Stockholders, in their capacities as stockholders of the Company,
will use their respective best efforts to cause the Company to take any action
or refrain from taking any action, or any similar phrase, then the Investor
Stockholders will, if necessary, take all steps permitted under applicable law
to replace any director who refuses or otherwise fails to use his best efforts
to direct the Company to comply with such covenants with a director who such
Investor Stockholders believe in good faith will cause the Company to comply
with such covenants.
1.3 Representations and Warranties of the Investor Stockholders.
Each Investor Stockholder (as to itself or himself only) represents and warrants
to the other Investor Stockholders that, as of the time such Investor
Stockholder becomes a party to this Agreement:
(a) this Agreement (or a separate Investor Joinder) has been duly
and validly executed and delivered by such Investor Stockholder and
constitutes a legal and binding obligation of such Investor Stockholder,
enforceable against such Investor Stockholder in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, by general equitable
principles (whether considered in a proceeding in equity or at law) and by
an implied covenant of good faith and fair dealing; and
(b) the execution, delivery and performance by such Investor
Stockholder of this Agreement and the consummation by such Investor
Stockholder of the transactions contemplated hereby will not, with or
without the giving of notice or lapse of time, or both (i) violate any
provision of law, statute, rule or regulation to which such Investor
Stockholder is subject, (ii) violate any order, judgment or decree
applicable to such Investor Stockholder, or (iii) conflict with, or result
in a breach or default under, any term or condition of any agreement or
other instrument to which such Investor Stockholder is a party or by which
such Investor Stockholder or any of its or his significant assets is
bound.
<PAGE>
6
ARTICLE II
VOTING ARRANGEMENTS
2.1 Number of Directors. The Investor Stockholders, in their
capacity as stockholders of the Company, will use their respective best efforts
to cause the Company, and the Company agrees, to cause the number of directors
constituting the Board on the date hereof to be seven, subject to adjustment
consistent with the other terms and provisions of this Agreement.
2.2 Election of Directors. From and after the date hereof, the
Investor Stockholders agree to observe the following procedures in the
nomination and election of directors of the Company:
(a) Each of Artal and Flowers shall each be entitled to nominate
three individuals for election to the Board, provided that if Artal or
Flowers (in each case together with its Affiliates) ceases to own at least
50% of the Securities originally purchased by it, such Investor
Stockholder shall only be entitled to nominate one individual for election
to the Board pursuant to this Section 2.2(a), and provided further that if
either Artal or Flowers (in each case together with its Affiliates) ceases
to own at least 10% of the Securities originally purchased by it, such
Investor Stockholder shall no longer be entitled to nominate an individual
for election to the Board pursuant to this Section 2.2(a).
(b) The remaining director shall be the CEO.
2.3 Covenant to Vote. Each of the Investor Stockholders agrees to
vote, in person or by proxy, or to enter into written consents in respect of,
all of the Securities issued by the Company and owned by such Investor
Stockholder, at any annual or special meeting of the stockholders of the Company
called for the purpose of voting on the election of directors or by consensual
action of stockholders without a meeting with respect to the election of
directors, in favor of the election of all of the individuals nominated by any
party in accordance with Sections 2.2(a) and (b) hereof.
2.4 Removal of Directors.
(a) At all times (i) Artal shall have the right to recommend the
removal, with or without cause, of all or any of the Artal Directors and (ii)
Flowers shall have the right to recommend the removal, with or without cause, of
all or any of the Flowers Directors.
(b) At all times, both Artal and Flowers jointly (but not
individually), shall have the right to recommend the removal, with or without
cause, of the CEO.
<PAGE>
7
(c) In the event that either Artal or Flowers acting as described in
Section 2.4(a) above (or acting jointly as described in Section 2.4(b) above)
shall, in accordance with their rights specified herein, recommend the removal
of any director or directors with respect to whom they have such right, then
each of the Investor Stockholders hereby agrees to join with Artal or Flowers,
as the case may be, in recommending such removal as described above, and in
causing the Company either to promptly hold a special meeting of stockholders or
to enter into or, if necessary, solicit, written consents of stockholders
without a meeting, and each of the Investor Stockholders hereby agrees to vote,
in person or by proxy, all of its or his Securities issued by the Company at
such meeting or pursuant to such written consent of stockholders, as the case
may be, in favor of such removal.
(d) In the event that at any time after the date of this Agreement,
(i) the number of Artal Directors on the Board is greater than the number that
Artal has the right to designate pursuant to Section 2.2, Artal shall promptly
take all appropriate action to cause to resign that number of Artal Directors as
is required to make the remaining number of such Artal Directors conform to
Section 2.2 or (ii) the number of Flowers Directors on the Board is greater than
the number that Flowers has the right to designate pursuant to Section 2.2,
Flowers shall promptly take all appropriate action to cause to resign that
number of Flowers Directors as is required to make the remaining number of such
Flowers Directors conform to Section 2.2. For purposes of clauses (i) and (ii)
above, such actions shall (if necessary) include, without limitation,
recommending the removal of such directors. Any such recommendation for removal
shall be deemed to be a recommendation for removal made pursuant to Section
2.4(c) above. In the event that the resignation or removal of one or more
directors is required because of an event described in the provisos to Section
2.2(a), the Investor Stockholders agree to use their respective best efforts to
cause the number of directors constituting the Board to be reduced by the number
of directors so resigning or being removed.
2.5 Vacancies. In the event a vacancy is created on the Board by
reason of the death, removal or resignation (other than a vacancy created
through the operation of the provisos to Sections 2.2(a) and/or 2.4(d)) of any
one of the Investor Directors, each of the Investor Stockholders hereby agrees
to cause the Company to either promptly hold a special meeting of stockholders
or to enter into or, if necessary, solicit, written consents of stockholders
without a meeting, and each of the Investor Stockholders hereby agrees to vote
all of its or his Securities issued by the Company at such meeting, in person or
by proxy, or pursuant to such written consent of stockholders, in favor of the
person or persons selected in accordance with Section 2.2 hereof to fill such
vacancy and, if necessary, in favor of removing any director, if any, who had
been elected to
<PAGE>
8
fill such vacancy otherwise than in accordance with the selection procedures of
Section 2.2 hereof.
2.6 Restrictions on Other Agreements.
(a) No Investor Stockholder shall grant any proxy or enter into or
agree to be bound by any voting trust or voting agreement with respect to the
Securities of the Company, other than pursuant to this Agreement.
(b) No Investor Stockholder shall enter into any stockholder
agreements or arrangements of any kind with any Person with respect to any
Securities on terms inconsistent with the provisions of this Agreement (whether
or not such agreements or arrangements are with other Investor Stockholders or
with Persons that are not parties to this Agreement), including but not limited
to, agreements or arrangements with respect to the acquisition or disposition of
Securities of the Company in a manner which is inconsistent with this Agreement.
(c) By execution of this Agreement, each Investor Stockholder
represents that it or he is not presently a party to, or bound by, any
arrangement prohibited by this Section 2.6.
2.7 Fundamental Corporate Actions. So long as (i) Artal is entitled
to nominate three individuals for election to the Board pursuant to Section 2.2,
each of the following actions (other than any such actions required pursuant to
contracts or agreements properly entered into by the Company or any of its
Subsidiaries) will require the approval of at least two of the Artal Directors,
provided that if Artal is entitled to nominate only one individual for election
to the Board pursuant to Section 2.2, any action described in clause (k) below
will require the approval of such Artal Director and (ii) Flowers is entitled to
nominate three individuals for election to the Board pursuant to Section 2.2,
each of the following actions (other than any such actions required pursuant to
contracts or agreements properly entered into by the Company or any of its
Subsidiaries) will require the approval of at least two of the Flowers
Directors, provided that if Flowers is entitled to nominate only one individual
for election to the Board pursuant to Section 2.2, any action described in
clause (k) below will require the approval of such Flowers Director:
(a) any amendments to the certificate of incorporation (including
any certificate of designations) or by-laws of the Company,
including, without limitation, any by-law amendment or other
resolution of the Board that would change the size of the Board
(except as required under Section 2.4(d));
(b) any merger, consolidation or similar business combination
involving the Company or any sale of
<PAGE>
9
substantially all of the Company's assets or equity, or any
reorganization or Recapitalization having similar effect;
(c) stock repurchases (other than pursuant to the repurchase rights
contained in the Executive Agreements);
(d) declaration by the Company of dividends and other distributions
to stockholders;
(e) acquisitions or dispositions (whether by way of sale, lease,
assignment, transfer or other disposition) of assets (including,
without limitation, primary or secondary stock or assets of the
Company's Subsidiaries) having an aggregate market value of 25% or
more of either the aggregate market value of the assets of the
Company on a consolidated basis or the aggregate market value of all
outstanding stock of the Company, other than the sale of goods in
the ordinary course of business;
(f) incurrence of material amount of additional debt or other credit
exposure or material amendments to existing credit facilities;
(g) termination of the chief executive officer or appointment of a
chief executive officer other than Samuel K. Reed;
(h) issuance or sale by the Company of any stock or stock options or
securities convertible into or exchangeable for stock (other than
pursuant to the Management Stock Option Plan or other approved stock
option plans);
(i) changes of 15% or more in the annual compensation of the chief
executive officer;
(j) the adoption of or material changes in (i) the Management Stock
Option Plan, (ii) any other stock option or executive compensation
plan or (iii) the form of Executive Agreement;
(k) any related-party transaction, except for transactions in the
ordinary course of business on terms no less favorable to the
Company than could be obtained in a comparable arm's-length
transaction with an independent Third Party;
(l) the dissolution of the Company; the adoption of a plan of
liquidation of the Company; or any action by the Company to commence
any suit, case, proceeding or other action (i) under any existing or
future law or
<PAGE>
10
any jurisdiction relating to bankruptcy, insolvency, reorganization
or relief of debtors seeking to have an order for relief entered
with respect to the Company, or seeking to adjudicate the Company a
bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, winding up, liquidation, dissolution, composition or
other relief with respect to the Company or (ii) seeking appointment
of a receiver, trustee, custodian or other similar official for the
Company, or for all or any substantial part of the assets of the
Company, or making a general assignment for the benefit of the
creditors of the Company; and
(m) any contract or agreement to do any of the foregoing.
Notwithstanding the foregoing, any proposed Liquidity Transaction
pursuant to Section 3.2 will only require the Board approval (if any) required
under the Company's by-laws.
2.8 Certificate of Incorporation and By-Laws. Each Investor
Stockholder shall take or cause to be taken all lawful action necessary to
ensure at all times that the Company's certificate of incorporation and by-laws
are not, at any time, inconsistent with the provisions of this Agreement.
2.9 Changes Upon Public Offering. Each of the Investor Stockholders
agrees to cooperate in good faith to make such changes to this Agreement
(including, without limitation, with respect to the composition of the Board)
and to the Company's certificate of incorporation and by-laws, and to take any
and all other actions, as may be necessary or appropriate in connection with the
consummation of a Public Offering and which are, to the greatest extent
possible, designed to reflect the intent of this Agreement.
ARTICLE III
COVENANTS
3.1 Transfers of Securities.
(a) Except as permitted pursuant to Section 3.1(b) or with the prior
written consent of both Artal and Flowers, no Investor Stockholder shall
Transfer any Securities until the seventh anniversary of the date hereof. Prior
to making any permitted (whether as result of the exceptions set forth in
Section 3.1(b) or otherwise) Transfer of Securities to any Person at any time
prior to the termination of this Agreement (other than a Transfer pursuant to a
Public Offering or a Transfer pursuant to clause (v) of Section 3.1(b) below),
the Investor Stockholder shall obtain an Investor Joinder from such transferee,
and such transferee shall, by execution thereof,
<PAGE>
11
agree to become an Investor Stockholder subject to all of the rights and
obligations contained in this Agreement applicable to an Investor Stockholder.
Promptly thereafter, the Investor Stockholder who Transferred Securities shall
cause originally executed copies of such Investor Joinder to be delivered to the
other Investor Stockholders and shall notify the Investor Stockholders of the
number and type of Securities Transferred.
(b) The restriction on Transfer contained in the first sentence of
Section 3.1(a) above shall be inapplicable with respect to:
(i) any Transfers of Securities made by an individual Investor
Stockholder to his or her Family Group and, thereafter, among members of
such Family Group, provided that no such Transfer shall be permitted
hereby if it would constitute a default or event of default under any
agreement governing material debt of the Company or any of its
Subsidiaries;
(ii) any Transfers by an Investor Stockholder to another Investor
Stockholder, to a member of its Corporate Group or to any member of the
Corporate Group of an Investor Stockholder, provided that no such Transfer
shall be permitted hereby if it would constitute a default or event of
default under any agreement governing material debt of the Company or any
of its Subsidiaries;
(iii) any Transfer of Securities pursuant to the terms of Section
3.2 (including, without limitation, Section 3.2(f));
(iv) any Transfers of Securities made by an individual Investor
Stockholder upon his death to his or her estate, provided that the
beneficiaries of the estate are permitted transferees under this
Agreement; or
(v) any Transfers of Securities to the Company pursuant to
Section 3.5 hereof.
(c) Any Transfer made in violation of this Section 3.1 (including,
without limitation, a Transfer made without obtaining a necessary Investor
Joinder) shall be null and void. The Company shall not permit such Transfer to
be recorded on the Company's books and records and shall not otherwise cooperate
in consummating such Transfer.
(d) No Person shall be permitted to become a party to this Agreement
except by executing an Investor Joinder pursuant to the terms set forth in this
Section 3.1.
3.2 Liquidity Transactions.
<PAGE>
12
(a) At any time after the third anniversary of the date hereof,
either Artal or Flowers may give written notice (a "Liquidity Notice"; and the
party delivering such Liquidity Notice, the "Requesting Stockholder") to each of
the other Investor Stockholders of its desire to Transfer its Securities. Each
of Artal and Flowers shall be entitled to deliver a Liquidity Notice on two
occasions only (the first Liquidity Notice delivered by a party being referred
to herein as a "First Liquidity Notice" and the second delivered by such party
as a "Second Liquidity Notice"), provided that either Artal or Flowers may
deliver one or more additional Liquidity Notices with the prior written consent
of the other. Each Liquidity Notice shall specify the number of each class of
Securities held by the Requesting Stockholder desired to be Transferred,
provided that any such specification shall not affect any obligation of the
Requesting Stockholder pursuant to Section 3.2(b) to consent to the Transfer of
all Securities held by it. Upon the delivery of a Liquidity Notice, Artal shall
have the authority on behalf of each Investor Stockholder, and shall use its
reasonable best efforts in good faith, to (i) solicit offers with respect to,
and negotiate the terms of and consummate, a Company Sale, (ii) effect a Public
Offering or (iii) subject to the provisions of Sections 3.2(c) and 3.2(f), if
Artal determines in good faith that a Company Sale or Public Offering would not
then be advisable with respect to the Securities of the Investor Stockholders
taken as a whole, either (A) solicit offers with respect to, and negotiate the
terms of and consummate, the Transfer of, or (B) effect a secondary Public
Offering of, all of the Securities of the Requesting Stockholder specified in
such Requesting Stockholder's Liquidity Notice (in each case, a "Liquidity
Transaction"). Notwithstanding anything to the contrary contained in Article IV
hereof, the Company agrees to effect any Public Offering requested by Artal
pursuant to clause (ii) above as if a Demand Registration (as defined in Annex A
hereto) had been made.
(b) The type and terms of any such Liquidity Transactions shall be
determined by Artal in its reasonable business discretion in good faith. For a
period of one year after the date the Liquidity Notice is given as set forth
above (the "Liquidity Period"), and subject to the provisions of Section
3.2(c)and 3.2(g), each of the Investor Stockholders agrees to consent to and
raise no objections to, and to take all other actions (including, without
limitation, voting, or entering into written consents with respect to, all of
its Securities in favor of such transaction) necessary or desirable to cause,
the consummation of any Liquidity Transaction on the terms proposed by Artal,
provided that such terms are in accordance with the other provisions of this
Section 3.2, and provided further that no Liquidity Transaction of a Requesting
Stockholder pursuant to clause (iii) of Section 3.2(a) shall be consummated
without the prior written consent of the Requesting Stockholder.
<PAGE>
13
(c) Subject to the provisions of Section 3.2(g), in any Liquidity
Transaction pursuant to clauses (i) or (ii) of Section 3.2(a), each of the
Investor Stockholders shall participate on a pro rata basis with respect to each
class of Securities being sold in such transaction. In any Liquidity Transaction
pursuant to clause (iii) of Section 3.2(a), each of the Investor Stockholders
shall participate on a pro rata basis with respect to each class of Securities
being sold unless any such Investor Stockholder elects not to so participate.
(d) In connection with any Liquidity Transaction pursuant to this
Section 3.2, Artal shall, if requested by either Artal or Flowers, cause to be
delivered to Artal and Flowers (at the Company's expense) a fairness opinion
regarding such Liquidity Transaction by an investment banking firm mutually
acceptable to Artal and Flowers. In connection with any Liquidity Transaction,
Artal may employ (at the expense of the Company) the services of such financial
advisors and investment banks, any of which shall be mutually acceptable to
Artal and Flowers, as it deems necessary in its reasonable discretion.
(e) Any Liquidity Period may be extended for successive six-month
periods with the mutual consent of Artal and Flowers. The failure of the Company
to consummate a Liquidity Transaction within any Liquidity Period shall not,
subject to the limitations set forth in Section 3.2(a), prejudice the rights of
Artal and Flowers to deliver any subsequent Liquidity Notice.
(f) In the event that Flowers shall have delivered a Liquidity
Notice and a definitive agreement with respect to a Liquidity Transaction shall
not have been entered into within the applicable Liquidity Period (including any
extensions thereof), or if such definitive agreement shall be terminated without
consummation after the expiration of such Liquidity Period (including any
extensions thereof), Flowers shall have the right, subject to the Investor
Joinder requirements of Section 3.1(a), to Transfer the Securities specified in
such Liquidity Notice for a period of 120 days in a private sale not involving
any Public Offering. After the expiration of such Liquidity Period and 120 day
period in the case of Flowers' First Liquidity Notice, if Flowers delivers its
Second Liquidity Notice then Artal's obligations in respect of such Second
Liquidity Notice shall be as otherwise set forth in this Section 3.2, except
that the provisions of clause (iii) of Section 3.2(a) shall not apply.
(g) If (i) Artal shall have, pursuant to its First Liquidity Notice,
previously effected a Liquidity Transaction under clause (iii) of Section 3.2(a)
in which Flowers has elected not to participate on a pro rata basis, and (ii) at
the time of a proposed Liquidity Transaction Artal (together with its
Affiliates) shall own less than 80% of the Securities then owned by Flowers
(together with its Affiliates), then, notwithstanding any other provision herein
to the contrary, no Liquidity
<PAGE>
14
Transaction described in Section 3.2(a)(i) or (ii) may be effected without
Flowers' prior written consent.
(g) Nothing contained in this Agreement shall prohibit any Investor
Stockholder from making an offer to purchase Securities in connection with any
Liquidity Transaction or other Transfer of Securities, provided that such offer
or any purchase resulting therefrom is not in violation of any law, statute,
rule or regulation to which such Investor Stockholder is subject.
3.3 Restrictions on Certain Fees.
(a) No Investor Stockholder shall accept from the Company or any of
its Subsidiaries, and the Company or any of its Subsidiaries shall not pay to
any Investor Stockholder or The Invus Group, Ltd. any management, consulting,
investment banking or similar fee without the prior consent of Flowers and
Artal.
(b) No director of the Company shall be entitled to receive any fees
or other compensation from the Company for serving on the Board (including any
committees thereof), except for reimbursement of out-of-pocket expenses actually
incurred by a director for the purpose of attending meetings of the Board (or
committees thereof) or performing other duties in furtherance of their service
as directors of the Company. Each Investor Stockholder agrees not to vote for or
consent to the granting of any director fees prohibited by the foregoing
sentence.
3.4 Limitation on Public Offering. Except as contemplated by Section
3.2 or Article IV, no Investor Stockholder will take action to cause (including
voting Securities in favor of) a Public Offering of Securities without the prior
written consent of both Artal and Flowers.
3.5 Resale of Securities to the Company. Each of Artal and Flowers
shall sell to the Company, and the Company shall purchase, at the original per
share purchase price set forth in the Subscription Agreement, a number of shares
of Common Stock equal to one-half of the number of shares of Common Stock
purchased pursuant to Executive Agreements within 120 days after the date of
this Agreement; provided that the per share purchase price for shares resold to
the Company pursuant to this Section 3.5 shall be equal to the per share price
for shares purchased pursuant to such Executive Agreements; and provided further
that in no event shall the aggregate purchase price for shares resold to the
Company pursuant to this Section 3.5 exceed $3,500,000.
ARTICLE IV
REGISTRATION RIGHTS
The procedures and further agreements of the parties hereto
regarding registration rights set forth in Annex A to this Agreement are
incorporated herein by reference.
<PAGE>
15
ARTICLE V
MISCELLANEOUS
5.1 Termination.
(a) This Agreement shall terminate, and, except as otherwise
expressly provided herein, shall thereafter have no further force or effect and
shall not be binding on any party hereto on the earlier of (i) the date on which
both Artal and Flowers (in each case together with its Affiliates) cease to own
at least 10% of the Securities of the Company originally purchased by them and
(ii) the tenth anniversary of the date of this Agreement.
(b) As to any particular Investor Stockholder, this Agreement shall
no longer be binding or of further force or effect as to such Investor
Stockholder, except as noted below or otherwise expressly provided herein, as of
the date such Investor Stockholder has Transferred all such Investor
Stockholder's interest in the Company's securities; provided, however, that no
such termination shall be effective if such Investor Stockholder is in breach of
this Agreement.
5.2 Remedies.
(a) Each Investor Stockholder shall have all rights and remedies
reserved for such Investor Stockholder pursuant to this Agreement, the Company's
certificate of incorporation and by-laws and all rights and remedies which such
holders have been granted at any time under any other agreement or contract and
all of the rights which such holders have under any law or equity. Any Person
having any rights under any provision of this Agreement will be entitled to
enforce such rights specifically, to recover damages by reason of any breach of
any provision of this Agreement and to exercise all other rights granted by law
or equity.
(b) The parties hereto agree that if any parties seek to resolve any
dispute arising under this Agreement pursuant to a legal proceeding, the
"prevailing" parties to such proceeding shall be entitled to receive reasonable
fees and expenses (including reasonable attorneys' fees and expenses) incurred
in connection with such proceedings. For purposes of this Section 5.2(b), a
party shall be deemed to be a "prevailing" party only if it prevails on each
element of its claim (including the amount and type of damages sought). If
neither party is the prevailing party, the parties agree to request the court or
other decision making body to make a separate determination as to the allocation
of fees and expenses.
(c) It is acknowledged that it will be impossible to measure in
money the damages that would be suffered if the parties fail to comply with any
of the obligations herein imposed on them and that in the event of any such
failure, an aggrieved
<PAGE>
16
Person will be irreparably damaged and will not have an adequate remedy at law.
Any such Person shall, therefore, be entitled to injunctive relief, including
specific performance, to enforce such obligations, and if any action should be
brought in equity to enforce any of the provisions of this Agreement, none of
the parties hereto shall raise the defense that there is an adequate remedy at
law.
5.3 Legends. Each certificate representing a Security held by any
Investor Stockholder will be imprinted with a legend in substantially the
following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
SUBSCRIPTION AGREEMENT AND A STOCKHOLDERS' AGREEMENT (COPIES OF
WHICH ARE ON FILE WITH THE SECRETARY OF THE COMPANY). NO TRANSFER,
SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT IN
ACCORDANCE WITH THE PROVISIONS OF SUCH STOCKHOLDERS' AGREEMENT AND
SUBSCRIPTION AGREEMENT AND (A) PURSUANT TO A REGISTRATION STATEMENT
EFFECTIVE UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B)
PURSUANT TO AN EXEMPTION FROM REGISTRATION THEREUNDER. THE HOLDER OF
THIS CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE
BOUND BY ALL OF THE PROVISIONS OF SUCH SUBSCRIPTION AGREEMENT AND
STOCKHOLDERS' AGREEMENT."
5.4 Consent to Amendments. Except as expressly set forth herein, the
provisions of this Agreement may only be amended or waived with the prior
written consent of the Company, Artal (provided that it, together with its
Affiliates, continues to own at least 10% of the Securities originally purchased
by it), Flowers (provided that it, together with its Affiliates, continues to
own at least 10% of the Securities originally purchased by it) and any other
Investor Stockholder which, together with its Affiliates, owns 30% or more of
the Securities purchased by the Investor Stockholders on the date of this
Agreement.
5.5 Successors and Assigns. Except as otherwise expressly provided
herein, all provisions contained in this Agreement by or on behalf of any of the
parties hereto will bind and inure to the benefit of the respective successors
and permitted transferees of the parties hereto whether so expressed or not.
This Agreement is not intended to create any third party beneficiaries.
5.6 Severability. Whenever possible, each provision
of this Agreement will be interpreted in such a manner as to be
effective and valid under applicable law. The parties agree that
<PAGE>
17
(i) the provisions of this Agreement shall be severable in the event that any of
the provisions hereof are held by a court of competent jurisdiction to be
invalid, void or otherwise unenforceable, (ii) such invalid, void or otherwise
unenforceable provisions shall be automatically replaced by other provisions
which are as similar as possible in terms to such invalid, void or otherwise
unenforceable provisions but are valid and enforceable and (iii) the remaining
provisions shall remain enforceable to the extent permitted by law. To the
extent there exists any inconsistency between the provisions of this Agreement
and the by-laws of the Company, the provisions of this Agreement shall govern in
all instances.
5.7 Counterparts. This Agreement may be executed in two or more
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together will constitute one and the same
Agreement. It shall not be necessary in making proof of this Agreement to
produce or account for more than one such counterpart.
5.8 Notices. All notices, demands and other communications to be
given or delivered under or by reason of the provisions of this Agreement shall
be in writing or sent by facsimile and shall be deemed to have been given (i)
when personally delivered or sent by facsimile (with proof of receipt at the
number to which notices are required to be sent), (ii) one business day after
being sent by overnight courier (receipt confirmation requested) or (iii) five
business days after being mailed by certified or registered mail (return receipt
requested and postage prepaid) to the recipient. Such notices, demands and other
communications will be sent to each stockholder at the address or addresses
indicated on the signature page hereto or on the Investor Joinder (as the case
may be), or to such other address or to the attention of such other person as
the recipient party has specified by prior written notice to the sending party.
5.9 Governing Law. In all respects, including all matters of
construction, validity and performance, this Agreement and the obligations
arising hereunder shall be governed by, and construed and enforced in accordance
with, the laws of the State of New York applicable to contracts made and
performed in such state, without regard to the principles thereof regarding
conflict of laws, except for matters directly within the purview of the General
Corporation Law of the State of Delaware (the "DGCL") which shall be governed by
the DGCL.
5.10 Further Assurances. Each party hereto shall do and perform or
cause to be done and performed all such further acts and things and shall
execute and deliver all such other agreements, certificates, instruments, and
documents as any other party hereto reasonably may request in order to carry out
the provisions of this Agreement and the consummation of the transactions
contemplated hereby.
<PAGE>
18
5.11 Jurisdiction; Venue; Process. (a) The parties to this Agreement
agree that jurisdiction and venue in any action brought by any party hereto
pursuant to this Agreement shall properly lie and shall be brought in any
federal or state court located in the State of New York. By execution and
delivery of this Agreement, each party hereto irrevocably submits to the
jurisdiction of such courts for itself or himself and in respect of its or his
property with respect to such action. The parties hereto irrevocably agree that
venue would be proper in such court, and hereby irrevocably waive any objection
that such court is an improper or inconvenient forum for the resolution of such
action.
(b) Artal hereby irrevocably and unconditionally designates and
directs Mr. David Van Zandt, with offices on the date hereof at Northwestern
University School of Law, 357 East Chicago Avenue, Chicago, Illinois 60611, as
its agent to receive service of any and all process and documents on its behalf
in any legal action or proceeding related to this Agreement and agrees that
service upon such agent shall constitute valid and effective service upon Artal
and that failure of such agent to give any notice of such service to Artal shall
not affect or impair in any way the validity of such service or of any judgment
rendered in any action or proceeding based thereon.
5.12 MUTUAL WAIVER OF JURY TRIAL. THE PARTIES HERETO WAIVE ALL RIGHT
TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND
ANY RIGHTS OR REMEDIES UNDER THIS AGREEMENT OR ANY DOCUMENTS RELATED HERETO.
* * * *
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
INFLO HOLDINGS CORPORATION
By:______________________________
Name: Sam K. Reed
Title: Chief Executive Officer
and President
<PAGE>
19
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
INVESTOR STOCKHOLDER SIGNATURE PAGE
Name: ARTAL LUXEMBOURG S.A.
Address for with copies
Notices: to:
Artal Luxembourg S.A. David Van Zandt
39 Boulevard Royal Northwestern University School
Luxembourg City, Luxembourg of Law
Facsimile No.: 352-22-42-66 357 East Chicago Avenue
Attn: Managing Director Chicago, Illinois 60611
Facsimile No.: 1-312-503-7694
ARTAL LUXEMBOURG S.A.
By:___________________________
Name: David Van Zandt
Title:
<PAGE>
20
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
INVESTOR STOCKHOLDER SIGNATURE PAGE
Name: FLOWERS INDUSTRIES, INC.
Address for with copies
Notices: to:
Flowers Industries, Inc. Jones, Day, Reavis & Pogue
11796 US Highway 19 South 3500 One Peachtree Center
Thomasville, Georgia 31799 303 Peachtree Street, N.E.
Facsimile No.: 1-912-225-3808 Atlanta, GA 30308
Attn: Robert P. Crozer Facsimile No.: 1-404-581-8330
Attn: Robert W. Smith, Esq.
FLOWERS INDUSTRIES, INC.
By:___________________________
Name: Robert P. Crozer
Title: Vice Chairman
<PAGE>
21
Exhibit 3.1(a)
INVESTOR JOINDER
By execution of this Investor Joinder, the undersigned agrees to
become a party to that certain Stockholders' Agreement, dated as of January 26,
1996 among INFLO Holdings Corporation (the "Company") and certain stockholders
of the Company, which stockholders originally included Artal Luxembourg S.A. and
Flowers Industries, Inc. The undersigned shall have all rights, and shall
observe all the obligations, applicable to an Investor Stockholder.
Name:_________________________
Address for with copies
Notices: to:
- ------------------------------ ------------------------------
- ------------------------------ ------------------------------
- ------------------------------ ------------------------------
- ------------------------------ ------------------------------
- ------------------------------ ------------------------------
If an individual, are you presently married or separated?
yes _____ no _____
(If yes, you must also have your spouse execute a spousal consent in the form
attached hereto.)
Signature:___________________
Date:___________________
<PAGE>
22
CONSENT AND AGREEMENT OF SPOUSE
I, _________________________________, am the spouse of
____________________, one of the stockholders of INFLO Holdings Corporation, a
Delaware corporation (the "Company"). I acknowledge that my spouse is a party to
that certain Stockholders' Agreement dated as of January 26, 1996 among the
Company and certain stockholders of the Company, which stockholders originally
included Artal Luxembourg S.A. and Flowers Industries, Inc. (the "Agreement"),
and that I have read the Agreement. I consent to, agree to, approve and ratify
each and every one of the terms and provisions of the Agreement, and I further
agree to provide all notices and information required of me in the time and
manner set forth in the Agreement.
Executed this ____ day of __________, 199_.
--------------------------------
(Signature of Consenting Spouse)
<PAGE>
ANNEX A
PROVISIONS REGARDING REGISTRATION RIGHTS
This Annex A is part of and is incorporated into that certain
Stockholders' Agreement (the "Stockholders' Agreement"), dated as of January 26,
1996, among INFLO Holdings Corporation, a Delaware corporation (the "Company"),
Artal Luxembourg S.A., a Luxembourg corporation ("Artal"), and Flowers
Industries, Inc., a Georgia corporation ("Flowers"). Capitalized terms used in
this Annex A and not otherwise defined shall have the meanings ascribed to them
in the Stockholders' Agreement. Certain capitalized terms used herein are
defined in Section 2.1 of this Annex A.
1.1 Demand Registrations.
(a) Demand Registrations. At any time, the Company shall, upon
receipt of a written request (the "Demand Notice") given by any of the Investor
Stockholders (the "Demanding Holders") to register Registrable Securities held
by such Holders, as promptly as practicable but in any event within 60 days
after receiving such Demand Notice, file a Registration Statement and shall
include in the Registration Statement for registration the Registrable
Securities requested to be registered by the Demanding Holders; provided,
however, that each Investor Stockholder agrees not to deliver any such Demand
Notice to the Company prior to the seventh anniversary of the date hereof,
except with the consent of each of Artal and Flowers (provided in each case that
it, together with its Affiliates, continues to own at least 10% of the
Securities originally purchased by it), or, if such registration is being made
pursuant to Section 3.2(a) of the Stockholders' Agreement, with the consent of
Artal only. A registration effected pursuant to this Section 1.1(a) is referred
to herein as a "Demand Registration."
(b) Number of Demand Registrations. The Investor Stockholders shall
be entitled to five (5) Demand Registrations in the aggregate (in addition to
any demand made pursuant to Section 3.2(a) of the Stockholders' Agreement),
provided that if (i) a Demand Registration is not declared and maintained
effective for the period required by Section 1.1(d) hereof or if the
consummation of the offering of Registrable Securities pursuant to such Demand
Registration is interfered with by any stop order, injunction or other order or
requirement of the Securities and Exchange Commission or other governmental
agency or court, or (ii) any Holder shall be prevented through the operation of
clause first of Section 1.1(e) from registering any of its Registrable
Securities requested to be registered in a Demand Notice, the Holders of
Registrable Securities included in such Demand Registration shall be entitled to
an additional Demand Registration in lieu thereof.
<PAGE>
2
(c) Minimum Amount of Registrable Securities. The Company shall not
be required to effect any Demand Registration unless the aggregate amount of the
class of Registrable Securities requested to be registered by the Demanding
Holders shall equal at least 10% of the aggregate amount of such class of
Securities issued to the Investor Stockholders on the date of this Agreement.
(d) Filing and Effectiveness. Each Demand Registration shall be on
Form S-1 or another available form acceptable to the Holders of a majority of
the Registrable Securities offered thereby, permitting registration of such
securities for resale by such Holders in the manner or manners designated by
them (including, without limitation, one or more underwritten offerings). The
Company shall file the Demand Registration within 60 days (the "Filing Date")
and shall use its best efforts to cause the same to be declared effective by the
SEC within 120 days (in each case, the "Effectiveness Date") of the date on
which the Holders of Registrable Securities give the Demand Notice required by
Section 1.1(a) hereof with respect to such Demand Registration.
Within ten days after receipt of such Demand Notice, the Company
shall serve written notice (the "Registration Notice") of such registration
request to all other Holders of Registrable Securities and shall, subject to the
provisions of Section 1.1(e) hereof, include in such registration all
Registrable Securities with respect to which the Company received written
requests for inclusion therein within fifteen (15) business days after the
receipt of the Registration Notice by the applicable Holder, provided that each
Investor Stockholder agrees not to make any such written request to register any
of its Registrable Securities in connection with any registration effected
pursuant to Section 3.2(a) of the Stockholders' Agreement, except with the
consent of Artal. All requests made pursuant to this Section 1.1 will specify
the number of Registrable Securities to be registered and will also specify the
intended methods of disposition thereof, provided that if the Holders of a
majority of the Registrable Securities then outstanding requested and permitted
to be included in such registration specify one particular type of underwritten
offering, such method of disposition shall be such type of underwritten offering
or a series of such underwritten offerings (as the Holders of such majority may
elect) during the time period the Registration Statement is effective.
The Company hereby agrees to use its best efforts to comply with all
necessary provisions of the federal securities laws in order to keep such
Registration Statement effective for a period of 180 days from its Effectiveness
Date.
(e) Priority on Demand Registrations. If the
Registrable Securities registered pursuant to a Demand
Registration are to be sold in one or more firm commitment
<PAGE>
3
underwritten offerings, and the sole or managing Underwriter, as the case may
be, of such underwritten offering advises the Holders of such securities that,
in its opinion, the amount of securities requested to be included in such
registration exceeds the amount which can be sold in such offering without
adversely affecting the distribution of the securities being offered, then the
Company shall register first, the maximum number of securities requested to be
included in such registration by the Company which in the Underwriter's opinion
can be sold, second, the maximum number of Registrable Securities requested to
be included in such registration by the Holders which in the Underwriter's
opinion can be sold, pro rata based on the number of Registrable Securities
requested to be included by such Holders, until all of such Registrable
Securities have been registered, and third, subject to the last proviso set
forth in Section 1.2(b) (or any similar limitation in any other applicable
agreement), the number of securities requested to be included in such
registration by the holders of the Company's securities pursuant to any
incidental or piggyback registration rights which in the Underwriter's opinion
can be sold, pro rata based on the number of securities requested to be included
by such Holders.
(f) Shelf Registrations. Upon receipt of a written request given by
both Artal and Flowers, the Company shall use its best efforts to file and
maintain an effective Registration Statement on Form S-3 at any time the Company
is eligible to register securities on such form; provided, however, that the
Company shall not be obligated to comply with this Section 1.1(f) at any time
that the Board of Directors of the Company determines, in its good faith
judgment, that complying with this Section would interfere with a valid need not
to disclose confidential information or because it would materially interfere
with any financing, acquisition, corporate reorganization or merger or other
transaction involving the Company.
(g) Other Registrations. The Company shall not effect any
registration of its Securities (except on Form S-8, S-4 or any successor forms
to such Forms), or effect any public or private sale or distribution of any of
its Securities, including a sale pursuant to Regulation D under the Securities
Act, whether on its own behalf or at the request of any Holder or Holders of
such Securities (other than pursuant to and in accordance with this Section
1.1), from the date of a request to register Registrable Securities pursuant to
and in accordance with this Section 1.1 until the earlier of (i) 90 days after
the date on which all securities covered by such Demand Registration have been
sold or (ii) 180 days after the date such Demand Registration has been declared
effective by the SEC unless the Company shall have first notified in writing the
Holders of the Registrable Securities covered by such Registration Statement of
its intention to do so, and the Holders of a majority of the Registrable
Securities or the managing Underwriter, if any, shall have consented thereto in
writing.
<PAGE>
4
(h) Postponement of Registration. Notwithstanding anything to the
contrary contained herein, the Company may postpone for up to ninety (90) days
the filing or the effectiveness of a Registration Statement for a registration
requested if its Board of Directors reasonably believes the requested
registration would have a material adverse effect on, or interfere in any
material respect with, any proposal or plan by the Company to engage in any
public financing or any material pending corporate development or transaction,
including, without limitation, a material acquisition of assets (other than in
the ordinary course of business), any tender offer or any merger, consolidation
or other similar transaction material to the Company and its subsidiaries taken
as a whole.
1.2 Incidental Registrations.
(a) "Piggy-back" Registrations. If the Company at any time proposes
to register any Securities under the Securities Act (other than a registration
on Form S-8, S-4 or any successor or similar forms) for public offerings for
cash, whether or not for its own account, it will each such time give prompt
written notice to all Investor Stockholders of record of Registrable Securities
of the class then being registered of its intention to do so and of such
Holders' rights under this Section 1.2, at least 30 days prior to the
anticipated date of the initial filing of the registration statement relating to
such registration. Such notice shall offer all such Holders the opportunity to
include in such registration statement such number of Registrable Securities of
the class then being registered as each such Holder may request, provided that
each Investor Stockholder agrees not to make any such written request to
register any of its Registrable Securities in connection with any registration
effected pursuant to Section 3.2(a) of the Stockholders' Agreement, except with
the consent of Artal. Upon the written request of any such Holder made within 20
days after the receipt of the Company's notice (which request shall specify the
number of Registrable Securities intended to be disposed of by such Holder), the
Company shall use its best efforts to effect the registration under the
Securities Act of all Registrable Securities of the class then being registered
which the Company has been so requested to register by the Holders thereof, to
permit the disposition of the Registrable Securities so to be registered,
provided that (i) if such registration involves an underwritten offering, all
Holders of Registrable Securities requesting to be included in the Company's
registration must sell their Registrable Securities to the underwriters selected
by the Company on the same terms and conditions as apply to the Company (except
that indemnification obligations of the Holders shall be limited to those
obligations set forth in Section 1.6(b)); (ii) if, at any time after giving
written notice of its intention to register any Securities pursuant to this
Section 1.2 and prior to the effective date of the registration statement filed
in connection with such registration, the Company shall determine for any reason
not to register such Securities, the Company shall
<PAGE>
5
give written notice to all Holders of Registrable Securities and, thereupon,
shall be relieved of its obligation to register any Registrable Securities in
connection with such registration; and (iii) any Holder that owns less than 3%
of the outstanding class of any securities to be registered in accordance with
this Section shall request to include in such registration all of such Holder's
shares of such class. A registration effected pursuant to this Section 1.2(a) is
referred to herein as an "Incidental Registration".
(b) Priority in Incidental Registrations. If a registration pursuant
to this Section 1.2 involves an underwritten offering and the managing
underwriter advises the Company that, in its opinion, the number of Securities
(including all Registrable Securities) which the Company, the Holders and any
other persons propose to include in such registration exceeds the largest number
of securities which can be sold without having an adverse effect on such
offering, including the price at which such securities can be sold, the Company
will include in such registration up to such maximum number of securities (i)
first, all the securities the Company initially proposes to sell for its own
account or for the account of any security holder pursuant to any contractual
requirement to register securities, and (ii) second, to the extent that the
number of securities referred to in clause (i) is less than the number of
Securities which the Company has been advised can be sold in such offering
without having the adverse effect referred to above, all Registrable Securities
requested to be included in such registration by the Holders pursuant to Section
1.2(a) or by any other holder of securities electing to register securities
pursuant to any similar registration rights agreement, provided that if the
number of Registrable Securities requested to be included in such registration
by the Holders pursuant to Section 1.2(a), together with the number of
securities which the Company proposes to sell for its own account to be included
in such registration pursuant to clause (i) of this Section exceeds the number
which the Company has been advised can be sold in such offering without having
the adverse effect referred to above, the number of such Registrable Securities
requested to be included in such registration by the Holders pursuant to Section
1.2(a) shall be limited to such extent and shall be allocated pro rata among all
Holders requesting such registration pursuant to Section 1.2(a) or any similar
registration rights agreement on the basis of the relative number of securities
requested to be included in such registration, and provided further that if the
sole or managing underwriter advises the Company that including the Registrable
Securities of any particular Holder in such registration would be reasonably
likely to have an adverse effect on such offering, including the price at which
such securities can be sold, the Company shall not be obligated to include any
Registrable Securities of such Holder.
1.3 Hold-Back Agreements. Each Holder of Registrable Securities
whose Registrable Securities are covered by a
<PAGE>
6
Registration Statement filed pursuant to Section 1.1 or Section 1.2 hereof
agrees, if requested (pursuant to a timely written notice) by the managing
Underwriter or Underwriters in an underwritten offering, not to effect any
public sale or distribution of any of the issue being registered or a similar
security of the Company or any securities convertible or exchangeable or
exercisable for such securities including a sale pursuant to Rule 144 or Rule
144A (except as part of such underwritten offering), during the period beginning
10 days prior to, and ending 180 days after, the closing date of each
underwritten offering made pursuant to such Registration Statement (or such
shorter period as the managing Underwriter or Underwriters may agree), to the
extent timely notified in writing by the Company or by the managing Underwriter
or Underwriters.
1.4 Registration Procedures. In connection with the registration of
any Registrable Securities, the Company shall effect such registrations to
permit the sale of such Registrable Securities in accordance with the intended
method or methods of disposition thereof, and pursuant thereto the Company shall
as expeditiously as possible:
(a) Prepare and file with the SEC a Registration Statement or
Registration Statements on Form S-1 or such other form available for the
sale of the Registrable Securities by the Holders thereof in accordance
with the intended method of distribution thereof, and use its best efforts
to cause each such Registration Statement to become effective and remain
effective as provided herein; provided, however, that before filing any
Registration Statement or Prospectus or any amendments or supplements
thereto (not including documents that would be incorporated or deemed to
be incorporated therein by reference), the Company shall afford the
Holders of the Registrable Securities covered by such Registration
Statement, their Special Counsel and the managing or sole Underwriter, if
any, an opportunity to review copies of all such documents proposed to be
filed. The Company shall not file any Registration Statement or Prospectus
or any amendments or supplements thereto in respect of which the Holders
have a right to review prior to the filing of such document, if the
Holders of a majority of the Registrable Securities covered by such
Registration Statement, their Special Counsel, or the managing
Underwriters, if any, shall reasonably object, in writing, on a timely
basis.
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep such
Registration Statement continuously effective for the effectiveness
period; cause the related Prospectus to be supplemented by any required
prospectus supplement, and as so supplemented to be filed pursuant to Rule
424 (or any similar provisions then in force) under the Securities Act;
and comply with the
<PAGE>
7
provisions of the Securities Act, the Exchange Act and the rules and
regulations of the SEC promulgated thereunder applicable to it with
respect to the disposition of all securities covered by such Registration
Statement as so amended or in such Prospectus as so supplemented.
(c) Notify the selling Holders of Registrable Securities, their
Special Counsel and the managing Underwriters, if any, promptly (but in
any event within 10 business days), and confirm such notice in writing,
(i) when a Prospectus or any prospectus supplement or post-effective
amendment has been filed, and, with respect to a Registration Statement or
any post-effective amendment, when the same has become effective
(including in such notice a written statement that any holder may, upon
request, obtain, without charge, one conformed copy of such Registration
Statement or post-effective amendment including financial statements and
schedules but excluding documents incorporated or deemed to be
incorporated by reference and exhibits), (ii) of the issuance by the SEC
of any stop order suspending the effectiveness of a Registration Statement
or of any order preventing or suspending the use of any preliminary
prospectus or the initiation of any proceedings for that purpose, (iii) if
at any time when a prospectus is required by the Securities Act to be
delivered in connection with sales of the Registrable Securities the
representations and warranties of the Company contained in any agreement
(including any underwriting agreement) contemplated by Section 1.4(k)
below cease to be true and correct in all material respects, (iv) of the
receipt by the Company of any notification with respect to the suspension
of the qualification or exemption from qualification of a Registration
Statement or any of the Registrable Securities for offer or sale in any
jurisdiction, or the initiation or threatening of any proceeding for such
purpose, (v) of the happening of any event that makes any statement made
in such Registration Statement or related Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in
any material respect or that requires the making of any changes in such
Registration Statement, Prospectus or documents so that, in the case of
such Registration Statement, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and
that in the case of the Prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, and (vi)
of the Company's reasonable determination that a post-effective amendment
to a Registration Statement would be appropriate.
<PAGE>
8
(d) Use its best efforts to prevent the issuance of any order
suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of a Prospectus or suspending the
qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, and, if any such order is issued,
to obtain the withdrawal of any such order at the earliest possible
moment.
(e) If requested by the managing or sole Underwriter, if any, or the
Holders of a majority of the Registrable Securities being sold in
connection with an underwritten offering, (i) promptly incorporate in a
prospectus supplement or post-effective amendment such information as the
managing or sole Underwriter, if any, or such holders reasonably request
to be included therein to comply with applicable law, (ii) make all
required filings of such prospectus supplement or such post-effective
amendment as soon as practicable after the Company has received
notification of the matters to be incorporated in such prospectus
supplement or post-effective amendment, and (iii) supplement or make
amendments to such Registration Statement; provided, however, that the
Company shall not be required to take any actions under this Section
1.4(e) that are not, in the opinion of counsel for the Company, in
compliance with applicable law.
(f) Furnish to each selling Holder of Registrable Securities who so
requests and to Special Counsel and each managing Underwriter, if any,
without charge, one conformed copy of the Registration Statement or
Statements and each post-effective amendment thereto, including financial
statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference and all exhibits.
(g) Deliver to each selling Holder of Registrable Securities, their
Special Counsel, and the Underwriters, if any, without charge, as many
copies of the Prospectus or Prospectuses (including each form of
prospectus) and each amendment or supplement thereto as such Persons may
reasonably request; and, the Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
Holders of Registrable Securities and the Underwriters, if any, in
connection with the offering and sale of the Registrable Securities
covered by such Prospectus and an amendment or supplement thereto.
(h) Prior to any public offering of Registrable Securities, to use
its best efforts to register or qualify, and cooperate with the selling
Holders of Registrable Securities, the Underwriters, if any, the sales
agent and their respective counsel in connection with the registration or
qualification (or exemption from such registration or
<PAGE>
9
qualification) of such Registrable Securities for offer and sale under the
securities or "blue sky" laws of such jurisdictions within the United
States as any selling Holder or the managing Underwriters, if any,
reasonably request in writing, provided that where Registrable Securities
are offered other than through an underwritten offering, the Company
agrees to cause its counsel to perform "blue sky" investigations and file
registrations and qualifications required to be filed pursuant to this
Section 1.4(h); use its best efforts to keep each such registration or
qualification (or exemption therefrom) effective during the period during
which the related Registration Statement is required to be kept effective
and use its best efforts to do any and all other acts or things necessary
or advisable to enable the disposition in such jurisdictions of the
Registrable Securities covered by the applicable Registration Statement;
provided, however, that the Company will not be required to (A) qualify
generally to do business in any jurisdiction where it is not then so
qualified or (B) take any action that would subject it to general service
of process in any such jurisdiction where it is not then so subject.
(i) Cooperate with the selling Holders of Registrable Securities and
the managing or sole Underwriter, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be sold, which certificates shall not bear any restrictive
legends and shall be in a form eligible for deposit with The Depository
Trust Company; and enable such Registrable Securities to be in such
denominations and registered in such names as the managing or sole
Underwriter, if any, or Holders may reasonably request at least two
business days prior to any sale of Registrable Securities in a firm
commitment underwritten public offering, or at least 10 business days
prior to any other such sale.
(j) Upon the occurrence of any event contemplated by clause (v) or
(vi) of Section 1.4(c) above, as promptly as practicable prepare a
supplement or post-effective amendment to the Registration Statement or a
supplement to the related Prospectus or any document incorporated or
deemed to be incorporated therein by reference, or file any other required
document so that, as thereafter delivered to the purchasers of the
Registrable Securities being sold thereunder, such Prospectus will not
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(k) If the offering is to be underwritten, enter into an
underwriting agreement in form, scope and substance as is customary in
underwritten offerings and take all such other
<PAGE>
10
actions as are reasonably requested by the managing or sole Underwriter in
order to expedite or facilitate the registration or the disposition of
such Registrable Securities, and in such connection, (i) make such
representations and warranties to the Underwriters, with respect to the
business of the Company and its subsidiaries, and the Registration
Statement, Prospectus and documents, if any, incorporated or deemed to be
incorporated by reference therein, in each case, in form, substance and
scope as are customarily made by issuers to Underwriters in underwritten
offerings, and confirm the same if and when requested; (ii) obtain
opinions of counsel to the Company and updates thereof (which counsel and
opinions shall be reasonably satisfactory (in form, scope and substance)
to the managing or sole Underwriters), addressed to the Underwriters
covering the matters customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably
requested by the Underwriters; (iii) obtain "cold comfort" letters and
updates thereof from the independent certified public accountants of the
Company (and, if necessary, any other independent certified public
accountants of any subsidiary of the Company or of any business acquired
by the Company for which financial statements and financial data are, or
are required to be, included in the Registration Statement), addressed to
each of the Underwriters, such letters to be in customary form and
covering matters of the type customarily covered in "cold comfort" letters
in connection with underwritten offerings; and (iv) if an underwriting
agreement is entered into, the same shall contain indemnification
provisions and procedures no less favorable than those set forth in
Section 1.6 hereof (or such other provisions and procedures acceptable to
Holders of a majority of the Registrable Securities covered by such
Registration Statement and the managing Underwriters or agents) with
respect to all parties to be indemnified pursuant to said Section. The
above shall be done at each closing under such underwriting agreement, or
as and to the extent required thereunder.
(l) Use its best efforts to cause the Registrable Securities covered
by a Registration Statement to be rated with the appropriate rating
agencies, if applicable, if so requested by the Holders of a majority of
the Registrable Securities covered by such Registration Statement or the
managing or sole Underwriter, if any.
(m) Use its best efforts to cause all Registrable Securities covered
by such Registration Statement to be (i) listed on each securities
exchange on which securities issued by the Company are then listed, or
(ii) authorized to be quoted on the NASDAQ or the National Market System
of the NASDAQ if the securities so qualify, in each case, if requested by
the Holders of a majority of the Registrable
<PAGE>
11
Securities covered by such Registration Statement or the managing or sole
Underwriter, if any.
(n) Make available for inspection by a representative of the Holders
of Registrable Securities being sold, any Underwriter participating in any
such disposition of Registrable Securities, if any, and any accountant
retained by such representative of the Holders or Underwriter or Special
Counsel (collectively, the "Inspectors"), at the offices where normally
kept, during reasonable business hours, all financial and other records,
pertinent corporate documents and properties of the Company and its
subsidiaries, and cause the officers, directors and employees of the
Company and its subsidiaries to supply all information in each case
reasonably requested by any such Inspector in connection with such
Registration Statement; provided, however, that any information that is
designated in writing by the Company, in good faith, as confidential at
the time of delivery of such information, shall be kept confidential by
such Inspector unless (i) disclosure of such information is required by
court or administrative order, (ii) disclosure of such information, in the
opinion of counsel to such Inspector, is necessary to avoid or correct a
misstatement or omission of a material fact in the Registration Statement,
Prospectus or any supplement or post-effective amendment thereto or
disclosure is otherwise required by law, or (iii) such information becomes
generally available to the public other than as a result of a disclosure
or failure to safeguard by such Inspector; without limiting the foregoing,
no such information shall be used by such Inspector as the basis for any
market transactions in securities of the Company or its subsidiaries in
violation of law.
(o) Comply with all applicable rules and regulations of the SEC and
make generally available to its securityholders earnings statements
satisfying the provisions of Section 11(a) of the Securities Act and Rule
158 thereunder (or any similar rule promulgated under the Securities Act)
no later than 45 days after the end of any 12-month period (or 90 days
after the end of any 12-month period if such period is a fiscal year) (i)
commencing at the end of any fiscal quarter in which Registrable
Securities are sold to Underwriters in a firm commitment or best efforts
underwritten offering and (ii) if not sold to Underwriters in such an
offering, commencing on the first day of the first fiscal quarter of the
Company after the Effectiveness Date of a Registration Statement, which
statements shall cover said 12-month periods.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish to the Company such
information regarding such seller and the distribution of such Registrable
Securities as the Company
<PAGE>
12
may, from time to time, reasonably request in writing, provided that such
information shall be used only in connection with such registration. The Company
may exclude from such registration the Registrable Securities of any seller who
unreasonably fails to furnish such information promptly after receiving such
request.
Each Holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event of the kind described in clause (ii), (iv) or (v) of
Section 1.4(c), such holder will forthwith discontinue disposition of such
Registrable Securities covered by such Registration Statement or Prospectus
until such Holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 1.4(j), or until it is advised in writing
(the "Advice") by the Company that the use of the applicable Prospectus may be
resumed, and has received copies of any amendments or supplements thereto. In
the event the Company shall give any such notice at any time during the
effectiveness period of a Registration Statement for registration of an offering
on a continuous basis under Rule 415, the effectiveness period shall be extended
by the number of days during such periods from and including the date of the
giving of such notice to and including the date when each seller of Registrable
Securities covered by such Registration Statement shall have received (x) the
copies of the supplemented or amended Prospectus contemplated by Section 1.4(j)
or (y) the Advice.
1.5 Registration Expenses.
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company
whether or not any Registration Statement is filed or becomes effective,
including, without limitation, (i) all registration and filing fees (including,
without limitation, (A) fees with respect to filings required to be made with
the National Association of Securities Dealers, Inc. in connection with an
underwritten offering and (B) fees and expenses of compliance with state
securities or "blue sky" laws (including, without limitation, fees and
disbursements of counsel for the Underwriters or counsel for the Company, in
connection with "blue sky" qualifications of the Registrable Securities and
determination of the eligibility of the Registrable Securities for investment
under the laws of such jurisdictions as provided in Section 1.4(h), in the case
of Registrable Securities), (ii) printing expenses (including, without
limitation, expenses of printing certificates for Registrable Securities in a
form eligible for deposit with The Depository Trust Company and of printing
Prospectuses if the printing of Prospectuses is requested by the managing or
sole Underwriter, if any, or by the Holders of a majority of the Registrable
Securities included in any Registration Statement), (iii) messenger, telephone
and delivery expenses, (iv) fees and disbursements of counsel for the Company,
(v) fees and disbursements of all independent certified public accountants
referred to in Section 1.4(k) (including,
<PAGE>
13
without limitation, the expenses of any special audit and "cold comfort" letters
required by or incident to such performance), (vi) Underwriters' fees and
expenses (excluding discounts, commissions, or fees of Underwriters, selling
brokers, dealer managers or similar securities industry professionals relating
to the distribution of the Registrable Securities, but including the fees and
expenses of any "qualified independent Underwriter" or other independent
appraiser participating in an offering pursuant to Schedule E to the By-laws of
the National Association of Securities Dealers, Inc., (vii) rating agency fees,
(viii) Securities Act liability insurance, if the Company so desires such
insurance, (ix) internal expenses of the Company (including, without limitation,
all salaries and expenses of officers and employees of the Company performing
legal or accounting duties), (x) the expense of any annual audit, (xi) the fees
and expenses incurred in connection with the listing of the securities to be
registered on any securities exchange, and (xii) the fees and expenses of any
Person, including special experts, retained by the Company.
(b) In connection with any Registration Statement hereunder, the
Holders of the Registrable Securities being registered shall bear the discounts,
commissions, or fees of Underwriters, selling brokers, dealer managers or
similar securities industry professionals relating to the distribution of the
Registrable Securities and the fees and disbursements of Special Counsel or such
other counsel chosen by the Holders.
1.6 Indemnification, Contribution.
(a) Indemnification by the Company. The Company shall indemnify and
hold harmless, to the full extent permitted by law, each Holder of Registrable
Securities, the officers, directors and agents and employees of each of them,
each Person who controls each such Holder (within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act), the officers, directors,
agents and employees of each such controlling person and any financial or
investment adviser (each, an "Indemnified Party"), from and against any and all
losses, claims, damages, liabilities, actions or proceedings (whether commenced
or threatened), reasonable costs (including, without limitation, reasonable
costs of preparation and reasonable attorneys' fees) and reasonable expenses
(including reasonable expenses of investigation) (collectively, "Losses"), as
incurred, arising out of or based upon (i) any untrue or alleged untrue
statement of a material fact contained in any Registration Statement, Prospectus
or form of prospectus or in any amendment or supplements thereto or in any
preliminary prospectus, or arising out of or based upon any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein not misleading, except to the extent that the same arise
out of or are based upon information furnished in writing to the Company by such
Indemnified Party or the related Holder of Registrable Securities expressly for
use
<PAGE>
14
therein or (ii) any violation by the Company of any federal, state or common law
rule or regulation applicable to the Company and relating to action required of
or inaction by the Company in connection with any such registration; provided,
however, that the Company shall not be liable to any Indemnified Party to the
extent that any such Losses arise out of or are based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in any
preliminary prospectus if (x) such Indemnified Party or the related Holder of
Registrable Securities failed to send or deliver (if it had a duty to do so) a
copy of the Prospectus with or prior to the delivery of written confirmation of
the sale by such Indemnified Party or the related Holder of Registrable
Securities to the Person asserting the claim from which such Losses arise, (y)
the Prospectus would have corrected such untrue statement or alleged untrue
statement or such omission or alleged omission, and (z) the Company has complied
with its obligations under Section 1.4(c). Such indemnity and reimbursement of
costs and expenses shall remain in full force and effect regardless of any
investigation made by or on behalf of such Indemnified Party.
(b) Indemnification by Holder of Registrable Securities. In
connection with any Registration Statement in which a Holder of Registrable
Securities is participating, an authorized officer of such Holder of Registrable
Securities shall furnish to the Company in writing such information as the
Company reasonably requests for use in connection with any Registration
Statement or Prospectus and agrees, severally and not jointly, to indemnify, to
the full extent permitted by law, the Company and its respective directors,
officers, agents and employees each Person who controls the Company (within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act),
and the directors, officers, agents or employees of such controlling persons,
from and against all Losses arising out of or based upon any untrue or alleged
untrue statement of a material fact contained in any Registration Statement,
Prospectus, or form of prospectus, or arising out of or based upon any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, to the extent, but only
to the extent, that such untrue or alleged untrue statement is contained in, or
such omission or alleged omission is required to be contained in, any
information so furnished in writing by such Holder to the Company expressly for
use in such Registration Statement or Prospectus and that such statement or
omission was relied upon by the Company in preparation of such Registration
Statement, Prospectus or form of prospectus; provided, however, that such Holder
of Registrable Securities shall not be liable in any such case to the extent
that the Holder has furnished in writing to the Company within a reasonable
period of time prior to the filing of any such Registration Statement or
Prospectus or amendment or supplement thereto information expressly for use in
such Registration Statement or Prospectus or any amendment or supplement thereto
which corrected or made not misleading, information previously
<PAGE>
15
furnished to the Company, and the Company failed to include such information
therein. In no event shall the liability of any selling Holder of Registrable
Securities hereunder be greater in amount than the dollar amount of the proceeds
(net of payment of all expenses) received by such Holder upon the sale of the
Registrable Securities giving rise to such indemnification obligation. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such indemnified party.
(c) Conduct of Indemnification Proceedings. If any Person shall be
entitled to indemnity hereunder (an "indemnified party"), such indemnified party
shall give prompt notice to the party or parties from which such indemnity is
sought (the "indemnifying parties") of the commencement of any action, suit,
proceeding or investigation or written threat thereof (a "Proceeding") with
respect to which such indemnified party seeks indemnification or contribution
pursuant hereto; provided, however, that the failure to so notify the
indemnifying parties shall not relieve the indemnifying parties from any
obligation or liability except to the extent that the indemnifying parties have
been prejudiced by such failure. The indemnifying parties shall have the right,
exercisable by giving written notice to an indemnified party promptly after the
receipt of written notice from such indemnified party of such Proceeding, to
assume, at the indemnifying parties' expense, the defense of any such
Proceeding, with counsel reasonably satisfactory to such indemnified party;
provided, however, that an indemnified party or parties (if more than one such
indemnified party is named in any Proceeding) shall have the right to employ
separate counsel in any such Proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such indemnified party or parties unless: (1) the indemnifying parties agree to
pay such fees and expenses; (2) the indemnifying parties fail promptly to assume
the defense of such Proceeding or fail to employ counsel reasonably satisfactory
to such indemnified party or parties; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such indemnified party
or parties and the indemnifying parties or an affiliate of the indemnifying
parties or such indemnified parties, and there may be one or more defenses
available to such indemnified party or parties that are different from or
additional to those available to the indemnifying parties, in which case, if
such indemnified party or parties notifies the indemnifying parties in writing
that it elects to employ separate counsel at the expense of the indemnifying
parties, the indemnifying parties shall not have the right to assume the defense
thereof and such counsel shall be at the expense of the indemnifying parties, it
being understood, however, that, unless there exists a conflict among
indemnified parties, the indemnifying parties shall not, in connection with any
one such Proceeding but substantially similar or related Proceedings in the same
jurisdiction, arising out of the same general allegations or circumstances, be
liable for the fees and
<PAGE>
16
expenses of more than one separate firm of attorneys (together with appropriate
local counsel) at any time for such indemnified party or parties. Whether or not
such defense is assumed by the indemnifying parties, such indemnifying parties
or indemnified party or parties will not be subject to any liability for any
settlement made without its or their consent (but such consent will not be
unreasonably withheld). The Indemnifying parties shall not consent to entry of
any judgment or enter into any settlement which (i) provides for other than
monetary damages without the consent of the indemnified party or parties (which
consent shall not be unreasonably withheld or delayed) or (ii) that does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party or parties of a release, in form and substance
satisfactory to the indemnified party or parties, from all liability in respect
of such Proceeding for which such indemnified party would be entitled to
indemnification hereunder.
(d) Contribution. If the indemnification provided for in this
Section 1.6 is unavailable to an indemnified party or is insufficient to hold
such indemnified party harmless for any Losses in respect of which this Section
1.6 would otherwise apply by its terms, then each applicable indemnifying party,
in lieu of indemnifying such indemnified party, shall have a joint and several
obligation to contribute to the amount paid or payable by such indemnified party
as a result of such Losses, in such proportion as is appropriate to reflect the
relative fault of the indemnifying party, on the one hand, and such indemnified
party, on the other hand, in connection with the actions, statements or
omissions that resulted in such Losses as well as any other relevant equitable
considerations. The relative fault of such indemnifying party, on the one hand,
and indemnified party, on the other hand, shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been taken by or relates to information supplied by,
such indemnifying party or indemnified party, and the parties relative intent,
knowledge, access to information and opportunity to correct or prevent any such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include any legal or other fees or expenses
incurred by such party in connection with any Proceeding, to the extent such
party would have been indemnified for such expenses if the indemnification
provided for in Section 1.6(a) or 1.6(b) was available to such party.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 1.6(d) were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provision of this Section 1.6(d), an indemnifying party that
is a selling Holder of Registrable
<PAGE>
17
Securities shall not be required to contribute any amount in excess of the
amount by which the net proceeds received by such indemnifying party exceeds the
amount of any damages that such indemnifying party has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
1.7 Rules 144 and 144A. The Company shall file the reports required
to be filed by it under the Securities Act and the Exchange Act and the rules
and regulations promulgated thereunder (or, if the Company is not required to
file such reports, it will, upon the request of any Holder of Registrable
Securities make publicly available other information so long as such information
is necessary to permit sales under Rules 144 and 144A), and will take such
further action as any Holder of Registrable Securities may reasonably request,
all to the extent required from time to time to enable such Holder to sell
Registrable Securities without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144 and Rule 144A. Upon the
request of any Holder of Registrable Securities, the Company shall deliver to
such Holder a written statement as to whether it has complied with such
requirements.
1.8 Underwritten Registrations. If any of the Registrable Securities
covered by any Demand Registration are to be sold in an underwritten offering,
the investment banker or investment bankers and manager or managers that will
manage the offering will be selected by the Company with the consent of a
majority of the Registrable Securities included in such registration. No Holder
of Registrable Securities may participate in any underwritten registration
hereunder unless such Holder (a) agrees to sell such Holder's Registrable
Securities on the basis provided in any underwriting arrangements approved by
the Persons entitled hereunder to approve such arrangements and (b) completes
and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements.
1.9 Other Investors. The Company may enter into Executive Agreements
with other purchasers of Securities who are employees of the Company or one of
its Subsidiaries, which agreements will incorporate the provisions of this Annex
A and give such purchasers all of the rights, preferences and privileges of an
original party to this Agreement (other than the Company) pursuant to this Annex
A; provided that, pursuant to any such Executive Agreement, such purchaser
expressly agrees to be bound by all of the terms, conditions and obligations of
this Annex A as if such purchaser were an original party (other than the
Company) hereto; and provided further that such purchaser shall not obtain any
right to request registration pursuant to
<PAGE>
18
Section 1.1. All Securities issued or issuable pursuant to Executive Agreements
shall be deemed to be Registrable Securities for purposes of this Agreement.
2.1 Definitions. Capitalized terms used in this Annex
A shall have the meanings set forth below:
"Advice" shall have the meaning specified in Section
1.4.
"Artal Registrable Securities" means, collectively, (a) the
Securities acquired by Artal on the date hereof, and (b) all Securities issued
with respect to the Securities described in clause (a) above by way of a
Recapitalization. Artal Registrable Securities shall remain Artal Registrable
Securities in the hands of any transferee (if they constitute Restricted
Securities in the hands of such transferee) and shall continue to be Artal
Registrable Securities so long as they remain Restricted Securities.
"Demand Notice" shall have the meaning specified in
Section 1.1(a).
"Demand Registration" shall have the meaning specified
in Section 1.1(a).
"Demanding Holders" shall have the meaning specified in
Section 1.1(a).
"Effectiveness Date" shall have the meaning specified
in Section 1.1(d).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and relations of the SEC promulgated thereunder.
"Filing Date" shall have the meaning specified in
Section 1.1(d).
"Flowers Registrable Securities" means, collectively, (a) the
Securities acquired by Flowers on the date hereof, and (b) all Securities issued
with respect to the Securities described in clause (a) above by way of a
Recapitalization. Flowers Registrable Securities shall remain Flowers
Registrable Securities in the hands of any transferee (if they constitute
Restricted Securities in the hands of such transferee) and shall continue to be
Flowers Registrable Securities so long as they remain Restricted Securities.
"Holder" means any holder of Registrable Securities.
"Indemnified Party" shall have the meaning specified in
Section 1.6(a).
<PAGE>
19
"Inspectors" shall have the meaning specified in
Section 1.4(n).
"Losses" shall have the meaning specified in Section
1.6(a).
"NASDAQ" means the National Association of Securities
Dealers Automated Quotation System.
"Proceeding" shall have the meaning specified in
Section 1.6(c).
"Registrable Securities" means the Artal Registrable
Securities, the Flowers Registrable Securities and any Securities deemed to be
Registrable Securities pursuant to Section 1.9 hereof.
"Registration Notice" shall have the meaning specified
Section 1.1(d).
"Registration Statement" means any registration statement of the
Company under which any of the Registrable Securities are included therein
pursuant to the provisions of this Agreement, including the Prospectus,
amendments and supplements to such registration statement, including
post-effective amendments, all exhibits, and all material incorporated by
reference or deemed to be incorporated by reference in such registration
statement.
"Restricted Securities" means the Securities (and securities issued
in respect thereof) upon original issuance thereof, and at all times subsequent
thereto, until, in the case of any such securities, the occurrence of any of the
following events: (i) a Registration Statement with respect to such securities
shall have been declared effective under the Securities Act and such Securities
shall have been disposed of by the Holder thereof pursuant to such Registration
Statement; (ii) such securities are distributed to the public pursuant to Rule
144 (or any successor provisions promulgated under the Securities Act); (iii)
such securities shall have been otherwise transferred and new certificates for
it not bearing a legend restricting further transfer shall have been delivered
by the Company; or (iv) such securities shall have ceased to be outstanding.
"Rule 144" means Rule 144 promulgated by the SEC under the
Securities Act as such rule may be amended from time to time, or any similar
rule then in force.
"Rule 144A" Rule 144A under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.
"SEC" means the Securities and Exchange Commission.
<PAGE>
20
"Special Counsel" means a single law firm selected by a majority of
the Holders of the Registrable Securities being registered pursuant to any
Registration Statement.
"Underwriter" has the meaning set forth in Section
2(11) of the Securities Act.
Exhibit 10.2
STOCK PURCHASE AGREEMENT
DATED
NOVEMBER 5, 1995
BETWEEN
INFLO HOLDINGS CORPORATION
AND
UB INVESTMENTS (NETHERLANDS) B.V.
REGARDING STOCK OF
UB INVESTMENTS US INC.
<PAGE>
TABLE OF CONTENTS
Section Page
ARTICLE I
PURCHASE OF SHARES
1.1 Purchase of Shares.............................................. 1
1.2 Purchase Price.................................................. 1
1.3 Net Working Capital Adjustment.................................. 2
ARTICLE II
THE CLOSING
2.1 Time and Place of Closing....................................... 5
2.2 Seller's Actions at Closing..................................... 5
2.3 Buyer's Actions at Closing...................................... 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Seller's Representations and Warranties......................... 6
3.2 Buyer's Representations and Warranties.......................... 30
3.3 Remedy for Breaches of Representations and Warranties........... 32
ARTICLE IV
ACTIONS PRIOR TO THE CLOSING
4.1 Activities Until Closing Date................................... 32
4.2 HSR Act......................................................... 36
4.3 Buyer's Loan to the Company..................................... 36
4.4 Elimination of Intercompany Debt................................ 37
4.5 Change of Company's Name........................................ 37
4.6 Seller's Efforts to Fulfill Conditions.......................... 38
4.7 Buyer's Efforts to Fulfill Conditions........................... 38
4.8 No Shopping..................................................... 38
4.9 Termination of Convenience Route Sales Activities............... 40
4.10 Shareholders' Meeting of United Biscuits........................ 40
4.11 Reimbursement of Expenses....................................... 41
4.12 Information Regarding Insurance Policies........................ 41
4.13 Buyer's Efforts to Obtain Financing............................. 42
4.14 Further Assurances.............................................. 42
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
5.1 Conditions to Buyer's Obligations............................... 42
5.2 Conditions to Seller's Obligations.............................. 48
ARTICLE VI
TERMINATION
6.1 Right to Terminate.............................................. 49
6.2 Effect of Termination........................................... 50
i
<PAGE>
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification Against Loss Due to Inaccuracies in
Seller's Representations and Warranties......................... 50
7.2 Indemnification Against Loss Due to Inaccuracies in
Buyer's Representations and Warranties.......................... 51
7.3 Limit on Claims Regarding Representations and
Warranties...................................................... 52
7.4 Environmental Indemnification................................... 53
7.5 Payment of Taxes................................................ 55
7.6 Indemnification Against Liabilities or Obligations
Relating to Reorganization...................................... 59
7.7 Company's Indemnification Against Liabilities or
Obligations Relating to Activities After Closing Date........... 59
7.8 Reimbursement for Costs Relating to the Convenience
Route Sales Activities.......................................... 60
7.9 Computation of Loss............................................. 61
7.10 Adjustment to Purchase Price.................................... 62
ARTICLE VIII
ABSENCE OF BROKERS
8.1 Representations and Warranties Regarding Brokers and
Others.......................................................... 62
ARTICLE IX
GENERAL
9.1 Expenses........................................................ 63
9.2 Access to Properties, Books and Records......................... 63
9.3 1995 Financial Statements....................................... 66
9.4 Change of Control Policies...................................... 66
9.5 Assumption of Contractual Obligations........................... 67
9.6 License Regarding Carr's Products............................... 67
9.7 Press Releases.................................................. 68
9.8 Entire Agreement................................................ 68
9.9 Effect of Disclosures........................................... 68
9.10 Captions........................................................ 69
9.11 Assignments..................................................... 69
9.12 Notices and Other Communications................................ 69
9.13 Governing Law................................................... 71
9.14 Amendments...................................................... 71
9.15 Waivers......................................................... 71
9.16 Guarantees...................................................... 72
9.17 Beneficiaries................................................... 74
9.18 Counterparts.................................................... 74
ii
<PAGE>
ExhibitS
Exhibit 3.1-C - Consents
Exhibit 3.1-E(1) - Certificates of Incorporation and By-
laws of the Company and Keebler
Exhibit 3.1-E(2) - Foreign Qualifications
Exhibit 3.1-E(3) - Finance Companies
Exhibit 3.1-H - Subsidiaries
Exhibit 3.1-I - Company Financial Statements; Pro Forma
Adjustments; Deviations from GAAP
Exhibit 3.1-J(1) - Material Adverse Changes
Exhibit 3.1-J(2) - Keebler Company Period 10, 1995
Statement
Exhibit 3.1-J(3) - Certain Indebtedness Information
Exhibit 3.1-K - Certain Liabilities and Obligations
Exhibit 3.1-N - Real Property; Real Property Liens
Exhibit 3.1-O - Other Liens
Exhibit 3.1-P - Certain Contracts and Contract Matters
Exhibit 3.1-Q - Intellectual Property
Exhibit 3.1-R - Taxes
Exhibit 3.1-S - Litigation; Proceedings
Exhibit 3.1-T - Unions
Exhibit 3.1-U(1) - Employee Benefit Plans
Exhibit 3.1-U(3) - Certain Company Plan Information
Exhibit 3.1-U(4) - Funding of Certain Company Plans
Exhibit 3.1-U(5) - Multiemployer Plan Liability
Exhibit 3.1-U(6) - Change-of-Control Payments
Exhibit 3.1-U(7) - Excess Parachute Payments
Exhibit 3.1-V - Environmental Liabilities
Exhibit 4.1-J - Changes to Company Plans
Exhibit 5.1-J - Joint Research and Development Projects
Exhibit 7.5 - Pre-Closing Tax Employees
Exhibit 9.5 - Assumed Obligations
iii
<PAGE>
INDEX OF DEFINED TERMS
Page
accumulated funding deficiency........................... 26
Acquisition Proposal..................................... 39
Agents................................................... 38
Anticipated Full Year Expense Adjustments................ 2
Artal.................................................... 72
Buyer.................................................... 1
Closing.................................................. 5
Closing Date............................................. 5
Code..................................................... 21
Common Stock............................................. 1
Company.................................................. 1
Company Financial Statements............................. 11
Company Plans............................................ 24
Continuing Businesses.................................... 9
Controlled Group......................................... 25
Convenience Route Sales Vans............................. 29
Current Assets........................................... 2
Current Operating Liabilities............................ 2
employee benefit plan.................................... 24
Environmental Laws....................................... 28
ERISA.................................................... 24
Excess Convenience Route Sales Employees................. 29
Excess Parachute Payment................................. 27
Final Arbiter............................................ 4
Flowers.................................................. 73
GAAP..................................................... 2
HSR Act.................................................. 5
Income Taxes............................................. 55
Indebtedness............................................. 1
Indemnified Party........................................ 61
Indemnifying Party....................................... 61
Keebler.................................................. 7
Losses................................................... 51
Material Adverse Effect.................................. 9
Net Current Assets Schedule.............................. 3
Net Proceeds............................................. 61
Objection Period......................................... 3
Other Businesses......................................... 9
ordinary course of business.............................. 14
Pre-Closing Tax Employees................................ 57
Pro Forma Financial Statements........................... 11
Purchase Price........................................... 1
Reorganization........................................... 12
Retirement Plan.......................................... 30
Retimed Interim Expenses................................. 2
Seller................................................... 1
Shaffer, Clarke Distribution Agreement................... 46
Shares................................................... 1
Subsidiary............................................... 11
Tax Benefit.............................................. 61
iv
<PAGE>
INDEX OF DEFINED TERMS (continued)
Tax Return............................................... 21
Taxes.................................................... 21
Third Parties............................................ 38
UBI...................................................... 18
UBUK..................................................... 44
United Biscuits.......................................... 6
Working Capital Adjustment Amount........................ 2
v
<PAGE>
STOCK PURCHASE AGREEMENT
This is an agreement dated November 5, 1995 between INFLO Holdings
Corporation (the "Buyer"), a Delaware corporation, and UB Investments
(Netherlands) B.V. (the "Seller"), a Netherlands company, relating to the
purchase by the Buyer from the Seller of 1,000,000 shares (the "Shares") of
Common Stock, par value $1.00 per share (the "Common Stock"), of UB Investments
US Inc. (the "Company"), a Delaware corporation, which agreement is as follows:
ARTICLE I
PURCHASE OF SHARES
1.1 Purchase of Shares. Upon the terms and subject to
the conditions contained herein, at the Closing described in Paragraph 2.1, the
Buyer will purchase the Shares from the Seller and the Seller will sell the
Shares to the Buyer.
1.2 Purchase Price. The purchase price to be paid by the Buyer for
all the Shares (the "Purchase Price") will be (i) $500,000,000, minus (ii) the
Indebtedness of the Company and its subsidiaries on the Closing Date, after
elimination and satisfaction of Indebtedness to United Biscuits and its
subsidiaries in accordance with Paragraphs 4.3 and 4.4, minus (iii) the amount
of the loan made by the Buyer to the Company in accordance with Paragraph 4.3,
subject to adjustment pursuant to Paragraph 1.3. As used in this Agreement, the
term "Indebtedness" means (v) obligations with regard to borrowed money
(including reimbursement obligations), (w) obligations evidenced by bonds,
debentures, notes or similar instruments, (x) obligations to pay
<PAGE>
the deferred purchase price of assets (other than accounts payable which are
incurred in the ordinary course of business consistent with past practice), (y)
obligations secured by assets of the Company or a subsidiary engaged in the
Continuing Businesses, and (z) obligations under leases which are required to be
classified and accounted for as capital leases on financial statements prepared
in accordance with generally accepted accounting principles in the United States
("GAAP").
1.3 Net Working Capital Adjustment. (a) On the day or days specified
below, the Buyer will pay to the Seller, or the Seller will pay to the Buyer, a
sum (the "Working Capital Adjustment Amount") equal to the amount by which the
consolidated Current Assets of the Company and its subsidiaries minus the
consolidated Current Operating Liabilities of the Company and its subsidiaries
on the Closing Date described in Paragraph 2.1, calculated in the same manner as
they were calculated in preparing the consolidated Pro Forma Financial
Statements of the Company and its subsidiaries set forth in Exhibit 3.1-I (which
manner is described on page 4 of Exhibit 3.1-I), except that the Current Assets
will not include any amount for "Retimed Interim Expenses" (which at September
9, 1995 were $16.9 million) or "Anticipated Full Year Expense Adjustments"
(which at September 9, 1995 were $10.3 million), (those current assets and
current operating liabilities being respectively, the "Current Assets" and the
"Current Operating Liabilities") is greater (in which case the Buyer will pay
the Working Capital Adjustment Amount to the Seller)
2
<PAGE>
or less (in which case the Seller will pay the Working Capital Adjustment Amount
to the Buyer) than $62,610,000.
(b) The Buyer will cause the Company to deliver to the Seller
and the Buyer, within 45 days after the Closing Date, a schedule (the "Net
Current Assets Schedule") which sets forth the amount of the Current Assets
minus the Current Operating Liabilities, sets forth in reasonable detail how the
Current Assets and the Current Operating Liabilities were determined, and sets
forth the resulting Working Capital Adjustment Amount.
(c) If within ten days after the Company delivers the Net
Current Assets Schedule to the Seller and the Buyer (the "Objection Period"),
either the Seller or the Buyer notifies the other of them of any objections to
the calculation of the Current Assets, the Current Operating Liabilities or the
Working Capital Adjustment Amount set forth on the Net Current Assets Schedule,
the Buyer and the Seller will attempt in good faith to agree by the day which is
75 days after the Closing Date upon the Current Assets, the Current Operating
Liabilities and the resulting Net Current Assets Amount.
(d) If the Seller and the Buyer agree by the day which is 75
days after the Closing Date to a Working Capital Adjustment Amount which is
different from that shown on the Net Current Assets Statement, the payment on
the day determined pursuant to subparagraph (f) will be of the agreed upon
amount.
(e) If the Seller or the Buyer objects to the calculation of
the Current Assets, the Current Operating Liabilities or the Working Capital
Adjustment Amount during the
3
<PAGE>
Objection Period and the Seller and the Buyer do not agree by the day which is
75 days after the Closing Date upon the amount which was required to be paid
under subparagraph (a), the matters in dispute (but no other matters) will be
submitted to Deloitte & Touche or, if that firm declines to act as provided in
this paragraph, another firm of independent certified accounts mutually
acceptable to the Seller and the Buyer (in either case, the "Final Arbiter"),
which firm will make a final and binding determination as to the matters in
dispute within 45 days after its appointment. The Final Arbiter will send its
written determination to the Seller and the Buyer, including confirmation of the
Working Capital Adjustment Amount which results from that determination, at
which point the determination of the Final Arbiter, and the resulting
calculation of the Working Capital Adjustment Amount, will be binding on the
Seller and the Buyer, absent fraud or manifest error. The fees and expenses of
the Final Arbiter will be borne equally by the Seller and the Buyer.
(f) On the day which is five days after the earlier of (i) the
last day of the Objection Period if neither the Buyer nor the Seller objects to
an item on the Net Current Assets Schedule, (ii) the day when the Seller and the
Buyer agree upon the Working Capital Adjustment Amount and (iii) the day on
which the Final Arbiter delivers its written determination to the Seller and the
Buyer, the Seller or the Buyer will pay to the other of them the applicable
Working Capital Adjustment Amount.
4
<PAGE>
(g) Any payments under subparagraph (f) will be made to the
Buyer or the Seller, as the case may be, by wire transfer of immediately
available funds to an account specified by the party which is to receive the
payment.
ARTICLE II
THE CLOSING
2.1 Time and Place of Closing. The closing (the "Closing") of the
purchase of the Shares will take place at the offices of Simpson Thacher &
Bartlett, 425 Lexington Avenue, New York, New York, at 10:00 a.m., New York City
time, on the day (the "Closing Date") which is the last to occur of (i) December
15, 1995, (ii) the third business day after the day on which all waiting periods
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act")
with regard to the transactions which are the subject of this Agreement expire
or are terminated and (iii) the date on which all the conditions in Article V
are satisfied or waived.
2.2 Seller's Actions at Closing. At the Closing, the Seller will
deliver to the Buyer the certificates representing all the Shares, endorsed or
accompanied by documents of assignment which comply with the requirements of
Section 8-401 of the Uniform Commercial Code as in effect in the State of New
York and which are in form and substance reasonably satisfactory to the Buyer,
together with evidence of payment of any applicable transfer taxes.
2.3 Buyer's Actions at Closing. At the Closing, the
Buyer will deliver to the Seller the following:
5
<PAGE>
(a) Evidence of a wire transfer to an account specified by the
Seller at least one business day before the Closing of immediately available
funds in an amount equal to the sum described in clause (i), minus the sums
described in clauses (ii) and (iii) of Paragraph 1.2.
(b) A letter acknowledging that the Buyer will be acquiring
the Shares for investment, and not with a view to their resale or distribution.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Seller's Representations and Warranties. The Seller represents
and warrants to the Buyer as follows:
(a) The Seller is a corporation duly organized and validly
existing under the laws of the Kingdom of the Netherlands.
(b) The Seller has all corporate power and authority necessary
to enable it to enter into this Agreement and carry out the transactions
contemplated by this Agreement. All corporate actions necessary to authorize the
Seller to enter into this Agreement and carry out the transactions contemplated
by it have been taken, except that the sale of the Shares must be approved by an
ordinary resolution of the shareholders of United Biscuits (Holdings) plc
("United Biscuits"). This Agreement has been duly executed by the Seller and is
a valid and binding agreement of the Seller, enforceable against the Seller in
accordance with its terms.
6
<PAGE>
(c) If the consents described on Exhibit 3.1-C are obtained,
neither the execution or delivery of this Agreement or of any document to be
delivered in accordance with this Agreement nor the consummation of the
transactions contemplated by this Agreement or by any document to be delivered
in accordance with this Agreement will (i) violate or conflict with the Articles
of Association of the Seller or the similar organizational documents of any of
the Seller's subsidiaries, or any law, or any order, rule or regulation of any
court or governmental agency or other regulatory organization having
jurisdiction over the Seller or any of its subsidiaries (which includes, for
purposes of all similar references in this Agreement, without limitation, the
Company, Keebler Company ("Keebler") and their subsidiaries), or (ii) violate,
breach or conflict with any provision of, or result in the acceleration of or
entitle any party to accelerate (whether after notice or lapse or time or both)
any obligation under, or result in the imposition of any material lien, charge,
pledge, security interest or other encumbrance upon the property of the Seller
or any or its subsidiaries pursuant to any provision of, or require the consent
or approval of any person under, any mortgage, lien, lease, agreement, license
or other instrument to which the Seller or any of its subsidiaries is a party or
by which any of them is bound, except for such violations, breaches or conflicts
(or acceleration or creation of encumbrance, as applicable) which, in the
aggregate, would not reasonably be expected to have a Material Adverse Effect
(as defined below).
7
<PAGE>
(d) The Seller owns all the Shares free and clear of any liens
or encumbrances and the Seller has full authority to sell the Shares as
contemplated by this Agreement. The Seller has not granted any option or right,
and is not a party to any other agreement, and no such option, right or
agreement exists, which requires, or which upon the passage of time, the payment
of money or the occurrence of any other event, may require, the Seller to
transfer any of the Shares to anyone other than the Buyer. When the Buyer
acquires the Shares as contemplated by this Agreement, the Buyer will receive
them free and clear of any liens, encumbrances or claims of other persons, other
than liens, encumbrances or claims resulting from acts of the Buyer.
(e) The Company and each of its subsidiaries (which includes,
for purposes of all similar references in this Agreement, without limitation,
Keebler and its subsidiaries) engaged in the Continuing Businesses (as that term
is defined below) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization and has full
corporate power to own, lease and operate its assets, properties and businesses.
Copies of the Certificate of Incorporation and all amendments, and of the
by-laws, of the Company and of Keebler, as currently in effect, are attached as
Exhibit 3.1-E(1). The Company and each of its subsidiaries is qualified to do
business as a foreign corporation in each jurisdiction in which it is required
to be qualified, except jurisdictions in which the failure to qualify, in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
Exhibit 3.1-E(2) is a list of all the
8
<PAGE>
jurisdictions in which the Company and each of its subsidiaries is qualified to
do business as a foreign corporation. As used in this Agreement, the term
"Material Adverse Effect" means a material adverse effect upon (i) the
consolidated financial position of the Company and its subsidiaries as
determined in a manner consistent with the consolidated balance sheet of the
Company and its subsidiaries included in the Company Financial Statements (as
that term is defined in Paragraph 3.1(i)), or (ii) the consolidated results of
operations of the Company and its subsidiaries as determined in a manner
consistent with the consolidated profit and loss statement of the Company and
its subsidiaries included in the Company Financial Statements, in the case of
each of (i) and (ii) after pro forma adjustments consistent with the Pro Forma
Financial Statements (as defined below), including, without limitation, the
elimination of the assets and liabilities applicable wholly or primarily to, and
the revenues and expenses of, or allocable to, the Company's frozen foods
business, conducted primarily by Bernardi's Italian Foods Co., The Original
Chili Bowl, Inc. and the Chinese Food Processing Corp., the salty snacks
business conducted by Keebler and other subsidiaries of the Company, Keebler's
convenience sales division, the Kame Oriental Foods business of Shaffer, Clarke
& Co., Inc. and the finance companies listed on Exhibit 3.1-E(3) (together, the
"Other Businesses"; the businesses of the Company and its subsidiaries other
than the Other Businesses being the "Continuing Businesses") or (iii) the
assets, liabilities, properties or business of the Continuing Businesses.
9
<PAGE>
(f) The only authorized capital stock of the Company is
1,000,000 shares of Common Stock, all of which are issued and outstanding. The
Shares constitute 100% of the outstanding capital stock of the Company. Each of
the Shares has been duly authorized and issued and is fully paid and
nonassessable. There are no existing options, warrants, calls, agreements or
commitments of any character to purchase or otherwise to receive from the
Seller, any of its subsidiaries or any of their respective affiliates any of the
outstanding or authorized and unissued capital stock of the Company or any of
its subsidiaries or any securities of the Company, any of its subsidiaries or
any of their respective affiliates which are convertible into or exchangeable
for, or which give any person any right to subscribe for or acquire or any
voting rights with respect to, any shares of capital stock of the Company or any
of its subsidiaries, and no such convertible or exchangeable securities or
rights are outstanding.
(g) No governmental (including, without limitation, European
Union) filings, authorizations, approvals, or consents, or other governmental
action, other than filings and the termination or expiration of waiting periods
under the HSR Act, are required to permit the Seller to fulfill all its
obligations under this Agreement.
(h) Exhibit 3.1-H is a complete list of all the corporations
and other entities (including the jurisdiction of organization thereof) of which
the Company owns directly or indirectly 50% or more in voting power of the
equity (each
10
<PAGE>
corporation or other entity of which the Company owns directly or indirectly 50%
or more in voting power of the equity being a "subsidiary" of the Company).
Except as shown on Exhibit 3.1-H, the Company owns all the outstanding shares
of, or other equity interests in, each of its subsidiaries. Except as set forth
on Exhibit 3.1-H, the Company does not own, directly or indirectly, any voting
securities of any corporation or other entity, except such as are not,
individually or in the aggregate, material to the Continuing Businesses. Each of
the shares owned by the Company of each of its subsidiaries which is a
corporation has been duly authorized and validly issued and is fully paid and
nonassessable. Neither the Company nor any of its subsidiaries has issued any
options, warrants or convertible or exchangeable securities, or is a party to
any other agreements, which require, or which upon the passage of time, the
payment of money or the occurrence of any other event may require, the Company
or any subsidiary to transfer to anyone or issue any stock of, or other equity
interest in, any subsidiary.
(i) The pro forma consolidated financial statements of the
Company and its subsidiaries at January 1, 1994 and December 31, 1994, and for
the two fifty-two week periods ended on those dates, and at September 9, 1995,
and for the thirty-six week period ended on that date (the "Pro Forma Financial
Statements"), copies of which are included in Exhibit 3.1-I, were prepared by
adjusting the consolidated financial statements of the Company and its
subsidiaries at those dates and for those periods which are reflected in Exhibit
3.1-I (the "Company Financial Statements") to
11
<PAGE>
reflect the pro forma adjustments listed on Exhibit 3.1-I. The pro forma
adjustments listed on Exhibit 3.1-I reasonably reflect the likely financial
impact of all transactions and other matters purported to be accounted for in
the Pro Forma Financial Statements and constitute all of the adjustments
necessary to fairly and accurately reflect the likely pro forma consolidated
financial condition and consolidated results of operations of the Company and
its subsidiaries engaged in the Continuing Businesses, after disposition of the
Other Businesses and the elimination and satisfaction of indebtedness
contemplated by Paragraph 4.3 and 4.4 (the reorganization, transfer or
disposition of the Other Businesses and related transactions, together with such
elimination and satisfaction of indebtedness, being referred to herein
collectively as the "Reorganization") at the dates, and for the periods, to
which the Pro Forma Financial Statements relate. The operating income of the
Company and its subsidiaries for each of the periods reflected in the Pro Forma
Financial Statements would not be adversely affected if it were restated to
reflect on an arm's-length basis all transactions with United Biscuits or its
subsidiaries which are not engaged in the Continuing Businesses with the Company
and its subsidiaries which are engaged in the Continuing Businesses. Except as
shown on Exhibit 3.1-I, the Company Financial Statements have been prepared in
accordance with GAAP applied on a consistent basis (except to the extent
described in the notes to those financial statements) and present fairly the
consolidated financial condition and the consolidated results of operations of
the Company and its subsidiaries at the dates, and
12
<PAGE>
for the periods, to which they relate. If the Company Financial Statements had
been prepared in accordance with GAAP in all respects, the consolidated
financial condition and the consolidated results of operations of the Company
and its subsidiaries at the dates, and for the periods, to which the Company
Financial Statements relate would not have been materially different from that
presented in the Company Financial Statements included in Exhibit 3.1-I, except
to the extent of differences because of (i) accounting for inventory on a LIFO,
instead of a FIFO, basis and (ii) amortization of goodwill.
(j) Since December 31, 1994, (i) except as described on
Exhibit 3.1-J(1) or reflected in the September 9, 1995 Pro Forma Financial
Statements or in the period ten 1995 statement of operations attached hereto as
Exhibit 3.1-J(2), there has not been any change, event or discovery which had or
which would reasonably be expected to have a Material Adverse Effect, except to
the extent working capital is reduced as a result of the transactions described
in Paragraph 4.4, (ii) the Company and its subsidiaries, including, but not
limited to, Keebler, have conducted the Continuing Businesses in the ordinary
course of business and consistent with past practice (including, without
limitation, with respect to the maintenance of books and records) and (iii)
there has not been any material adverse change in the relationships of the
Company and its subsidiaries, taken as a whole with respect to the Continuing
Businesses, with their customers, suppliers or regulatory authorities. After
giving pro forma effect to the transactions contemplated by Paragraphs 4.3 and
4.4, the
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outstanding principal amount of consolidated Indebtedness of the Company and its
subsidiaries, after elimination and satisfaction of Indebtedness to United
Biscuits and its subsidiaries in accordance with Paragraphs 4.3 and 4.4, is not
in excess of $50 million, and the outstanding amounts, creditors and applicable
debt instruments relating to each material portion of such Indebtedness are as
set forth on Exhibit 3.1-J(3). Since September 9, 1995 through the date of this
Agreement, the Company and its subsidiaries engaged in the Continuing Businesses
have not sold or leased any of their assets other then sales of inventory or
fixed assets which have come to the end of their useful life in the ordinary
course of business consistent with past practice. For all purposes of this
Agreement, any agreement, transaction or event shall be deemed not to be in the
"ordinary course of business" if it would be material to the Continuing
Businesses.
(k) Except as set forth in Exhibit 3.1-K, neither the Company
nor any of its subsidiaries has any liability or obligation, secured or
unsecured (whether absolute, accrued, contingent or otherwise, and whether due
or to become due), which would be required by GAAP to be reflected in a
consolidated balance sheet of the Company and its subsidiaries or disclosed in
the notes thereto, except liabilities and obligations which (i) are adequately
accrued or reserved against in the September 9, 1995 Pro Forma Financial
Statements or disclosed in the notes thereto, (ii) were incurred after September
9, 1995 in the ordinary course of business and consistent with past practice and
are not in the aggregate material to the Continuing Businesses, (iii) have been
14
<PAGE>
discharged or paid in full or (iv) otherwise will not be obligations of the
Company or its subsidiaries engaged in the Continuing Businesses after the
Closing.
(l) The assets of the Company and its subsidiaries are
sufficient to enable them to operate the Continuing Businesses after the Closing
substantially as they are being operated prior to the date of this Agreement,
except, because United Biscuits intends that the Company and its subsidiaries
will have a zero cash balance on the Closing Date, to the extent the Company and
its subsidiaries require cash.
(m) The Company and its subsidiaries have all licenses and
permits from all governmental authorities which are necessary or useful to
permit the Company and its subsidiaries to conduct the Continuing Businesses and
are, and within the applicable statute of limitations have been, in compliance
in all material respects with such licenses and permits and all applicable laws
and regulations relating to the operation of their respective businesses. No
officer or executive of the Seller or any of its subsidiaries has been informed,
or has any other reason to believe, that there is any reason for any such permit
or license not to be renewed as a routine matter prior to its expiration. Other
than such non-compliance and such licenses and permits from governmental
authorities the lack of which would not in the aggregate reasonably be expected
to have a Material Adverse Effect, the execution and implementation of this
Agreement shall have no effect on the validity, terms, or any other aspect of
any such license or permit.
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<PAGE>
(n) Exhibit 3.1-N is a list of all real property, including
office space, owned or leased by the Company or by any of its subsidiaries which
is used primarily in the Continuing Businesses, or which is included as assets
on the Pro Forma Financial Statements, showing as to each property whether it is
owned or leased, by whom it is owned or leased and, if it is leased, the
identity of the lessor and the date of the lease. All that real property is
being used by the Company or the applicable subsidiary in conformance in all
material respects with all zoning, environmental and other laws and regulations,
deed restrictions, covenants and lease provisions applicable to it. As to real
property shown on Exhibit 3.1-N as being owned, the Company or the applicable
subsidiary owns fee title to the real property, free and clear of any liens or
other encumbrances, except (i) the lien of taxes not yet due and other statutory
liens relating to governmental obligations which are not yet due, and (ii) liens
securing indebtedness reflected on the balance sheet included in the September
9, 1995 Pro Forma Financial Statements included in Exhibit 3.1-I and other
encumbrances which do not interfere with the use of the properties to which they
relate for the purposes for which those properties were acquired or are
currently used. As to real property which is shown on Exhibit 3.1-N as being
leased, the Company or the subsidiary which is the lessee under each of the
leases has a valid, binding and enforceable leasehold interest and has complied
in all material respects with the terms of the lease, all rents and other sums
and charges payable by the Company or any of its subsidiaries are current and no
officer or senior management
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<PAGE>
executive of the Company or Keebler has been informed by the lessor under any of
the leases, or has any other reason to believe after due inquiry, that the
lessor is in default thereunder or has taken, or intends to take, action to
terminate the lease. The real property listed in Exhibit 3.1-N comprises all of
the real property which is necessary to operate the Continuing Businesses as
currently being operated.
(o) On the Closing Date, the Company and each of its
subsidiaries will own all its assets which are used in the Continuing Businesses
free and clear of any liens or encumbrances other than (i) the lien of taxes not
yet due or other statutory liens relating to governmental obligations which are
not yet due, (ii) liens securing indebtedness reflected on the balance sheet
included in the September 9, 1995 Pro Forma Financial Statements included in
Exhibit 3.1-I which do not interfere with the use of the assets to which they
relate for the purposes for which those assets were acquired or are currently
used, and (iii) liens disclosed on Exhibit 3.1-N or 3.1-O, all of which secure
obligations arising out of, or otherwise relating to, the Continuing Businesses.
All assets owned or leased by the Company and its subsidiaries which are used in
the Continuing Businesses are suitable for the uses for which they are intended
and are in a good state of maintenance and repair, normal wear and tear
excepted, except where failure to meet such standards, in the aggregate would
not reasonably be expected to have a Material Adverse Effect.
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<PAGE>
(p) Exhibit 3.1-P is a complete list of each agreement to
which the Company or any of its subsidiaries is a party which will require the
Company or any of its subsidiaries to make payments, or under which the Company
expects it or its subsidiaries to receive revenues, of more than $10 million,
including all installments thereunder, or is otherwise material (including those
agreements that may involve amounts of less than $10 million, except with
respect to results of operations) in amount or significance to the assets,
liabilities, businesses, results of operations or financial condition of the
Continuing Businesses, other than (i) short-term customer purchase orders
received in the ordinary course of business, (ii) purchase orders to suppliers
entered into in the ordinary course of business ordering materials which are
available from at least several suppliers in quantities consistent with the
customary purchasing practices of the Company or the applicable subsidiary and
with the customary purchasing practices in the industries in which the Company
or the applicable subsidiary participates and (iii) agreements relating
primarily to the Other Businesses which prior to or on the Closing Date will be
assigned to, and assumed by, UB Investments plc ("UBI") as provided in Paragraph
9.5. No officer or senior management executive of the Company or Keebler has any
reason to believe after due inquiry that any of the agreements listed on Exhibit
3.1-P is not legal, valid, binding and enforceable in accordance with its terms.
The Company and each of its subsidiaries has fulfilled in all material respects
all its obligations under all the agreements listed on Exhibit 3.1-P to which it
is a party, no officer or senior
18
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management executive of the Company or Keebler has been informed by any other
party to any of those agreements, or has any other reason to believe after due
inquiry, that the Company or any subsidiary is in default in its obligations
under any of those agreements and no officer or senior management executive of
the Company or Keebler has been informed by, or has any other reason to believe
after due inquiry that, another party to any of those agreements is in default
thereon or intends to terminate the agreement before its stated termination
date. Except as shown on Exhibit 3.1-P, the transactions contemplated by this
Agreement will not be a basis for any party to any agreement listed on Exhibit
3.1-P to terminate that agreement or alter the basis on which it will be doing
business with the Company or with any of its subsidiaries, as the case may be,
under that agreement.
(q) Exhibit 3.1-Q is a complete list of all patents, patent
applications, patent licenses, trademarks, trademark licenses, trade names,
copyrights and service marks which are material to the Continuing Businesses as
a whole. The Company and each subsidiary owns or is (or, upon execution of the
Cross License Agreement described in Paragraph 5.1(i), will be) entitled to use
for their respective lives all the patents, trademarks, trade names, service
marks, technology and copyrights which it uses (or has used during the year
prior to the date of this Agreement) in connection with the Continuing
Businesses, other than patents, trademarks, trade names, service marks,
technology and copyrights which, if the Company and the subsidiaries were to
stop using, would not, in the aggregate, reasonably be expected to have a
19
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Material Adverse Effect. By the Closing Date, United Biscuits will own, directly
or through subsidiaries, the trademarks, trade names and service marks listed on
Exhibit 3.1-Q for use in the countries listed on Exhibit 3.1-Q. Except as shown
on Exhibit 3.1-Q, (i) no officer or senior management executive of the Company
or of Keebler has been notified, or has reason to believe after due inquiry,
that the Company or any subsidiary engaged in the Continuing Businesses is
violating any patents, trademarks, tradenames, service marks, copyrights or
other intellectual properties owned by any other persons, and (ii) the
transactions which are the subject of this Agreement will not result in the
termination or modification of, or otherwise require the consent of any party
to, any patent license or trademark license listed on Exhibit 3.1-Q.
(r) The Company and each of its subsidiaries has filed when
due all Tax Returns (as defined below) which each has been required to file and
has paid all Taxes (as defined below) shown on those returns to be due. Those
Tax Returns accurately reflect the Taxes required to have been paid, except to
the extent of items which may be disputed by applicable taxing authorities but
for which there is substantial authority to support the position taken by the
Company or the subsidiary and which have been adequately reserved against on the
balance sheet at September 9, 1995 included in the Company Financial Statements.
Except as shown on Exhibit 3.1-R, (i) no extension of time given by the Company
or any of its subsidiaries for completion of the audit of any Tax Return is in
effect, (ii) no tax lien has been filed by any taxing authority against the
Company or any of its subsidiaries or any of
20
<PAGE>
their assets, (iii) no Federal, state or local audits or other administrative
proceedings or court proceedings with regard to Taxes are presently pending with
regard to the Company or any of its subsidiaries, (iv) neither the Company nor
any subsidiary is a party to any agreement providing for the allocation or
sharing of Taxes, (v) neither the Company nor any subsidiary has participated in
or cooperated with an international boycott as that term is used in Section 999
of the Internal Revenue Code of 1986, as amended (the "Code"), and (vi) neither
the Company nor any subsidiary has filed a consent pursuant to Section 341(f) of
the Code or agreed to have Section 341(f)(2) of the Code apply to any
disposition of a Subsection (f) asset (as that term is defined in Section
341(f)(4) of the Code) owned by the Company or any subsidiary. The Company is
not and has not been a United States real property holding company (as defined
in Section 897(c)(2) of the Code) during the applicable period specified in
Section 897(c)(1)(ii) of the Code and the Seller will cause the appropriate
documents contemplated by Section 1445(b)(3) of the Code to be provided to the
Buyer at the Closing to establish that the Company is not a United States real
property holding company. For the purposes of this Agreement, the term "Taxes"
means all taxes (including, but not limited to, withholding taxes), assessments,
fees, levies and other governmental charges, and any related interest or
penalties. For the purposes of this Agreement, the term "Tax Return" means any
report, return or other information required to be supplied to a taxing
authority in connection with Taxes.
21
<PAGE>
(s) Except as shown on Exhibit 3.1-S, none of the Company, any
subsidiary of the Company or any Company Plan (as hereinafter defined) or any
fiduciary with respect thereto in respect of which the Company or any of its
subsidiaries has any indemnity or other obligation is a party to any action,
suit or proceeding in any court, or by or before any governmental agency or
authority, any arbitral body or any other dispute resolution entity, nor has any
officer or senior management executive of the Company or Keebler been notified,
or has any other reason to believe after due inquiry, that any action, suit or
proceeding is threatened against any of those entities, other than actions,
suits or proceedings which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. The Company and its
subsidiaries are not the subject of any judgment, stipulation, order, decree or
agreement arising from any such action, suit or proceeding which would, in the
aggregate, reasonably be expected to have a Material Adverse Effect. No action,
suit or proceeding is pending, and no officer or senior management executive of
United Biscuits, the Seller, the Company or Keebler has been notified, or has
any other reason to believe after due inquiry, that any action, suit or
proceeding is threatened which seeks to question, delay or prevent the
consummation of the transactions contemplated by this Agreement.
(t) Exhibit 3.1-T contains a complete list of all unions which
represent any employees of the Company or any of its subsidiaries and a complete
list of all labor union and collective bargaining agreements to which the
Company or any of its
22
<PAGE>
subsidiaries is a party or is subject. Except as set forth on Exhibit 3.1-T and
for such matters as would not, in the aggregate, reasonably be expected to have
a Material Adverse Effect, (i) the Company and its subsidiaries are in
compliance with all applicable laws, agreements, contracts and policies
respecting employment and employment practices, terms and conditions of
employment and wages and hours, and are not engaged in any unfair labor
practices, (ii) there is no unfair labor practice charge or complaint against
the Company or any of its subsidiaries pending, and no officer or executive of
the Seller or any of its subsidiaries is aware, or has any other reason to
believe, that any such action is threatened before any regulatory or judicial
body, (iii) there is no, and during the past three years there has been no,
labor strike, dispute, slowdown, stoppage, lockout or other material labor
controversy in effect, and no officer or executive of the Seller or any of its
subsidiaries is aware, or has any other reason to believe after due inquiry,
that any such action is threatened against the Company or any of its
subsidiaries, (iv) no certification petition respecting the employees of the
Company or any of its subsidiaries has been filed with the National Labor
Relations Board and no officer or senior management executive of the Company or
Keebler is aware, or has any other reason to believe after due inquiry, that any
union is attempting to organize or otherwise become the bargaining
representative for any employees of the Company or any of its subsidiaries, (v)
except as part of the Reorganization or as expressly contemplated by this
Agreement, neither the Company nor any of its subsidiaries has closed any
23
<PAGE>
plant or facility, effectuated any layoffs of employees or implemented any early
retirement, separation or window program within the last three years, nor has
the Company or any subsidiary planned or announced any such action or program
for the future and (vi) the Company and its subsidiaries are in compliance with
their obligations pursuant to the Worker Adjustment and Retraining Notification
Act of 1988, and all other notification and bargaining obligations arising under
any collective bargaining agreement, statute or otherwise.
(u) (i) Exhibit 3.1-U(1) contains a true and complete list of
each "employee benefit plan" (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), including,
without limitation, multiemployer plans within the meaning of Section 3(37) of
ERISA, stock purchase, stock option, severance, employment, change-in-control,
fringe benefit, collective bargaining, bonus, incentive, deferred compensation
and all other employee benefit plans, agreements, programs, policies or other
arrangements, whether or not subject to ERISA (including any funding mechanism
therefor now in effect or required in the future as a result of the transaction
contemplated by this Agreement or otherwise), whether formal or informal, oral
or written, under which any employee or former employee of the Company or any of
its subsidiaries has any present or future right to benefits or under which the
Company or any of its subsidiaries has any present or future liability. All such
plans, agreements, programs, policies and arrangements shall be collectively
referred to as the "Company Plans."
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<PAGE>
(ii) With respect to each Company Plan, the Company has
made available to the Buyer a current, accurate and complete copy (or, to the
extent no such copy exists, an accurate description) thereof and, to the extent
applicable: (A) any related trust agreement or other funding instrument; (B) the
most recent determination letter, if applicable; (C) any summary plan
description and other material written communications by the Company or any of
its subsidiaries to its employees concerning the extent of the benefits provided
under a Company Plan; and (D) for the three most recent years (I) the Form 5500
and attached schedules; (II) audited financial statements; (III) actuarial
valuation reports; and (IV) attorney's response to an auditor's request for
information.
(iii) Except as set forth on Exhibit 3.1-U(3) and for
such matters as would not, in the aggregate, reasonably be expected to have a
Material Adverse Effect, (A) each Company Plan has been established and
administered in accordance with its terms, and in compliance with the applicable
provisions of ERISA, the Code and other applicable laws, rules and regulations;
(B) each Company Plan which is intended to be qualified within the meaning of
Code Section 401(a) is so qualified and has received a favorable determination
letter as to its qualification and nothing has occurred, whether by action or
failure to act, which would cause the loss of such qualification; (C) no event
has occurred and no condition exists that would subject the Company or any of
its subsidiaries, either directly or by reason of its affiliation with any
member of its "Controlled Group" (defined as any organization
25
<PAGE>
which is a member of a controlled group of organizations within the meaning of
Sections 414(b), (c), (m) or (o) of the Code), to any tax, fine, lien or penalty
imposed by ERISA, the Code or other applicable laws, rules and regulations; (D)
for each Company Plan with respect to which a Form 5500 has been filed, no
material change has occurred with respect to the matters covered by the most
recent Form since the date thereof; and (E) no Company Plan has incurred any
"accumulated funding deficiency" as such term is defined in Section 302 of ERISA
and Section 412 of the Code (whether or not waived).
(iv) Except as set forth on Exhibit 3.1-U(4), with
respect to each of the Company Plans which is not a multiemployer plan within
the meaning of Section 4001(a)(3) of ERISA but is subject to Title IV of ERISA,
as of the Closing Date, the assets of each such Company Plan are at least equal
in value to the present value of the accrued benefits (vested and unvested) of
the participants in such Company Plan on a termination and projected benefit
obligation basis, based on the actuarial methods and assumptions indicated in
the most recent actuarial valuation reports.
(v) Except as set forth on Exhibit 3.1-U(5), with
respect to any multiemployer plan (within the meaning of Section 4001(a)(3) of
ERISA) to which the Company or any member of its Controlled Group has any
liability or contributes (or has at any time contributed or had an obligation to
contribute): (A) neither the Company nor any member of its Controlled Group has
incurred any withdrawal liability under Title IV of ERISA or would
26
<PAGE>
be subject to such liability if, as of the Closing Date, the Company or any
member of its Controlled Group were to engage in a complete withdrawal (as
defined in Section 4203 of ERISA) or partial withdrawal (as defined in ERISA
Section 4205) from any such multiemployer plan; and (B) no such multiemployer
plan is in reorganization or insolvent (as those terms are defined in Sections
4241 and 4245 of ERISA, respectively).
(vi) Except as set forth on Exhibit 3.1-U(6), no
Company Plan exists which could result in the payment to any employee or former
employee of the Company or any of its subsidiaries of any money or other
property or rights or accelerate or provide any other rights or benefits to any
employee or former employee of the Company or any of its subsidiaries as a
result of the transactions contemplated by this Agreement (other than the
Reorganization, including the termination of employees associated with Keebler's
convenience route sales group), whether or not such payment would constitute a
parachute payment within the meaning of Section 280G of the Code.
(vii) Except as shown on Exhibit 3.1-U(7), there are no
contracts, agreements or other arrangements which could result in the payment by
the Company or by any subsidiary of an "Excess Parachute Payment" as that term
is used in Section 280G of the Code.
(viii) Except as otherwise disclosed in the Exhibits,
and except to the extent required under existing employee and director benefit
plans, agreements or arrangements as in effect on the date of this Agreement,
since December 31, 1994, the Company
27
<PAGE>
and its subsidiaries have not increased the compensation or fringe benefits of
any of its directors, officers or employees, except for increases in salary or
wages of employees of the Company or its subsidiaries who are not officers of
the Company in the ordinary course of business and consistent with past
practice.
(v) Except as shown on Exhibit 3.1-V, (i) neither the Company
nor any subsidiary has received notice of material noncompliance or material
liability under any Federal, state, local or foreign laws (including, without
limitation, common law) or regulations relating to the environment or employee
health and safety ("Environmental Laws") relating to the Company or a subsidiary
thereof, (ii) no officer or senior management executive of the Company or
Keebler has been informed, or has any other reason to believe after due inquiry,
that any fact or set of facts exist that constitute or could reasonably be
expected to give rise to material noncompliance or material liability of the
Company or any subsidiary thereof under any Environmental Law, and (iii) the
Seller has provided to the Buyer true and complete copies of all reports,
studies, assessments, audits, or other similar documents in the possession or
control of Seller or the Company or any subsidiaries thereof that address any
issue of actual or potential noncompliance with, or actual or potential
liability under, any Environmental Law that may affect the Company or any
subsidiary thereof.
(w) The aggregate cost to the Company and its subsidiaries, in
the event that all employees and former employees covered by individual
employment or severance agreements are
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terminated, will not exceed $8.75 million plus deferred compensation taken into
account in the following sentence. The present value of all deferred
compensation payable under any deferred compensation plan or agreement (other
than trust funds of qualified retirement plans) does not exceed in the aggregate
$25.5 million, which includes not more than $14 million under individual
deferred compensation agreements, $11 million in respect the Company's
Supplemental Retirement Plan and $500,000 under the Company's Excess Retirement
Benefit Plan, using discount rates of 9%, 8-1/2% and 7%, respectively.
(x) At September 9, 1995, Keebler was employing 643 persons
associated with its convenience route sales group, of whom it expects that no
more than 93 persons will be required after Keebler discontinues its convenience
route sales activities (which it plans to do), and Keebler was using 495 sixteen
foot vans (the "Convenience Route Sales Vans") in its convenience route sales
activities, none of which will be required after Keebler discontinues those
activities. The total compensation of the at least 550 employees who were
associated with the convenience route sales group at September 9, 1995, but whom
Keebler expects will not be required after Keebler discontinues its convenience
route sales activities (those 550 employees being the "Excess Convenience Route
Sales Employees"), including non-salary employee costs, was annualized to be at
least $22 million per year and the maintenance, depreciation, lease, travel and
other costs associated with the convenience route sales activities which will
not be necessary after Keebler discontinues its convenience route sales
activities,
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<PAGE>
including the maintenance, depreciation and lease costs associated with the 495
sixteen foot vans, was at the annualized rate of at least $12 million per year.
The Pro Forma Financial Statements do not reflect any value for the Convenience
Route Sales Vans and any such vans unsold as of the Closing Date will remain
assets of the Company or one of its subsidiaries.
(y) The Company and its subsidiaries maintain policies of
insurance and bonds of the type and in amounts customarily carried by persons
conducting businesses similar to those of the Company and its subsidiaries. Such
policies and bonds are adequate for the conduct of the Continuing Businesses.
(z) The present value of the potential additional liabilities
under the Retirement Plan of Salaried and Certain Hourly Employees of Keebler
Company (the "Retirement Plan") attributable to the window benefits added
pursuant to the Third Amendment to the Retirement Plan is not in excess of the
amount by which the value of the assets of the Retirement Plan exceeds the
present value of the benefit liabilities of the Retirement Plan.
3.2 Buyer's Representations and Warranties. The Buyer
represents and warrants to the Seller as follows:
(a) The Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
(b) The Buyer has all corporate power and authority necessary
to enable it to enter into this Agreement and carry out the transactions
contemplated by this Agreement. All corporate actions necessary to authorize the
Buyer to enter into this Agree-
30
<PAGE>
ment and carry out the transactions contemplated by it have been taken. This
Agreement has been duly executed by the Buyer and is a valid and binding
agreement of the Buyer, enforceable against the Buyer in accordance with its
terms.
(c) Neither the execution and delivery of this Agreement or of
any document to be delivered in accordance with this Agreement nor the
consummation of the transactions contemplated by this Agreement or by any
document to be delivered in accordance with this Agreement will violate, result
in a breach of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, the Certificate of
Incorporation or by-laws of the Buyer, any agreement or instrument to which the
Buyer is a party or by which it is bound, any law, or any order, rule or
regulation of any court or governmental agency or other regulatory organization
having jurisdiction over the Buyer.
(d) No governmental filings, authorizations, approvals or
consents, or other governmental action, other than filings and termination or
expiration of the waiting periods under the HSR Act are required to permit the
Buyer to fulfill all its obligations under this Agreement.
(e) The Buyer has, or has agreements with or written
commitments from banks or other financially sound financial institutions to
provide the Buyer with, all the funds the Buyer will need to pay the Purchase
Price, to make the loan described in Paragraph 4.3 and otherwise to complete the
transactions which are the subject of this Agreement.
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<PAGE>
3.3 Remedy for Breaches of Representations and Warranties. Except as
otherwise provided in Article VII, the indemnifications in Paragraphs 7.1 and
7.2 will be the only remedies available thereunder to the Buyer or the Seller
after the Closing for breaches of representations or warranties contained in
Paragraph 3.1 or 3.2. Any claim for that indemnification must be made as
provided in Paragraph 7.3.
ARTICLE IV
ACTIONS PRIOR TO THE CLOSING
4.1 Activities Until Closing Date. From the date of this
Agreement to the Closing Date, the Seller will ensure that the Company and its
subsidiaries will, except with the written consent of the Buyer:
(a) Operate the Continuing Businesses in the ordinary course
and in a manner consistent with the manner in which they are being operated
prior to the date of this Agreement (including, without limitation, with respect
to management of inventory, collection of accounts receivable and timing of
receipts, payment of accounts payable and other disbursements of cash) and the
Seller will continue to provide working capital to the Company and its
subsidiaries consistent with past practices.
(b) Take all reasonable steps available to them to maintain
the goodwill of the Continuing Businesses and the continued employment of their
executives and other employees who are engaged in the Continuing Business, and
to preserve their relationships with customers, suppliers and others having
business
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<PAGE>
relationships with the Company and its subsidiaries, except to the extent
resulting from the Reorganization.
(c) Maintain all their assets which are used in connection
with the Continuing Businesses in good repair and condition, except to the
extent of reasonable wear and use and damage by fire or other unavoidable
casualty.
(d) Not make any borrowings other than intercompany borrowings
in the ordinary course of business and consistent with past practice or, except
as provided hereunder, not pay any Indebtedness (or any installment thereof)
prior to its stated maturity.
(e) Not enter into any contractual commitments involving
capital expenditures, loans or advances, and not voluntarily incur any
contingent liabilities, except in each case in the ordinary course of business
and consistent with past practice and the 1995 capital expenditure program
previously disclosed to the Buyer, but in any event not to exceed $7,000,000 in
the aggregate (provided that any individual items over $250,000 will require
Buyer's consent, such consent not to be unreasonably withheld) and except that
the Company's subsidiaries may enter into operating leases in connection with
the Da Vinci Computer project previously disclosed to the Buyer provided that
the total liability under such leases shall not exceed $11 million (it being
agreed that, to the extent that any amounts payable, whether before or after the
Closing, under the Da Vinci operating leases have not been paid on or before the
Closing Date, then the Seller shall reimburse the Company for such amounts (to
the extent they are not
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included in the calculation of Current Operating Liabilities pursuant to
Paragraph 1.3)).
(f) Not make any distributions, dividends, loans or advances
(other than (i) advances for travel and other normal business expenses in an
aggregate amount outstanding at one time not to exceed $500,000 and (ii)
distributions and dividends paid in cash) to stockholders (other than to the
Company or to subsidiaries of the Company which are engaged in the Continuing
Businesses), directors, officers, employees or affiliates.
(g) Maintain their books of account and records in the same
manner, and on the same basis, that they were maintained during the thirty-six
weeks prior to and including September 9, 1995 and that they were maintained
between September 9, 1995 and the date of this Agreement.
(h) Comply in all material respects with all applicable laws
and regulations of governmental agencies relating to the Continuing Businesses.
(i) Not sell (including pursuant to sale/leaseback
transactions), dispose of or encumber any property or assets used primarily in
connection with the Continuing Businesses or reflected on the balance sheet
included in the September 9, 1995 Pro Forma Financial Statements, except for
sales of inventory or other transactions (not exceeding $250,000 per
transaction) in the ordinary course of business and consistent with past
practice, or engage in any activities or transactions relating to the Continuing
Businesses, except in the ordinary course of business and consistent with past
practice.
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(j) Except as set forth on Exhibit 4.1-J, and except to the
extent required under existing employee and director benefit plans, agreements
or arrangements as in effect on the date of this Agreement, not increase the
compensation or fringe benefits of any of its directors, officers or employees,
except for increases in salary or wages of employees of the Company or its
subsidiaries who are not officers of the Company in the ordinary course of
business and consistent with past practice, or grant any severance or
termination pay not currently required to be paid under existing severance plans
or entered into any employment, consulting or severance agreement or arrangement
with any present or former director, officer or other employee of the Company or
any of its subsidiaries, or establish, adopt, enter into or amend or terminate
any collective bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund, policy
or arrangement for the benefit of any directors, officers or employees, except
in each case to the extent the action relates to Other Businesses and will not
result in liabilities or costs to the Company or its subsidiaries after the
Closing or otherwise affect the Continuing Businesses.
(k) Not enter into any transaction with any of their
respective affiliates, other than with respect to accounts payable in the
ordinary course of business and consistent with past practice on terms no less
favorable than would be negotiated on an arm's-length basis and other than
transactions specifically contemplated by this Agreement.
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(l) Not amend its certificate of incorporation or
by-laws or the terms of any outstanding security.
(m) Except as otherwise permitted herein, not amend any
contracts or waive any rights under any contracts, except in the ordinary course
of business and consistent with past practice.
(n) Not dissolve or liquidate, or merge or
consolidate with or into any other entity.
(o) Use its best efforts to maintain in force (including
necessary renewals thereof) the insurance policies referred to in Paragraph
3.1(y), give reasonable prior notice to the Buyer of any cancellation or
expiration of any such insurance policy and consult in good faith with the Buyer
as to any replacement policy.
4.2 HSR Act. The Company and the Buyer will each make as promptly as
practicable the filing it is required to make under the HSR Act with regard to
the transactions which are the subject of this Agreement and each of them will
take all reasonable steps within its control (including providing information to
the Federal Trade Commission and the Department of Justice) to cause the waiting
periods required by the HSR Act to be terminated or to expire as promptly as
practicable. The Company and the Buyer will each provide information and
cooperate in all other respects to assist the other of them in making its filing
under the HSR Act.
4.3 Buyer's Loan to the Company. At or before the time
of the Closing, the Buyer will lend the Company an amount equal to
the total net indebtedness (other than ordinary course arm's-length
accounts payable from Shaffer, Clarke & Co, Inc. to United Biscuits
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(UK) Limited) on the Closing Date (after the elimination of debt described in
Paragraph 4.4) of the Company and its subsidiaries which are engaged in the
Continuing Businesses to United Biscuits and its subsidiaries which are not
engaged in the Continuing Businesses (including, but not limited to, the
Seller). Promptly following receipt of the Buyer's loan, the Company will
deliver the full proceeds of that loan to United Biscuits in satisfaction in
full of such indebtedness.
4.4 Elimination of Intercompany Debt. Immediately before the time of
the Closing, the Seller will cause all indebtedness of the Company and its
subsidiaries which are engaged in the Continuing Businesses to and from
subsidiaries of the Company which are not engaged in the Continuing Businesses
to be eliminated immediately before the Closing (or as to companies which cease
being subsidiaries of the Company before the Closing Date, immediately before
they cease being subsidiaries of the Company), whether through contributions to
capital, dividends or otherwise. The Seller will consult with the Buyer about
the manner in which indebtedness will be eliminated and will attempt to effect
the elimination of indebtedness contemplated by this Paragraph in the manner
which will minimize any adverse tax consequences to the Company and its
subsidiaries engaged in the Continuing Businesses.
4.5 Change of Company's Name. Before the time of the
Closing, the Seller will cause the name of the Company to be
changed to a name reasonably acceptable to the Buyer which does not
include the letter combination "UB" or the words "United Biscuits."
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4.6 Seller's Efforts to Fulfill Conditions. The Seller will use its
best efforts to cause all the conditions set forth in Paragraph 5.1 (including,
without limitation, the conditions set forth in Paragraphs 5.1(e) and 5.1(n)) to
be fulfilled prior to or at the Closing (except that the Seller will not be
required to attempt to cause United Biscuits or its directors to make a
statement to the shareholders of United Biscuits which is inconsistent with the
fiduciary duties of the directors of United Biscuits).
4.7 Buyer's Efforts to Fulfill Conditions. The Buyer
will use its best efforts to cause all the conditions contained in
Paragraph 5.2 to be fulfilled prior to or at the Closing.
4.8 No Shopping. Until this Agreement is terminated, each of United
Biscuits and the Seller shall not, and shall not permit any of their
subsidiaries, or any representatives, officers, employees, agents and affiliates
of any of the foregoing (collectively, "Agents"), to directly or indirectly (i)
solicit, initiate or encourage the submission of any inquiries, indications of
interest, proposals or offers from any corporation, partnership, person, entity
or group, other than the Buyer (collectively, "Third Parties"), concerning the
sale of the Shares, or any equity security of, or any other direct or indirect
interest in, the Company or any of its subsidiaries, the sale of any assets of
the Company or any of its subsidiaries (other than sales of the Other Businesses
as contemplated hereby, sales of inventory in the ordinary course of business
and consistent with past practice or any matters specifically disclosed in an
Exhibit hereto) or any
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merger, recapitalization or other business combination transaction involving the
Company or any of its subsidiaries (herein an "Acquisition Proposal"), (ii)
participate in any discussions (except to the extent United Biscuits receives
written advice of counsel that such discussions are required to enable the
directors of United Biscuits to fulfill their legal obligations because of their
fiduciary duties to United Biscuits' shareholders) or negotiations regarding, or
enter into any agreements or understandings (whether or not in writing) relating
to, any of the foregoing with, or provide any information concerning the
Company, and of its subsidiaries or any of the foregoing to, any Third Parties,
or (iii) otherwise cooperate in any way with, or assist or participate in,
facilitate or encourage, any effort or attempt by any Third Party to do or seek
any of the foregoing. Prior to or promptly following the Closing, if the Buyer
so requests, United Biscuits and the Seller shall use their best efforts to
cause the destruction or return of all non-public, confidential or proprietary
information concerning the Company and its subsidiaries provided to potential
purchasers of the Company or its subsidiaries or assets thereof. United Biscuits
and the Seller will immediately notify the Buyer after the receipt by either of
them or any of their respective Agents of any inquiry, indication of interest,
proposal or offer with respect to an Acquisition Proposal by any Third Party and
will immediately deliver to the Buyer any written documentation relating
thereto, including any written advice of counsel as described above.
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4.9 Termination of Convenience Route Sales Activities. From the date
hereof through the Closing Date, the Buyer and Keebler will cooperate to effect
the termination of the convenience route sales activities of Keebler (including,
without limitation, by effecting the disposition of the Convenience Route Sales
Vans and the termination of the Excess Convenience Route Sales Employees) in
such a manner as to effect an orderly transition to an alternative distribution
system for the Continuing Businesses and to result in the cost savings projected
in the Pro Forma Financial Statements. The Seller will cause Keebler to consult
in good faith with the Buyer with respect to any actions proposed to be taken in
furtherance of the foregoing, to take any such actions agreed upon by the Buyer
and Keebler, and not to take any such actions without the prior consent of the
Buyer, which consent shall not be unreasonably withheld. At the request of the
Buyer, the Seller will cause Keebler to terminate the employment of all the
Excess Convenience Route Sales Employees prior to the Closing, to the extent it
is legally able to do so.
4.10 Shareholders' Meeting of United Biscuits. United Biscuits will
call and hold a general meeting of its shareholders as promptly as practicable
(but in no event later than 40 days) after the date of this Agreement for the
purpose of voting upon an ordinary resolution for the approval of the sale of
the Shares. United Biscuits shall, in connection with such meeting, (i)
recommend to its shareholders that they approve and adopt this Agreement and the
transactions contemplated hereby, (ii) prepare and distribute a circular
containing such recommendation in
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compliance with applicable rules of The London Stock Exchange and (iii) take all
other action necessary or advisable to secure the vote or consent required by
applicable law to obtain such approvals, except in each case as may be otherwise
required under the applicable fiduciary duties of the respective directors of
United Biscuits.
4.11 Reimbursement of Expenses. If this Agreement is terminated by
the Buyer pursuant to Paragraph 6.1(c) hereof, by the Seller pursuant to
Paragraph 6.1(d) hereof, or otherwise primarily as a result of the failure of
the shareholders of United Biscuits to approve and adopt this Agreement and the
transactions contemplated hereby, then the Seller shall reimburse the Buyer
(promptly after submission of statements therefor) for all out-of-pocket
expenses and fees (including, without limitation, commitment and other fees and
expenses payable to all banks, investment banking firms and other financial
institutions, and their respective agents, and all fees and expenses of counsel,
accountants, experts and consultants to the Buyer) actually incurred by the
Buyer or on its behalf in connection with the consummation of all transactions
contemplated by this Agreement and in connection with the negotiation,
preparation, execution and performance of this Agreement.
4.12 Information Regarding Insurance Policies. Within ten days after
the date of this Agreement, the Seller will deliver to the Buyer a list of all
policies of insurance and bonds maintained by the Company and its subsidiaries
that are engaged in the Continuing Businesses which will not continue in effect
after
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the Closing as to the Company and those of its subsidiaries to which they apply
at the date of this Agreement.
4.13 Buyer's Efforts to Obtain Financing. The Buyer will use its
best efforts to obtain the financing contemplated by the commitments it has
delivered to the Seller on or before the date of this Agreement on the terms
contemplated by those commitments.
4.14 Further Assurances. At any time and from time to time after the
Closing, the parties agree to cooperate with each other, to execute and deliver
such other documents, instruments of transfer or assignment, files, books and
records and do all such further acts and things as may be reasonably required to
carry out the transactions contemplated hereunder.
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
5.1 Conditions to Buyer's Obligations. The obligations of the Buyer
at the Closing are subject to satisfaction of the following conditions (any or
all of which may be waived by the Buyer):
(a) The representations and warranties of the Seller contained
in this Agreement will be true and correct in all material respects at the
Closing Date with the same effect as though made on that date, and the Seller
will have delivered to the Buyer a certificate dated that date and signed by a
Managing Director of the Seller to that effect.
(b) The Seller will have fulfilled in all material
respects all its obligations under this Agreement required to have
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been fulfilled prior to or at the Closing, and the Seller will have delivered to
the Buyer a certificate dated that date and signed by a Managing Director of the
Seller to that effect.
(c) No order will have been entered by any court or
governmental or regulatory authority and be in force which invalidates this
Agreement or restrains the Buyer from completing the transactions which are the
subject of this Agreement.
(d) The applicable waiting periods under the HSR Act shall
have expired or been terminated.
(e) The Buyer shall have received evidence reasonably
acceptable to it that each of the consents set forth on Exhibit 3.1-C have been
obtained, except consents the absence of which would not individually or in the
aggregate have a Material Adverse Effect.
(f) The Buyer shall have obtained, on terms and conditions at
least as favorable to the Buyer as those contemplated by the written financing
commitments, the proceeds of financing sufficient for the Buyer to consummate
the transactions contemplated hereby (provided that this will not be a condition
to the Buyer's obligations unless the shareholders of the Buyer are ready,
willing and able to provide cash common equity financing of at least
$125,000,000 in the aggregate).
(g) The sale of the shares contemplated by this Agreement will
have been approved by an ordinary resolution of the shareholders of United
Biscuits not later than 60 days after the date of this Agreement.
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(h) The Company and its subsidiaries will have disposed of the
Other Businesses, whether by the sale of shares or assets, by distribution to
the Seller or its affiliates (other than the Company and its subsidiaries) or
otherwise, and will have completed the other elements of the Reorganization, in
each case in form and substance reasonably satisfactory to the Buyer as to any
element thereof that could have a post-Closing impact on the Buyer, on the
Company and its subsidiaries or on the Continuing Businesses.
(i) United Biscuits (UK) Limited ("UBUK"), the Company and
each of its subsidiaries which is engaged in the Continuing Businesses will have
entered into a Cross License Agreement in form and substance reasonably
acceptable to the Buyer under which (i) UBUK grants the Company a perpetual,
royalty free, non-exclusive license, with a right to sublicense to wholly-owned
subsidiaries (but not with a right to sublicense to anyone else), to use all
technology owned by United Biscuits or any of its subsidiaries which is not
engaged in the Continuing Businesses which the Company or any of its
subsidiaries which is engaged in the Continuing Businesses is using at the
Closing Date or has used within three years before the Closing Date, except that
the Company and its subsidiaries may not use the heat flux measurement device
outside the United States of America, and (ii) the Company and each of its
subsidiaries which is engaged in the Continuing Businesses grants UBUK a
perpetual, royalty free, non-exclusive license, with a right to sublicense
wholly-owned subsidiaries (but not with a right to sublicense to anyone else),
to use all technology owned by
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the Company or any of its subsidiaries which is engaged in the Continuing
Businesses which UBUK or any of its subsidiaries which is not engaged in the
Continuing Businesses is using at the Closing Date or has used within three
years before the Closing Date. Such Cross License Agreement shall permit the
transfer or assignment of such license or portion thereof with any sale of any
business in which it is used.
(j) With respect to each joint research and development
project being conducted by Keebler and its affiliates and subsidiaries with UBUK
at the Closing Date, which projects are specified on Exhibit 5.1-J, either (i)
Keebler (or its affiliate or subsidiary, as the case may be) and UBUK will have
entered into an agreement, which is approved by the Buyer, for the project to be
completed and the costs to be allocated between Keebler (or its affiliate or
subsidiary, as the case may be) and UBUK, or (ii) if the Buyer will not approve
what UBUK states to be its most favorable (to Keebler or its affiliate or
subsidiary, as the case may be) proposal, UBUK will have assumed sole
responsibility for the project and will have reimbursed Keebler (or its
affiliate or subsidiary, as the case may be) for its expenditures prior to the
Closing Date with regard to the project and Keebler (or its affiliate or
subsidiary, as the case may be) will have assigned to UBUK all Keebler's (or its
affiliate's or subsidiary's, as the case may be) interests in products or
processes which are or may be developed as a result of the project.
(k) United Biscuits or a subsidiary will have entered into an
agreement with Shaffer, Clarke & Co., Inc. in form
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and substance reasonably acceptable to the Buyer regarding continued
distribution of "Carr's" branded products by Shaffer, Clarke & Co., Inc. in the
United States of America, which agreement will permit the assignment of rights
of Shaffer, Clarke & Co., Inc. thereunder upon the consent of United Biscuits
(which consent shall not be unreasonably withheld) (the "Shaffer, Clarke
Distribution Agreement").
(l) The Buyer will have received an opinion from Rogers &
Wells, counsel to the Seller, to the effect that (i) the Seller is a corporation
duly organized and validly existing under the laws of the Kingdom of the
Netherlands; (ii) the Seller has all corporate power and authority necessary to
enable it to enter into this Agreement and carry out the transactions
contemplated by this Agreement; (iii) all corporate actions necessary to
authorize the Seller to enter into this Agreement and carry out the transactions
contemplated by it have been taken; (iv) this Agreement has been duly executed
by the Seller and is a valid and binding agreement of the Seller, enforceable
against the Seller in accordance with its terms, except to the extent
enforceability may be affected by bankruptcy, reorganization or similar laws in
the United States of America or the Netherlands affecting the rights of
creditors generally or by equitable principles of general application relating
to the availability of remedies (whether in an action at law or a proceeding in
equity); (v) the Shares have been duly authorized and issued and are fully paid
and non-assessable; (vi) neither the execution and delivery of this Agreement or
of any document to be delivered in accordance with this Agreement nor the
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consummation of the transactions contemplated by this Agreement or by any
document to be delivered in accordance with this Agreement will violate, result
in a breach of, or constitute a default (or an event which, with notice or lapse
of time or both would constitute a default) under, the Articles of Association
of the Seller, any agreement or instrument of which that counsel is aware, after
a reasonable investigation, to which the Seller or any subsidiary of the Seller
is a party or by which any of them is bound, any law or rule or regulation of
any governmental authority, or any order of which that counsel is aware, after a
reasonable investigation, of any court or governmental agency having
jurisdiction over the Seller or any of its subsidiaries; and (vii) no
governmental filings, authorizations, approvals or consents, or other
governmental actions, other than filings and the termination or expiration of
the waiting periods under the HSR Act (which has occurred), are required to
permit the Seller to fulfill all its obligations under this Agreement. In
rendering that opinion, Rogers & Wells may rely as to matters governed by the
laws of the Netherlands, and with regard to investigations conducted in the
Netherlands, upon the opinion of De Brauw Blackstone Westbroek, Netherlands
counsel to the Seller.
(m) The Seller shall have delivered to the Buyer documents
contemplated by Section 1445(b)(3) of the Code to establish that the Company is
not a United States real property holding company.
(n) The Seller shall have caused all Indebtedness outstanding
under the Note Agreement, dated as of March 1, 1987,
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between Keebler and Teachers Insurance and Annuity Association of America to be
paid in full to the extent required or permitted by the holders of such
Indebtedness.
5.2 Conditions to Seller's Obligations. The obligations
of the Seller at the Closing are subject to the following
conditions (any or all of which may be waived by the Seller):
(a) The representations and warranties of the Buyer contained
in this Agreement will be true and correct in all material respects at the
Closing Date with the same effect as though made on that date, and the Buyer
will have delivered to the Seller a certificate dated that date and signed by
the President or a Vice President of the Buyer to that effect.
(b) The Buyer will have fulfilled in all material respects all
its obligations under this Agreement required to have been fulfilled prior to or
at the Closing, and the Buyer will have delivered to the Seller a certificate
dated that date and signed by the President or a Vice President of the Buyer to
that effect.
(c) No order will have been entered by any court or
governmental or regulatory authority and be in force which invalidates this
Agreement or restrains the Seller from completing the transactions which are the
subject of this Agreement.
(d) The sale of the Shares contemplated in this Agreement will
have been approved by an ordinary resolution of the shareholders of United
Biscuits.
(e) The Seller will have received an opinion from Simpson
Thacher & Bartlett, counsel to the Buyer, to the effect that (i) the Buyer is a
corporation duly organized, validly
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existing and in good standing under the laws of the State of Delaware; (ii) the
Buyer has all corporate power and authority necessary to enable it to enter into
this Agreement and carry out the transactions contemplated by this Agreement;
(iii) all corporate actions necessary to authorize the Buyer to enter into this
Agreement and carry out the transactions contemplated by it have been taken;
(iv) this Agreement has been duly executed by the Buyer and is a valid and
binding agreement of the Buyer, enforceable against the Buyer in accordance with
its terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of good
faith and fair dealing; and (v) neither the execution and delivery of this
Agreement or of any document to be delivered in accordance with this Agreement
nor the consummation of the transactions contemplated by this Agreement or by
any document to be delivered in accordance with this Agreement will violate,
result in a breach of, or constitute a default (or an event which, with notice
or lapse of time or both would constitute a default) under, the Certificate of
Incorporation or by-laws of the Buyer.
ARTICLE VI
TERMINATION
6.1 Right to Terminate. This Agreement may be terminated at any time
prior to the Closing:
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(a) By mutual consent of the Buyer and the Seller.
(b) By either the Buyer or the Seller if, without fault of the
terminating party, the Closing does not occur on or before March 31, 1996.
(c) By the Buyer if a proposal to approve the sale of the
Shares contemplated by this Agreement is presented to a general meeting of the
shareholders of United Biscuits, but is not approved at that meeting by an
ordinary resolution of the shareholders, or such a proposal is not so presented
and voted upon within 40 days after the date of this Agreement.
(d) By the Seller if a proposal to approve the sale of the
Shares contemplated by this Agreement is presented to a general meeting of the
shareholders of United Biscuits, but is not approved at that meeting by an
ordinary resolution of the shareholders.
6.2 Effect of Termination. If this Agreement is terminated pursuant
to Paragraph 6.1, after this Agreement is terminated, neither party will have
any further rights or obligations under this Agreement, other than pursuant to
the provisions of Paragraph 4.11. Nothing contained in this Paragraph will,
however, relieve either party of liability for any breach of this Agreement
which occurs before this Agreement is terminated.
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification Against Loss Due to Inaccuracies in Seller's
Representations and Warranties. The Seller indemnifies
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the Buyer against, and agrees to hold the Buyer harmless from, all losses,
costs, damages, liabilities, claims, demands, judgments, settlements and
expenses of any nature whatsoever, governmental or non-governmental (including,
but not limited to, reasonable fees and expenses of counsel and expenses of
investigation) (collectively, "Losses") incurred directly or indirectly because
or resulting from or arising out of (i) the fact that any matter which is the
subject of a representation or warranty contained in Paragraph 3.1 is not as
represented or warranted, but only to the extent of the amount, if any, by which
such Losses, computed as provided in Paragraph 7.9, exceed in total $7.5 million
and do not exceed in total $150 million (provided that any claim for
indemnification made with respect to any matter which is the subject of a
representation or warranty contained in Paragraph 3.1(a), 3.1(b), 3.1(d), 3.1(f)
or 3.1(z), or the first sentence of Paragraph 3.1(e) insofar as it refers to the
Company or Keebler, shall not be subject to any limitations as to amount)), or
(ii) the failure of United Biscuits, the Seller or the Company to fulfill in any
respect any of its obligations under this Agreement or under any document
delivered in accordance with this Agreement which is required to be fulfilled
before or after the Closing.
7.2 Indemnification Against Loss Due to Inaccuracies in Buyer's
Representations and Warranties. The Buyer indemnifies the Seller against, and
agrees to hold the Seller harmless from, all Losses incurred directly or
indirectly because or resulting from or arising out of (i) the fact that any
matter which is the subject of a representation or warranty contained in
Paragraph 3.2 is not as
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represented or warranted (but only to the extent of the amount, if any, by which
such Losses, computed as provided in Paragraph 7.9, exceed in total $7.5 million
and do not exceed in total $150 million), or (ii) the failure of the Buyer to
fulfill in any respect any of its obligations under this Agreement or under any
document delivered in accordance with this Agreement which is required to be
fulfilled before or after the Closing.
7.3 Limit on Claims Regarding Representations and Warranties. Except
as otherwise provided in this Article VII, the indemnification in Paragraph 7.1
or 7.2, as the case may be, will be the sole remedy of the Buyer or the Seller
because any matter which is the subject of a representation or warranty
contained in Paragraph 3.1 or 3.2 is not as represented or warranted. Any claim
for that indemnification must be made not later than the earlier of (i) June 30,
1997, and (ii) the date which is 30 days after the receipt by the Buyer of
audited financial statements of the Company and its subsidiaries for the fiscal
year ending on or about December 31, 1996, provided that any claim for
indemnification made with respect to any matter which is the subject of a
representation or warranty contained in Paragraph 3.1(a), 3.1(b), 3.1(d) or
3.1(f), or the first sentence of Paragraph 3.1(e) insofar as it refers to the
Company or Keebler, may be made at any time, and provided further that any claim
for indemnification made with respect to any matter which is the subject of a
representation or warranty contained in Paragraph 3.1(r) may be made at any time
prior to 30 days after the end of the statute of limitations period applicable
to the matter which is the subject of the claim. A
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claim must be made by a written notification to the party from which
indemnification is sought which reasonably summarizes the nature of the claim
and the facts on which it is based. Neither the Seller nor the Buyer will have
any liability pursuant to Paragraph 7.1 or 7.2, as the case may be, because any
matter which is the subject of a representation or warranty contained in
Paragraph 3.1 or 3.2 is not as represented or warranted unless it is described
in a notification given as provided in this Paragraph.
7.4 Environmental Indemnification.
(a) The Seller indemnifies the Buyer against, and agrees to
hold the Buyer harmless from, all Losses of the Company or any of its
subsidiaries, incurred directly or indirectly because of: (i) any violation of,
or condition that could reasonably be expected to give rise to liability under,
any Environmental Law, which violation or condition cannot be identified as
having first arisen after the Closing Date, provided that any lack of compliance
with any requirement imposed by any Environmental Law shall constitute a
violation subject to this clause (i) regardless of whether such lack of
compliance is required to be remedied by the Closing Date; or (ii) any claim
against the Buyer or the Company or any of its subsidiaries with respect to any
such asserted violation or condition; provided that, in any case, within three
years of the Closing Date, Buyer notifies Seller of such violation, condition or
claim, and provided further that the Seller shall be deemed to have received
notice of the matters disclosed on Exhibit 3.1-V.
(b) With respect to notices of matters covered pursuant to
clause (a)(i) above, such notice shall reasonably
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summarize the violation or condition involved, including the laws and
regulations violated or under which liability would reasonably be expected. With
respect to remediation costs that are among any Losses for which indemnification
is sought pursuant to clause (a)(i) above, the Buyer, the Company, and each of
the Company's subsidiaries shall be entitled to reimbursement for their
reasonable costs of remediating the violation or condition, to the extent: (A)
necessary to eliminate the violation or to render the condition in compliance
with any requirement of any Environmental Law or that is imposed by any
governmental authority with jurisdiction over the matter, and (B) if the
property involved is real property occupied by the Company or any of its
subsidiaries under a lease, the cost is not borne or reimbursed by the owner of
the real property. For purposes of clause (a)(i) above, the costs of remediating
a violation or condition will include, without limitation, the direct cost of
the remediation and all costs of investigations, studies, tests, or similar
items (provided that the cost of any investigation, study, test, or similar item
shall not be considered a cost of remediation to the extent it is undertaken to
identify the existence of violations or conditions subject to indemnification
under clause (a)(i) above and fails to identify such violations or conditions
and is not required by any Environmental Law or governmental authority).
(c) The Seller only will be required by this Paragraph 7.4 to
indemnify or reimburse Buyer and the Company and its subsidiaries to the extent
such indemnification and reimbursement would exceed $500,000 in the aggregate,
but for this
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limitation. The Seller will not have any liability or obligation hereunder
because of any condition which violates any Environmental Law other than as
provided in this Paragraph or in Paragraph 7.1, and the Buyer will cause the
Company and Keebler, jointly and severally, to indemnify the Seller and its
affiliates against, and to hold them harmless from, all Losses because of any
claim that any condition on any real property used in the Continuing Businesses
listed on Exhibit 3.1-N violates any Environmental Law, except to the extent
that (i) the Seller has obligations under the preceding provisions of this
Paragraph or under Paragraph 7.1 or (ii) such Losses of the Seller or its
affiliates are based upon the actions of the Seller or its affiliates or agents
as opposed to the Company and its subsidiaries and agents.
7.5 Payment of Taxes.
(a) The Seller will indemnify and reimburse the Buyer, the
Company and each of the Company's subsidiaries for all Income Taxes of, or
payable by, the Company or any of its subsidiaries with regard to any periods
ended on or before the Closing Date and for the portion described below of
Income Taxes with regard to periods which include the Closing Date, including,
without limitation, any Income Taxes attributable to transactions contemplated
by Paragraphs 4.3 and 4.4 of this Agreement. As used in this Agreement, the term
"Income Taxes" means all income, gains, franchise and similar taxes measured by
income or gains of an entity. The Buyer will cause the Company and its
subsidiaries to pay over to the Seller all refunds of Income Taxes relating to
periods ended on or before the Closing Date and the portion
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described below of refunds of Income Taxes relating to periods which include the
Closing Date (whether such Income Taxes were paid before or after the Closing
Date). With regard to any Income Tax during a period which begins before but
ends after the Closing Date, or any refund of Income Tax for such a period, the
amount for which the Seller will reimburse the Buyer, the Company or any of the
Company's subsidiaries (or refund to which the Seller will be entitled) will be
the amount for which the Seller would have been required to reimburse the Buyer,
the Company or any of the Company's subsidiaries (or refund to which the Seller
would have been entitled) if the applicable taxable years of the Company and
each of its subsidiaries which began before the Closing Date had ended on the
Closing Date. If the Buyer and the Seller cannot agree on such amount, the
amount will be determined by Deloitte & Touche LLP, whose expenses shall be
borne equally by the Buyer and the Seller and whose determination will bind the
Buyer and the Seller.
(b) The Buyer will cause the Company and its subsidiaries to
give the Seller complete control over the preparation and filing of Income Tax
Returns, and amendments of Income Tax Returns, relating to Income Taxes of the
Company or a subsidiary with respect to periods ending on or before the Closing
Date (and the Seller shall pay all Income Taxes shown as due on such Income Tax
Returns), and all audits of such Income Tax Returns, provided, however, that the
Seller shall not, without the prior written consent of the Buyer (which shall
not be unreasonably withheld), settle or compromise any Income Tax contest or
claim
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that would reasonably be expected to adversely affect the Buyer, the Company or
any of its subsidiaries with respect to any period ending after the Closing
Date. The Buyer and the Seller shall jointly control the preparation and filing
of Income Tax Returns, and amendments of Income Tax Returns, relating to periods
beginning before and ending after the Closing Date and all audits of such Income
Tax Returns. The Buyer shall control the preparation and filing of amendments to
and audits of all other Tax Returns. The Buyer will cause the Company and its
subsidiaries to cooperate with the Seller and its representatives in all
reasonable ways in connection with the preparation or amendment of Income Tax
Returns and audits of Income Tax Returns relating to Income Taxes for which the
Buyer, the Company or any subsidiary of the Company is entitled to reimbursement
under this Paragraph (including Income Tax Returns or amendments which will
result in refunds of Income Taxes). At the request of the Seller, the Company
and its subsidiaries will make available to the Seller the assistance of the
employees of Keebler listed on Exhibit 7.5 (the "Pre-Closing Tax Employees"), or
other employees of the Company or Keebler approved by the Seller, to prepare
Income Tax Returns relating to periods ending on or before the Closing Date
under the supervision of the Seller, in which case the Seller will reimburse the
Company or its subsidiaries for its or their reasonable costs (including
reimbursement of the salaries of its or their employees on a per diem basis) of
preparing such Income Tax Returns.
(c) If at any time before all the Income Tax Returns of the
Company or any of its subsidiaries relating to
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periods ending on or before the Closing Date have been filed, the Buyer or
Keebler determines to terminate the employment of any Pre-Closing Tax Employee,
(i) the Buyer will, or will cause Keebler to, give the Seller at least 15 days'
notice of its intention to terminate the employment of the Pre-Closing Tax
Employee before carrying out that termination of employment and (ii) if the
Seller agrees to reimburse Keebler for all the compensation of the Pre-Closing
Tax Employee (including non-salary employee costs) between the date specified in
the notice and the date the employment of the Pre-Closing Tax Employee is
terminated with the consent of the Seller, Keebler will (x) continue to employ
the Pre-Closing Tax Employee until a date consented to by the Seller and (y)
assign the Pre-Closing Tax Employee exclusively to preparing, under the
supervision of the Seller or its designee, Tax Returns and amendments to Tax
Returns, and assisting the Seller in connection with audits of Tax Returns,
relating to Taxes of the Company or a subsidiary of the Company and for periods
ending on or before the Closing Date.
(d) The Buyer, the Company and each of its subsidiaries may
make a claim for indemnity and reimbursement pursuant to Paragraph 7.5(a)
hereunder at any time prior to 90 days after the expiration of the applicable
Tax statute of limitations with respect to the relevant taxable period
(including all periods of extension, whether automatic or permissive).
(e) If there is an audit adjustment to any item reported on
any Income Tax Return pertaining to Income Taxes subject to indemnification
under Section 7.5(a) of this Agreement,
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which adjustment results in an increase in the Income Taxes payable by the
Seller, and such adjustment results in a corresponding adjustment to items
reported on a Income Tax Return relating to a taxable period ending after the
Closing Date with the result that the Income Taxes payable either by the Company
or any consolidated group of companies of which the Company is a member are
reduced, or a refund of Income Taxes for the period ending after the Closing
Date is increased, the Buyer shall promptly pay the Seller the amount by which
such Income Taxes are reduced or such refunds are increased.
7.6 Indemnification Against Liabilities or Obligations Relating to
Reorganization. The Seller indemnifies the Buyer, the Company and each of the
Company's subsidiaries engaged in the Continuing Businesses against, and agrees
to hold each of them harmless from, all Losses (including, without limitation,
any broker's, finder's or similar fees) (a) related to, or arising as a result
of, the Reorganization, including, without limitation, the disposition of the
Other Businesses contemplated by Paragraph 5.1(h) or (b) incurred as a result of
activities conducted, liabilities created or obligations required to be
fulfilled with regard to, an Other Business (including, without limitation, any
obligations under agreements listed on Exhibit 3.1-P to the extent they relate
to the Other Businesses) whether before or after it is disposed of as
contemplated by Paragraph 5.1(h).
7.7 Company's Indemnification Against Liabilities or Obligations
Relating to Activities After Closing Date. The Company and its subsidiaries
indemnify the Seller and each of its
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affiliates against, and agree to hold each of them harmless from, all Losses
related to, or arising as a result of, activities conducted or liabilities
created after the Closing Date by the Company or its subsidiaries engaged in the
Continuing Businesses (provided such activities or liabilities do not involve or
result from actions of the Seller or such affiliates), except for Losses covered
by Paragraph 7.8.
7.8 Reimbursement for Costs Relating to the Convenience Route Sales
Activities. The Seller will promptly reimburse Keebler for (a) any direct or
indirect Losses incurred by the Company or any of its subsidiaries within 18
months after the Closing Date (i) relating to or arising out of the termination
by Keebler or any of its subsidiaries of the employment of any of the 550 Excess
Convenience Route Sales Employees prior to or after the Closing Date (including,
without limitation, any Losses relating to any severance, pension, welfare costs
or expenses or costs or expenses of litigation relating to the terminations of
employment, it being understood that the Seller's liability for severance
payments shall be limited to payments at levels in accordance with Keebler's
severance policies in effect prior to the Closing Date, but excluding ongoing
pension, welfare, salary and other compensation expenses for employees not
requested by the Buyer to be terminated pursuant to Paragraph 4.9 during such 18
month period and which are unrelated to such termination of employment) and (ii)
in terminating leases of Convenience Route Sales Vans or leases of
mini-warehouses related to the convenience route sales activities of Keebler and
its subsidiaries, in each case which are in effect
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at the Closing Date, minus (b) any proceeds received by Keebler or any of its
subsidiaries from sales or other dispositions of Convenience Route Sales Vans
which are owned by Keebler at the Closing Date.
7.9 Computation of Loss. Whenever the Buyer or the Seller (the
"Indemnifying Party") is required to indemnify the other of them (the
"Indemnified Party") against, and hold the Indemnified Party harmless from, or
to reimburse the Indemnified Party for, any item of Loss, the Indemnifying Party
will pay the Indemnified Party the amount of the Loss, including all Federal
(but not state or local) corporate income or gains taxes, or similar Taxes,
resulting from the payment net of (i) the Net Proceeds of any insurance policy
paid to the Indemnified Party with respect to such Loss prior to the
indemnification payment and (ii) any Tax Benefit actually received by the
Indemnified Party with respect to such Loss prior to the indemnification
payment. For purposes of this Paragraph 7.9, (A) "Net Proceeds" shall mean the
insurance proceeds actually received, less any additional or increased premium,
deductibles, co-payments, other payment obligations (including attorneys' fees
and other costs of collection) or future cost that relates to or arises from the
making of the claim for indemnification and (B) "Tax Benefit" shall mean any
refund of income Taxes paid or any actual reduction in the amount of income
Taxes which would otherwise be paid currently, in each case computed by assuming
that the tax attribute resulting from such Loss results in a refund or in an
actual reduction in income Taxes only after all the other tax attributes of the
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Indemnified Party have been utilized and no Tax Benefit shall be deemed to have
occurred while a reasonable possibility exists of a challenge by any federal,
state or local tax authority. If any Indemnified Party receives a Tax Benefit or
Net Proceeds after an indemnification payment is made which relates thereto, the
Indemnified Party shall promptly repay to the Indemnifying Party such amount of
the indemnification payment as would not have been paid had the Tax Benefit or
Net Proceeds reduced the original payment (any such repayment shall be a credit
against any applicable indemnification cap set forth in this Article VII) at
such time or times as and to the extent that such Tax Benefit or Net Proceeds is
actually received.
7.10 Adjustment to Purchase Price. The parties agree to treat all
payments made under this Article VII, under other indemnity provisions of this
Agreement and for any misrepresentations or breaches of warranties or covenants
as adjustments to the Purchase Price for Tax purposes.
ARTICLE VIII
ABSENCE OF BROKERS
8.1 Representations and Warranties Regarding Brokers and Others. The
Buyer and the Seller each represents and warrants to the other of them that
nobody acted as a broker, a finder or in any similar capacity in connection with
the transactions which are the subject of this Agreement, except that (i)
Dillon, Read & Co., Inc. acted as financial advisor to a shareholder of the
Buyer and (ii) Morgan Stanley & Co. Incorporated acted as financial advisor to
the
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Seller. All fees of Dillon, Read & Co., Inc. will be paid by a shareholder of
the Buyer and all fees of Morgan Stanley & Co. Incorporated will be paid by the
Seller. The Buyer and the Seller each indemnifies the other of them against, and
agrees to hold the other of them harmless from, all Losses incurred because of
any claim by anyone for compensation as a broker, a finder or in any similar
capacity by reason of services allegedly rendered to the Indemnifying Party in
connection with the transactions which are the subject of this Agreement.
ARTICLE IX
GENERAL
9.1 Expenses. Unless otherwise specified in this Agreement, the
Buyer and the Seller will each pay its own expenses in connection with the
transactions which are the subject of this Agreement, including legal fees. The
Seller will pay, or otherwise insure that there is no diminution in the value to
be transferred hereunder to the Buyer as a result of, all expenses of the
Company and its subsidiaries in connection with the transactions which are the
subject of this Agreement, including legal fees. Except as otherwise provided in
this Agreement, the Seller and the Buyer will each bear the expense of any stock
transfer tax or sales tax and any real estate transfer tax or similar tax
applicable to the transactions contemplated hereby.
9.2 Access to Properties, Books and Records.
(a) From the date of this Agreement until the Closing Date,
the Seller will cause the Company and each of its
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subsidiaries to give representatives of the Buyer full access during normal
business hours to all of their respective properties, books, records and
knowledgeable personnel. Until the completion of the transactions which are to
take place at the Closing, the Buyer will, and will cause its representatives
to, hold all information it receives as a result of its access to the
properties, books and records of the Company and its subsidiaries in confidence,
except as may be consented to in writing by the Seller and except to the extent
that information (i) is or becomes available to the public (other than through a
breach of this Agreement), (ii) becomes available to the Buyer from a third
party which, insofar as the Buyer is aware, is not under an obligation to the
Seller, to the Company or to a subsidiary to keep the information confidential,
(iii) was known to the Buyer before it was made available to the Buyer or its
representative by the Seller, the Company or a subsidiary, (iv) otherwise is
independently developed by the Buyer or (v) is required to be disclosed by stock
exchange or governmental authorities, a court of competent jurisdiction or
applicable law. If this Agreement is terminated prior to completion of the
transactions which are to take place at the Closing, the Buyer will, at the
Seller's request, deliver to the Seller all documents and other material
obtained by the Buyer from the Seller, the Company or a subsidiary in connection
with the transactions which are the subject of this Agreement or evidence that
material has been destroyed by the Buyer.
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(b) After the Closing, the Buyer will cause the Company to
provide the Seller with access to the books and records and knowledgeable
personnel of the Company and of its subsidiaries during normal business hours in
connection with the preparation of financial statements by the Seller or its
affiliates, the preparation of Tax Returns by the Seller or its affiliates, the
preparation of Tax Returns by the Company or its subsidiaries under the control
of the Seller as provided in Paragraph 7.5, audits of Tax Returns filed by the
Seller or its affiliates or audits of Tax Returns filed by the Company or its
subsidiaries which are controlled by the Seller as provided in Paragraph 7.5.
(c) After the Closing, the Seller will, and will cause its
affiliates to, provide the Company with access to their books and records
relating to the Company or its subsidiaries during normal business hours in
connection with the preparation of financial statements by the Buyer, the
Company or their respective affiliates, the preparation of Tax Returns by the
Buyer, the Company or their respective affiliates or audits of Tax Returns of
the Buyer, the Company or their respective affiliates. The Seller shall use its
best efforts to cause Ernst & Young to assist the Buyer, at the Buyer's expense,
in the preparation of audited financial statements of the Company and its
subsidiaries and provide access to such accountants' work papers that have been
prepared in connection with reviews or audits of accounts and financial
statements of the Company and its subsidiaries performed prior to the Closing.
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9.3 1995 Financial Statements. The Buyer will deliver to the Seller,
not later than 90 days after the Closing Date, consolidated financial statements
of the Company and its subsidiaries at the Closing Date and for the period from
January 1, 1995 to the Closing Date, audited (or, with the permission of the
Seller, reviewed) by Ernst & Young, which will certify that those financial
statements were (or, if Ernst & Young has only performed a review, will be
accompanied by a letter which states that nothing in the review led Ernst &
Young to believe that the financial statements were not) prepared in accordance
with GAAP (except to the extent, and in the manner, described in the notes to
the Company Financial Statements that the Company Financial Statements were not
prepared in accordance with GAAP) applied in a manner consistent with the way
they were applied in preparing the Company Financial Statements, and that they
fairly present the consolidated financial condition and results of operations of
the Company and its subsidiaries at, and for the period from January 1, 1995 to
the Closing Date; provided that Seller shall pay all expenses and costs incurred
by the Buyer, the Company and its subsidiaries in satisfying the requirements of
this Paragraph 9.3 and such activities shall not unreasonably interfere with the
ordinary course of business activities of the Buyer and its subsidiaries.
9.4 Change of Control Policies. The Buyer will cause
Keebler and its subsidiaries to honor the Change of Control
Policies of Keebler set forth in Exhibit 3.1-U(1), which are in
effect at the date of this Agreement with respect to their
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application as a result of the Closing, unamended for at least the periods
specified in those Change of Control Policies.
9.5 Assumption of Contractual Obligations. On or before the Closing
Date, UBI will assume, and agree to fulfill, all the obligations of Keebler or
its subsidiaries under each of the agreements listed on Exhibit 9.5 and such
obligations shall be included in the obligations subject to indemnification
under Paragraph 7.6.
9.6 License Regarding Carr's Products. Following the date of this
Agreement, the Buyer and UBI will negotiate in good faith promptly an agreement
under which UBUK will license Keebler or a subsidiary to manufacture and
distribute in the United States (but no place else in the world) biscuits,
crackers and like products (other than those which are distributed under the
Shaffer, Clarke Distribution Agreement) to be marketed under the "Carr's"
tradename, subject to, among other things, (i) payment of reasonable royalties
to UBUK with regard to such products, (ii) approval by UBUK of the
appropriateness of marketing particular types of biscuits, crackers or like
products under the "Carr's" tradename, (iii) approval by UBUK of other matters
which might affect the reputation or sales of Carr's products in the United
States as gourmet products, and (iv) provisions assuring that products
manufactured and distributed by Keebler or a subsidiary do not adversely affect
sales of Carr's products manufactured by UBUK or an affiliate that are
distributed under the Shaffer, Clarke Distribution Agreement (or any
substantially similar successor distribution agreements) in the United States in
a manner adverse
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to UBUK. In considering the grant of approval under clauses (ii) and (iii)
above, UBUK will agree to act in good faith and not exercise disapproval
unreasonably.
9.7 Press Releases. The Buyer and the Seller will consult with each
other before issuing any press releases or otherwise making any public
statements with respect to this Agreement, except that nothing in this Paragraph
will prevent either party from making any statement when and as required by law
or by the rules of any securities exchange or securities trading system on which
securities of that party or an affiliate are traded.
9.8 Entire Agreement. This Agreement, the Exhibits hereto and the
documents to be delivered in accordance with this Agreement contain the entire
agreement between the Buyer and the Seller relating to the transactions which
are the subject of this Agreement and those other documents, all prior
negotiations, understandings and agreements between the Buyer and the Seller are
superseded by this Agreement and those other documents, and there are no
representations, warranties, understandings or agreements concerning the
transactions which are the subject of this Agreement or those other documents
other than those expressly set forth in this Agreement or those other documents.
9.9 Effect of Disclosures. Any information disclosed by a party in
connection with any representation or warranty contained in this Agreement
(including Exhibits to this Agreement) will be treated as having been disclosed
in connection with each other representation and warranty made by that party in
this Agreement,
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but only to the extent the information disclosed is reasonably clearly
applicable to such other representation and warranty.
9.10 Captions. The captions of the articles and paragraphs of this
Agreement are for reference only, and do not affect the meaning or
interpretation of this Agreement.
9.11 Assignments. Neither this Agreement nor any right of any party
under it may be assigned, except that the Buyer may assign its rights and
obligations under this Agreement to a lender in connection with the financing
referred to in Paragraph 3.2(e) and to any of its affiliates, including a
corporation which is wholly owned by the Buyer or by persons or entities which
own all the outstanding stock of the Buyer, if the Buyer unconditionally
guarantees that such affiliate or corporation to which the Buyer's rights and
obligations are assigned will perform fully all the obligations of the Buyer
under this Agreement.
9.12 Notices and Other Communications. Any notice or other
communication under this Agreement must be in writing and will be deemed given
when delivered in person or sent by facsimile (with proof of receipt at the
number to which it is required to be sent), or on the third business day after
the day on which mailed by first class mail from within the United States of
America, to the following addresses (or such other address as may be specified
after the date of this Agreement by the party to which the notice or
communication is sent):
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If to the Seller:
UB Investments (Netherlands) B.V.
c/o United Biscuits (Holdings) plc
Church Road
West Drayton
Middlesex, UB7 7PR
England
Facsimile No.: 44-1-895-43-20-28
Attention: Alan D. Frew
with a copy to:
Rogers & Wells
200 Park Avenue
New York, New York 10166
Facsimile No.: 1-212-878-8375
Attention: David W. Bernstein
If to the Buyer:
c/o Artal Luxembourg S.A.
39 Boulevard Royal
Luxembourg City, Luxembourg 2449
Facsimile No.: 352-22-42-66
Attention: Managing Director
with a copy to:
Flowers Industries, Inc.
11796 US Highway 19 South
Thomasville, Georgia 31799
Facsimile No.: 1-912-225-3808
Attention: Robert P. Crozer
and:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Facsimile No.: 1-212-455-2502
Attention: Robert E. Spatt
and:
David Van Zandt
411 South Sangamon Street, Apt. 8D
Chicago, Illinois 60607
Facsimile No.: 1-312-733-0436
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9.13 Governing Law.
(a) This Agreement will be governed by, and construed under,
the laws of the State of New York in the United States of America relating to
contracts made and to be performed in that state.
(b) The Seller and the Buyer each agrees that any action or
proceeding relating to this Agreement or the transactions contemplated by it may
be brought in any Federal or state court sitting in the State of New York in the
United States of America and each of them (i) consents to the jurisdiction of
each of those courts in any such action or proceeding, (ii) agrees not to seek
to have the venue of any such action or proceeding changed because of
inconvenience of the forum or otherwise (except that nothing in this Paragraph
will prevent a party from removing an action from a state court to a Federal
court sitting in that state), and (iii) agrees that process in any such action
or proceeding may be served by registered mail or in any other manner permitted
by the rules of the court in which the action or proceeding is brought.
9.14 Amendments. This Agreement may be amended only by a document in
writing signed by both the Buyer and the Seller.
9.15 Waivers. No waiver of any provision of this Agreement will
constitute a waiver of any other provision of this Agreement, and no waiver of a
provision in one instance will constitute a waiver of that or any other
provision in any other instance.
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9.16 Guarantees.
(a) UBI hereby guarantees the performance of each of the
obligations (financial or otherwise) of the Seller and each of the Seller's
subsidiaries under this Agreement including, without limitation, any obligation
to indemnify the Buyer pursuant to Article VII hereof or otherwise.
(b) UBI hereby represents and warrants to the Buyer that: (i)
it is a corporation duly organized, validly existing and in good standing under
the laws of the Kingdom of Great Britain; (ii) it has all corporate power and
authority necessary to enable it to enter into this Agreement and to perform its
obligations hereunder; and (iii) all corporate actions necessary to authorize
UBI to enter into this Agreement and to perform its obligations hereunder have
been taken, except that the sale of the Shares must be approved by an ordinary
resolution of the shareholders of United Biscuits; and (iv) the agreement of
United Biscuits contained in this Paragraph 9.16 is a valid and binding
agreement of United Biscuits, enforceable against it in accordance with its
terms.
(c) Artal Luxembourg S.A. ("Artal") hereby guarantees the
performance of each of the obligations (financial or otherwise) of the Buyer
under this Agreement including, without limitation, any obligation to indemnify
the Seller pursuant to Article VII hereof or otherwise, provided that (i) the
aggregate liability of Artal under this Paragraph will not exceed $62,500,000
and (ii) the guarantee of Artal will terminate upon completion of the Closing,
including payment of the Purchase Price to the Seller.
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(d) Artal hereby represents and warrants to the Seller that
(i) it is a corporation duly organized and validly existing under the laws of
the Duchy of Luxembourg; (ii) it has all corporate power and authority necessary
to enable it to enter into this Agreement and to perform its obligations
hereunder; (iii) all corporate actions necessary to authorize the Buyer to enter
into this Agreement and to perform its obligations hereunder have been taken;
and (iv) the agreement of Artal contained in this Paragraph 9.16 is a valid and
binding agreement of Artal, enforceable against it in accordance with its terms.
(e) Flowers Industries, Inc. ("Flowers") hereby guarantees the
performance of each of the obligations (financial or otherwise) of the Buyer
under this Agreement including, without limitation, any obligation to indemnify
the Seller pursuant to Article VII hereof or otherwise, provided that (i) the
aggregate liabilities of Flowers under this Paragraph will not exceed
$62,500,000, and (ii) the guarantee of Flowers will terminate upon completion of
the Closing, including payment of the Purchase Price to the Seller.
(f) Flowers hereby represents and warrants to the Seller that,
(i) it is a corporation duly organized, validly existing and in good standing
under the laws of Georgia; (ii) it has all corporate power and authority
necessary to enable it to enter into this Agreement and to perform its
obligations hereunder; (iii) all corporate actions necessary to authorize the
Buyer to enter into this Agreement and to perform its obligations hereunder have
been taken; and (iv) the agreement of Flowers contained in
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this Paragraph 9.16 is a valid and binding agreement of Flowers, enforceable
against it in accordance with its terms.
9.17 Beneficiaries. This Agreement is for the benefit of the parties
and their respective successors and permitted assigns. This Agreement is not for
the benefit of any other person and no other person will have any rights under
or by reason of this Agreement.
9.18 Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same agreement.
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IN WITNESS WHEREOF, the Buyer and the Seller have executed this
Agreement, intending to be legally bound by it, on the day shown on the first
page of this Agreement.
UB INVESTMENTS (NETHERLANDS) B.V.
By:___________________________________________
Title: Authorized Signatory
UB INVESTMENTS PLC,
only as to Paragraph
9.16(a) and (b)
By:___________________________________________
Title: Director and Secretary
UNITED BISCUITS (HOLDINGS) PLC,
only as to Paragraphs 4.8 and 4.10
By:___________________________________________
Title: Secretary
INFLO HOLDINGS CORPORATION
By:___________________________________________
Title: President
ARTAL LUXEMBOURG S.A.,
only as to Paragraph 9.16(c)
and (d)
By:___________________________________________
Title:
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FLOWERS INDUSTRIES, INC.
only as to Paragraph 9.16(e)
and (f)
By:___________________________________________
Title:
Exhibit 10.3
AMENDMENT TO STOCK PURCHASE AGREEMENT
This is an amendment agreement (the "Amendment Agreement") dated
January 26, 1996 between INFLO Holdings Corporation (the "Buyer"), a Delaware
corporation, and UB Investments (Netherlands) B.V. (the "Seller"), a Netherlands
company, amending a Stock Purchase Agreement (the "Agreement") dated November 5,
1995 between the Buyer and the Seller relating to the purchase by the Buyer from
the Seller of 1,000,000 shares of Common Stock, par value $1.00 per share, of UB
Investments US Inc., a Delaware corporation.
The Agreement is amended, effective immediately, as follows:
1. The preamble to the Agreement is amended and restated in its
entirety, and states the following:
This is an agreement dated November 5, 1995, as amended on January
26, 1996 (as originally executed prior to such amendment date, and as
amended from and after such amendment date, the "Agreement") between INFLO
Holdings Corporation (the "Buyer"), a Delaware corporation, and UB
Investments (Netherlands) B.V. (the "Seller"), a Netherlands company,
relating to (i) the purchase by a direct or indirect wholly-owned
subsidiary of the Buyer ("Asset Sub") from direct or indirect wholly-owned
subsidiaries of the Seller, of the assets listed on Exhibit A hereto (the
"Assets") and (ii) the purchase by the Buyer (or a direct or indirect
wholly-owned subsidiary of the Buyer) from the Seller of 1,000,000 shares
(the "Shares") of Common Stock, par value $1.00 per share (the "Common
Stock"), of UB Investments US Inc. (the "Company"), a Delaware
corporation, which agreement is as follows:
2. A new Exhibit A is added to the Agreement, a copy of which is
attached to this Amendment Agreement as Exhibit A.
3. Article I is renamed "Purchase of Assets and Shares".
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4. Paragraph 1.1 is amended and restated in its entirety, and states
the following:
1.1 Purchase of Assets and Shares. Upon the terms and subject to the
conditions contained herein, at the Closing described in Paragraph 2.1,
(i) the Buyer will cause Asset Sub to purchase the Assets from the
appropriate subsidiaries of the Seller and the Seller will cause those
subsidiaries to sell the Assets to Asset Sub and (ii) the Buyer will (or
will cause a direct or indirect wholly-owned subsidiary of the Buyer to)
purchase the Shares from the Seller and the Seller will sell the Shares to
the Buyer (or a direct or indirect wholly-owned subsidiary of the Buyer).
5. The first sentence of Paragraph 1.2 is amended and restated in
its entirety, and states the following:
The total purchase price to be paid by Asset Sub and the Buyer,
respectively, for all the Assets and the Shares will be $500,000,000 minus
(a) the Indebtedness of the Company and its subsidiaries on the Closing
Date, after elimination and satisfaction of Indebtedness to United
Biscuits and its subsidiaries in accordance with Paragraphs 4.3 and 4.4
and (b) the amount of the loan made by the Buyer to the Company in
accordance with Paragraph 4.3 (which loan shall not be in excess of
$300,000,000), subject to adjustment pursuant to Paragraph 1.3 (the
"Purchase Price"). Of the Purchase Price, $42,500,000 (the "Asset Purchase
Price") will be for the Assets and the balance (the "Share Purchase
Price") will be for the Shares.
6. Paragraph 1.3 is amended and restated in its entirety, and states
the following:
1.3 Net Working Capital Adjustment. (a) On the day or days specified
below, the Buyer will pay to the Seller, or the Seller will pay to the
Buyer, a sum (the "Working Capital Adjustment Amount") equal to the amount
by which the consolidated Current Assets of the Company and its
subsidiaries minus the consolidated Current Operating Liabilities of the
Company and its subsidiaries at the close of business of the Company and
its subsidiaries on the Closing Date described in Paragraph 2.1 (or as of
any other date and time as shall be agreed upon in writing between the
Buyer and the Seller; for purposes of this Section 1.3, the Closing Date
or, if applicable, such other agreed upon date and time, will be referred
to as the "Adjustment Effective Time"), calculated (except as otherwise
described in this subparagraph (a)) in the same manner as they were
calculated in preparing the consolidated Pro Forma Financial Statements of
the Company and its subsidiaries set forth in Exhibit 3.1-I (which manner
is described on page 4 of Exhibit 3.1-I) (those current assets
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and current operating liabilities being respectively, the "Current Assets"
and the "Current Operating Liabilities") is greater (in which case the
Buyer will pay the Working Capital Adjustment Amount to the Seller) or
less (in which case the Seller will pay the Working Capital Adjustment
Amount to the Buyer) than (x) $74,010,000 minus (y) the Adjustment Reserve
Amount (as defined in Paragraph 2.3(a)). For purposes of determining the
Working Capital Adjustment Amount, (i) Current Assets will not include (A)
any amount for "Retimed Interim Expenses" (which at September 9, 1995 were
$16.9 million) or "Anticipated Full Year Expense Adjustments" (which at
September 9, 1995 were $10.3 million), (B) the cash described in Paragraph
5.1(o) or (C) any assets which are Current Assets under GAAP only because
they are being held for sale (and which would not be Current Assets if
they were not being held for sale); and (ii) Current Operating Liabilities
will not include any liabilities which the Seller assumes or for which the
Seller is obligated to reimburse or indemnify the Buyer, the Company or
its subsidiaries as provided in Article VII of this Agreement to the
extent that such assumption, reimbursement or indemnification which is due
prior to the date of delivery of the Net Current Assets Schedule has been
paid when due. The Buyer and the Seller acknowledge that in preparing the
consolidated Pro Forma Financial Statements of the Company and its
subsidiaries as set forth in Exhibit 3.1- I, checks which had been written
but had not yet cleared zero balance bank accounts were treated as
accounts payable (and, therefore, as Current Operating Liabilities) and
lock box checks which were received by the last day of the period and
recognized by the bank on the first day of the following period were
treated as restricted cash, reducing accounts receivable (and, therefore,
as Current Assets). Those items will be treated in the same manner for the
purpose of calculating the Working Capital Adjustment Amount.
(b) The Buyer will cause the Company to deliver to the Seller
and the Buyer, within 45 days after the Effective Time, a schedule (the
"Net Current Assets Schedule") which sets forth the amount of the Current
Assets minus the Current Operating Liabilities, sets forth in reasonable
detail how the Current Assets and the Current Operating Liabilities were
determined, and sets forth the resulting Working Capital Adjustment
Amount.
(c) Within ten days after the Company delivers the Net Current
Assets Schedule to the Seller and the Buyer (the "Objection Period"), the
Seller or the Buyer will notify the other of them of any objections to the
calculation of the Current Assets, the Current Operating Liabilities or
the Working Capital Adjustment Amount set forth on the Net Current Assets
Schedule (the "Disputed Amounts"). Within three business days after the
end of the Objection Period, whichever of the Buyer or the Seller would be
required by Paragraph 1.3(a) to make a payment to the other of them based
upon the amounts shown on the Net Current Assets Schedule which are not
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in dispute, will pay that amount to the other of them, provided that
neither party will be required to make any such payment if the Net Current
Assets Schedule had indicated that it was not required to make any
payment.
(d) The Buyer and the Seller will attempt in good faith to
agree by the day which is 75 days after the Adjustment Effective Time upon
the Disputed Amounts.
(e) If the Seller and the Buyer do not agree on particular
Disputed Amounts by the day which is 75 days after the Effective Time, the
dispute with regard to those Disputed Amounts (but no other matters) will
be submitted to Deloitte & Touche or, if that firm declines to act as
provided in this paragraph, another firm of independent certified
accountants mutually acceptable to the Seller and the Buyer (in either
case, the "Final Arbiter"), which firm will make a final and binding
determination as to those Disputed Amounts within 45 days after its
appointment. The Final Arbiter will send its written determination to the
Seller and the Buyer, including confirmation of the Working Capital
Adjustment Amount which results from that determination, at which point
the determination of the Final Arbiter, and the resulting calculation of
the Working Capital Adjustment Amount, will be binding on the Seller and
the Buyer, absent fraud or manifest error. The fees and expenses of the
Final Arbiter will be borne equally by the Seller and the Buyer.
(f) If there are no Disputed Amounts, the Working Capital
Adjustment Amount shown on the Net Current Assets Schedule will be the
finally determined Working Capital Adjustment Amount. If there are
Disputed Amounts, but all disputes are resolved by agreement in accordance
with Paragraph 1.3(c) or otherwise, the amount agreed upon will be the
finally determined Working Capital Adjustment Amount. If disputes are
submitted to the Final Arbiter, the Working Capital Adjustment Amount
determined by the Final Arbiter will be the finally determined Working
Capital Adjustment Amount. Within three days after the Working Capital
Adjustment Amount is finally determined, the Seller or the Buyer,
respectively, will pay to the other of them (i) the difference, if any,
between any payment made in accordance with Paragraph 1.3(c) and the
finally determined Working Capital Adjustment Amount, plus (ii) interest
on that amount at the rate of 10% per annum from the last day of the
Objection Period to the date of the payment.
(g) Any payments under this Paragraph 1.3 will be made to the
Buyer or the Seller, as the case may be, by wire transfer of immediately
available funds to an account specified by the party which is to receive
the payment.
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7. The reference to December 15, 1995 in Paragraph 2.1 is changed to
January 26, 1996.
8. Paragraph 2.2 is renamed "Actions of the Seller's Subsidiaries
and the Seller at Closing".
9. Paragraph 2.2 is further amended by making the entire text a
subparagraph designated subparagraph "(b)".
10. Paragraph 2.2 is further amended by adding a new subparagraph
(a) which states the following:
(a) At the Closing, the Seller will cause each of its subsidiaries
that owns the Assets to deliver to Asset Sub a customary bill of sale
transferring ownership of the Assets to Asset Sub.
11. Paragraph 2.3 is renamed "Actions of Asset Sub and Buyer at
Closing".
12. Paragraph 2.3 is further amended by deleting the text in the
first two lines thereof and substituting, in lieu thereof, the following:
At the Closing, the Buyer will cause Asset Sub (in the case of (a) below)
to deliver to the applicable subsidiaries of the Seller and the Buyer (in
the case of (b), (c) and (d) below) will (or will cause a direct or
indirect wholly-owned subsidiary of the Buyer to) deliver to the Seller,
respectively, the following:
13. Paragraph 2.3 is further amended by adding a new subparagraph
(a) which states the following:
(a) Evidence of wire transfers to accounts of the applicable
subsidiaries of the Seller specified by the Seller at least one business
day prior to the Closing in an aggregate amount equal to the Asset
Purchase Price, which funds shall immediately be delivered by those
subsidiaries to the Company and then immediately delivered by the Company
to the Seller. An amount equal to the Asset Purchase Price will be
delivered by the Company to the Seller in satisfaction of indebtedness
then outstanding.
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14. Subparagraph (a) of Paragraph 2.3 is redesignated as
subparagraph (b) and is amended and restated in its entirety, and
states the following:
(b) Evidence of a wire transfer to an account specified by the
Seller at least one business day before the Closing of immediately
available funds in an amount equal to the Share Purchase Price minus the
sum of: (i) the principal amount of the promissory note described in
subparagraph (c) of this Paragraph 2.3; and (ii) a reserve in the amount
of $12,500,000 (the "Adjustment Reserve Amount").
15. A new subparagraph (c) is added to Paragraph 2.3 (and former
subparagraph (b) is designated subparagraph (d)), and states the following:
(c) A promissory note executed by the Buyer, in the form of Exhibit
2.3-C, in an aggregate principal amount of $32,500,000.
16. A new Exhibit 2.3-C is added to the Agreement, a copy of which
is attached to this Amendment Agreement as Exhibit B.
17. The following parenthetical phrase is added to the thirteenth
line of subparagraph 3.1(i) immediately following the words "Pro Forma Financial
Statements": (with the exception of the dispositions of the Kame Oriental Foods
business and of the Elfin Loaves product line).
18. The following parenthetical phrase is added to the eighteenth
line of subparagraph 3.1(i) immediately following the words "Other Businesses":
(except that they do not reflect the effects of the dispositions of the Kame
Oriental Foods business and of the Elfin Loaves product line).
19. The following language is added to the end of clause (i) in
subparagraph 3.1(j):
, and except that the mere fact that consolidated operating profits
(calculated in the same manner as in the Pro Forma Financial Statements)
of the Company and its subsidiaries for
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the fiscal year ended December 30, 1995 were as low as, but not less (in
other than a de minimis amount) than, $16,600,000 shall not constitute a
change which had a Material Adverse Effect (it being understood that the
Seller does not concede that if those consolidated operating profits were
less than $16,600,000 in other than a de minimis amount, such fact would
constitute a change which had a Material Adverse Effect).
20. The word "zero" is deleted from the fifth line of subparagraph
3.1(l) and the following language is added to the sixth line after the words "on
the Closing Date":
$639,153.37, representing the net proceeds from the sale of Keebler's
distribution center in Jacksonville, Florida, plus such other cash amounts
as have been or are hereafter agreed in writing by the parties to be
retained by the Company and its subsidiaries on the Closing Date, which
cash shall be maintained in a segregated bank account for the benefit of
the Buyer or, with the consent of the Buyer, invested in short-term
interest-bearing securities in the name of Keebler that will mature on the
next business day after the Closing Date.
21. A new subparagraph (f) of Paragraph 3.2 is added, and states the
following:
(f) The Confidential Information Memorandum dated January 1996
provided to the banks or other financial institutions referred to in
subparagraph (e) reflected that consolidated operating profits (calculated
in the same manner as in the Pro Forma Financial Statements) of the
Company and its subsidiaries for the 1995 fiscal year are estimated to be
$16,600,000.
22. Subparagraph 4.1 (e) is amended and restated in its entirety,
and states the following:
(e) Not enter into any contractual commitments involving capital
expenditures, loans or advances, and not voluntarily incur any contingent
liabilities, except in each case in the ordinary course of business and
consistent with past practice and the 1995 capital expenditure program
previously disclosed to the Buyer, but in any event not to exceed
$7,000,000 in the aggregate (provided that any individual items over
$250,000 will require Buyer's consent, such consent not to be unreasonably
withheld), and except that the Buyer has consented to the leases entered
into by the Company's subsidiaries prior to December 15, 1995 with respect
to $2,000,000 of equipment which is part of the Da Vinci Computer project,
copies of which leases have previously been provided to the Buyer (it
being understood that any other leases proposed to be entered into by the
Company or any of its
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subsidiaries with regard to the Da Vinci Computer project require the
prior written consent of the Buyer).
23. Clause (ii) of subparagraph 4.1(f) is amended and restated in
its entirety, and states the following:
(ii) distributions and dividends paid in cash which do not
prevent satisfaction of the condition described in Paragraph
5.1(o)
24. Subparagraph 4.1(i) is amended by adding the following after
"past practice" in the seventh line thereof:
and except that the Buyer has consented to the sales entered into by the
Company's subsidiaries prior to December 15, 1995 with respect to
$2,000,000 of equipment which is part of the Da Vinci Computer project,
which is described in Paragraph 4.1(e) (it being understood that any other
sales proposed to be entered into by the Company or any of its
subsidiaries with regard to the Da Vinci Computer project require the
prior written consent of the Buyer)
25. A new Paragraph 4.15 is added, and states the following:
4.15 Identification of Other Business Positions to be Eliminated,
Etc. Exhibit 4.15 hereto contains a list of (i) those positions (and, if
applicable and available, individuals) at the Company and its subsidiaries
that will be eliminated as a result of or in connection with the
Reorganization and (ii) those employees of the Company and its
subsidiaries who were working in the Other Businesses who will be
transferred to the Continuing Businesses prior to the Closing.
26. A new Exhibit 4.15 is added to the Agreement, a copy of which is
attached hereto as Exhibit C.
27. A new Paragraph 4.16 is added, and states the following:
4.16 Resignation of Officers and Directors. The Seller will, upon
the request of the Buyer, obtain the resignation, effective upon the
Closing, of each of the directors and officers of the Company and each of
its subsidiaries engaged in the Continuing Businesses.
28. A new Paragraph 4.17 is added, and states the following:
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4.17 Termination of Access to Bank Accounts. To the extent there are
any bank accounts existing prior to the Closing through which funds of the
Company and its subsidiaries which are engaged in the Continuing
Businesses are transferred to the Seller and its affiliates (other than
the Company and its subsidiaries which are engaged in the Continuing
Businesses) or from which the Seller and its affiliates (other than the
Company and its subsidiaries which are engaged in the Continuing
Businesses) have any right to draw funds, the Seller will insure that,
effective immediately upon Closing, all such arrangements and rights shall
be cancelled, and after the Closing the Seller and its affiliates (other
than the Company and its subsidiaries which are engaged in the Continuing
Businesses) shall not take any action to withdraw or transfer funds from
such accounts.
29. A new Paragraph 4.18 is added, and states the following:
4.18 Notice of Discontinuance of Directors and Officers Insurance.
The Seller shall give the Buyer at least 30 days' prior written notice of
any material diminution or cancellation of director and officer insurance
for present and former directors and officers of the Company and its
subsidiaries relating to claims arising out of or pertaining to matters
existing or occurring at or prior to the Closing.
30. A new subparagraph (o) is added to Paragraph 5.1, and states the
following:
(o) At the Closing Date, the Company will have cash of $639,153.37
(representing the aggregate net proceeds to Keebler from the sale of its
Jacksonville, Florida distribution center), plus such other cash amounts
as have been or are hereafter agreed in writing by the parties to be
retained by the Company and its subsidiaries on the Closing Date, in a
segregated bank account for the benefit of the Buyer or, with the consent
of the Buyer, invested in short-term interest-bearing securities in the
name of Keebler that will mature on the next business day after the
Closing Date.
31. Paragraph 7.1 is amended by deleting the parenthetical phrase in
clause (i) thereof in its entirety and replacing it with the following:
(provided that any claim for indemnification made with respect to (x) any
matter which is the subject of a representation or warranty contained in
Paragraph 3.1(a), 3.1(b), 3.1(d), 3.1(f) or 3.1(z), or the first sentence
of Paragraph 3.1(e) insofar as it refers to the Company or Keebler, or (y)
the representations and warranties contained in Paragraph 3.1(h),
including, without limitation, those regarding any affidavits
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of lost certificates to be delivered to the Buyer at the Closing (the
"Lost Certificate Affidavits"), the obligations under which the Seller
hereby assumes, shall in each case not be subject to any limitations as to
amount),
32. Paragraph 7.3 is amended by deleting the text beginning with the
word "provided" in the tenth line thereof through and including the word "time"
in the fourteenth line thereof, and replacing it with the following:
provided that any claim for indemnification made with respect to (x) any
matter which is the subject of a representation or warranty contained in
Paragraph 3.1(a), 3.1(b), 3.1(d) or 3.1(f), or the first sentence of
Paragraph 3.1 (e) insofar as it refers to the Company or Keebler, or (y)
the representations and warranties contained in Paragraph 3.1(h),
including, without limitation, those regarding the Lost Certificate
Affidavits, may in each case be made at any time,
33. The fourth sentence of Subparagraph (a) of Paragraph 7.5 is
amended and restated in its entirety, and states the following:
With regard to any period which begins before but ends after the Closing
Date, the amount for which the Seller will reimburse the Buyer, the
Company or any of the Company's subsidiaries (or refund to which the
Seller will be entitled) will be the amount for which the Seller would
have been required to reimburse the Buyer, the Company or any of the
Company's subsidiaries (or refund to which the Seller would have been
entitled) if the applicable taxable years of the Company and each of its
subsidiaries which began before the Closing Date had ended on the Closing
Date.
34. A new subparagraph (f) is added to Paragraph 7.5, and states the
following:
(f) Section 338 Election. Notwithstanding anything to the contrary
contained in this Agreement, the Seller shall not be required to reimburse
the Buyer, the Company or any of its subsidiaries engaged in the
Continuing Businesses for, or otherwise bear, any Income Taxes and other
costs resulting from any election made by the Buyer under Section 338 of
the Code with respect to the transactions which are the subject of this
Agreement.
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35. Paragraph 7.6 is amended by adding the following text
immediately after the text "The Seller" in the first line thereof:
hereby assumes and retains all liabilities and obligations
with regard to, and
36. A new clause (c) is added to the end of Paragraph 7.6, and
states the following:
or (c) without limiting the foregoing, relating to or arising out of the
termination of the leases described in Exhibit 7.6 hereto (which leases
are all of the leases relating to the Other Businesses under which the
Company or any of its subsidiaries engaged in the Continuing Businesses is
liable as of the Closing Date) or relating to or arising out of the other
items or events listed in Exhibit 7.6.
37. A new Exhibit 7.6 is added to the Agreement, a copy of which is
attached to this Amendment Agreement as Exhibit D.
38. Paragraph 7.8 is amended by adding the following text
immediately after the text "The Seller" in the first line thereof:
hereby assumes and retains all liabilities and obligations with regard to,
and
39. The text "(a)" and the entire text from and after ", minus (b)"
of Paragraph 7.8 are deleted.
40. New Paragraphs 7.9, 7.10, 7.11, 7.12, 7.13, 7.14 and 7.15 are
added (and former Paragraphs 7.9 and 7.10 are designated 7.16 and 7.17
respectively), and state the following:
7.9 Assumption of Certain Liabilities or Obligations Relating to
Termination of Certain Employees, Etc.
(a) The Seller hereby assumes and retains, and indemnifies the
Buyer, the Company and each of the Company's subsidiaries engaged in the
Continuing Businesses against, and agrees to hold them harmless from, all
Losses relating to or arising out of severance payments, post-employment
or other welfare benefits, pension, workers' compensation or other sums
now or hereafter due to (and all costs and expenses, including in respect
of litigation, relating to the termination of
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employment of) any employees (the "Seller Assumed Employees") who (i) have
been employed by, or have rendered services primarily with regard to, the
Other Businesses (other than those referred to in clause (iii) hereof);
(ii) were identified (by name or position) pursuant to clause (i) of
Paragraph 4.15 as being eliminated; or (iii) were employed in the Other
Businesses prior to the Closing and are both (A) identified (by name or
position) pursuant to clause (ii) of Paragraph 4.15 as being transferred
to the Continuing Businesses prior to the Closing and (B) terminated by
Keebler (or by such employee) within one year after the Closing Date. At
the Closing, immediately prior to the sale of the Shares to the Buyer, the
Company will pay the Seller $14,000,000 in consideration for the Seller's
assumption of obligations as provided in this Paragraph 7.9. The Buyer
agrees that it shall not claim any income tax deduction with respect to
payments made by the Seller regarding obligations assumed hereunder to the
extent that such payments are claimed as a deduction by the Seller and are
not disallowed.
(b) The Buyer and the Seller agree that (i) the Seller's obligations
under this Paragraph 7.9 are not intended to limit the indemnification
obligations of the Seller contained in Paragraphs 7.6, 7.8 or otherwise
under this Agreement and (ii) the Seller's liability for severance
payments, post-employment or other welfare benefits or other sums
described in this Paragraph 7.9 will be limited to payments at levels in
accordance with the policies of the Company's subsidiaries in effect prior
to the Closing Date.
(c) In furtherance (and not in limitation) of the foregoing, the
Seller, or affiliates of the Seller (other than the Company and its
subsidiaries), shall (as promptly as practicable) enter into such
arrangements with the third-party administrators of the Company Plans that
provide welfare benefits to, or of statutory arrangements that provide
workers' compensation or other coverage of, the Seller Assumed Employees
as may be necessary to effectuate the obligations of the Seller under
subparagraph (a) of this Paragraph 7.9, including, but not limited to,
requesting that the third party administrators bill the Seller directly
for any sums due after the Closing Date with regard to the Seller Assumed
Employees. Except as provided above, after the Closing, the Company and
its subsidiaries will continue to provide such administration of the
Company Plans with respect to the benefits for the Seller Assumed
Employees as they provided prior to the Closing, to the extent they
continue to provide administration after the Closing for the employees of
the Company and its subsidiaries, and the Seller will reimburse the
Company or its subsidiaries for its or their reasonable costs (including
salary costs) attributable to administering the Company Plans for the
Seller Assumed Employees.
(d) At the Closing, the Seller will deposit $14,000,000 with J.P.
Morgan Bank, New York, New York, to fund a portion
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of the Seller's obligations under subparagraph (a) of this Paragraph 7.9,
clause (c) of Paragraph 7.6 or Paragraph 7.8 (the "Seller Assumed
Obligations Account"). The Seller shall make such arrangements with J.P.
Morgan Bank as are necessary to permit the Company and its subsidiaries to
directly withdraw, without further consent of the Seller and its
affiliates, sums from the Seller Assumed Obligations Account after the
Closing in order to fund in advance payments of the nature contemplated by
such provisions. All sums in excess of the amount deposited in and
disbursed to the Company from the Seller Assumed Obligations Account which
the Seller is obligated to pay under subparagraph (a) of this Paragraph
7.9, clause (c) of Paragraph 7.6 and Paragraph 7.8, and which are not
previously paid directly by the Seller, will be paid by the Seller to the
Company and its subsidiaries one business day prior to the date specified
in a written request (a "Company Request") from the Company or its
applicable subsidiary as the date on which the Company or that subsidiary
is required to pay such amounts to or on account of one or more Seller
Assumed Employees. Each Company Request shall be delivered to the Seller
at least two business days prior to the date on which payment is to be
made by the Seller and shall specify in reasonable detail the obligations
of the Seller to which such Company Request relates. As promptly as
practicable after each disbursement from the Seller Assumed Obligations
Account and each payment made by the Company and its subsidiaries in
respect of a Company Request, the Company or the applicable subsidiary
will, if applicable, provide the Seller with written confirmation that the
proceeds thereof were delivered to the applicable beneficiaries and
furnish the Seller with copies of all related release forms executed by
such beneficiaries. After April 8, 1996, the Seller may withdraw any
amounts which remain in the Seller Assumed Obligations Account, after
which it will make all further payments it is obligated to under
subparagraph (a) of this Paragraph 7.9, clause (c) of Paragraph 7.6 or
Paragraph 7.8 by payments to the Company in response to Company Requests
as provided in this subparagraph.
7.10 Sharing of Certain Buyer Losses. With respect to Losses for
which the Seller is liable under clause (c) of Paragraph 7.6 and clause
(a)(ii) of Paragraph 7.9 (whether such Losses are paid through withdrawals
from the Seller Assumed Obligations Account or otherwise), the Buyer shall
bear the cost of 17% of all such Losses until the aggregate amount so
borne by the Buyer equals $3,300,000. Thereafter, the Seller shall be
liable for 100% of such Losses.
7.11 Reimbursement for Costs Relating to Shaffer Clarke Lease and
Convenience Route Sales Vans and Project Breakthrough Vans. The Buyer will
(i) reimburse the Seller promptly after the Closing, for the $450,000 fee
paid by the Seller or United Biscuits as a result of the early termination
of the lease for Shaffer Clarke & Co., Inc.'s Darien, Connecticut office
space and (ii) pay to the Seller promptly
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<PAGE>
after they are received, (x) the net proceeds from any sales after the
Closing Date of Convenience Route Sales Vans purchased by the Company and
its subsidiaries engaged in the Continuing Businesses on or prior to the
Closing Date upon the expiration or early termination of leases for those
vans, (y) the net proceeds from any sales after the Closing Date of the 66
Project Breakthrough (18') vans purchased from The Fifth Third Leasing
Company on January 26, 1996 and (z) the first $1,000,000 of net proceeds
from any sales after the Closing Date of other Project Breakthrough (18')
vans owned on the Closing Date by the Company and its subsidiaries engaged
in the Continuing Businesses (in each case to the extent such proceeds are
not included in the calculation of Current Assets pursuant to Paragraph
1.3).
7.12 Reimbursement of Letter of Credit Obligations. The Seller will
guarantee, or enter into indemnification arrangements with respect to, the
payment of amounts due to banks or other financial institutions for
payments they make until the third anniversary of the Closing Date under
(i) the letters of credit described on Exhibit 7.12, (ii) any other
letters of credit existing on the Closing Date which were issued to secure
obligations of the Company or its subsidiaries under workers compensation,
automobile insurance and other statutes, and (iii) any replacements of the
particular letters of credit described in clauses (i) and (ii) in amounts
from time to time outstanding not exceeding the greater of (x) the
respective amounts of the letters of credit outstanding at the Closing
Date and (y) the respective amounts that should have been outstanding
under the respective letters of credit in order to comply with applicable
law or agreements in effect at the Closing Date.
7.13 Reimbursement of Special Retention Incentive Payments. The
Seller will promptly reimburse the Buyer for all amounts paid by Keebler
to those individuals previously identified, represented and warranted by
the Seller in a written memorandum dated December 11, 1995 from Alastair
Clark to Dennis Christensen attached to a copy of memorandum to the Buyer
dated December 15, 1995 as being entitled to special retention incentive
payments, who Seller represents are the only persons entitled to such
special retention incentive payments. The maximum reimbursement
obligations of the Seller under this Paragraph will not exceed $197,331,
which Seller represents are the only special retention incentive payments
or similar payments to such persons payable by the Company or any of its
subsidiaries.
7.14 Services Agreement. The Seller will indemnify and promptly
reimburse the Buyer, the Company and each of the Company's subsidiaries
engaged in the Continuing Businesses against, and agrees to hold each of
them harmless from, any and all Losses relating to or arising out of
liabilities for consequential or special damages, but not actual damages,
relating to any judgment, or any settlement approved by the
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<PAGE>
Seller, in respect of (i) the Services Agreement, dated as of January 10,
1996, between Keebler Company and Windsor Quality Food Company Ltd. or
(ii) the Transition Agreement, dated January 25, 1996 between Keebler
Company and Kelly Food Products, Inc., unless Kelly Food Products, Inc.
has agreed that Keebler Company shall not be liable for consequential or
special damages under that agreement.
7.15 Reimbursement of Costs For Advertising or Marketing Programs.
Seller will promptly reimburse the Buyer for 75% of any amount which prior
to six months after the Closing Date the Company or any of its
subsidiaries spends, or irrevocably commits to spend, as required payments
to cancel or fulfill commitments made by the Company or any of its
subsidiaries before the Closing Date for advertising or marketing programs
relating to periods after the Closing Date, provided that the Seller's
reimbursement obligations under this Paragraph 7.15 shall in no event
exceed $2,250,000.
41. A new Exhibit 7.12 is added to the Agreement, a copy of which is
attached to this Amendment Agreement as Exhibit E.
42. New Paragraphs 9.7 and 9.8 are added (and former Paragraphs 9.7
through 9.18 are designated Paragraphs 9.9 through 9.20, respectively), and
state the following:
9.7 Certain Equipment. The Buyer agrees that United Biscuits will
retain ownership of the equipment listed in Exhibit 9.7 (the "UB
Equipment") currently located at Keebler's facilities in Elmhurst,
Illinois and Bluffton, Indiana, following the Closing. Within 90 days
after the Closing Date, United Biscuits will cause the UB Equipment to be
removed from Keebler's facilities (leaving such facilities in good order
and repair) at United Biscuits' cost.
9.8 1996 Tax Returns. The Buyer agrees to file a consolidated Income
Tax Return which includes the Company and its subsidiaries with regard to
the period from the Closing Date through December 31, 1996, with the
effect that the taxable year of the Company and its subsidiaries will
terminate on the Closing Date.
43. A new Exhibit 9.7 is added to the Agreement, a copy of which is
attached to this Amendment Agreement as Exhibit F.
44. Subparagraph (c) is added to Paragraph 9.13 (now designated
Paragraph 9.15), and states the following:
15
<PAGE>
(c) Artal hereby designates, appoints and empowers Mr. David Van
Zandt, currently located at Northwestern University School of Law, 357
East Chicago Avenue, Chicago, Illinois 60611, as its authorized agent, the
Buyer (the Buyer and Artal together, the "Buyer Parties") hereby
designates, appoints and empowers Simpson Thacher & Bartlett, currently
located at 425 Lexington Avenue, New York, New York, Attn. Robert E.
Spatt, as its authorized agent, and each of the Seller, UBI and United
Biscuits (collectively, the "Seller Parties") hereby designates, appoints
and empowers Rogers & Wells, currently located at 200 Park Avenue, New
York, New York 10166, Attn. David W. Bernstein, as its authorized agent,
in each case to accept, receive and acknowledge for and on behalf of each
Buyer Party and each Seller Party, as the case may be, and its property,
service of any and all process which may be served in any action, suit or
proceeding of the nature referred to above in the State of New York, which
appointment shall be irrevocable until the appointment and acceptance of a
successor authorized agent. Each Buyer Party and each Seller Party further
submits to the personal jurisdiction of any court referred to in
subparagraph (b) above in any such legal action, suit or proceeding and
agrees that, to the fullest extent permitted by applicable law, such
service of process may be made personally or by mailing or delivering a
copy of the summons and complaint or other legal process in any such legal
suit, action or proceeding to the applicable Buyer Party or the applicable
Seller Party, as the case may be, in care of such agent at the aforesaid
address, and such agent is hereby authorized to accept, receive and
acknowledge the same for and on behalf of the applicable Buyer Party or
the applicable Seller Party, as the case may be, and to admit service with
respect thereto. Upon service of process being made on such agent as
aforesaid, a copy of the summons and complaint or other legal process
shall be mailed to the applicable Buyer Party or the applicable Seller
Party, as the case may be, by registered mail, return receipt requested,
at its address specified in or pursuant to Paragraph 9.14 hereof. In the
event that for any reason the agent mentioned above shall not serve as
agent to receive service of process in the State of New York in accordance
with the provisions of this Paragraph 9.15(c), the applicable Buyer Party
or Seller Party, as applicable, shall promptly appoint a successor agent
satisfactory to the other of them and deliver evidence in writing of the
successor agent's acceptance of such appointment. To the extent that any
Buyer Party or any Seller Party has or hereafter may acquire any immunity
from jurisdiction of any court or from any legal process (whether through
service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property,
each Buyer Party and each Seller Party hereby irrevocably waives such
immunity in respect of its obligations with respect to this Agreement.
Each Buyer Party and each Seller Party agrees, to the extent permitted by
law, that a final and unappealable judgment against any of them in any
action, suit or proceeding
16
<PAGE>
contemplated above shall be conclusive and may be enforced in any other
jurisdiction within or outside the United States by suit on the judgment,
a certified or exemplified copy of which shall be conclusive evidence of
the fact and amount of such judgment. Each of Artal, UBI and United
Biscuits agrees that the provisions of Paragraphs 9.15(a) and (b) of the
Agreement shall apply to and be binding upon each of them.
45. The text beneath the names of "UB INVESTMENTS PLC", "UNITED
BISCUITS (HOLDINGS) PLC", "ARTAL LUXEMBOURG S.A." AND "FLOWERS INDUSTRIES, INC."
is amended to add in each case at the end thereof the words "and 9.15(c)".
46. Subparagraph (b)(iv) of Paragraph 9.16 (now designated Paragraph
9.18) is amended by deleting the reference to "United Biscuits" each time it
appears and replacing it with "UBI" in each instance.
47. The representation and warranties of the Seller and the Buyer
set forth in Paragraphs 3.1(b),(c), (g) and Paragraphs 3.2(b), (c) and (d),
respectively, are hereby made with respect to this Amendment Agreement as if the
Agreement referred to therein meant the Agreement as amended by this Amendment
Agreement
48. The parties agree that all paragraph references contained in the
Agreement which would require modification to accurately reflect the additions,
deletions and other modifications set forth in this Amendment Agreement are
hereby deemed to be so modified.
49. Except as expressly set forth above, the Agreement will remain
in full force and effect and unmodified.
17
<PAGE>
IN WITNESS WHEREOF, the Buyer and the Seller have executed this
Amendment, intending to modify the Agreement as set forth above, on the date
first shown on the first page of this Amendment.
UB INVESTMENTS (NETHERLANDS) B.V.
By:_________________________________________
Title: Authorized Signatory
INFLO HOLDINGS CORPORATION
By:_________________________________________
Title: Chief Executive Officer
and President
18
<PAGE>
Acknowledged and Accepted Solely for the Purposes for which the Undersigned
Executed the Agreement:
UB INVESTMENTS PLC
By:___________________________________
Title:
UNITED BISCUITS (HOLDINGS) PLC
By:___________________________________
Title:
ARTAL LUXEMBOURG S.A.
By:___________________________________
Title:
FLOWERS INDUSTRIES, INC.
By:___________________________________
Title:
19
<PAGE>
Exhibit A TO
AMENDMENT AGREEMENT
[List of Assets]
20
<PAGE>
Exhibit B TO
AMENDMENT AGREEMENT
PROMISSORY NOTE
Date: January 26, 1996
Place: New York, NY
$32,500,000
FOR VALUE RECEIVED, the undersigned (the "Maker") promises to pay to
the order of UB Investments (Netherlands) B.V. or its registered assigns (the
"Holder"), at the principal office of the Holder, or such other place as the
Holder may designate, the principal amount of thirty-two million five hundred
thousand dollars, on January 26, 2007.
1. The principal sum evidenced by this Note (the "Principal") will not
bear interest until January 26, 1999. Beginning January 26, 1999 the balance of
the Principal outstanding from time to time will bear interest at the rate of
10% per annum. On the last day of March, June, September and December (each of
those days being an "Interest Payment Date") of each of 1999, 2000 and 2001,
beginning with March 31, 1999, interest since the preceding Interest Payment
Date (or, with regard to March 31, 1999, interest since January 26, 1999) will
be added to, and will become a part of, the Principal. On each Interest Payment
Date beginning with March 31, 2002, interest since the preceding Interest
Payment Date will be payable in cash as provided in the following paragraph. Any
payment of Principal or interest which is not made when it is due will bear
interest from the date it is due until the date it is made at the rate of 12%
per annum. In no event, however, will the rate at which interest accrues under
this Note exceed the maximum rate permitted by law. Interest shall be calculated
for the actual number of days elapsed on the basis of a year consisting of 365
or 366 days, as the case may be, and be payable quarterly in arrears. After
maturity of this Promissory Note, principal and accrued interest on this
Promissory Note shall be payable on demand.
All payments of Principal and interest payable in cash, and all
other amounts in cash becoming due with regard to this Note, will be made in
United States Dollars by wire transfer of immediately available funds to Account
No. 903280 entitled "Morgan Grenfell, London for United Biscuits" at J.P. Morgan
Bank, New York, New York, or to such other account as the Holder may specify to
the Maker in writing at least ten days before payment is to be made, or to such
other place or account and in such other manner as may be designated from time
to time in writing by the Holder of
1
<PAGE>
this Note. All payments will be made without reduction by reason of set-off,
counterclaim or otherwise.
Whenever any payment under this Note is due to be made on a day that
is not a Business Day, that payment will be due on the next succeeding Business
Day. If, because an Interest Payment Date is not a Business Day, the interest
payment due on that Interest Payment Date is made on the next succeeding
Business Day, the interest payment will include interest to the Business Day on
which it is made and that Business Day will, for the purpose of determining the
interest due on the next succeeding Interest Payment Date, be deemed to have
been an Interest Payment Date, and such extension of time shall be included in
the computation of the payment of interest on this Note. For the purposes of
this Note, a "Business Day" will be any day other than a Saturday, Sunday or a
day on which banking institutions in New York City are authorized or required by
law to close.
2. Each of the following events will constitute an Event of Default under
this Note:
(a) The Maker fails to make any payment of Principal when it is due
or any payment of interest on this Note within 30 days after the date when it is
due; or
(b) The Maker pays any cash dividends to its common equity holders,
makes any distributions to its common equity holders in cash or other property
(other than in the form of equity securities), purchases or redeems any of its
equity securities or otherwise retires any of its equity securities or takes any
action which would have an effect equivalent to any of the foregoing, excluding
(i) repurchases of equity securities held by then present or former officers or
employees of the Maker or any of its subsidiaries in accordance with any
subscription or stockholders' agreement, incentive plan or similar arrangement
with such person, (ii) repurchases of equity securities held by stockholders of
the Maker in connection with sales of the same number and class of equity
securities (at an equal or greater price) to officers or employees of the Maker
or any of its subsidiaries pursuant to arrangements of the type described in
clause (i) above, (iii) any purchases or redemptions of warrants or similar
securities (including any securities issued upon the exercise thereof) issued
under the Note and Warrant Purchase Agreement (the "Nomura Purchase Agreement"),
dated as of January 26, 1996, among INFLO Holdings Corporation, Keebler
Acquisition Corp. and Nomura Holding America Inc. (and any amendment or
replacement thereof) or otherwise issued to parties providing debt financing to
the Maker or its subsidiaries which is used to pay or refinance a portion of the
aggregate purchase price paid by the Maker pursuant to the Stock Purchase
Agreement dated November 5, 1995, as amended on January 26, 1996, between INFLO
Holdings Corporation and UB Investments (Netherlands) B.V. or to acquire assets
in an arm's-length transaction and (iv) dividends or distributions on, or
purchases or redemptions of, preferred equity issued in arm's-length
2
<PAGE>
transactions and not held by the initial common equity holders of the Maker or
affiliates thereof; or
(c) The Maker institutes a proceeding seeking relief as a debtor
under the United States Bankruptcy Code or any state insolvency law; or
(d) An order is entered in a proceeding under the United States
Bankruptcy Code or any state insolvency law declaring the Maker to be insolvent,
or appointing a receiver or similar official for substantially all the Maker's
properties, and either (i) the Maker consents to the entry of that order, or
(ii) that order is not dismissed within 90 days.
3. If there is an Event of Default, at any time while it is continuing,
the Holder may declare the entire remaining balance of the Principal to be
immediately due and payable, at which time that Principal and all accrued but
unpaid interest will immediately become due and payable, without demand,
presentment, protest, notice of dishonor or other diligence of any kind, all of
which are waived by the Maker.
4. By acceptance of this Note, the Holder agrees that (a) it will not seek
to consolidate the assets of any subsidiary of the Maker with the assets of the
Maker in a bankruptcy, insolvency, reorganization, receivership, liquidation or
similar proceeding (collectively, "Bankruptcy Proceedings") pursuant to the
doctrine of "substantive consolidation" or otherwise, (b) it will not institute,
or join any other person in instituting, any Bankruptcy Proceeding against any
subsidiary of the Maker and (c) the obligations of the Maker hereunder shall be
subordinated in right of payment to all indebtedness (including subordinated
indebtedness) of the Maker or any subsidiary of the Maker to the same extent
that "Subordinated Indebtedness" is subordinated to "Senior Indebtedness" under
the Nomura Purchase Agreement. The provisions of this paragraph are for the
benefit of the creditors of the Maker and its subsidiaries and, accordingly,
such creditors shall be deemed to be third party beneficiaries of, and shall
have the right to enforce, said provisions.
5. The Maker has the right to prepay all or any part of the unpaid
Principal at any time without premium or penalty. The Maker will give the Holder
at least ten days prior notice of each prepayment of Principal, and will state
in each notice the amount of Principal being prepaid and the date on which the
prepayment is to be made. When a notice of prepayment has been given, the
Principal amount specified in the notice of prepayment and all accrued but
unpaid interest on that amount will be due and payable on the date for the
prepayment specified in the notice of prepayment.
6. The Maker will maintain a register (the "Note Register") in which it
will record the name and address of the Holder of this Note and of the holders
of any Notes issued upon transfer or exchange of this Note. The Company will at
all times treat the
3
<PAGE>
person named in the Note Register as the owner of this Note for all purposes and
will make all payments of principal and interest to that person even if the
Maker has received notice that the Holder has attempted to transfer this Note to
another person. No transfer of this Note will be valid until the name and
address of the person to whom this Note is transferred is recorded in the Note
Register.
7. The Maker will pay all reasonable expenses, including reasonable
attorneys' fees and legal expenses, incurred by the Holder in successfully
endeavoring to collect any amounts payable under this Note which are not paid
when due.
8. No delay on the part of the Holder in exercising any right or remedy
will operate as a waiver of that right or remedy, and no single or partial
exercise by the Holder of any right or remedy will preclude any other or further
exercise of that or any other right or remedy.
9. This Promissory Note is made under and governed by the laws of the
State of New York applicable to contracts made and to be performed in that
state.
SIGNED AND DELIVERED on January 26, 1996.
INFLO HOLDINGS CORPORATION
By:_________________________________________
Title:
4
<PAGE>
Exhibit C TO
AMENDMENT AGREEMENT
I. TERMINATIONS
Deborah K. Alfred
James Borne
David M. Hunt
Thomas R. Lunn
Randy S. McCorkle
Jack L. McDonald, Jr.
Joyce A. Owens
Robert M. Palmer
Jeanetta Perry
James A. Ragg, Jr.
Jane A. Searles
James W. Uptgraft
Ned Anderson
Kathy Blair
Charlie Goodstein
Mike Tudor
Ron Cushey
Gloria Shefter
John Galbreath
Thomas Harvat
Dennis Kozlowski
Peter Tangprasertchai
J. Prescott Wallace
Richard DeStefano
Joseph Warner
Tim Gallagher
Bob Hoyler
Mabra McCumber
Toni Pristo
807 Keebler Employees in the Retail Sales and Distribution Organization
(Including Convenience Division, Store Door, Breakthrough, Breakthrough
Transition Team and Distribution Organization)
1
<PAGE>
II. TRANSFERRED EMPLOYEES FROM OTHER BUSINESSES TO CONTINUING
BUSINESSES
Betty Ellingson
Anne Marie Johnson
David Karpick
Sandip Parikh
Dan Reynolds
Mark Clark
Joan O'Malley
Donna Steger
Juanita Dennis
Sheila Krambeer
Deborah Walsh
Susan Hartigan
Margi Walstrom
Eric Auciello
Mary Billings
Gail Frankfort
Rosemary Hanson
Carolyn Milschewski
Susan Padilla
Harold Plein
Rosemary Sikora
Sherri Curcio
Becky Hultine
Ross Bridge
Lynn Guca
Lynn Coyle
Rick Marcantonio
Cheryl Hallquist
Ted Johnson
2
<PAGE>
Exhibit D TO
AMENDMENT AGREEMENT
I. LEASE TERMINATIONS
1. 140 Industrial Drive Lease
2. Prestige Building Lease
II. OTHER REORGANIZATION ITEMS OR EVENTS
1. DBU Transition Team Post-Closing Salary and Expenses
2. Salty Snack Transition Team Post-Closing Salary and Expenses
3. Union Medical Payments re: Oxford, Pennsylvania and Haltom City,
Texas Salty Snack Plants
4. Food Services Sales Personnel Relocation Costs for Four Food Service
Field Sales Managers
5. Kelly Food Products Transition Support Costs
6. Post-Closing Convenience Division Wind-Down Salary and Expenses
7. Expenses of Delaying Breakthrough Reorganization for Four Weeks
Post-Closing
8. Breakthrough Transition Team Wind-Down Salary and Expenses
9. Breakthrough Driver Car Allowances
10. Accrued Vacation for Employees Hired by Kelly Food Products
11. Change of Control Benefits Paid Post-Closing With Respect
to Employees Terminated Pre-Closing
Exhibit 10.5
DATED January 26 1996
- --------------------------------------------------------------------------------
(1) UNITED BISCUITS (UK) LIMITED
- and -
(2) SHAFFER, CLARKE & CO., INC.
-------------------------------
DISTRIBUTION AGREEMENT
-------------------------------
United Biscuits (UK) Limited
Legal Department
Church Road
West Drayton
MIDDLESEX
UB7 7PR
<PAGE>
THIS AGREEMENT is made the 26th day of January 1996
BETWEEN:
(1) UNITED BISCUITS (UK) LIMITED a company registered in England under
number 2506007 and whose registered office is at Church Road, West
Drayton, Middlesex, UB7 7PR (the "Supplier"); and
(2) SHAFFER, CLARKE & CO., INC. a company incorporated under the laws of
Delaware, USA whose principal place of business is at 677 Larch Avenue,
Elmhurst, Illinois, USA (the "Distributor").
WHEREAS:
Pursuant to the Stock Purchase Agreement dated November 5, 1995, as amended on
January 26, 1996 (the "Purchase Agreement"), between INFLO Holdings Corporation
("INFLO") and UB Investments (Netherlands) B.V., a wholly owned subsidiary of
INFLO will acquire all of the outstanding shares of Common Stock of UB
Investments US Inc. ("UBIUS"), of which the Distributor is a wholly owned
subsidiary; and
The parties hereto wish to record the terms on which the Distributor is to be
appointed as the exclusive distributor of the Supplier for the Products in the
Territory; and
The profit received by the Distributor from sales of certain of the Supplier's
products represents a significant portion of the profits of UBIUS; and
Section 5.1(k) of the Purchase Agreement provides for the execution of this
Agreement as a condition to the Closing; and
The Distributor desires to have the right to continue in perpetuity distributing
certain of the Supplier's products.
IT IS AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
In this Agreement (unless the context otherwise requires) the following words
and expressions shall have the following meanings:
1.1 "Aggregate Manufacturing Profit" means, with respect to any two-year
determination period described in Section 4.5, the aggregate of (a)
Supplier Sales during such period, multiplied by the Margin Rate, plus
(b) all royalties received by the Supplier pursuant to the License
Agreement for Line Extension Products during such period.
1.2 "Baseline Manufacturing Profit" means $3,000,000 (such amount
representing the Margin Rate multiplied by the Supplier Sales during
the 1995 calendar year),
<PAGE>
multiplied at the end of any two-year determination period pursuant to
Section 4.5 by the applicable Inflation Rate since January 1, 1996.
1.3 "Commercially Reasonable Efforts" means commercially reasonable efforts
to promote and sell the Products within the Territory pursuant to this
Agreement, in light of all then existing market, economic, supply,
competitive and other conditions.
1.4 "Inflation Rate" means, with respect to any two-year determination
period, the percentage change in the cracker price index published by
Milling and Baking News, or if that index is unavailable, the closest
possible substitute therefor, for the period from January 1, 1996
through the end of that period.
1.5 "License Agreement" means the trademark license agreement entered into
by the parties hereto and of even date herewith.
1.6 "Line Extension Products" means biscuits, crackers and other baked
snacks (other than those which are distributed under this Agreement)
which are marketed under the Trade Marks pursuant to the License
Agreement, and which are similar to, variations of or competing with,
any product then manufactured by the Supplier.
1.7 "Margin Rate" means 27.8% (such amount representing $3,000,000 divided
by the actual Supplier Sales during the 1995 calendar year).
1.8 "New Product" shall have the meaning set forth in Section 9 below.
1.9 "Period" means in any Year, one of the 13 Periods in the Supplier's
marketing calendar provided by the Supplier to the Distributor;
1.10 "Products" means the products listed in Schedule 1 hereto and any New
Product agreed to be distributed pursuant to Section 9 below.
1.11 "Shortfall" means, with respect to any two-year determination period
described in Section 4.5, the amount, if any, resulting from (a) the
percentage of the Baseline Manufacturing Profit set forth in Section
4.5 with respect to such period minus (b) the Aggregate Manufacturing
Profit applicable to such period.
1.12 "Supplier Sales" during a period means the sales of Products
manufactured by the Supplier and sold to the Distributor during such
period, measured in U.S. Dollars on an FOB (Port of Embarkation) basis.
1.13 "Territory" means the United States of America, including its
territories, possessions, commonwealths and trusteeships, including
Puerto Rico, and such other territories as subsequently agreed by the
Supplier in writing.
1.14 "Trade Marks" means the trade marks owned by the Supplier or by the
Supplier's licensor and used by the Supplier on and in connection with
the Products and listed in Schedule 2 hereto;
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<PAGE>
1.15 "Year" means calendar year;
1.16 References to sections, clauses or schedules in this Agreement shall be
to clauses and schedules of this Agreement and the schedules shall be
deemed to be a part of this Agreement.
1.17 References to any provision of a statute or regulation shall be
construed as a reference to that provision as amended, re-enacted or
extended at the relevant time; and
1.18 Clause headings in this Agreement are for ease of reference only and
should not be taken into account in construing this Agreement.
2. APPOINTMENT
2.1 The Supplier hereby appoints the Distributor as its exclusive
distributor of the Products in the Territory in perpetuity and the
Distributor accepts such appointment upon the terms and subject to the
conditions of this Agreement.
3. DURATION OF AGREEMENT
This Agreement shall come into force on the date hereof and shall
continue in perpetuity thereafter, unless terminated by the Distributor
pursuant to Section 25 below.
4. DISTRIBUTOR'S ROLE
4.1 The relationship between the Supplier and the Distributor is that of
seller and purchaser. The Distributor is not, and shall not hold itself
out as, the agent of the Supplier, nor as having any power to contract
on behalf of the Supplier and shall not act in any manner that will
expose the Supplier to any liability, or pledge or purport to pledge
the Supplier's credit.
4.2 The Distributor shall:
4.2.1 promptly supply from time to time, at the request of the
Supplier, such documentary information relating to the
distribution of the Products in the Territory as the Supplier
may reasonably require;
4.2.2 in relation to the Products, use only the Trade Marks and not
alter, modify, obliterate, obscure, remove, conceal or
otherwise interfere with such Trade Marks or indications of the
sources of origin of the Products or any other markings which
may be placed on the Products when delivered to the
Distributor;
4.2.3 endeavor to notify the Supplier in writing of the requirements
of the law of the Territory on an ongoing basis with regard to
the specifications, recipes, ingredients, labelling and
packaging for the Products, it being understood
3
<PAGE>
that any failure or alleged failure of the Distributor to so
notify the Supplier shall not deprive the Distributor of any
rights to which it is entitled under this Agreement or
otherwise;
4.2.4 keep separate accounts and records containing full and complete
details of all enquiries or transactions received and conducted
in relation to the supply and sale of the Products to, and by,
the Supplier;
4.2.5 subject to Section 8.3 below, obtain the Products for resale
only from the Supplier; and
4.2.6 not be permitted to export the Products from the Territory for
any purpose whatsoever, or knowingly to supply the Products to
a party who exports the Products, without the prior written
agreement of the Supplier.
4.2.7 The Distributor shall use its Commercially Reasonable Efforts;
provided, however, that the Supplier's remedies for the
Distributor's failure to comply with this Section 4.2.7 shall
only be as outlined in Sections 4.3, 4.4 and 4.5.
4.3 If the Supplier has a good faith belief that the Distributor is not
using Commercially Reasonable Efforts, the Supplier shall give the
Distributor written notice specifying in reasonable detail the respects
in which the Supplier believes the Distributor's efforts are deficient.
4.4 Upon receipt of any deficiency notice pursuant to Section 4.3, the
Distributor will promptly and in good faith investigate each specified
alleged deficiency. If the Distributor disputes that a specified
deficiency exists, the Distributor will give the Supplier written
notice of such dispute promptly after the Distributor's investigation
is completed. The Distributor will make a good faith, reasonable effort
promptly to cure each undisputed specified deficiency and will give the
Supplier written notice promptly after such deficiency has been cured.
4.5 Promptly after December 31, 1997 and after every second year
thereafter, if (i) the Supplier's Aggregate Manufacturing Profit on the
aggregate of all Products ordered pursuant to this Agreement for such
two-year determination period does not equal or exceed 170% of the
Baseline Manufacturing Profit for the period ending December 31, 1997
or 200% of the Baseline Manufacturing Profit for each subsequent
two-year determination period; and (ii) the Supplier has complied with
Section 4.3 but continues to have a good faith belief that the
Distributor is not using Commercially Reasonable Efforts under this
Agreement, the Supplier shall have the right to give the Distributor a
written demand for arbitration, which shall be the Supplier's sole
remedy for the condition set forth in (i) and (ii) above and shall be
conducted as provided below:
4.5.1 The issues submitted for arbitration will be limited to whether
or not the Distributor used Commercially Reasonable Efforts
during the relevant two-year determination period.
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4.5.2 The Arbitration will be heard by a single arbitrator selected
by mutual agreement of the parties. If within 30 days after the
demand for arbitration, the parties have not agreed upon an
arbitrator, the arbitrator shall be appointed in accordance
with the Rules of the American Arbitration Association then in
effect.
4.5.3 Each such arbitration will be held in the City of New York, New
York under the Rules of the American Arbitration Association
then in effect.
4.5.4 If the arbitrator finds that the Distributor did not use
Commercially Reasonable Efforts during the relevant two-year
determination period, the arbitrator shall order the
Distributor to pay to the Supplier an amount equal to the
Shortfall.
4.5.5 The award of the arbitrator shall be final and binding upon
both parties, and shall be enforceable in any court of
competent jurisdiction, which shall be the Supplier's sole
remedy with respect to the subject matter of the arbitration;
except that the Supplier may, in addition, thereafter seek
specific enforcement of the Distributor's obligations under
Section 4.2.7.
4.5.6 If in each of three consecutive two-year determination periods
there is an arbitral finding that the Distributor has not used
Commercially Reasonable Efforts during each relevant two-year
determination period, the Supplier will have the right, subject
to Section 4.6, to license any products which are not then
being sold pursuant to the License Agreement on a non-exclusive
basis, provided that no rights of the Distributor to any
Product governed by the License Agreement pursuant to Section
8.3 hereof shall ever become non- exclusive.
4.6 The Distributor will have the right to disapprove the following
products if they do not meet the standard set forth in Section 2(b) of
the License Agreement (it being understood that the term "Licensor"
therein shall apply to the Supplier and the term "Licensee" therein
shall apply to the Distributor): (i) all products which are not
Products under the License Agreement, (which Products are cookies,
biscuits, crackers, and other baked snacks), which the Supplier
proposes to sell or license under the Trade Marks; and (ii) all
products which are sold under the Licensed Trademarks pursuant to the
License Agreement at any time after the Distributor's rights thereunder
become non-exclusive pursuant to Section 4.5.6 hereof. The Supplier
will not sell in the Territory any product which the Distributor
disapproves in accordance with this Section 4.6.
4.7 Nothing in this Agreement shall prevent the Distributor from selling in
the Territory any products other than the Products under trademarks
other than the Trade Marks.
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5. SUPPLIER'S ROLE
5.1 The Supplier undertakes not to sell the Products or any products made
with substantially similar formulations or processing methods (whether
or not utilizing the Trade Marks) or any products which compete
directly with any Products (whether or not utilizing the Trade Marks)
(collectively, "Competing Products") in the Territory other than to the
Distributor. The Supplier also undertakes not to sell the Products or
any Competing Products to any person whom the Supplier knows or has
good reason to believe would ship the Products or Competing Products
into the Territory. Upon receipt by the Supplier of written notice from
the Distributor stating the Distributor's good faith belief that a
person identified in such notice is selling Products or Competing
Products in or into the Territory, the Supplier will take reasonable
steps to investigate such claim and to preclude any such sale. It is
agreed between the Distributor and the Supplier that this Section 5.1
shall not be violated by the Supplier's acquiring a business which at
the time it is acquired manufactures Competing Products and sells them
in the Territory and permitting such business to continue to
manufacture such products (but no other Competing Products) and sell
them in the Territory.
5.2 Nothing in this Agreement shall prevent the Supplier from making such
changes in the appearance, design, production or packaging thereof as
the Supplier shall decide, subject to the reasonable approval of the
Distributor.
5.3 The Supplier shall obtain any manufacturing licenses which are required
to sell Products in the Territory and comply with all United States
food and drug regulations so long as such compliance does not require
an unreasonable change in the Supplier's specifications, recipes,
ingredients, labelling or packaging. If pursuant to the foregoing the
Supplier elects not to make any change necessary to achieve such
compliance, then the Distributor will automatically be licensed under
the License Agreement (without need for the Supplier's approval or
consent) to manufacture substitute Products which do achieve such
compliance.
5.4 The Supplier may at any time cease supplying the Distributor any
Product because the Supplier totally discontinues manufacturing that
Product, except that the Supplier may not cease supplying the
Distributor Products which are table water and related products prior
to the tenth anniversary of the date of this Agreement. If the Supplier
ceases supplying a Product as permitted by the previous sentence, at
least 12 months before doing so, the Supplier will consult with the
Distributor about a means of providing the Distributor an alternate
economic source of that Product and at the request of the Distributor
will use its best efforts to ensure that such alternate source is
available to the Distributor.
6. PROMOTION AND ADVERTISING
6.1 The Distributor will not advertise the Products in any manner without
the prior written approval of the Supplier and shall submit all
proposed advertising and promotional material to the Supplier for this
purpose.
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6.2 The Distributor shall present to the Supplier on or before 1 June in
each Year a marketing plan for the immediately succeeding Year which
plan shall set out an overall marketing strategy for each of the
Products including where appropriate the promotional strategy, product
development recommendations, market research plans, analysis of
competitive activity and historical analysis of product sales and
distribution along with a detailed breakdown of proposed promotional
spending by category/sector and to co-operate with the Supplier in
developing and modifying such a plan in a mutually acceptable way. By
30 July of each year the Supplier will notify the Distributor in
writing of the Supplier's review of such marketing plan and recommend
modifications thereto, it being expressly understood that such
recommendation shall not be binding upon the Distributor.
6.3 The Supplier may give financial assistance to the Distributor to
advertise certain of the Products as selected by the Supplier, to the
extent considered suitable by the Supplier. The Distributor will only
use this financial assistance as agreed by the Supplier.
6.4 The Supplier shall advise the Distributor on the marketing strategy for
the Products and the Distributor shall consider this advice when
preparing proposed advertising material for approval by the Supplier in
accordance with Section 6.1.
6.5 The Distributor will supply the Supplier with such information with
regard to the marketing and sale of the Products in the Territory and
of competitive products, as the Supplier may reasonably require.
7. DEMAND FORECASTING AND REPORTING
7.1 The Distributor shall provide the Supplier with its best estimate of
the volume of orders, product by product, likely to be placed with the
Supplier both:
7.1.1 weekly on a rolling 12 weekly forecast basis; and
7.1.2 each Period on a rolling 13 Period forecast basis provided that
such estimates shall not be binding on either party.
7.2 The Distributor shall provide the Supplier, every Period, within 15
days of the expiration of the Period, with an analysis of the
Distributor's stock and sales position in relation to the Products,
together with and an indication of business trends for the immediate
future in a form to be agreed between the Supplier and Distributor.
7.3 The Distributor shall provide to the Supplier before the end of the
first Period in any Year, full details of its trading terms with
customers, including supply prices, and such other information as the
Supplier may reasonably request.
7.4 For the avoidance of doubt, all financial or marketing data provided by
the Distributor to the Supplier, other than under Clause 7.1.1 above,
shall be provided on a 13 Period basis.
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8. ORDERS AND DELIVERY
8.1 The Distributor shall give firm orders in writing for the Products 21
days in advance of expected despatch from factory gates.
8.2 The Supplier shall:
8.2.1 endeavor to despatch such orders as near to the expected
despatch date as possible;
8.2.2 advise the Distributor as soon as practicable where an order is
to be despatched sooner than the expected despatch date or more
then 14 days thereafter; and
8.2.3 use its commercially reasonable efforts to supply sufficient
quantities of the Products to meet the orders of the
Distributor made in accordance with this clause and consistent
with the Distributor's historical requirements;
but the Supplier shall be under no liability whatsoever for any loss or
damage arising directly or indirectly from delay in delivery resulting
from any cause beyond the reasonable control of the Supplier, provided
that the Supplier maintain insurance coverage pursuant to Section 15.
8.3 If the Supplier is unable to supply the Products within 90 days of
accepting the Distributor's order, the Distributor shall have the right
to arrange for the supply of alternate Products under the License
Agreement until the Supplier is able to resume proper performance of
its obligations hereunder. If the Distributor uses a co-packer or
similar alternate source of supply, then notwithstanding the foregoing,
the Distributor will have the right to use such alternate source for at
least twelve months. If the Supplier is not able to resume proper
performance of its obligations hereunder, at the end of such
twelve-month period, the Distributor will continue to have the
exclusive right to arrange for alternate supply under the License
Agreement in perpetuity.
8.4 The Supplier shall deliver or arrange for delivery to the Distributor
each consignment of the Products at United States ports with the cost
of overseas shipping and insurance to be borne by the Distributor.
8.5 Title and risk of loss in each consignment of the Products shall not
pass to the Distributor before unloading of the Products at the United
States port.
8.6 The Supplier's standard conditions of sale as supplied by the Supplier
to the Distributor from time to time shall apply to all sales of the
Products to the Distributor
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pursuant to this Agreement except in so far as the same are
unreasonable or inconsistent with either the terms of this Agreement or
the past practice between the parties.
9. EXTENSION OF PRODUCT RANGE
9.1 In the event that the Distributor wishes to sell under the Trade Marks
within the Territory any cookie, biscuit, cracker or other baked snack
(in addition to the Products) (in this clause a "New Product"), it
shall notify the Supplier of such fact and give the Supplier a period
of 30 days in which to make a proposal to manufacture such New Product
under the Distribution Agreement. If the Supplier does not make a
proposal acceptable to the Distributor, the Distributor may cause the
manufacture, marketing and sale of such New Product under the terms of
the License Agreement.
10. DEFECTS AND SAMPLING
10.1 In the case of defects in the Products, the Distributor shall notify
the Supplier of such defects as soon as practically possible after the
date of delivery of the Products, but in any event within twenty-eight
days after the date of delivery or in the case of latent defects as
soon as practicable after discovery thereof. Promptly after receipt of
such notice, the Supplier shall replace defective Products, credit the
account of the Distributor for defective Products, or refund any monies
paid by the Distributor for defective Products, at the option of the
Distributor.
10.2 The Distributor shall not, without the Supplier's consent, sell or
otherwise dispose of any Products which are damaged or defective,
whether in respect of contents or packaging and shall comply with the
Supplier's instructions as to the disposal of such Products.
10.3 The Supplier shall submit to the Distributor for its inspection,
samples of the Products and associated packaging, advertising and
promotional material as may be reasonably requested by the Distributor
on 30 days' written notice.
11. HANDLING AND STORAGE
11.1 The Distributor shall use commercially reasonable efforts to ensure
that proper handling, storage, control and inspection is made of the
Products while the Products are in its possession and shall use its
commercially reasonable efforts to procure the same when the Products
are passed on to other distributors or sales outlets, until the
Products are purchased by the consumer.
12. FINANCIAL TERMS
12.1 The initial prices of the Products shall be those set out in Schedule 3
hereto. The selling prices shall be established on a variable
manufacturing cost plus same percentage margin thereon as the Supplier
has used to determine transfer prices for the Products in the 1995 and
1996 calendar years. The selling prices shall be valid
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<PAGE>
for a one-year period from January to January, provided that if an
extraordinary change occurs in variable costs which renders it
commercially impracticable for the Supplier to perform its obligations
under this Agreement, then the Supplier will have the right to make an
interim price increase (and the obligation to eliminate such price
increase upon the termination or reversal of such extraordinary change)
at any time, subject to the notice requirement set forth in this
Section. The Supplier shall send a written notice of any price increase
at least three months before it is to become effective. Any price
increase will not apply to Products ordered prior to the effective date
of such price increase. If variable costs other than those for raw
materials increase at a rate greater than 4% per year, price increases
shall be computed to reflect a rate of increase of only 4%.
12.2 All payments hereunder will be made by telegraphic transfer as arranged
with the Supplier in United States dollars.
12.3 Payment for the Products shall be made by the Distributor in full and
without deduction, set-off or counterclaim notwithstanding that the
Distributor may have a claim against the Supplier.
12.4 The full price for the Products will be payable by the Distributor no
later than 45 days from the date of receipt of the Products or of the
invoice, whichever is later. If the Distributor fails to make any
payments within 60 days after they are due (i.e., 60 days after the end
of the 45 day period), applying all payments to the oldest outstanding
undisputed invoices, the Supplier may, on at least 7 days' prior notice
to the Distributor, suspend shipments of Products to the Distributor
until there are no outstanding undisputed sums which were not paid
within 60 days after they were due.
12.5 The Distributor shall not be entitled to pledge or in any way charge by
way of security for any indebtedness any of the Products which remain
the property of the Supplier.
12.6 Any duties, taxes or other charges levied upon or as a result of the
import of the Products into the Territory, shall be for the sole
account of the Distributor who is and shall accept responsibility as
the importer of the Products into the Territory.
13. INDEMNITY
13.1 The Supplier agrees to indemnify, defend and hold harmless the
Distributor and its affiliates, subsidiaries, parent companies, related
companies, officers, directors, employees, agents or representatives
against any and all claims, losses, damages, expenses, obligations,
penalties, demands, suits, procedures, assessments, judgments, costs
and liabilities (including costs of collection, investigation,
reasonable attorney's fees and other costs of defenses) incurred by
them, arising out of or resulting from (i) any claim relating to
defective quality of the Products at the time title to such Products
passes to the Distributor or the failure of the Supplier to meet any
requirements of law which exist at the date of this Distribution
Agreement (or changes in such requirements of which the Supplier is
notified by the Distributor pursuant to Section 4.2.3 ("Notified Legal
Changes")) in the Territory in respect of them, including but
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not limited to, ingredients, recipes, packaging and labelling,
trademarks, copyrights and patents, (ii) any claim of statutory or
common law trademark infringement or dilution relating to the use by
the Distributor of the Trademarks or any other intellectual property
pursuant to this Distribution Agreement, and (ii) any breach of any
representation, warranty, covenant or agreement made by the Supplier
herein.
13.2 The Supplier warrants that the Products will at the time of unloading
at the United States port be substantially of the nature, substance and
quality described in the Supplier's literature from time to time
relating to the Products and will comply with all applicable statutory
requirements in the Territory in respect of ingredients, recipes,
packaging and labelling which exist as of the date of this Distribution
Agreement or which are Notified Legal Changes.
13.3 The Distributor shall if so requested under the written instructions
and at the expense of the Supplier, take up, defend, discuss and settle
any such claim by a third party as referred to in clause 13.1, in the
name of the Distributor or in the joint names of the Distributor and
the Supplier and shall give the Supplier all information and assistance
in its power.
14. TRADE MARKS AND COPYRIGHT
14.1 The Supplier hereby grants to the Distributor the right to use the
Trade Marks on the Products.
14.2 In all advertisements, sales and promotional literature in which any of
the Trade Marks appear, the Distributor must identify such Trade Marks
as trade marks owned by the Supplier by placing the symbol (R) after
the mark keyed to the statement "(R) Registered Trade Mark of United
Biscuits". In no instance shall the Distributor use any Trade Mark in
any manner which tends to indicate or imply that such Trade Mark is not
solely and exclusively the property of the Supplier.
14.3 The Distributor agrees that it will sell the Products only under the
Trade Marks and that the Distributor will use the Trade Marks only on
the Products (including products which become Products pursuant to
Section 9) and products subject to the License Agreement.
14.4 In all advertisements, sales and promotional literature or other
printed matter in which any Trade Mark appears the Distributor must
identify itself by its full name and address.
14.5 The Distributor agrees to notify the Supplier in writing of any
infringements, counterfeits, or passing off affecting the Trade Marks
or any patent, name, design, copyright or other intellectual property,
immediately after gaining knowledge thereof, and to cooperate fully in
any reasonable action thereon which the Supplier may consider
appropriate.
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14.6 In the event that the Supplier decides to take no action the
Distributor shall, however, be entitled at the Distributors expense to
take any action thereon but shall keep the Supplier informed of such
action and shall not compromise or settle such action without affording
the Supplier the opportunity of continuing such action at the
Supplier's expense.
14.7 The Distributor shall not be entitled to grant any licenses in respect
of the Trade Marks except in the case when the Supplier is unable to
fill orders for 90 days as described in Section 8.3.
15. INSURANCE
15.1 The Supplier shall obtain or cause to be obtained for it and the
Distributor, and the Supplier shall maintain at its sole cost and
expense, product liability insurance from an insurer or insurers, or by
means of self-insurance, in conformity with industry standards and at
the request of the Distributor, business interruption insurance
covering the Distributor's loss if such business interruption insurance
is available and so long as the Distributor reimburses the Supplier for
the incremental cost of covering the Distributor's (as opposed to the
Supplier's) loss. The Supplier will furnish the Distributor with a copy
of each such insurance policy issued by an insurer and a certificate
evidencing that the Distributor is covered thereby and that such
insurance coverage cannot be changed or discontinued unless the
Distributor has been given 30 days written notice by the insurer.
16. BREACH
16.1 If there is a breach by either party to this Agreement, the sole remedy
of the aggrieved party will be to seek damages or specific performance,
and in no event may such party terminate this Agreement as a result
thereof.
16.2 It is expressly understood by the parties that if the Distributor
breaches any of its obligations under the License Agreement with
respect to the Products subject to this Agreement, the Supplier's sole
remedy will be to seek damages or specific performance, and in no event
may the Supplier terminate the Distributor's rights with respect to
such Products.
17. CHANGE OF NAME OF DISTRIBUTOR
17.1 The Distributor shall, so long as the License Agreement is exclusive,
have the right to use the name "Carr's", together with the word
"Distributor" or a similar word, as its corporate name or in any wholly
owned subsidiary or business unit or division engaged in distribution
hereunder.
18. CONFIDENTIALITY
18.1 Each party agrees that it shall not and will use its commercially
reasonable efforts to provide that each of its officers and employees
shall not divulge or communicate to
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any person any of the other party's confidential information, know-how
or trade secrets other than to its own employees or agents whom it is
essential should know the same in order for it to fulfil its
obligations under this Agreement.
19. FORCE MAJEURE
19.1 Neither party shall be liable for any failure to perform any of its
obligations hereunder due to any cause not within its reasonable
control, provided that the party so affected notifies the other party
of such cause without delay.
20. NON ASSIGNMENT
20.1 The Distributor shall not assign, nor purport to assign, the benefits
or obligations of this Agreement without the prior written consent of
the Supplier other than to one or more of its affiliates, provided,
however, that this Distribution Agreement and any and all rights
hereunder may be transferred upon the sale of all or substantially all
of the assets or stock of the Distributor, or in connection with any
other direct or indirect change of control of the Distributor. Nothing
in this paragraph shall be deemed to prevent the Distributor from
distributing through or to any person, including, without limitation,
through master distributorship agreements or subdistributorships or
through any other method or arrangement currently used by the
Distributor or its subsidiaries or otherwise commercially reasonable.
21. WAIVER
21.1 The failure of any party at any time to enforce any provision of this
Agreement, shall not affect its right thereafter to require complete
performance by the other party.
22. SEVERABILITY
22.1 If any provision of this Agreement shall become or be declared illegal,
invalid or unenforceable for any reason whatsoever by any court or
other competent tribunal or authority in any part of the Territory,
such provision shall be divisible from this Agreement and shall be
deemed to be deleted from this Agreement and all other clauses or parts
thereof contained in the Agreement shall remain in full force and
effect.
23. NOTICES
23.1 All notices to be given hereunder shall be given in writing in the
English language and delivered personally, or by recorded delivery or
registered post to the parties at the respective addresses of the
parties given in this Agreement or any other such address as either
party may designate by notice in writing to the other party. All
notices shall be deemed to have been served, if by personal delivery on
the next working day after delivery and if by recorded delivery or
registered post, 2 working days after posting except in the event of
any postal or other strike or industrial action affecting postal
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communications in or between the United Kingdom and/or the Territory
(in which case notices shall be given personally or by facsimile or
telex transmission).
24. AMENDMENT
24.1 This Agreement shall supersede all prior agreements and communications
between the parties relating to the subject matter hereof and may only
be amended in writing, signed by an authorized officer of both parties.
25. TERMINATION
25.1 This Agreement may not be terminated by the Supplier. This Agreement
may be terminated by the Distributor at any time after December 31,
2000, upon 12 months' prior written notice.
26. LANGUAGE
26.1 This Agreement shall be written in the English Language which shall
prevail over any translation hereof.
27. ENTIRE AGREEMENT
27.1 Each party hereby confirms that this Agreement, including the
provisions of the License Agreement to which it refers, sets out the
entire agreement and understanding between the parties and that it
supersedes all previous agreements, arrangements and understandings
between them as to the subject matter hereof.
28. PROPER LAW
28.1 The construction, performance and validity of this Agreement shall be
governed by the law of the State of New York, including the New York
Uniform Commercial Code, relating to contracts made and to be performed
in that state.
28.2 The Distributor hereby designates, appoints and empowers Simpson
Thacher & Bartlett, currently located at 425 Lexington Avenue, New
York, New York, Attn. Robert E. Spatt, as its authorized agent, and the
Supplier hereby designates, appoints and empowers Rogers & Wells,
currently located at 200 Park Avenue, New York, New York 10166, Attn.
David W. Bernstein, as its authorized agent, in each case to accept,
receive and acknowledge for and on behalf of each respective party, as
the case may be, and its property, service of any and all process which
may be served in any action, suit or proceeding in the State of New
York, which appointment shall be irrevocable until the appointment and
acceptance of a successor authorized agent. Each respective party
further submits to the personal jurisdiction of any Federal or state
court sitting in the State of New York in the United States of America
in any such legal action, suit or proceeding and agrees that, to the
fullest extent permitted by applicable law, such service of process may
be made personally or by mailing or delivering a copy of the summons
and complaint or other legal process in any such
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legal suit, action or proceeding to the applicable party, as the case
may be, in care of such agent at the aforesaid address, and such agent
is hereby authorized to accept, receive and acknowledge the same for
and on behalf of the applicable party, as the case may be, and to admit
service with respect thereto. Upon service of process being made on
such agent as aforesaid, a copy of the summons and complaint or other
legal process shall be mailed to the applicable party, as the case may
be, by registered mail, return receipt requested, at its address
specified in or pursuant to Paragraph 23 hereof. In the event that for
any reason the agent mentioned above shall not serve as agent to
receive service of process in the State of New York in accordance with
the provisions of this Paragraph 28.2, the applicable party shall
promptly appoint a successor agent satisfactory to the other party and
deliver evidence in writing of the successor agent's acceptance of such
appointment. To the extent that either party has or hereafter may
acquire any immunity from jurisdiction of any court or from any legal
process (whether through service or notice, attachment prior to
judgment, attachment in aid of execution, execution or otherwise) with
respect to itself or its property, each respective party hereby
irrevocably waives such immunity in respect of its obligations with
respect to this Agreement. Each respective party agrees, to the extent
permitted by law, that a final and nonappealable judgment against it in
any action, suit or proceeding contemplated above shall be conclusive
and may be enforced in any other jurisdiction within or outside the
United States by suit on the judgment, a certified or exemplified copy
of which shall be conclusive evidence of the fact and amount of such
judgment.
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IN WITNESS WHEREOF the parties have executed this Agreement by their respective
duly authorized officers on the day and year first before written.
UNITED BISCUITS (UK) LIMITED
By:_____________________________
Name:
Title:
SHAFFER, CLARKE & CO. INC.
By:_____________________________
Name:
Title:
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SCHEDULE 1
PRODUCTS
See Schedule 3
17
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SCHEDULE 2
TRADE MARKS
Registration Reg. No.
CARR'S 310969
CARR'S MINI CROISSANT SNACKS 1865897
CARR'S TABLE WATER CRACKERS & DESIGN 1425867
CROISSANT CRACKERS 1358297
HOME WHEAT 1841967
HOB-NOBS 1681334
ROYAL PORTIONS 1807807
TABLE WATER 943705
WHEATOLO 600104
CARR'S MUESLI COOKIES 1641423
Applications App. No.
CARR'S TABLE WATER CRACKERS & 75-012774
DESIGN
THE CROISSANT OF CRACKERS 74-715569
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SCHEDULE 3
PRICE LIST
19
Exhibit 10.6
TRADEMARK LICENSE AGREEMENT
Dated as of January 26, 1996
Between
UNITED BISCUITS (UK) LIMITED
and
SHAFFER, CLARKE & CO., INC.
<PAGE>
TRADEMARK LICENSE AGREEMENT
Trademark License Agreement, dated as of January 26, 1996, between
UNITED BISCUITS (UK) LIMITED, an English corporation (the "Licensor") and
SHAFFER, CLARKE & CO., INC. (the "Licensee"), a Delaware corporation and wholly
owned subsidiary of INFLO Holdings Corporation ("INFLO").
This License Agreement is being entered into in connection with the
acquisition by INFLO of all of the outstanding shares of Common Stock of UB
Investments US Inc. pursuant to the terms and conditions set forth in the Stock
Purchase Agreement dated November 5, 1995, as amended on January 26, 1996 (the
"Purchase Agreement") between INFLO and UB Investments (Netherlands) B.V.
Section 9.6 of the Purchase Agreement provided that the Licensor and
Licensee execute a trademark license agreement substantially in the form hereof.
The Licensor is the owner of rights in the United States of America
in certain trademarks and other intellectual property as utilized in the
production, manufacture, sale, marketing, promotion, advertising and
distribution of certain biscuits, crackers and similar products.
<PAGE>
2
The Licensee desires, and the Licensor desires to grant, the
exclusive license to use the Licensed Trademarks on or in connection with the
production, manufacture, sale, marketing, promotion, advertising and
distribution of the Products with respect to the Territory.
The Licensee acknowledges the reputation and quality of products
heretofore sold under the Licensed Trademarks and the Licensor's desire to
safeguard, promote and enhance that reputation by ensuring the future quality of
the products developed, produced, manufactured, sold, marketed or distributed
under the Licensed Trademarks.
To effect the foregoing, the parties hereto agree as follows:
SECTION 1. DEFINITIONS.
"Affiliates" as used herein means, with respect to any person, such
person's affiliates, subsidiaries, parent companies, related companies,
officers, directors, employees, agents or representatives.
"Carr's Products" as used herein means Products as defined in Clause
1.9 of the Distribution Agreement.
<PAGE>
3
"Control Affiliate" as used herein means, with respect to the
Licensee, a corporation, partnership or other business organization controlling,
controlled by, or under common control with the Licensee, and the term "control"
as used in this context means the possession, direct or indirect, whether
through the ownership of voting securities, by contract, or otherwise, of the
power to direct or cause the direction of the management and policies of, and
the right to control the use of the Licensed Trademarks by, another person.
"The Co-Pack Products" as used herein means products supplied to the
Licensee by Griesson Germany and P.L. Foods Canada and either being made or in
development as of the date of the Agreement.
"Deficiency Notice" as used herein shall have the meaning set forth
in Section 4(e)(i) hereof.
"Distribution Agreement" means the distribution agreement entered
into by the parties hereto and of even date.
"FDA" as used herein shall have the meaning set forth in Section
4(e)(i) hereof.
<PAGE>
4
"Governmental Authority" as used herein means any federal, state,
county, local, foreign or other governmental department, regulatory body,
commission, board, bureau, agency or instrumentality.
"Inspector" as used herein shall have the meaning set forth in
Section 4(c) hereof.
"Licensed Trademarks" as used herein means any and all (i)
registered or applied for trademarks listed in Exhibit A attached hereto, and
all related designs, trade dress, copyrights and unregistered trademarks
currently or hereafter used by the Licensor, and (ii) any Modified Marks (as
defined in Section 3(b) below) or New Marks (as defined in Section 3(b) below)
which become Licensed Trademarks hereunder pursuant to Section 3(b) below.
"Line Extension Products" as used herein shall have the meaning set
forth in Section 1.5 of the Distribution Agreement.
"Losses" as used herein shall have the meaning set forth in Section
9(a) hereof.
"Modified Mark" as used herein shall have the meaning set forth in
Section 3(b) hereof.
<PAGE>
5
"New Mark" as used herein shall have the meaning set forth in
Section 3(b) hereof.
"Products" as used herein means biscuits, cookies, crackers and
other baked snacks.
"Qualifying Joint Venture" as used herein means a joint venture of
which the Licensee is a constituent venturer with either (i) at least a fifty
percent (50%) equity ownership interest in such joint venture, or (ii) if the
laws of any applicable jurisdiction preclude the Licensee from owning at least a
fifty percent (50%) equity ownership interest, then at least a forty-nine
percent (49%) equity ownership interest in such joint venture, and in the case
of either (i) or (ii) the Licensee has the right to control the use of the
Licensed Trademarks by such joint venture.
"Restricted Person" as used herein shall have the meaning set forth
in Section 2(g) hereof.
"Territory" as used herein means the United States of America,
including its territories, possessions, commonwealths, trusteeships and Puerto
Rico.
<PAGE>
6
SECTION 2. GRANT TO THE LICENSEE AND RELATED MATTERS.
(a) Grant. Subject to paragraph 2(b) below and upon the terms and
conditions of this License Agreement, the Licensor hereby grants to the Licensee
the exclusive right and license to use the Licensed Trademarks on and in
connection with the development, production, manufacture, sale, marketing,
promotion, advertising and distribution of the Products in the Territory. In
consideration of such license the Licensee shall pay to the Licensor royalties
as set forth in Exhibit B. If for three consecutive two-year periods there are
arbitral findings that the Distributor under the Distribution Agreement has not
used commercially reasonable efforts during the relevant two-year period, the
license granted pursuant to this Agreement will thereupon automatically become
non-exclusive with respect to any future Products sold pursuant to this
Agreement, provided that no rights of the Licensee to any of the Carr's Products
to which the Distribution Agreement relates, but which are governed by this
Agreement pursuant to Section 8.3 of the Distribution Agreement, shall ever
become non-exclusive.
The Licensor also hereby grants to Licensee the exclusive,
perpetual, royalty-free right and license to use the Licensed Trademarks on and
in connection with the manufacture,
<PAGE>
7
sale, marketing, promotion, advertising and distribution of The Co-Pack Products
in the Territory whether supplied by the current suppliers or substitute
suppliers.
(b) Licensor's Retained Rights and Restrictions.
(i) All rights in the Licensed Trademarks other than those
specifically granted herein are reserved to the Licensor for its own use and
benefit. Notwithstanding the foregoing, except for Products sold to the Licensee
under the Distribution Agreement, the Licensee will have the right to disapprove
the following products if it makes a good faith determination, not unreasonably
exercised, that such products or other matters relating to them might materially
adversely affect the reputation or sales of Products in the Territory as gourmet
products: (a) all products which are not Products under this License Agreement,
which the Licensor proposes to sell or license under the Licensed Trademarks;
and (b) all products which constitute Products at any time after the Licensee's
rights hereunder become non-exclusive pursuant to Section 4.5.6 of the
Distribution Agreement. The Licensor will not sell in the Territory any product
which the Licensee disapproves in accordance with this Section 2(b).
(ii) The Licensor undertakes not to sell the Products or any
products with substantially similar formulation or process
<PAGE>
8
(whether or not utilizing the Licensed Trademarks) or any products which compete
directly with any Products (whether or not utilizing the Licensed Trademarks)
(collectively, "Competing Products") in the Territory other than to the
Licensee. The Licensor also undertakes not to sell the Products or any Competing
Products to any person whom the Licensor knows or has good reason to believe
would ship the Products or Competing Products into the Territory. Upon receipt
by the Licensor of written notice from the Licensee stating the Licensee's good
faith belief that a person identified in such notice is selling Products of
Competing Products in or into the Territory, the Licensor will take reasonable
steps to investigate such claim and to preclude any such sale. It is agreed
between the Licensee and the Licensor that this Section 5.1 shall not be
violated by the Licensor's acquiring a business which at the time it is acquired
manufactures Competing Products and sells them in the Territory and permitting
such business to continue to manufacture such products (but no other Competing
Products) and sell them in the Territory.
(iii) With respect to each Product other than The Co-Pack Products
for which Licensee proposes to use any of the Licensed Trademarks under this
Agreement (in this clause, "Proposed Products"), Licensor shall have the right
to disapprove such Proposed Product if it makes a good faith determination not
<PAGE>
9
unreasonably exercised, that such Proposed Product or other matters relating to
it might materially adversely affect the reputation or sales of Licensor's
Products in the Territory as gourmet products. If the Licensee gives Licensor
written notice specifying a Proposed Product, Licensor will give Licensee
written notice, within 30 days of its receipt of Licensee's notice, stating
whether that Proposed product is approved or disapproved, and stating in
reasonable detail the reasons for any disapproval. Licensor's failure timely to
respond to the Licensee's notice will be deemed approval.
(c) Name Change of Licensee. Notwithstanding anything to the
contrary contained in this License Agreement, the Licensee shall have the right
to use the name "Carr's" as its corporate name or in any wholly owned subsidiary
or business unit or division, provided that the corporate name includes the word
"Distribution" or a similar word. If any rights of the Licensee become
non-exclusive pursuant to Section 2(a), the Licensee will promptly cause the
name "Carr's" to be removed from all such corporate names.
(d) Ownership.
(i) The parties acknowledge and agree that as between the
Licensor and the Licensee the Licensed Trademarks are the sole and
exclusive property of the
<PAGE>
10
Licensor. The Licensee acknowledges and agrees that it shall not acquire
any right, title or interest in or to the Licensed Trademarks as a result
of this License Agreement (other than the license expressly granted it
hereunder), or the Licensee's use of the Licensed Trademarks, or as a
result of any other act or thing, that the Licensee will not attack the
Licensor's title to or ownership of the Licensed Trademarks, and that all
use of the Licensed Trademarks by the Licensee and all goodwill generated
thereby shall inure to the benefit of the Licensor.
(ii) The parties acknowledge and agree that any registered,
applied for or unregistered trademarks, designs, trade dress and
copyrights which are currently owned or may in the future be developed by
the Licensee which are not Licensed Trademarks or Carr's Trademarks and
which are used by the Licensee on or in connection with the Products, and
which do not contain or include the Licensed Trademarks or the Carr's
Trademarks, shall remain the sole and exclusive property of the Licensee.
(e) Sublicenses. Subject to the Licensor's approval, which will not
be unreasonably withheld or delayed, the Licensee shall have the right to grant
a sublicense to use the Licensed Trademarks without the express prior written
approval of the
<PAGE>
11
Licensor, to any Control Affiliate of the Licensee or to any Qualifying Joint
Venture. Any sublicense granted to any Control Affiliate or Qualifying Joint
Venture pursuant hereto shall terminate immediately if such Control Affiliate
ceases to be a Control Affiliate of the Licensee or the Licensee ceases to be a
constituent venturer of the joint venture with the requisite equity ownership
interest and Licensed Trademark control rights specified above. In addition, the
Licensee shall be entitled to utilize one or more third-party distributors,
packers and/or manufacturers in connection with the distribution, packing,
manufacture and/or production of the Products for and on behalf of the Licensee
and under the Licensee's direction and control, and shall have the right to
sublicense the right to use the Licensed Trademarks hereunder to any such third
party distributor, packer, or manufacturer to the limited extent necessary to
enable such third party to perform the particular functions for which such third
party is engaged without the prior approval of the Licensor. In the event of any
sublicense, the Licensee shall remain primarily obligated under all of the
provisions of this License Agreement. No sublicense agreement shall contain any
terms or conditions, and the Licensee shall not take or authorize any actions in
connection with any sublicense agreement, inconsistent with the terms and
conditions hereof. The Licensor shall appoint the Licensee its agent solely for
the purpose of exercising quality control as provided herein over any
<PAGE>
12
such sublicensee, third-party distributor, packer, and/or manufacturer, and the
Licensor retains the right to revoke any such appointment at any time if the
Licensor reasonably believes that the Licensee is not adequately exercising such
quality control and to reinstate such appointment at any time. Notwithstanding
any such appointment, the Licensor shall have the independent right to exercise
quality control directly over all sublicensees, third-party distributors,
packers, and/or manufacturers if the Licensor reasonably believes that the
Licensee is not adequately exercising such quality control. The Licensee will
take all steps reasonably necessary or desirable to enforce the terms of this
License Agreement against its sublicensees, third-party distributors, packers,
and/or manufacturers.
(f) Advertising and Promotional Merchandise. The Licensor hereby
grants to the Licensee the right to use the Licensed Trademarks on or in
connection with any advertising or promotional merchandise or other materials
directly relating to the sale, marketing or distribution of any Products. Any
promotional merchandise on or in connection with which the Licensed Trademarks
are utilized must be of a quality consistent with the standards of quality of
promotional merchandise on which the Licensor utilizes the Licensed Trademarks;
it being agreed that any promotional merchandise obtained from the Licensor or a
<PAGE>
13
source designated by the Licensor shall be presumed to meet such
standards of quality.
SECTION 3. METHOD OF USE OF THE LICENSED TRADEMARKS.
(a) Form and Manner. The Licensee shall use the Licensed Trademarks
in such form and manner as currently used by the Licensor as of the date hereof
and shall faithfully and accurately reproduce the Licensed Trademarks. The
Licensee shall notify the Licensor in writing of any desired change in the form
of a Licensed Trademark and request the Licensor's approval thereof, which
approval will not be unreasonably withheld or delayed. If the Licensor fails to
approve any such requested change in form, the Licensor will upon request of the
Licensee specify in writing the reasons for such disapproval.
Notwithstanding the foregoing, the Licensee shall have the right,
without the prior approval of the Licensor, to use the Licensed Trademarks on
Products (but not as or in any manner which would make it appear to be a
composite mark), in combination, juxtaposition or conjunction with the trade
name or house trademark of the Licensee, any Qualifying Joint Venture or any
constituent venturer thereof.
<PAGE>
14
(b) Modified and New Trademarks. If at any time during the term
hereof, the Licensor uses any modified or derivative version of the Licensed
Trademarks, including, without limitation, any version containing the name
"Carr's" (a "Modified Mark"), then unless such Modified Mark would be generally
considered inappropriate, applying reasonable standards, for use in the business
relating to the applicable Products, such Modified Mark shall automatically be
deemed to constitute a Licensed Trademark hereunder and shall be owned by the
Licensor. If at any time during the term hereof, the Licensor uses any new
trademark containing the word "Carr's" (as opposed to any modified or derivative
version of the Licensed Trademarks) (a "New Mark"), such New Mark shall, unless
it would be generally considered inappropriate, applying reasonable standards,
for use in the business relating to the applicable Products, automatically be
deemed to constitute a Licensed Trademark hereunder and shall be owned by the
Licensor.
(c) Display. The Licensee shall apply such trademark notices,
copyright notices or other markings in connection with the Licensed Trademarks
as may be necessary or reasonably deemed desirable by the Licensor under the
laws or regulations of each territory and country where such Licensed Trademark
is used. The Licensee shall include on any Product label or packaging on which
any Licensed Trademark appears a statement in substantially the
<PAGE>
15
following form (subject to such modifications as may be required by any laws,
rules or regulations of any applicable Governmental Authority, to reflect any
permitted or required change of corporate name, and to translation into
applicable foreign languages where necessary or appropriate):
"Distributed by Shaffer, Clarke & Co., Inc. under license."
The Licensee shall also include on all labels and packaging any consumer inquiry
or complaint information (such as an address or telephone number) which
customarily appears on other products of the Licensee in the Territory.
SECTION 4. QUALITY STANDARDS AND PROCEDURES.
(a) Quality. The Licensee acknowledges that the Licensed Trademarks
have become associated generally with products that possess a positive and
wholesome image, and the Licensee agrees not to use the Licensed Trademarks in
any manner, or in connection with the production, manufacture, sale, marketing,
advertising, promotion or distribution of any Products, inconsistent with such
image. The Licensee agrees to market and promote the Products as a high quality
brand.
<PAGE>
16
(b) Samples. The Licensee shall submit to the Licensor for its
inspection, testing and quality evaluation representative samples of Products
and tags, labels, packaging, advertising, display and promotional material
related thereto, and any other printed matter of any kind bearing or sold under
a Licensed Trademark, as may reasonably be requested by the Licensor for
purposes of determining compliance with the terms of this License Agreement.
Such submissions shall be made at such times as the Licensor may reasonably
request upon thirty (30) days prior written notice, but no more frequently than
annually. All shipping and packing costs in connection with such inspection,
testing and quality evaluation shall be borne by the Licensor.
(c) On Site Inspections. Upon reasonable notice, but no more
frequently than annually, the Licensor shall have the right to notify the
Licensee, whereupon the parties agree to initiate the inspection provisions set
forth herein. The parties shall, within five (5) days of delivery of such notice
under this subsection 4(c) refer the matter to a mutually agreed upon
independent, competent, nationally recognized food laboratory similar to the
National Food Laboratory of the National Food Processors' Association (the
"Inspector") who shall have access for inspection purposes to the premises
wherein Products are produced, manufactured or held for distribution or sale
during
<PAGE>
17
regular business hours at such time or times as to not unduly interfere with the
operations of the Licensee. The Licensee shall provide the Inspector with copies
of formulas, specifications, standards and procedures used by the Licensee in
connection with the Products and of all tests of Products conducted by or on
behalf the Licensee to determine compliance with quality control standards. In
addition, the Inspector shall have access to the Licensee's books and records
relating to such formulas, specifications, standards and procedures and the
implementation thereof. The sole purpose of such inspection shall be to
determine whether the Licensee has complied with the quality standards or other
requirements of this Section. The Inspector shall not reveal the materials
provided by the Licensee to any third party. The Inspector shall act as
arbitrator and determine, based solely on presentations by the Licensor and
Licensee and on the basis of the standards set forth in this Section, whether
the Licensee has complied with the quality standards or other requirements of
this Section. The Inspector shall deliver its written determination to the
Licensor and Licensee no later than thirty (30) days from the date such matter
is referred to it. The Inspector's determination shall be conclusive and binding
upon the parties. In the event that any inspection of any premise or records
reveals that the Licensee has failed to comply with the quality standards or
other requirements of this Section, the Inspector shall reinspect such
<PAGE>
18
premise or records upon the earlier to occur of the Licensor's receipt of notice
of cure by the Licensee or the expiration of any applicable cure period set
forth herein. All expenses of conducting such inspections shall be borne by the
Licensor, unless such inspection reveals that the Products do not comply in any
material respect with the standards of quality or other requirements set forth
herein, in which case the Licensee shall pay all reasonable costs and expenses
of carrying out the inspection.
(d) Governmental Inquiries. The Licensee shall immediately notify
the Licensor in writing of any investigation, inquiry, claim or sanction by any
Governmental Authority regarding any quality, labeling, advertising or other
regulatory matter relating to the Products and shall keep the Licensor advised
of the progress and findings of such investigation or inquiry.
(e) Deficiency Procedures.
(i) If the Licensor reasonably determines that any particular
Product does not meet the required standards of quality set forth in this
Section, the Licensor shall notify the Licensee in writing of such defect
(a "Deficiency Notice"), providing the Licensee with reasonable detail
regarding the deficiency therein. If the Licensee disputes
<PAGE>
19
the Licensor's determination of deficiency and the parties are not able to
resolve the dispute between themselves, they shall refer the dispute to a
mutually agreed upon third party for resolution. Upon receipt of such
Deficiency Notice, if the Licensee or, if applicable, the mutually agreed
upon third party, concurs in the determination of deficiency, the Licensee
shall cure such deficiency within a commercially reasonable amount of
time, and shall provide the Licensor with evidence of such cure including
samples of such Product. If any deficiency is not cured within the
applicable time period set forth herein, the Licensee shall cease all use
of the Licensed Trademarks in connection with the production, manufacture,
distribution, sale, advertising and promotion of the Products in issue
unless and until such cure is achieved.
(ii) If any deficiency is such that any such Products are
subject to market withdrawal, recall or correction based on applicable
Food and Drug Administration ("FDA") or other applicable Governmental
Authority guidelines, including good manufacturing procedures, the
Licensee agrees to immediately implement such withdrawal, recall or
correction procedures at the Licensee's sole cost and expense and shall
coordinate and cooperate with the Licensor in connection therewith,
including with respect to
<PAGE>
20
all press releases and other public relations aspects thereof. Similarly,
if the Licensee is otherwise required or determines to withdraw from
market, recall or correct any such Products, the Licensee shall give the
Licensor prior notice of such withdrawal, recall or correction as soon as
practicable and the parties shall coordinate and cooperate with each other
in connection therewith, including with respect to all press releases and
other public relations aspects thereof.
(f) Compliance; Fitness for Use. The Licensee shall be solely
responsible for and shall comply with all laws, rules and regulations, if any,
of Governmental Authorities in connection with the production, manufacture,
distribution, sale, labeling, packaging, advertising and promotion of the
Products. The Licensee represents and warrants that the Products and all
materials related thereto (i) shall be in all respects noninjurious, (ii) shall
not be adulterated or misbranded within the meaning of any applicable laws,
rules or regulations of any Governmental Authority, (iii) shall not be packaged
or sold in damaged containers, which damage caused such products to be
adulterated or misbranded or in any way in violation of any such applicable
laws, rules or regulations, and (iv) shall not violate the rights of any other
person or entity; (it being understood and agreed that the representations and
warranties contained in
<PAGE>
21
subsections (i), (ii) and (iv) of this Section shall not apply to any such
violation to the extent it results from a breach by the Licensor of any of its
representations or warranties under this License Agreement or the Distribution
Agreement).
SECTION 5. TERM AND TERMINATION.
(a) Except as provided in Section 11(c) hereof, the initial term of
this License Agreement shall commence as of the date hereof and shall expire on
the 20th anniversary of such date; provided that the term of this License
Agreement shall be automatically extended for successive 20 year periods at the
option of the Licensee, unless the Licensee gives to the Licensor written notice
of termination at least 365 days prior to the scheduled expiration of the
then-current term.
(b) If the Licensee is in breach of any material obligation under this
Agreement, the Licensor may give written notice to the Licensee specifying the
nature thereof. If the breach is capable of being cured within 45 days after the
Licensee's receipt of that notice and the Licensee has failed substantially to
cure it within that period, or with respect to any other breach, if the Licensee
has failed within that period to take steps to commence to cure that breach or
has failed diligently to pursue such steps until that breach has been
substantially cured, then (except as provided in Section 11 (c)), the Licensor
may terminate this
<PAGE>
22
Agreement, without prejudice to any other rights or remedies the Licensor may
have, by giving written notice of termination to the Licensee.
SECTION 6. PROTECTION OF THE LICENSED TRADEMARKS.
(a) Existing and Pending Registrations. The Licensor shall maintain
at its expense each and every one of the registrations for the currently
existing Licensed Trademarks in full force and effect in the Territory,
including, but not limited to, renewing registrations to the extent required. In
addition, the Licensor shall prosecute at its expense (i) all currently pending
applications for registration in the Territory for the currently existing
Licensed Trademarks, (ii) any Modified Marks and (iii) any New Marks, and shall
use reasonable efforts to maintain, at its own expense, any registrations issued
pursuant to any such application referred to in (i), (ii) or (iii) above. The
Licensor's obligations pursuant to the preceding two sentences shall continue as
long as this License Agreement continues in effect, except to the extent the
parties may mutually agree to the contrary or to the extent maintenance of any
trademark is precluded by reason of the lack of use thereof, and the Licensee
agrees to provide assistance and documentation as is reasonably required by the
Licensor in connection with the foregoing.
<PAGE>
23
(b) Infringement. The Licensor and the Licensee shall notify each
other of any actual or threatened infringement of or act of unfair competition
or other harmful or wrongful activities of third parties with respect to the
Licensed Trademarks as to which they have notice, and shall consult and
cooperate with each other with respect to any action to be taken with respect
thereto, including the settlement thereof.
Unless otherwise agreed in writing by the parties, the party that
commences and prosecutes any litigation or proceeding to protect the Licensed
Trademarks pursuant to this Section shall be entitled to all monetary damages
received as the result thereof. Each party shall cooperate with the other in the
prosecution of any litigation or proceeding provided for in this Section.
Notwithstanding anything to the contrary contained in this Section, no party
shall enter into any agreement, consent order or other resolution of a claim by
or against a third party that adversely affects any rights of any other party
with respect to the Licensed Trademarks or the Carr's Trademarks without the
prior written consent of such other party.
If the Licensor and the Licensee desire to agree to joint
participation in any such litigation or other proceeding with respect to the
Licensed Trademarks, the respective responsibilities of the parties, and their
contributions to the
<PAGE>
24
costs and participation in any recoveries, will be agreed upon in writing prior
to undertaking such action. Notwithstanding anything to the contrary contained
herein, with respect to any such litigation or proceeding which the Licensor
desires to commence that directly involves the Products, the Licensor shall
offer the Licensee the opportunity to participate in such litigation or
proceeding and, if the Licensee desires to do so, the parties shall promptly
negotiate in good faith regarding the matters referred to in the immediately
preceding sentence.
(c) Claims Against The Licensee. The Licensee shall promptly notify
the Licensor of any claim of infringement or any complaint based upon the
Licensee's use or authorization of use of the Licensed Trademarks and of any
suit, action or proceeding brought against the Licensee based upon said claim or
complaint, and the provisions of Section 9 shall apply.
SECTION 7. RECORDATION OF AGREEMENT.
The parties shall cooperate to determine and comply with applicable
laws or regulations in the Territory with respect to the recordation of,
validation of, or otherwise to render effective this License Agreement.
SECTION 8. REPRESENTATIONS AND WARRANTIES.
<PAGE>
25
(a) Representations and Warranties of the Licensor.
The Licensor represents and warrants as follows:
(i) Due Organization and Power of the Licensor. The Licensor
is a corporation duly organized, validly existing and in good standing
under the laws of England and the United Kingdom and has all requisite
corporate power and authority to enter into this License Agreement and
perform its obligations hereunder.
(ii) Authorization and Validity of License Agreement. The
execution, delivery and performance by the Licensor of this License
Agreement and the consummation by it of the transactions contemplated
hereby have been duly authorized by its Board of Directors, and no other
corporate action on the part of the Licensor is necessary for the
execution, delivery and performance by the Licensor of this License
Agreement and the consummation by the Licensor of the transactions
contemplated hereby. This License Agreement has been duly executed and
delivered by the Licensor, and this License Agreement is the legal, valid
and binding obligation of the Licensor, enforceable against the Licensor
in accordance with and subject to its terms.
<PAGE>
26
(iii) No Conflict. The execution, delivery and performance by the
Licensor of this License Agreement and the consummation by the Licensor of
the transactions contemplated hereby do not and will not (A) violate any
provision of any federal, state, local or foreign law, rule or regulation
or any order, injunction, judgment or decree applicable to the Licensor;
(B) require any consent or approval of, or filing with or notice to, any
Governmental Authority under any provision of law applicable to the
Licensor other than filings under applicable trademark laws; (C) violate
any provision of the Certificate of Incorporation or By-Laws or other
constituent documents of the Licensor; or (D) require any consent,
approval or notice under, conflict with, or result in the breach, lapse,
cancellation or termination of, or constitute a default under, or result
in the acceleration (whether after the filing of notice or the lapse of
time or both) of any right or obligation of or the performance by the
Licensor under, or result in a loss of any benefit to which the Licensor
is entitled under any indenture, mortgage, deed of trust, lease, license,
franchise, contract, agreement, concession or other instrument to which
the Licensor is a party or by which it, or any of its assets, are bound or
encumbered, where the failure to obtain such consent, approval or notice
or the occurrence of any of the matters referred to in this
<PAGE>
27
subsection (D) would adversely affect the Licensee's rights hereunder.
(iv) The Licensor's Rights in the Licensed Trademarks. The
Licensed Trademarks are registered or applied for in the Licensor's name
under the registration/application numbers set forth in Exhibit A hereto,
as the same may be amended from time to time, and such registrations are
duly issued, currently valid, and subsisting and such applications are
duly filed. The Licensor is not a party to any pending suit, dispute or
claim, and has received no notice of any threatened suit, dispute or
claim, regarding the registration or use of the Licensed Trademarks, nor
is the Licensor aware of (A) any trademark, patent or other intellectual
property rights of any third party that would be infringed by the use of
the Licensed Trademarks authorized pursuant to this License Agreement, (B)
any third-party claim of ownership of any right, title or interest in and
to, or license to use, the Licensed Trademarks, inconsistent with the
rights granted to the Licensee hereunder, or (C) any fact or circumstance
that would impair the Licensor's right and power to enter into this
License Agreement and consummate the transactions contemplated hereby or
to grant the Licensee the right to use the Licensed Trademarks as provided
herein. There are
<PAGE>
28
no liens, security interests or other charges or encumbrances of any kind
on the Licensed Trademarks that may adversely affect the Licensee's rights
hereunder, and the Licensor hereby warrants that the Licensor will not
grant any lien, security interests or other encumbrances on or concerning
the Licensed Trademarks in favor of any person or entity without notifying
such person or entity of the existence of this License Agreement and the
Licensee's rights hereunder.
(b) Representations and Warranties of the Licensee.
The Licensee represents and warrants as follows:
(i) Due Organization and Power of the Licensee. The Licensee
is a corporation duly organized, validly existing and in good standing
under the laws of Delaware, is a wholly owned subsidiary of INFLO and has
all requisite corporate power and authority to enter into this License
Agreement and perform its obligations hereunder.
(ii) Authorization and Validity of License
Agreement. The execution, delivery and performance by the
Licensee of this License Agreement and the consummation by
it of the transactions contemplated hereby have been duly
authorized by its Board of Directors, and no other corporate
<PAGE>
29
action on the part of the Licensee is necessary for the execution,
delivery and performance by the Licensee of this License Agreement and the
consummation by the Licensee of the transactions contemplated hereby. This
License Agreement has been duly executed and delivered by the Licensee,
and this License Agreement is the legal, valid and binding obligation of
the Licensee, enforceable against the Licensee in accordance with and
subject to its terms.
(iii) No Conflict. The execution, delivery and performance by the
Licensee of this License Agreement and the consummation by the Licensee of
the transactions contemplated hereby do not and will not (A) violate any
provision of any federal, state, local or foreign law, rule or regulation
or any order, injunction, judgment or decree applicable to the Licensee;
(B) require any consent or approval of, or filing with or notice to, any
Governmental Authority under any provision of law applicable to the
Licensee; (C) violate any provision of the Certificate of Incorporation or
By-Laws or other constituent documents of the Licensee; or (D) require any
consent, approval or notice under, conflict with, or result in the breach,
lapse, cancellation or termination of, or constitute a default under, or
result in the acceleration (whether after the filing of notice or the
lapse of time or both) of any right
<PAGE>
30
or obligation of or the performance by the Licensee under, or result in a
loss of any benefit to which the Licensee is entitled under, any
indenture, mortgage, deed of trust, lease, license, franchise, contract,
agreement, concession or other instrument to which the Licensee is a party
or by which it, or any of its assets, are bound or encumbered where the
failure to obtain such consent, approval or notice or the occurrence of
any of the matters referred to in this clause D would adversely impact the
Licensor.
SECTION 9. INDEMNIFICATION.
(a) By the Licensor. The Licensor shall indemnify, defend and hold
harmless the Licensee and its Affiliates from and against and in respect of any
and all claims, losses, damages, expenses, obligations, penalties, demands,
suits, procedures, assessments, judgments, costs and liabilities (including
costs of collection, investigation, reasonable attorney's fees and other costs
of defenses) ("Losses") incurred by them, arising out of or resulting from: (i)
any claim of statutory or common law trademark infringement or dilution relating
to the authorized use by the Licensee of the Licensed Trademarks, and (ii) any
breach of any representation, warranty, covenant or agreement made by the
Licensor herein.
<PAGE>
31
(b) By the Licensee. The Licensee shall indemnify, defend and hold
harmless the Licensor and its Affiliates from and against and in respect of any
and all Losses incurred by them, arising out of or resulting from: (i) any use
by the Licensee or its permitted sublicensees of the Licensed Trademarks, but
excluding any Losses for which the Licensor must indemnify the Licensee pursuant
to Section 9(a) above; (ii) death or injury to persons or damages or loss to
property in any way arising out of or connected with the production,
manufacture, marketing, promotion, advertising, sale or distribution by the
Licensee or its permitted sublicensees or distributors of any Products; and
(iii) any breach of any representation, warranty, covenant or agreement made by
the Licensee herein.
(c) Procedure. If a claim by a third party is made against an
indemnified party, the indemnified party shall promptly notify the indemnifying
party of such claim. Failure to so notify the indemnifying party shall not
relieve the indemnifying party of any liability which the indemnifying party
might have, except to the extent that such failure materially prejudices the
indemnifying party's legal rights. The indemnifying party shall have thirty days
after receipt of such notice to undertake, conduct and control, through counsel
of its own choosing (subject to the consent of the indemnified party, such
consent not to be unreasonably withheld) and at its expense,
<PAGE>
32
the settlement or defense of such claim, and the indemnified party shall
cooperate with the indemnifying party in connection therewith; provided,
however, that (i) the indemnifying party shall permit the indemnified party to
participate in such settlement or defense through counsel chosen by the
indemnified party, provided that the fees and expenses of such counsel shall be
borne by the indemnified party and (ii) the indemnifying party shall reimburse
the indemnified party for the full amount of any Loss resulting from such claim
and all related expenses incurred by the indemnified party within the limits of
this Section 9 as such are incurred. Notwithstanding anything contained herein,
the indemnifying party shall not enter into any settlement without the consent
of the indemnified party, which consent shall not be unreasonably withheld. So
long as the indemnifying party is reasonably contesting any such claim in good
faith, the indemnified party shall not pay or settle any such claim.
Notwithstanding the foregoing, the indemnified party shall have the right to pay
or settle any such contested claim (provided that such settlement does not
adversely affect any rights of the indemnifying party with respect to the
Licensed Trademarks or the Carr's Trademarks), but in such event it shall
automatically waive any right to indemnity therefor by the indemnifying party.
If the indemnifying party does not notify the indemnified party within thirty
days after receipt of the indemnified party's notice of a claim of indemnity
hereunder that it elects to
<PAGE>
33
undertake the defense thereof, or so notifies the indemnified party but fails to
undertake or maintain such defense promptly and in good faith, the indemnified
party shall have the right to contest, settle or compromise the claim in the
exercise of its reasonable judgment and without prejudice to the rights of the
indemnified party to indemnification hereunder.
(d) Survival. The provisions of this Section 9 shall survive the
termination or expiration of this License Agreement.
SECTION 10. INSURANCE.
The Licensee shall obtain or cause to be obtained for it and the
Licensee shall maintain, in each case at its sole cost and expense, throughout
the term of this License Agreement and renewals thereof, commercial general
liability insurance (including Products/Completed Operations, Hazard,
Advertising, Personal Injury and Blanket Contractual Liability) from an insurer
(or insurers), or by means of self-insurance, in conformity with industry
standards.
SECTION 11. RIGHTS ON TERMINATION.
(a) On the expiration or termination of this License Agreement,
subject to Section 9(d), all the rights of the
<PAGE>
34
Licensee hereunder shall forthwith terminate and automatically revert to the
Licensor and the Licensee shall forthwith discontinue and shall cause any
sublicensee to forthwith discontinue all use of the Licensed Trademarks and
shall no longer have the right to use the Licensed Trademarks or any variation
or simulation thereof. The Licensee shall and shall cause any sublicensee to
thereupon immediately discontinue any and all goods or services using the
Licensed Trademarks and shall, at the Licensee's election, either destroy (and
evidence such destruction by an appropriate Certification of Destruction
executed by an authorized officer of Licensee) or deliver to the Licensor, free
of charge, all packaging, labels, tags, brochures, advertising materials,
original art, mechanicals, film, plates, screens and other design and
production, manufacturing or other materials of any kind or nature in its
possession with the Licensed Trademarks thereon. Notwithstanding the foregoing,
the Licensee may for twelve (12) months immediately following the termination of
this License Agreement, sell or otherwise dispose of any Products or packaging
therefor in its inventory at the date of termination, or which are produced in
the ordinary course of business pursuant to a binding, non-cancelable commitment
which the Licensee entered into prior to the termination date, utilizing the
Licensed Trademarks, provided that such Products comply with the Licensor's
quality standards and other
<PAGE>
35
requirements set forth in Section 4 and subject to all of the other terms and
conditions of this License Agreement.
(b) Upon termination of this License Agreement, the parties shall
perform all other acts which may be necessary or useful to render effective the
termination of the interest of the Licensee in the Licensed Trademarks, and the
Licensee shall execute any assignment, conveyance, acknowledgment or other
document that the Licensor may reasonably require, relinquishing or conveying to
the Licensor any and all rights to or interest to use the Licensed Trademarks
that the Licensee has, and any goodwill associated therewith. Without limiting
the foregoing, the Licensee hereby consents to any application which the
Licensor may make, upon termination of this License Agreement, to limit or
terminate the Licensee's status as a registered user and hereby irrevocably
agrees not to contest, oppose or dispute such application.
(c) Notwithstanding anything to the contrary in this Agreement, if
the Licensee breaches any of its obligations under this Agreement with respect
to the Carr's Products subject to this Agreement as provided in Section 5.4, 8.3
or 9.1 of the Distribution Agreement, or with respect to The Co-Pack Products,
the Licensor's sole remedy will be to seek damages or specific performance, and
in no event may the Licensor terminate the Licensee's rights with respect to
such Carr's Products.
<PAGE>
36
SECTION 12. MISCELLANEOUS.
(a) Representation or Authority. Each party hereto represents and
warrants that it has the full power and authority to (without conflict with any
other agreement) enter into and perform its obligations hereunder and to grant
the rights granted to the other hereunder.
(b) Force Majeure. No party to this License Agreement shall be in
default hereunder by reason of its delay in performance of, or failure to
perform, any of its obligations hereunder, if such delay or failure is caused by
strikes or other labor disturbance, acts of God or the public enemy, riots or
other civil disturbances, fire, flood, interference by Civil or military
authorities, compliance with any laws, rules or regulations of any Governmental
Authority, delays in transportation, failure of suppliers, inability to secure
necessary governmental priorities for materials, or any other fault beyond its
reasonable control or without its fault or negligence.
(c) Entire Agreement. This License Agreement and the Exhibits
hereto, including the provisions of the Distribution Agreement to which it
refers, contain the entire agreement between the Licensor and the Licensee
relating to the
<PAGE>
37
transactions which are the subject of this License Agreement and those other
documents, all prior negotiations, understandings and agreements between the
Licensor and the Licensee are superseded by this License Agreement and those
other documents, and there are no representations, warranties, understandings or
agreements concerning the transactions which are the subject of this License
Agreement or those other documents other than those expressly set forth in this
License Agreement or those other documents.
(d) Captions. The captions of the sections and paragraphs of this
License Agreement are for reference only, and do not affect the meaning or
interpretation of this License Agreement.
(e) Number and Gender. Words used herein, regardless of the number
and gender specifically used, shall be deemed and construed to include any other
number, singular or plural, and any other gender, masculine, feminine or neuter,
as the context requires. Any reference to a "person" herein shall include any
individual, firm, corporation, partnership, limited liability company, trust,
governmental authority or body, association, unincorporated organization or any
other entity.
(f) Expenses. Each party hereto shall pay its respective expenses
incidental to the preparation of this Agreement, the
<PAGE>
38
carrying out of the provisions of this License Agreement and the consummation of
the transactions contemplated hereby.
(g) Exhibits. All exhibits, if any, referred to herein are intended
to be and hereby are specifically made a part of this License Agreement.
(h) Assignments. Neither this License Agreement nor any rights
granted the Licensee hereunder may be assigned by the Licensee without the prior
written consent of the Licensor except to a Control Affiliate of the Licensee;
provided, however, that no such permitted assignment shall relieve the Licensee
of its obligations or liabilities hereunder; provided, further, that the
Licensee may assign this License Agreement without the consent of the Licensor
in connection with (i) the sale of all or substantially all of the assets of the
Licensee or (ii) the sale of all or substantially all of the businesses relating
to the Products, the Licensed Trademarks or any trade names containing the word
"Carr's", and the Licensee shall be relieved of its obligations and liabilities
hereunder if the purchaser in such sale assumes this License Agreement and such
obligations and liabilities in writing for the express benefit of the Licensor.
The Licensee shall give the Licensor written notice of any such assignment
referred to in (i) or (ii) of the prior sentence as promptly as reasonably
possible following the occurrence thereof.
<PAGE>
39
This License Agreement shall be freely assignable by the Licensor; provided,
however, that no such assignment shall relieve the Licensor of its obligations
or liabilities hereunder except if such assignment is made in connection with
the sale of all or substantially all of its business relating to the Licensed
Trademarks and the purchaser in such sale assumes this License Agreement and
such obligations and liabilities in writing for the express benefit of the
Licensee.
(i) Notices and Other Communications. Any notice or other
communication under this License Agreement must be in writing and will be deemed
given when delivered in person or sent by facsimile (with proof of receipt at
the number to which it is required to be sent), on the third business day after
the day on which mailed by first class mail from within the United States of
America, or on the fifth business day after the day on which mailed by first
class mail from within the United Kingdom, to the following addresses (or such
other address as may be specified after the date of this License Agreement by
the party to which the notice or communication is sent):
<PAGE>
40
If to the Licensor:
United Biscuits (UK) Limited
c/o United Biscuits (Holdings) plc
Church Road
West Drayton
Middlesex, UB7 7PR
England
Attention: Alan D. Frew
Facsimile No.: 44-1-895-43-20-28
with a copy to:
Rogers & Wells
200 Park Avenue
New York, New York 10166
Attention: David W. Bernstein
Facsimile No.: 1-212-878-8375
If to the Licensee:
Shaffer, Clarke & Co., Inc.
677 Larch Avenue
Elmhurst, Illinois 60126
Attention: Sam K. Reed
Facsimile No.: (708) 833-8272
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Robert E. Spatt
Facsimile No.: (212) 455-2502
or to such other person or address as either party shall specify by notice in
writing to the other party.
(j) Binding Effect; Benefit. This License Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Nothing in this License Agreement, expressed
or implied, is
<PAGE>
41
intended to confer on any person other than the parties hereto or their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this License Agreement.
(k) Relationship of the Parties. This License Agreement shall in no
way constitute or give rise to a partnership, joint venture or agency between
the parties, it being acknowledged and agreed that the relationship created
hereby is strictly that of licensor and licensee. Except as may be expressly
provided to the contrary herein, nothing in this License Agreement shall
constitute or be deemed to constitute either party as the legal representative
or agent of the other, nor shall either party have the right or authority to
assume, create, or incur any liability or any obligation of any kind, expressed
or implied, in the name of or on behalf of the other party.
(l) Amendments. Subject to applicable law, this License Agreement
and any Exhibits hereto may be amended, modified and supplemented only by a
document in writing signed by both the Licensor and the Licensee.
(m) Waivers. No waiver of any provision of this License Agreement
will constitute a waiver of any other provision
<PAGE>
42
of this License Agreement, and no waiver of a provision in one instance will
constitute a waiver of that or any other provisions in any other instance.
(n) Further Assurances. From time to time, pursuant to the request
of the Licensee delivered to the Licensor, the Licensor, at the Licensee's
expense, will execute and deliver such instruments and documents and take such
actions as the Licensee may reasonably request in order to allow the Licensee
the use of the Licensed Trademarks contemplated hereby or otherwise to carry out
the purposes and intent of this License Agreement. From time to time, pursuant
to the request of the Licensor delivered to the Licensee, the Licensee, at the
Licensor's expense, will execute and deliver such instruments and documents and
take such actions as the Licensor may reasonably request to carry out the
purposes and intent of this License Agreement.
(o) Governing Law. This License Agreement will be governed by, and
construed under, the laws of the State of New York in the United States of
America, including the New York Uniform Commercial Code, relating to contracts
made and to be performed in that state.
<PAGE>
43
(p) Jurisdiction. The Licensee hereby designates, appoints and
empowers Simpson Thacher & Bartlett, currently located at 425 Lexington Avenue,
New York, New York, Attn. Robert E. Spatt, as its authorized agent, and the
Licensor hereby designates, appoints and empowers Rogers & Wells, currently
located at 200 Park Avenue, New York, New York 10166, Attn. David W. Bernstein,
as its authorized agent, in each case to accept, receive and acknowledge for and
on behalf of each respective party, as the case may be, and its property,
service of any and all process which may be served in any action, suit or
proceeding in the State of New York, which appointment shall be irrevocable
until the appointment and acceptance of a successor authorized agent. Each
respective party further submits to the personal jurisdiction of any Federal or
state court sitting in the State of New York in the United States of America in
any such legal action, suit or proceeding and agrees that, to the fullest extent
permitted by applicable law, such service of process may be made personally or
by mailing or delivering a copy of the summons and complaint or other legal
process in any such legal suit, action or proceeding to the applicable party, as
the case may be, in care of such agent at the aforesaid address, and such agent
is hereby authorized to accept,
<PAGE>
44
receive and acknowledge the same for and on behalf of the applicable party, as
the case may be, and to admit service with respect thereto. Upon service of
process being made on such agent as aforesaid, a copy of the summons and
complaint or other legal process shall be mailed to the applicable party, as the
case may be, by registered mail, return receipt requested, at its address
specified in or pursuant to Paragraph 23 hereof. In the event that for any
reason the agent mentioned above shall not serve as agent to receive service of
process in the State of New York in accordance with the provisions of this
Paragraph 28.2, the applicable party, shall promptly appoint a successor agent
satisfactory to the other party and deliver evidence in writing of the successor
agent's acceptance of such appointment. To the extent that either party has or
hereafter may acquire any immunity from jurisdiction of any court or from any
legal process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to itself
or its property, each respective party hereby irrevocably waives such immunity
in respect of its obligations with respect to this Agreement. Each respective
party agrees, to the extent permitted by law, that a final
<PAGE>
45
and nonappealable judgment against it in any action, suit or proceeding
contemplated above shall be conclusive and may be enforced in any other
jurisdiction within or outside the United States by suit on the judgment, a
certified or exemplified copy of which shall be conclusive evidence of the fact
and amount of such judgment.
(q) Severability of Provisions. Any provision of this License
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
enforceability without invalidating the remaining provisions hereof or affecting
the validity or enforceability of such provisions in any other jurisdiction.
(r) Specific Performance; Remedies.
(i) General. The Licensor and the Licensee each acknowledge
that, in view of the uniqueness of the transactions contemplated by this
License Agreement, the other party would suffer irreparable harm and would
not have an adequate remedy at law for money damages if this License
Agreement has not been performed in accordance with its terms. Each party
therefore agrees that the other party shall be entitled to specific
performance of the terms
<PAGE>
46
hereof and injunctive relief in respect of any material breach of the
terms hereof in addition to any other remedy to which it may be entitled
hereunder or at law or in equity. All remedies provided for herein shall
be cumulative and the exercise of any particular remedy by a party shall
not limit or preclude the exercise of any other remedy available to such
party.
(ii) Notwithstanding anything contained herein the Licensor
agrees that, in view of the uniqueness of the circumstances giving rise to
this License Agreement, it shall not be entitled to revoke the rights to
use the Licensed Trademarks licensed hereunder or terminate this License
Agreement.
(s) Attorneys' Fees. If any claim, action, suit or proceeding is
brought by a party hereto against the other in connection with this License
Agreement, the prevailing party in such claim, action, suit or proceeding shall,
in addition to all other rights and remedies to which such party is entitled, be
entitled to recover from the non-prevailing party all costs and expenses
(including without limitation court costs and reasonable attorneys' fees)
incurred in connection with such claim, action, suit or proceeding.
<PAGE>
47
(t) Counterparts. This License Agreement may be executed in two or
more counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same agreement.
<PAGE>
48
IN WITNESS WHEREOF, the parties hereto have executed this License
Agreement as of the date first above written.
UNITED BISCUITS (UK) LIMITED
By:_____________________________
Name:
Title:
SHAFFER, CLARKE & CO., INC.
By:_____________________________
Name:
Title:
<PAGE>
49
Exhibit A
Licensed Trademarks
<PAGE>
50
Exhibit B
Royalties
The royalty rate for all Products subject to this License Agreement
(except for The Co-Pack Products) will be 5% of the Licensee's net sales. As
used herein, "net sales" means the invoice price to the Licensee's customer less
returns, credits, discounts actually taken and allowances actually given.
Royalties will be payable annually within 90 days after the end of each calendar
year. Each royalty payment will be accompanied by a statement setting forth in
reasonable detail the computation of the royalty.
Exhibit 10.7
[EXECUTION COPY]
U.S. $447,875,000
AMENDED AND RESTATED CREDIT AGREEMENT,
dated as of June 4, 1996
(Amending and Restating the Credit Agreement,
dated as of January 26, 1996),
among
KEEBLER HOLDING CORP.,
as the Borrower,
VARIOUS FINANCIAL INSTITUTIONS,
as the Lenders,
THE FIRST NATIONAL BANK OF CHICAGO,
PEARL STREET L.P.,
BANK OF MONTREAL,
BHF-BANK, AKTIENGESELLSCHAFT
and
NATIONSBANK, N.A. (SOUTH),
as the Co-Agents for the Lenders
and
THE BANK OF NOVA SCOTIA,
as the Administrative Agent for the Lenders.
<PAGE>
TABLE OF CONTENTS
Section Page
- ------- ----
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.1. Defined Terms................................................ 4
1.2. Use of Defined Terms......................................... 49
1.3. Cross-References............................................. 49
1.4. Accounting and Financial Determinations...................... 49
ARTICLE II
CONTINUATION AND REALLOCATION OF EXISTING LOANS
AND EXISTING LETTERS OF CREDIT;
COMMITMENTS, BORROWING AND ISSUANCE PROCEDURES,
NOTES AND LETTERS OF CREDIT
2.1. Commitments.................................................. 49
2.1.1. Term Loan Commitments........................................ 50
2.1.2. Revolving Loan Commitment and Swing Line
Loan Commitment............................................ 50
2.1.3. Letter of Credit Commitment.................................. 51
2.1.4. Lenders Not Permitted or Required To Make
the Loans.................................................. 52
2.1.5. Issuer Not Permitted or Required to Issue
Letters of Credit.......................................... 52
2.1.6. Assignment and Reallocation of Existing
Commitments and Existing Loans............................. 53
2.2. Reduction of the Commitment Amounts.......................... 56
2.2.1. Optional..................................................... 56
2.2.2. Mandatory.................................................... 56
2.3. Borrowing Procedures and Funding Maintenance................. 57
2.3.1. Incremental Term Loans and Revolving Loans................... 57
2.3.2. Swing Line Loans............................................. 58
2.4. Continuation and Conversion Elections........................ 60
2.5. Funding...................................................... 60
2.6. Issuance Procedures.......................................... 61
2.6.1. Other Lenders' Participation................................. 61
2.6.2. Disbursements; Conversion to Revolving Loans................. 62
2.6.3. Reimbursement................................................ 63
2.6.4. Deemed Disbursements......................................... 63
2.6.5. Nature of Reimbursement Obligations.......................... 64
2.7. Notes........................................................ 65
2.8. Registered Notes............................................. 65
<PAGE>
Section Page
- ------- ----
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
3.1. Repayments and Prepayments; Application...................... 66
3.1.1. Repayments and Prepayments................................... 66
3.1.2. Application.................................................. 72
3.2. Interest Provisions.......................................... 72
3.2.1. Rates........................................................ 72
3.2.2. Post-Maturity Rates.......................................... 74
3.2.3. Payment Dates................................................ 74
3.3. Fees......................................................... 75
3.3.1. Commitment Fee............................................... 75
3.3.2. Administrative Agent's Fee................................... 75
3.3.3. Letter of Credit Fee......................................... 75
3.3.4. Amendment Fee................................................ 76
ARTICLE IV
CERTAIN LIBO RATE AND OTHER PROVISIONS
4.1. LIBO Rate Lending Unlawful................................... 76
4.2. Deposits Unavailable......................................... 76
4.3. Increased LIBO Rate Loan Costs, etc.......................... 77
4.4. Funding Losses............................................... 77
4.5. Increased Capital Costs...................................... 78
4.6. Taxes........................................................ 78
4.7. Payments, Computations, etc.................................. 80
4.8. Sharing of Payments.......................................... 81
4.9. Setoff....................................................... 82
4.10. Mitigation................................................... 82
ARTICLE V
CONDITIONS TO CREDIT EXTENSIONS
5.1. Initial Credit Extension..................................... 82
5.1.1. Resolutions, etc............................................. 83
5.1.2. Sunshine Acquisition Documents............................... 83
5.1.3. Sunshine Acquisition Certificate............................. 83
5.1.4. Affirmation and Consent...................................... 83
5.1.5. Closing Date Certificate..................................... 84
5.1.6. Delivery of Notes............................................ 84
5.1.7. Payment of Outstanding Indebtedness, etc..................... 84
5.1.8. Supplement to Subsidiary Guaranty............................ 84
5.1.9. Supplement to Borrower Pledge Agreement...................... 84
5.1.10. Supplement to Subsidiary Security Agreement, etc............. 85
<PAGE>
Section Page
- ------- ----
5.1.11. Mortgages.................................................... 85
5.1.12. Amendments to Existing Mortgages............................. 86
5.1.13. Financial Information, etc................................... 87
5.1.14. Solvency Certificate......................................... 87
5.1.15. Amendments to the Subordinated Debt Agreements............... 87
5.1.16. Closing Fees, Expenses, etc.................................. 87
5.1.17. Trademark Security Agreement, Copyright
Security Agreement, Patent Security Agreement.............. 87
5.1.18. Litigation................................................... 88
5.1.19. Material Adverse Change...................................... 88
5.1.20. Continuation of Existing Loans/Commitments................... 88
5.1.21. No Liens..................................................... 88
5.1.22. Reliance Letters............................................. 88
5.1.23. Opinions of Counsel.......................................... 88
5.1.24. Amendment to Holdings Guaranty............................... 89
5.2. All Credit Extensions........................................ 89
5.2.1. Compliance with Warranties, No Default, etc.................. 90
5.2.2. Credit Extension Request..................................... 90
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1. Organization, etc............................................ 91
6.2. Due Authorization, Non-Contravention, etc.................... 91
6.3. Government Approval, Regulation, etc......................... 92
6.4. Validity, etc................................................ 92
6.5. Financial Information........................................ 92
6.6. No Material Adverse Change................................... 93
6.7. Litigation, Labor Controversies, etc......................... 93
6.8. Subsidiaries................................................. 93
6.9. Ownership of Properties...................................... 93
6.10. Taxes........................................................ 93
6.11. Pension and Welfare Plans.................................... 94
6.12. Environmental Warranties..................................... 94
6.13. Regulations G, U and X....................................... 95
6.14. Accuracy of Information...................................... 96
6.15. Seniority of Obligations, etc................................ 96
6.16. Solvency..................................................... 97
ARTICLE VII
COVENANTS
7.1. Affirmative Covenants........................................ 97
7.1.1. Financial Information, Reports, Notices, etc................. 97
7.1.2. Compliance with Laws, etc....................................100
<PAGE>
Section Page
- ------- ----
7.1.3. Maintenance of Properties....................................100
7.1.4. Insurance....................................................101
7.1.5. Books and Records............................................101
7.1.6. Environmental Covenant.......................................101
7.1.7. Future Subsidiaries..........................................102
7.1.8. Future Leased Property and Future
Acquisitions of Real Property..............................103
7.1.9. Use of Proceeds, etc.........................................104
7.1.10. Exchange of Bridge Notes.....................................104
7.1.11. Hedging Obligations..........................................105
7.1.12. Interest on Exchange Notes...................................105
7.1.13. Borrower Pledge Agreement....................................105
7.2. Negative Covenants...........................................105
7.2.1. Business Activities..........................................106
7.2.2. Indebtedness.................................................106
7.2.3. Liens........................................................108
7.2.4. Financial Condition..........................................110
7.2.5. Investments..................................................112
7.2.6. Restricted Payments, etc.....................................114
7.2.7. Capital Expenditures, etc....................................117
7.2.8. Consolidation, Merger, etc...................................118
7.2.9. Asset Dispositions, etc......................................119
7.2.10. Modification of Certain Agreements...........................120
7.2.11. Transactions with Affiliates.................................122
7.2.12. Negative Pledges, Restrictive Agreements, etc................122
7.2.13. Stock of Subsidiaries........................................123
7.2.14. Sale and Leaseback...........................................123
7.2.15. No Investments, etc. in Designated Subsidiaries..............123
ARTICLE VIII
EVENTS OF DEFAULT
8.1. Listing of Events of Default.................................124
8.1.1. Non-Payment of Obligations...................................124
8.1.2. Breach of Warranty...........................................124
8.1.3. Non-Performance of Certain Covenants
and Obligations............................................124
8.1.4. Non-Performance of Other Covenants
and Obligations............................................124
8.1.5. Default on Other Indebtedness................................124
8.1.6. Judgments....................................................125
8.1.7. Pension Plans................................................125
8.1.8. Change in Control............................................125
8.1.9. Bankruptcy, Insolvency, etc..................................125
8.1.10. Impairment of Security, etc..................................126
8.1.11. Subordinated Notes...........................................127
8.1.12. Redemption...................................................127
<PAGE>
Section Page
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8.1.13. Termination of Receivables Facility..........................128
8.2. Action if Bankruptcy, etc....................................128
8.3. Action if Other Event of Default.............................128
ARTICLE IX
THE AGENTS
9.1. Actions......................................................129
9.2. Funding Reliance, etc........................................130
9.3. Exculpation..................................................130
9.4. Successor....................................................130
9.5. Credit Extensions by each Agent..............................131
9.6. Credit Decisions.............................................131
9.7. Copies, etc..................................................132
9.8. The Co-Agents................................................132
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1. Waivers, Amendments, etc.....................................132
10.2. Notices......................................................134
10.3. Payment of Costs and Expenses................................134
10.4. Indemnification..............................................135
10.5. Survival.....................................................137
10.6. Severability.................................................137
10.7. Headings.....................................................137
10.8. Execution in Counterparts, Effectiveness, etc................137
10.9. Governing Law; Entire Agreement..............................138
10.10. Successors and Assigns.......................................138
10.11. Sale and Transfer of Loans and Notes;
Participations in Loans and Notes..........................138
10.11.1. Assignments..................................................138
10.11.2. Participations...............................................141
10.11.3. Assignment of Registered Notes...............................142
10.12. Other Transactions...........................................142
10.13. Forum Selection and Consent to Jurisdiction..................142
10.14. Waiver of Jury Trial.........................................143
10.15. Confidentiality..............................................143
10.16. Disclosure Schedule Amendment................................144
10.17. Consent to Holdings Guaranty Amendment.......................144
<PAGE>
SCHEDULE I - Disclosure Schedule
SCHEDULE II - DaVinci Project Summary
SCHEDULE III - Percentages and Administrative Information SCHEDULE IV - Fiscal
Quarters SCHEDULE V - Existing Letters of Credit, Existing Loans SCHEDULE VI -
Assignment Information SCHEDULE VII - Incremental Commitments and Incremental
Loans SCHEDULE VIII- Amendment Fee Calculation Amounts
EXHIBIT A-1 - Form of Revolving Note
EXHIBIT A-2 - Form of Swing Line Note
EXHIBIT A-3 - Form of Term-A Note
EXHIBIT A-4 - Form of Term-B Note
EXHIBIT A-5 - Form of Term-C Note
EXHIBIT A-6 - Form of Registered Note
EXHIBIT B-1 - Form of Borrowing Request
EXHIBIT B-2 - Form of Issuance Request
EXHIBIT B-3 - Form of Borrowing Base Certificate
EXHIBIT C - Form of Continuation/Conversion Notice
EXHIBIT D - Form of Closing Date Certificate
EXHIBIT E - Form of Compliance Certificate
EXHIBIT F-1 - Form of Borrower Security Agreement
EXHIBIT F-2 - Form of Subsidiary Security Agreement
EXHIBIT G-1 - Form of Holdings Pledge Agreement
EXHIBIT G-2 - Form of Borrower Pledge Agreement
EXHIBIT G-3 - Form of Subsidiary Pledge Agreement
EXHIBIT H-1 - Form of Subsidiary Guaranty
EXHIBIT H-2 - Form of Holdings Guaranty
EXHIBIT I - Form of Mortgage
EXHIBIT J - Form of Lender Assignment Agreement
EXHIBIT K - Form of Intercompany Subordination Agreement
EXHIBIT L - Form of Opinion of New York Counsel to the
Obligors
EXHIBIT M - Form of Seller Note
<PAGE>
AMENDED AND RESTATED
CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of June 4, 1996
(amending and restating the Existing Credit Agreement, as defined below), is
among KEEBLER HOLDING CORP., a Delaware corporation (the "Borrower", as the
surviving corporation of the merger (the "Merger") of Keebler Acquisition Corp.
with and into UB Investments US Inc., a Delaware corporation ("UBI")), the
various financial institutions as are or may become parties hereto
(collectively, the "Lenders"), THE FIRST NATIONAL BANK OF CHICAGO, PEARL STREET
L.P., BANK OF MONTREAL, BHF-BANK, AKTIENGESELLSCHAFT and NATIONSBANK, N.A.
(SOUTH), as co-agents (collectively referred to as the "Co-Agents") for the
Lenders, and THE BANK OF NOVA SCOTIA ("Scotiabank"), as administrative agent
(the "Administrative Agent") for the Lenders.
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, dated as of January 26, 1996 (as
amended or otherwise modified prior to the Amendment Effective Date (such
capitalized term, and other capitalized terms used in these recitals, to have
the meanings provided in Section 1.1), the "Existing Credit Agreement"), among
the Borrower, the financial institutions parties thereto on the Amendment
Effective Date (the "Existing Lenders"), certain financial institutions as the
co-agents for the Existing Lenders and Scotiabank, as administrative agent for
the Existing Lenders,
(i) Scotiabank (in its capacity as the Issuer) issued those letters of
credit (referred to as the "Existing Letters of Credit") described in Item
A of Schedule V hereto,
(ii) Scotiabank (in its capacity as Swing Line Lender) made swing line
loans (the "Existing Swing Line Loans") to the Borrower, with the
outstanding principal amount of Existing Swing Line Loans on the Amendment
Effective Date set forth in Item B of Schedule V hereto, and
(iii) the Existing Lenders made revolving loans (the "Existing
Revolving Loans") and/or term loans (the "Existing Term Loans") to the
Borrower, with the outstanding principal amounts of the Existing Revolving
Loans and Existing Term Loans on the Amendment Effective Date as set forth
in Item C of Schedule V hereto (the Existing Term Loans, Existing Swing
Line Loans and Existing Revolving Loans are collectively referred to as the
"Existing Loans");
<PAGE>
WHEREAS, the Borrower is a direct, wholly-owned Subsidiary of INFLO
Holdings Corporation, a Delaware corporation ("Holdings");
WHEREAS, in accordance with and subject to the terms and conditions
contained in the Stock Purchase Agreement, dated November 5, 1995, as amended by
a first amendment, dated January 26, 1996 (as originally executed and delivered
and amended by the first amendment, and as otherwise further amended or modified
in accordance with clause (a) of Section 7.2.10, the "Keebler Purchase
Agreement"), between Holdings (with the rights and obligations thereunder being
assigned to the Borrower) and UB Investments (Netherlands) B.V., a Netherlands
company (the "Seller"), the Borrower prior to the Merger acquired from the
Seller all of the outstanding Shares of UBI and certain assets of certain
Subsidiaries of the Seller (collectively, the "Keebler Acquisition"), as further
set forth in the Keebler Purchase Agreement, and in connection with the Keebler
Acquisition and to provide the Borrower with funds for its working capital and
general corporate purposes, the Existing Lenders made the Existing Loans and
Scotiabank issued the Existing Letters of Credit;
WHEREAS, in accordance with and subject to the terms and conditions
contained in the Stock Purchase Agreement, dated as of May __, 1996 (as
originally executed and delivered, and as otherwise amended or modified in
accordance with clause (a) of Section 7.2.10, the "Sunshine Purchase
Agreement"), among G.F. Industries, Inc., a Nevada corporation ("GFI"), Holdings
and the Borrower, the Borrower has agreed to acquire (referred to as the
"Sunshine Acquisition") from GFI all of the outstanding Sunshine Shares of
Sunshine Biscuits, Inc., a Delaware corporation ("Sunshine"), as further set
forth in the Sunshine Purchase Agreement, for a net purchase price of
$148,000,000 in cash minus the outstanding Indebtedness (as defined in the
Sunshine Purchase Agreement) of Sunshine on the date of acquisition thereof plus
(ii) 990,076 shares of common stock of Holdings plus (iii) the Sunshine
Warrants;
WHEREAS, to finance in part the Sunshine Acquisition and to provide for the
ongoing working capital and general corporate needs of the Borrower and its
Subsidiaries, the Borrower desires to amend and restate in its entirety the
Existing Credit Agreement to, among other things, continue the Existing Loans as
Loans under this Agreement, and to obtain from the Lenders (and the Issuer, as
the case may be)
(i) a Term-A Loan Commitment, a Term-B Loan Commitment and a Term-C
Loan Commitment pursuant to which Borrowings of Incremental Term Loans will
be made in a maximum, original principal amount of $40,000,000
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(in the case of Incremental Term-A Loans), $30,000,000 (in the case of
Incremental Term-B Loans) and $25,000,000 (in the case of Incremental
Term-C Loans) to the Borrower in a single Borrowing to occur on the
Amendment Effective Date;
(ii) a Revolving Loan Commitment (to include availability for
Revolving Loans, Swing Line Loans and Letters of Credit) pursuant to which
Borrowings of Revolving Loans, in a maximum aggregate principal amount
(together with all Swing Line Loans and Letter of Credit Outstandings) not
to exceed $155,000,000 (increased from $105,000,000 under the Existing
Credit Agreement), will be made to the Borrower from time to time on and
subsequent to the Amendment Effective Date but prior to the Revolving Loan
Commitment Termination Date;
(iii) a Letter of Credit Commitment pursuant to which the Issuer will
issue Letters of Credit for the account of the Borrower and its
Subsidiaries from time to time on and subsequent to the Amendment Effective
Date but prior to the Revolving Loan Commitment Termination Date in a
maximum aggregate Stated Amount at any one time outstanding not to exceed
$45,000,000 (increased from $35,000,000 under the Existing Credit
Agreement) (provided, that the aggregate outstanding principal amount of
Revolving Loans, Swing Line Loans and Letter of Credit Outstandings at any
time shall not exceed the then existing Revolving Loan Commitment Amount);
and
(iv) a Swing Line Loan Commitment pursuant to which Borrowings of
Swing Line Loans in an aggregate outstanding principal amount not to exceed
$20,000,000 (increased from $15,000,000 under the Existing Credit
Agreement) will be made on and subsequent to the Amendment Effective Date
but prior to the Revolving Loan Commitment Termination Date (provided, that
the aggregate outstanding principal amount of Swing Line Loans, Revolving
Loans and Letter of Credit Outstandings at any time shall not exceed the
then existing Revolving Loan Commitment Amount);
with all the proceeds of the Credit Extensions to be used for the
purposes set forth in Section 7.1.9; and
WHEREAS, the Lenders are willing, on the terms and subject to the
conditions hereinafter set forth (including Article V), to (i) amend and restate
in its entirety the Existing Credit Agreement in accordance with the terms
hereof, (ii) continue as
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<PAGE>
Term Loans hereunder the Existing Term Loans, (iii) continue as Revolving Loans
hereunder the Existing Revolving Loans, (iv) continue as Swing Line Loans
hereunder the Existing Swing Line Loans, (v) continue as Letters of Credit
hereunder the Existing Letters of Credit, and (vi) extend such Commitments
(including as increased) and make Loans to the Borrower and issue (or
participate in) Letters of Credit for the account of the Borrower and its
Subsidiaries pursuant to such Commitments;
NOW, THEREFORE, the parties hereto agree as set forth above and as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. Defined Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall, except where the context otherwise requires, have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):
"Account" means any account (as that term is defined in Section 9-106 of
the UCC) of the Borrower or any of its wholly-owned U.S. Subsidiaries arising
from the sale or lease of goods or rendering of services.
"Account Debtor" is defined in clause (b) of the definition of "Eligible
Account".
"Acquired Businesses" means the businesses of UBI and its Subsidiaries
other than UBI's frozen foods business, conducted primarily by Bernardi's
Italian Foods Co., The Original Chili Bowl, Inc. and the Chinese Food Processing
Corp., the salty snacks business conducted by Keebler Company and other
Subsidiaries of UBI, Keebler Company's convenience sales division, the Kame
Oriental Foods business of Shaffer, Clarke & Co., Inc., and the businesses of
U.H.B.C., Inc. and U.B.F.C., Inc.
"Administrative Agent" is defined in the preamble and includes each other
Person as shall have subsequently been appointed as the successor Administrative
Agent pursuant to Section 9.4.
"Affiliate" of any Person means any other Person which, directly or
indirectly, controls, is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Plan).
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<PAGE>
A Person shall be deemed to be "controlled by" any other Person if such other
Person possesses, directly or indirectly, power
(a) to vote 15% or more of the securities (on a fully diluted basis)
having ordinary voting power for the election of directors or managing
general partners; or
(b) to direct or cause the direction of the management and policies of
such Person whether by contract or otherwise.
"Agents" means, collectively, the Administrative Agent and the Co-Agents.
"Agreement" means, on any date, this Amended and Restated Credit Agreement
as originally in effect on the Amendment Effective Date and as thereafter from
time to time amended, supplemented, amended and restated, or otherwise modified
and in effect on such date.
"Alternate Base Rate" means, on any date and with respect to all Base Rate
Loans, a fluctuating rate of interest per annum equal to the higher of
(a) the rate of interest most recently established by the
Administrative Agent at its Domestic Office as its base rate for Dollar
loans in the United States; and
(b) the Federal Funds Rate most recently determined by the
Administrative Agent plus 1/2 of 1%.
The Alternate Base Rate is not necessarily intended to be the lowest rate of
interest determined by the Administrative Agent in connection with extensions of
credit. Changes in the rate of interest on that portion of any Loans maintained
as Base Rate Loans will take effect simultaneously with each change in the
Alternate Base Rate. The Administrative Agent will give notice promptly to the
Borrower and the Lenders of changes in the Alternate Base Rate.
"Amendment Effective Date" means the date this Agreement becomes effective
pursuant to Section 10.8 and the initial Credit Extension hereunder is made in
accordance with the terms of this Agreement.
"Applicable Commitment Fee Margin" means at all times during the applicable
periods set forth below, (i) from January 26, 1996 through (and including) the
six-month anniversary of the Amendment Effective Date, 1/2 of 1% per annum, and
(ii) thereafter, at the applicable percentage per annum set forth
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<PAGE>
below under the column entitled "Applicable Commitment Fee Margin":
Applicable
Debt to EBITDA Ratio Commitment Fee Margin
-------------------- ---------------------
Greater than or equal to 3.0:1 .500%
Less than 3.0:1 .375%
The Debt to EBITDA Ratio used to compute the Applicable Commitment Fee
Margin shall be the Debt to EBITDA Ratio set forth in the Compliance Certificate
most recently delivered by the Borrower to the Administrative Agent pursuant to
clause (c) of Section 7.1.1; changes in the Applicable Commitment Fee Margin
resulting from a change in the Debt to EBITDA Ratio shall become effective upon
delivery by the Borrower to the Administrative Agent of a new Compliance
Certificate pursuant to clause (c) of Section 7.1.1. If the Borrower shall fail
to deliver a Compliance Certificate within the number of days after the end of
any Fiscal Quarter as required pursuant to clause (c) of Section 7.1.1 (without
giving effect to any grace period), the Applicable Commitment Fee Margin from
and including the first day after the date on which such Compliance Certificate
was required to be delivered to but not including the date the Borrower delivers
to the Administrative Agent a Compliance Certificate shall conclusively equal
the highest Applicable Commitment Fee Margin set forth above.
"Applicable Margin" means at all times during the applicable periods set
forth below,
(a) with respect to the unpaid principal amount of Term-B Loans
maintained as a
(i) Base Rate Loan, 2.25% per annum; and
(ii) LIBO Rate Loan, 3.25% per annum;
(b) with respect to the unpaid principal amount of Term-C Loans
maintained as a
(i) Base Rate Loan, 2.50% per annum; and
(ii) LIBO Rate Loan, 3.50% per annum;
(c) with respect to the unpaid principal amount of each Revolving Loan
and each Term-A Loan maintained as a Base Rate Loan, (i) from January 26,
1996 through (and including) the six-month anniversary of the Amendment
Effective Date, 1.75% per annum, and (ii) thereafter, at the
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<PAGE>
applicable percentage per annum set forth below under the column entitled
"Applicable Margin for Base Rate Loans"; and
(d) with respect to the unpaid principal amount of each Revolving Loan
and each Term-A Loan maintained as a LIBO Rate Loan, (i) from January 26,
1996 through (and including) the six-month anniversary of the Amendment
Effective Date, 2.75% per annum, and (ii) thereafter, at the applicable
percentage per annum set forth below under the column entitled "Applicable
Margin for LIBO Rate Loans":
For Revolving Loans and Term-A Loans:
Applicable Applicable
Margin for Base Margin For LIBO
Debt to EBITDA Ratio Rate Loans Rate Loans
- -------------------- ---------- ----------
Less than 2.0:1 0.50% 1.50%
Greater than or equal
to 2.0:1 and less than
3.0:1 0.75% 1.75%
Greater than or equal
to 3.0:1 and less than
3.75:1 1.25% 2.25%
Greater than or equal
to 3.75:1 1.75% 2.75%
The Debt to EBITDA Ratio used to compute the Applicable Margin for
Revolving Loans and Term-A Loans shall be the Debt to EBITDA Ratio set forth in
the Compliance Certificate most recently delivered by the Borrower to the
Administrative Agent pursuant to clause (c) of Section 7.1.1; changes in the
Applicable Margin for Revolving Loans and Term-A Loans resulting from a change
in the Debt to EBITDA Ratio shall become effective upon delivery by the Borrower
to the Administrative Agent of a new Compliance Certificate pursuant to clause
(c) of Section 7.1.1. If the Borrower shall fail to deliver a Compliance
Certificate within the number of days after the end of any Fiscal Quarter as
required pursuant to clause (c) of Section 7.1.1 (without giving effect to any
grace period), the Applicable Margin for Revolving Loans and Term-A Loans from
and including the first day after the date on which such Compliance Certificate
was required to be delivered to but not including the date the Borrower delivers
to the Administrative Agent a Compliance Certificate shall conclusively equal
the highest Applicable Margin for Revolving Loans and Term-A Loans set forth
above.
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<PAGE>
"ARTAL" means ARTAL Luxembourg S.A., a corporation organized under the laws
of Luxembourg.
"Assignee Lender" is defined in Section 10.11.1.
"Authorized Officer" means, relative to any Obligor, those of its officers
whose signatures and incumbency shall have been certified to the Administrative
Agent and the Lenders pursuant to Section 5.1.1.
"Bank Confidential Offering Memorandum" means, collectively, (i) the
Confidential Offering Memorandum, dated January, 1996, distributed in connection
with the initial syndication of the Commitments under (and as defined in) the
Existing Credit Agreement and (ii) the Confidential Offering Memorandum, dated
May, 1996 distributed in connection with this Agreement and the Sunshine
Acquisition.
"Base Rate Loan" means a Loan bearing interest at a fluctuating rate
determined by reference to the Alternate Base Rate.
"Borrower" is defined in the preamble.
"Borrower Pledge Agreement" means the Pledge Agreement, dated as of January
26, 1996, executed and delivered by the Borrower pursuant to clause (b) of
Section 5.1.9 of the Existing Credit Agreement, substantially in the form of
Exhibit G-2 hereto, as amended, supplemented, amended and restated or otherwise
modified from time to time pursuant to the terms thereof.
"Borrower Security Agreement" means the Security Agreement, dated as of
January 26, 1996, executed and delivered by the Borrower pursuant to Section
5.1.10 of the Existing Credit Agreement, substantially in the form of Exhibit
F-1 hereto, as amended, supplemented, amended and restated or otherwise modified
from time to time pursuant to the terms thereof.
"Borrowing" means the Loans of the same type and, in the case of LIBO Rate
Loans, having the same Interest Period made by the relevant Lenders on the same
Business Day and pursuant to the same Borrowing Request in accordance with
Section 2.1.
"Borrowing Base Amount" means, at any time, the sum (without duplication)
of
(a) the Net Asset Value of all Eligible Accounts at such time as
determined in accordance with clause (a) of the definition of "Net Asset
Value" and as certified by the
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<PAGE>
Borrower to the Lenders in the most recently delivered Borrowing Base
Certificate;
plus
(b) the Net Asset Value of Eligible Inventory at such time as
determined in accordance with clause (b) of the definition of "Net Asset
Value" and as certified by the Borrower to the Lenders in the most recently
delivered Borrowing Base Certificate.
"Borrowing Base Certificate" means a certificate duly completed and
executed by the treasurer, assistant treasurer, chief accounting or financial
Authorized Officer of the Borrower, substantially in the form of Exhibit B-3
hereto.
"Borrowing Request" means a loan request and certificate duly executed by
an Authorized Officer of the Borrower, substantially in the form of Exhibit B-1
hereto.
"Bridge Note Agreement" means the Note and Warrant Purchase Agreement,
dated as of January 26, 1996 (as amended, supplemented, amended and restated or
otherwise modified in accordance with clause (b) of Section 7.2.10), among the
Borrower, Holdings and Nomura Holding America Inc., a Delaware corporation, as
the original purchaser of the Bridge Notes.
"Bridge Notes" means the unsecured Increasing Rate Extendable Senior
Subordinated Notes in the form of Exhibit A as of January 26, 1996 to the Bridge
Note Agreement issued by the Borrower on January 26, 1996 in an aggregate
principal amount of $125,000,000, evidencing loans made pursuant to the Bridge
Note Agreement, as amended, supplemented or otherwise modified in accordance
with clause (b) of Section 7.2.10.
"Business Day" means
(a) any day which is neither a Saturday or Sunday nor a legal holiday
on which banks are authorized or required to be closed in New York City;
and
(b) relative to the making, continuing, prepaying or repaying of any
LIBO Rate Loans, any day on which dealings in Dollars are carried on in the
London interbank market.
"Capital Expenditures" means for any period, the sum, without duplication,
of
(a) the aggregate amount of all expenditures of the Borrower and its
Subsidiaries for fixed or capital assets
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<PAGE>
made during such period which, in accordance with GAAP,
would be classified as capital expenditures; and
(b) the aggregate amount of all Capitalized Lease Liabilities incurred
during such period.
"Capital Stock" means (i) any and all shares, interests, participations or
other equivalents of or interests in (however designated) corporate stock,
including shares of preferred or preference stock, (ii) all partnership
interests (whether general or limited) in any Person which is a partnership,
(iii) all membership interests or limited liability company interests in any
limited liability company, and (iv) all equity or ownership interests in any
Person of any other type.
"Capitalized Lease Liabilities" means, without duplication, all monetary
obligations of the Borrower or any of its Subsidiaries under any leasing or
similar arrangement which, in accordance with GAAP, would be classified as
capitalized leases, and, for purposes of this Agreement and each other Loan
Document, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP, and the stated maturity thereof
shall be the date of the last payment of rent or any other amount due under such
lease prior to the first date upon which such lease may be terminated by the
lessee without payment of a penalty.
"Cash Equivalent Investment" means, at any time:
(a) any evidence of Indebtedness, maturing not more than one year
after such time, issued or guaranteed by the United States Government;
(b) commercial paper, maturing not more than nine months from the date
of issue, which is issued by
(i) a corporation (other than an Affiliate of any Obligor)
organized under the laws of any state of the United States or of the
District of Columbia and rated at least A-1 by S&P or P-1 by Moody's,
or
(ii) any Lender (or its holding company);
(c) any certificate of deposit or bankers acceptance, maturing not
more than one year after such time, which is issued by either
(i) a commercial banking institution that is a member of the
Federal Reserve System and has a combined capital and surplus and
undivided profits of not less than $500,000,000, or
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<PAGE>
(ii) any Lender;
(d) short-term tax-exempt securities rated not lower than MIG-1/1+ by
either Moody's or S&P with provisions for liquidity or maturity
accommodations of 183 days or less; or
(e) any money market or similar fund the assets of which are comprised
exclusively of any of the items specified in clauses (a) through (d) above
and as to which withdrawals are permitted at least every 90 days.
"Cash Flow Coverage Ratio" means, as of the close of any Fiscal Quarter,
the ratio computed (except as set forth in the proviso set forth below) for the
period consisting of such Fiscal Quarter and each of the three immediately prior
Fiscal Quarters with respect to the Borrower and its Subsidiaries on a
consolidated basis of:
(a) the excess (for all such Fiscal Quarters) of
(i) the sum of (A) EBITDA plus (B) management and consulting fees
paid pursuant to Section 7.2.11
over
(ii) Capital Expenditures;
to
(b) the sum (for all such Fiscal Quarters) of
(i) Interest Expense;
plus
(ii) scheduled, mandatory principal repayments of Debt (including
scheduled amortization repayments of Existing Term Loans made on April
30, 1996 under the terms of the Existing Credit Agreement and
principal repayments of the Term Loans pursuant to the provisions of
clauses (h), (i) and (j) of Section 3.1.1, but excluding the amount of
Debt which is refinanced with other Debt pursuant to Section 7.2.2, to
the extent so refinanced (including the principal repayments of
Subordinated Debt to the extent made with the proceeds of other
Subordinated Debt issued to refinance or replace such original
Subordinated Debt in accordance with the terms of this Agreement));
plus
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<PAGE>
(iii) all federal, state, local and foreign income taxes actually
paid in cash by the Borrower and its Subsidiaries;
plus
(iv) the payment of any dividends pursuant to clause (d)(iv) of
Section 7.2.6;
plus
(v) management and consulting fees paid pursuant to Section
7.2.11;
provided, however, that in computing the Cash Flow Coverage Ratio for the second
and third Fiscal Quarters for Fiscal Year 1996, the Cash Flow Coverage Ratio
shall be determined by reference to the applicable amounts for such Fiscal
Quarter and each of the immediately preceding Fiscal Quarter(s) that have
occurred since January 26, 1996.
"Casualty Event" means the damage, destruction or condemnation, as the case
may be, of property of the Borrower or any of its Subsidiaries.
"Casualty Proceeds" means, with respect to any Casualty Event, the amount
of any insurance proceeds or condemnation awards received by the Borrower or any
of its Subsidiaries in connection with such Casualty Event, but excluding any
proceeds or awards required to be paid to a creditor (other than the Lenders)
which holds a first-priority Lien permitted by Section 7.2.3 on the property
which is the subject of such Casualty Event.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List.
"Certificate of Merger" means the certificate of merger, dated January 26,
1996, of the Borrower.
"Change in Control" means
(a) at any time prior to any Initial Public Offering,
(i) the failure of the Permitted ARTAL Investor Group to own free
and clear of all Liens at least 35% of the outstanding voting shares
of Capital Stock of
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Holdings on a fully diluted basis, less (A) up to 3.75% of such voting
Capital Stock issued or issuable pursuant to the Sunshine Warrants and
(B) if the Warrants have been issued pursuant to the terms of the
Bridge Note Agreement to holders of the Bridge Notes or Exchange Notes
and/or if warrants to purchase the voting shares of Capital Stock of
Holdings have been issued to Subordinated Noteholders in connection
with the issuance of the Refinancing Notes (collectively referred to
as the "Debtholder Warrants"), one-half of the percentage that such
Debtholder Warrants represent (on the date of issuance) of the voting
shares of Capital Stock of Holdings on a fully diluted basis;
provided, that in no event shall the Permitted ARTAL Investor Group
own less than 30% of the voting shares of Capital Stock of Holdings on
a fully diluted basis less up to 3.75% of such voting Capital Stock
issued or issuable pursuant to the Sunshine Warrants;
(ii) the failure of Flowers to own, directly or indirectly
through wholly-owned Subsidiaries, free and clear of all Liens, at
least 35% of the outstanding voting shares of Capital Stock of
Holdings on a fully diluted basis, less (A) up to 3.75% of such voting
Capital Stock issued or issuable pursuant to the Sunshine Warrants and
(B) if the Debtholder Warrants have been issued, one-half of the
percentage that such Debtholder Warrants represent (on the date of
issuance) of the voting shares of Capital Stock of Holdings on a fully
diluted basis; provided, that in no event shall Flowers own less than
30% of the voting shares of Capital Stock of Holdings on a fully
diluted basis less up to 3.75% of such voting Capital Stock issued or
issuable pursuant to the Sunshine Warrants; or
(iii) the failure of Holdings to directly own, free and clear of
all Liens (other than in favor of the Administrative Agent pursuant to
a Loan Document), 100% of the outstanding voting shares of Capital
Stock of the Borrower on a fully diluted basis; or
(b) at any time after an Initial Public Offering,
(i) the failure of the Permitted ARTAL Investor Group to own,
directly or indirectly through any wholly-owned Subsidiaries, free and
clear of all Liens, at least 20% of the outstanding voting shares of
Capital Stock of Holdings on a fully diluted basis;
(ii) the failure of Flowers to own, directly or indirectly
through any wholly-owned Subsidiaries, free
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and clear of all Liens, at least 20% of the outstanding voting shares
of Capital Stock of Holdings on a fully diluted basis;
(iii) the failure of the Permitted ARTAL Investor Group and
Flowers in the aggregate to own, directly or indirectly through any
wholly-owned Subsidiaries, free and clear of all Liens, at least 51%
of the outstanding voting shares of Capital Stock of Holdings on a
fully diluted basis;
(iv) any "person" or "group" (as such terms are used in Rule
13d-5 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and Sections 13(d) and 14(d) of the Exchange Act) of
persons (other than the Permitted ARTAL Investor Group or Flowers or,
in either case, any of their wholly-owned Subsidiaries) becomes,
directly or indirectly, in a single transaction or in a related series
of transactions by way of merger, consolidation, or other business
combination or otherwise, the "beneficial owner" (as such term is used
in Rule 13d-3 of the Exchange Act) of more than 20% of the total
voting power in the aggregate of all classes of Capital Stock of
Holdings then outstanding entitled to vote generally in elections of
directors of Holdings;
(v) during any period of 24 consecutive months, individuals who
at the beginning of such period constituted the Board of Directors of
Holdings (together with any new directors whose election to such Board
or whose nomination for election by the stockholders of Holdings was
approved by ARTAL or Flowers or a vote of a majority of the directors
then still in office who were either directors at the beginning of
such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority
of the Board of Directors of Holdings then in office; or
(vi) the failure of Holdings to directly own, free and clear of
all Liens (other than in favor of the Administrative Agent pursuant to
a Loan Document), 100% of the outstanding shares of Capital Stock of
the Borrower on a fully diluted basis.
"Closing Date Certificate" means a certificate of an Authorized Officer of
the Borrower substantially in the form of Exhibit D hereto, delivered pursuant
to Section 5.1.5.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Commitment" means, as the context may require, a Lender's Letter of Credit
Commitment, Revolving Loan Commitment, Swing Line Loan Commitment, Term-A Loan
Commitment, Term-B Loan Commitment or Term-C Loan Commitment.
"Commitment Amount" means, as the context may require, the Letter of Credit
Commitment Amount, the Revolving Loan Commitment Amount, the Swing Line Loan
Commitment Amount, the Term-A Loan Commitment Amount, the Term-B Loan Commitment
Amount or the Term-C Loan Commitment Amount.
"Commitment Termination Date" means, as the context may require, the
Revolving Loan Commitment Termination Date or any Term Loan Commitment
Termination Date.
"Commitment Termination Event" means
(a) the occurrence of any Event of Default described in clauses (a)
through (d) of Section 8.1.9; or
(b) the occurrence and continuance of any other Event of Default and
either
(i) the declaration of the Loans to be due and payable pursuant
to Section 8.3, or
(ii) in the absence of such declaration, the giving of notice by
the Administrative Agent, acting at the direction of the Required
Lenders, to the Borrower that the Commitments have been terminated.
"Compliance Certificate" means a certificate duly completed and executed by
the chief financial Authorized Officer of the Borrower, substantially in the
form of Exhibit E hereto.
"Contingent Liability" means any agreement, undertaking or arrangement by
which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) the indebtedness,
obligation or any other liability of any other Person (other than by
endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of any other Person.
The amount of any Person's obligation under any Contingent Liability shall
(subject to any limitation set forth therein) be deemed to be the outstanding
principal amount (or maximum principal amount, if larger) of the debt,
obligation or other liability guaranteed thereby.
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<PAGE>
"Continuation/Conversion Notice" means a notice of continuation or
conversion and certificate duly executed by an Authorized Officer of the
Borrower, substantially in the form of Exhibit C hereto.
"Controlled Group" means all members of a controlled group of corporations
and all members of a controlled group of trades or businesses (whether or not
incorporated) under common control which, together with the Borrower, are
treated as a single employer under Section 414(b) or 414(c) of the Code or
Section 4001 of ERISA.
"Copyright Security Agreement" means any Copyright Security Agreement
executed and delivered by any Obligor in substantially the form of Exhibit C to
any Security Agreement, as amended, supplemented, amended and restated or
otherwise modified.
"Credit Extension" means, as the context may require,
(a) the making of a Loan by a Lender; or
(b) the issuance of any Letter of Credit, or the extension of any
Stated Expiry Date of any previously issued Letter of Credit, by the
Issuer.
"Credit Extension Request" means, as the context may require, any Borrowing
Request or Issuance Request.
"Current Assets" means, on any date, without duplication, all assets (other
than cash) which, in accordance with GAAP, would be included as current assets
on a consolidated balance sheet of the Borrower and its Subsidiaries at such
date as current assets (excluding, however, amounts due and to become due from
Affiliates of the Borrower which have arisen from transactions which are other
than arm's-length and in the ordinary course of its business).
"Current Liabilities" means, on any date, without duplication, all amounts
which, in accordance with GAAP, would be included as current liabilities on a
consolidated balance sheet of the Borrower and its Subsidiaries at such date,
excluding current maturities of Indebtedness and current liabilities resulting
from Restructuring Charges.
"DaVinci Project" means the DaVinci computer project described in Schedule
II hereto.
"Debt" means the outstanding principal amount of all Indebtedness of the
Borrower and its Subsidiaries of the type referred to in clauses (a), (b)
(except to the extent that the reimbursement obligations under letters of credit
are guaranteed
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<PAGE>
by UB Investments plc or the Seller, and without duplication of letters of
credit issued to support obligations under industrial development revenue bonds
to the extent the obligations arising under such bonds are otherwise included in
this definition), (c), (e) and (f) of the definition of "Indebtedness" or any
Contingent Liability in respect thereof.
"Debt to EBITDA Ratio" means, as of the last day of any Fiscal Quarter, the
ratio of
(a) Debt outstanding on the last day of such Fiscal Quarter
to
(b) EBITDA computed for the period consisting of such Fiscal Quarter
and each of the three immediately preceding Fiscal Quarters;
provided, that in computing the Debt to EBITDA Ratio for
(c) the second Fiscal Quarter of the 1996 Fiscal Year, the amount set
forth in clause (b) above shall be determined by reference to the sum of
(i) EBITDA for such Fiscal Quarter and the immediately preceding Fiscal
Quarter plus (ii) $6,100,000, multiplied by 2.167;
(d) the third Fiscal Quarter of the 1996 Fiscal Year, the amount set
forth in clause (b) above shall be determined by reference to the sum of
(i) EBITDA for such Fiscal Quarter and the two immediately preceding Fiscal
Quarters plus (ii) $6,100,000, multiplied by 1.444;
(e) the fourth Fiscal Quarter of the 1996 Fiscal Year, the amount set
forth in clause (b) above shall be determined by reference to the sum of
(i) EBITDA for such Fiscal Quarter and the three immediately preceding
Fiscal Quarters plus (ii) $6,100,000, multiplied by 1.083; and
(f) the first Fiscal Quarter of the 1997 Fiscal Year, the amount set
forth in clause (b) above shall be determined by reference to the sum of
(i) EBITDA for such Fiscal Quarter and the three immediately preceding
Fiscal Quarters plus (ii) $2,500,000.
"Debtholder Warrants" is defined in clause (a)(i) of the definition of
"Change in Control".
"Default" means any Event of Default or any condition, occurrence or event
which, after notice or lapse of time or both, would constitute an Event of
Default.
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<PAGE>
"Designated Subsidiary" means, individually Keebler International Prep
Track & Field Invitational Foundation, an Illinois Not-For-Profit corporation,
Keebler Company Foundation, an Illinois Not-For-Profit corporation and Keebler
Foreign Sales Corporation, a U.S. Virgin Islands corporation and collectively
means all such corporations.
"Disbursement" is defined in Section 2.6.2.
"Disbursement Date" is defined in Section 2.6.2.
"Disbursement Due Date" is defined in Section 2.6.2.
"Disclosure Schedule" means the Disclosure Schedule attached hereto as
Schedule I, as it may be amended, supplemented or otherwise modified from time
to time by the Borrower with the written consent of the Required Lenders.
"Dollar" and the sign "$" mean lawful money of the United States.
"Domestic Office" means, relative to any Lender, the office of such Lender
designated as such on Schedule III hereto or designated in the Lender Assignment
Agreement or such other office of a Lender (or any successor or assign of such
Lender) within the United States as may be designated from time to time by
notice from such Lender, as the case may be, to each other Person party hereto.
"EBITDA" means, for any applicable period, the sum (without duplication) of
(a) Net Income,
plus
(b) the amount deducted, in determining Net Income, representing
amortization,
plus
(c) the amount deducted, in determining Net Income, of all income
taxes (whether paid or deferred) of the Borrower and its Subsidiaries,
plus
(d) Interest Expense,
plus
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<PAGE>
(e) the amount deducted, in determining Net Income, representing
depreciation of assets,
plus
(f) an amount equal to the amount of all non-cash charges deducted in
arriving at Net Income,
minus
(g) an amount equal to the amount of all non-cash credits included in
arriving at Net Income,
minus
(h) cash expenditures actually paid in connection with post-retirement
health, insurance and related benefits.
"Eligible Account" means, with respect to the Borrower and any of its
wholly-owned U.S. Subsidiaries (other than the Designated Subsidiaries and
Receivables Co.), at the time of any determination thereof, any Account as to
which each of the following requirements has been fulfilled to the reasonable
satisfaction of the Administrative Agent:
(a) the Borrower or such Subsidiary owns such Account free and clear
of all Liens other than any Lien in favor of the Administrative Agent and
the Lenders granted pursuant to this Agreement or another Loan Document
(and, other than in the case of Accounts referred to in clause (d) below,
the Administrative Agent shall have a first-priority (other than inchoate
statutory Liens otherwise permitted by Section 7.2.3) perfected Lien on
such Account);
(b) such Account is a legal, valid, binding and enforceable obligation
of the Person obligated under such Account (the "Account Debtor");
(c) such Account is not subject to any bona fide dispute, setoff,
counterclaim or other claim or defense on the part of the Account Debtor or
any other Person denying liability under such Account; provided, however,
that any such Account shall constitute an Eligible Account to the extent it
is not subject to any such dispute, setoff, counterclaim or other claim or
defense;
(d) except for Accounts in an aggregate amount not to exceed
$4,000,000 at any one time, for which the Account Debtor is the government
of the United States or an instrumentality thereof, the Borrower or such
Subsidiary has the full and unqualified right to assign and grant a Lien in
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such Account to the Administrative Agent, for its benefit and that of the
Lenders, as security for the Obligations;
(e) such Account is evidenced by an invoice rendered to the Account
Debtor (which shall include computer records) or is reflected by computer
records maintained by the Borrower or such Subsidiary evidencing such
Account and is not evidenced by any instrument or chattel paper (as the
terms "instrument" and "chattel paper" are defined in Section 9-105 of the
UCC);
(f) such Account arose from the sale of goods on an absolute basis
(and not on a consignment, approval or sale- and-return basis, except to
the extent that goods giving rise to the Account may be returned in
accordance with policies consistent with other U.S. manufacturers of
comparable cookie, cracker and/or snack foods and/or past practices of the
Borrower or its Subsidiaries) by the Borrower or such Subsidiary in the
ordinary course of the Borrower's or such Subsidiary's business, and such
goods have been shipped or delivered to the Account Debtor for such
Account;
(g) with respect to such Account, no Account Debtor is
(i) an Affiliate (other than Flowers and its Affiliates) of the
Borrower or any of its Subsidiaries, or
(ii) the subject of any reorganization, bankruptcy, receivership,
custodianship, insolvency or other condition analogous with respect to
such Account Debtor to those described in clauses (a) through (d) of
Section 8.1.9;
(h) such Account is not outstanding more than 90 days past the
original billing date (which date shall not be later than seven days from
the date of the shipment of the Inventory giving rise to such Account) for
such Account;
(i) such Account is not an Account owing by an Account Debtor having,
at the time of any determination of Eligible Accounts, in excess of 10% of
the aggregate outstanding amount of all of such Account Debtor's Accounts
(other than any Accounts which are the subject of bona fide disputes
between such Account Debtor and the Borrower or such Subsidiary, as the
case may be) outstanding more than 90 days past the original invoice date
with respect thereto;
(j) with respect to the Account Debtor under such Account, neither the
Borrower nor any such Subsidiary is
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<PAGE>
indebted to such Account Debtor, unless the Borrower or such Subsidiary and
such Account Debtor have entered into an agreement whereby the Account
Debtor is prohibited from exercising any right of setoff with respect to
the Accounts of the Borrower or such Subsidiary; provided, that in any
event, if such an agreement prohibiting setoff rights is not delivered by
the Account Debtor, then only up to the amount that the Borrower or such
Subsidiary is indebted to such Account Debtor shall be excluded as an
Eligible Account pursuant to this clause; and
(k) such Account arises from a sale to an Account Debtor located
within the United States, Puerto Rico or Canada, unless the Account
Debtor's obligations (or that portion of such obligations which is
acceptable to the Administrative Agent) with respect to a sale to an
Account Debtor not located within the United States, Puerto Rico or Canada
are secured by a letter of credit, guaranty or eligible bankers' acceptance
having terms, and from such issuers and confirmation banks, as are
acceptable to the Administrative Agent.
"Eligible Inventory" means, with respect to the Borrower and any of its
wholly-owned U.S. Subsidiaries (other than the Designated Subsidiaries and
Receivables Co.), at the time of any determination thereof, any Inventory
located in the United States arising in the ordinary course of business and as
to which each of the following requirements has been fulfilled to the reasonable
satisfaction of the Administrative Agent:
(a) the Borrower or such Subsidiary owning such Inventory, as the case
may be, has full and unqualified right to assign and grant, and has
assigned and granted, a perfected Lien in such Inventory to the
Administrative Agent, for its benefit and that of the Lenders, as security
for the Obligations;
(b) the Borrower or such Subsidiary owns such Inventory free and clear
of all Liens in favor of any Person other than any Lien in favor of the
Administrative Agent and the Lenders granted pursuant to this Agreement or
another Loan Document and other than inchoate statutory Liens otherwise
permitted by Section 7.2.3;
(c) none of such Inventory is obsolete, unsalable, damaged or
otherwise unfit for sale or consumption or further processing; and
(d) none of such Inventory has been stored by a warehouseman which has
issued a negotiable warehouse receipt that is not held by the
Administrative Agent.
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<PAGE>
"Environmental Laws" means all applicable federal, state or local statutes,
laws, ordinances, codes, rules and regulations (including consent decrees and
administrative orders) relating to public health and safety and protection of
the environment.
"Equity Contribution" means (i) the issuance by Holdings of the Seller Note
and (ii) the cash contribution to the equity of the Borrower on January 26, 1996
in a minimum amount of $125,000,000 (net of incurred expenses in an amount not
to exceed $1,300,000).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default" is defined in Section 8.1.
"Excess Cash Flow" means, for any Fiscal Year, the excess (if any), of
(a) EBITDA for such Fiscal Year
over
(b) the sum, without duplication (for such Fiscal Year) of
(i) Interest Expense;
plus
(ii) scheduled payments and optional and mandatory prepayments,
to the extent actually made, of the principal amount of the Term Loans
(including scheduled amortization repayments of Existing Term Loans
made on April 30, 1996 under the terms of the Existing Credit
Agreement) or any other term Debt (including Capitalized Lease
Liabilities) and mandatory prepayments of the principal amount of the
Revolving Loans pursuant to clause (b) or (g) of Section 3.1.1 in
connection with a reduction of the Revolving Loan Commitment Amount;
plus
(iii) all federal, state and foreign income taxes actually paid
in cash by the Borrower and its Subsidiaries;
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<PAGE>
plus
(iv) Capital Expenditures actually made in such Fiscal Year
pursuant to clauses (a) (excluding Capital Expenditures constituting
Capitalized Leases and by way of the incurrence of Indebtedness to a
vendor of any assets permitted to be acquired pursuant to Section
7.2.7 to finance the acquisition of such assets) and (b)(v) of Section
7.2.7;
plus
(v) the amount of the net increase (or minus a net decrease), of
Current Assets over Current Liabilities of the Borrower and its
Subsidiaries from the last day of the immediately preceding Fiscal
Year (provided, that any change in working capital caused solely as a
result of the operation of the Permitted Receivables Transaction shall
not be included for purposes of the calculation under this clause
(b)(v));
plus
(vi) Investments permitted and actually made pursuant to clauses
(d), (g) and (i) (and, in the case of Investments in the Receivables
Co., clauses (c) and (e)) of Section 7.2.5;
plus
(vii) Restricted Payments permitted and actually made pursuant to
Section 7.2.6;
plus
(viii) cash expenditures relating to Restructuring Charges other
than those paid with Net Disposition Proceeds.
"Exchange Act" is defined in clause (b)(iii) of the definition of "Change
in Control".
"Exchange Date" means the date (if any) on which the Bridge Notes are
exchanged for the Exchange Notes on the Extended Maturity Date (as defined in
the Bridge Note Agreement) on the terms set forth in clause (b) of Section 2.8
of the Bridge Note Agreement.
"Exchange Note Indenture" means the Indenture, if any, to be dated on or
about the Exchange Date by and among the Borrower, Holdings and the Subsidiaries
of the Borrower (as guarantors)
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from time to time parties thereto and the trustee to be named thereunder, in the
form of Exhibit F as of January 26, 1996 to the Bridge Note Agreement, as such
Exchange Note Indenture may be amended, supplemented, amended and restated or
otherwise modified in accordance with the terms of Section 7.2.10.
"Exchange Notes" means the Increasing Rate Senior Subordinated Exchange
Notes, if any, to be issued by the Borrower in exchange for the Bridge Notes
pursuant to the Exchange Note Indenture in the form of Exhibit A as of January
26, 1996 to the Exchange Note Indenture, as such Exchange Notes may be amended,
supplemented or otherwise modified from time to time in accordance with Section
7.2.10.
"Excluded Proceeds" is defined in the definition of "Net Equity Proceeds".
"Exempted Properties" is defined in clause (a)(viii) of Section 7.2.9.
"Existing Credit Agreement" is defined in the first recital.
"Existing Lenders" is defined in the first recital.
"Existing Letters of Credit" is defined in the first recital.
"Existing Loans" is defined in the first recital.
"Existing Revolving Loans" is defined in the first recital.
"Existing Swing Line Loans" is defined in the first recital.
"Existing Term Loans" is defined in the first recital.
"Federal Funds Rate" means, for any period, a fluctuating interest rate per
annum equal for each day during such period to
(a) the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by federal
funds brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank of
New York; or
(b) if such rate is not so published for any day which is a Business
Day, the average of the quotations for such day on such transactions
received by the Administrative Agent from three federal funds brokers of
recognized standing selected by it.
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"Fee Letter" means, collectively, (i) the confidential fee letter, dated as
of December 29, 1995, among ARTAL, Flowers and the Administrative Agent and (ii)
the confidential fee letter, dated as of May 2, 1996, between the Borrower and
the Administrative Agent.
"Fiscal Quarter" means any quarter beginning and ending on the dates set
forth in Schedule IV.
"Fiscal Year" means any period of 52 (or, if applicable, 53) consecutive
weeks ending on the Saturday occurring nearest to December 31 of any year;
references to a Fiscal Year with a number corresponding to any calendar year
(e.g., the "1996 Fiscal Year") refer to the Fiscal Year ending on the Saturday
occurring nearest to December 31 of that calendar year, even if such date occurs
in the next calendar year.
"Flowers" means Flowers Industries, Inc., a Georgia corporation.
"F.R.S. Board" means the Board of Governors of the Federal Reserve System
or any successor thereto.
"GAAP" is defined in Section 1.4.
"GFI" is defined in the fourth recital.
"Hazardous Material" means
(a) any "hazardous substance", as defined by CERCLA;
(b) any "hazardous waste", as defined by the Resource Conservation and
Recovery Act, as amended;
(c) any petroleum product; or
(d) any pollutant or contaminant or hazardous, dangerous or toxic
chemical, material or substance within the meaning of any other applicable
federal, state or local law, regulation, ordinance or requirement
(including consent decrees and administrative orders) relating to or
imposing liability or standards of conduct concerning any hazardous, toxic
or dangerous waste, substance or material, all as amended or hereafter
amended.
"Hedging Obligations" means, with respect to any Person, all liabilities of
such Person under interest rate swap agreements, interest rate cap agreements
and interest rate collar agreements, and all other agreements or arrangements
designed to protect such Person against fluctuations in interest rates or
currency exchange rates.
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"herein", "hereof", "hereto", "hereunder" and similar terms contained in
this Agreement or any other Loan Document refer to this Agreement or such other
Loan Document, as the case may be, as a whole and not to any particular Section,
paragraph or provision of this Agreement or such other Loan Document.
"Holdings" is defined in the second recital.
"Holdings Guaranty" means the Guaranty, dated as of January 26, 1996,
executed and delivered by an Authorized Officer of Holdings pursuant to clause
(b) of Section 5.1.8 of the Existing Credit Agreement substantially in the form
of Exhibit H-2 hereto, as amended, supplemented, restated or otherwise modified
from time to time in accordance with its terms.
"Holdings Pledge Agreement" means the Pledge Agreement, dated as of January
26, 1996, executed and delivered by an Authorized Officer of Holdings pursuant
to clause (a) of Section 5.1.9 of the Existing Credit Agreement, substantially
in the form of Exhibit G-1 hereto as amended, supplemented, restated or
otherwise modified from time to time in accordance with its terms.
"Immaterial Subsidiary" means, at any date of determination, any Subsidiary
or group of Subsidiaries of the Borrower having assets as at the end of and
EBITDA for the immediately preceding four Fiscal Quarter period for which the
relevant financial information has been delivered pursuant to clause (a) or
clause (b) of Section 7.1.1 of less than $2,000,000 individually or in the
aggregate.
"Impermissible Qualification" means, relative to the opinion or
certification of any independent public accountant as to any financial statement
of any Obligor, any qualification or exception to such opinion or certification
(a) which is of a "going concern" or similar nature;
(b) which relates to the limited scope of examination of matters
relevant to such financial statement; or
(c) which relates to the treatment or classification of any item in
such financial statement and which, as a condition to its removal, would
require an adjustment to such item the effect of which would be to cause
such Obligor to be in default of any of its obligations under Section
7.2.4.
"including" means including without limiting the generality of any
description preceding such term, and, for purposes of this
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Agreement and each other Loan Document, the parties hereto agree that the rule
of ejusdem generis shall not be applicable to limit a general statement, which
is followed by or referable to an enumeration of specific matters, to matters
similar to the matters specifically mentioned.
"Incremental Term-A Loans" is defined in clause (a) of Section 2.1.1.
"Incremental Term-B Loans" is defined in clause (b) of Section 2.1.1.
"Incremental Term-C Loans" is defined in clause (c) of Section 2.1.1.
"Incremental Term Loans" means, collectively, all Incremental Term-A Loans,
Incremental Term-B Loans and Incremental Term-C Loans.
"Indebtedness" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments for borrowed money in respect thereof;
(b) all obligations, contingent or otherwise, relative to the face
amount of all letters of credit, whether or not drawn, and banker's
acceptances issued for the account of such Person;
(c) all obligations of such Person as lessee under leases which have
been or should be, in accordance with GAAP, recorded as Capitalized Lease
Liabilities;
(d) net liabilities of such Person under all Hedging Obligations;
(e) whether or not so included as liabilities in accordance with GAAP,
all obligations of such Person to pay the deferred purchase price of
property or services, and indebtedness (excluding prepaid interest thereon
and interest not yet due) secured by a Lien on property owned or being
purchased by such Person (including indebtedness arising under conditional
sales or other title retention agreements), whether or not such
indebtedness shall have been assumed by such Person or is limited in
recourse; provided, however, that, for purposes of determining the amount
of any Indebtedness of the type described in this clause, if recourse with
respect to such Indebtedness is limited to specific property financed with
such
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Indebtedness, the amount of such Indebtedness shall be limited to the fair
market value (determined on a basis reasonably acceptable to the
Administrative Agent) of such property or the principal amount of such
Indebtedness, whichever is less;
(f) all Receivables Facility Outstandings; and
(g) all Contingent Liabilities of such Person in respect of any of the
foregoing;
provided, that, Indebtedness shall not include unsecured Indebtedness incurred
in the ordinary course of business in the nature of accrued liabilities and open
accounts extended by suppliers on normal trade terms in connection with
purchases of goods and services, but excluding the Indebtedness incurred through
the borrowing of money or Contingent Liabilities in connection therewith. For
all purposes of this Agreement, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture in which such Person is a
general partner or a joint venturer (to the extent such Person is liable for
such Indebtedness).
"Indemnified Liabilities" is defined in Section 10.4.
"Indemnified Parties" is defined in Section 10.4.
"Initial Public Offering" means any sale of the Capital Stock of Holdings
to the public pursuant to an initial, primary offering registered under the
Securities Act of 1933 and, for purposes of the Change of Control definition
only, pursuant to which no less than 10% of the Capital Stock of Holdings
outstanding after giving effect to such offering was sold pursuant to such
offering.
"Intercompany Subordination Agreement" means an agreement to be executed
and delivered pursuant to the terms of this Agreement (including clause (g) of
Section 7.2.2), substantially in the form of Exhibit K hereto, as amended,
supplemented, amended and restated or otherwise modified from time to time in
accordance with its terms.
"Interest Coverage Ratio" means, at the close of any Fiscal Quarter, the
ratio computed (except as set forth in the proviso set forth below) for the
period consisting of such Fiscal Quarter and each of the three immediately prior
Fiscal Quarters of:
(a) EBITDA (for all such Fiscal Quarters)
to
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(b) Interest Expense (for all such Fiscal Quarters);
provided, however, that in computing the Interest Coverage Ratio for the second
and third Fiscal Quarters of Fiscal Year 1996, the Interest Coverage Ratio shall
be determined by reference to the applicable amounts for such Fiscal Quarter and
each of the immediately preceding Fiscal Quarter(s) that have occurred since
January 26, 1996.
"Interest Expense" means, for any Fiscal Quarter, the aggregate
consolidated cash interest expense (net of interest income) of the Borrower and
its Subsidiaries for such Fiscal Quarter, as determined in accordance with GAAP,
including (i) the portion of any payments made in respect of Capitalized Lease
Liabilities allocable to interest expense and (ii) interest (or other fees in
the nature of interest or discount accrued and paid or payable in cash for such
Fiscal Quarter) in respect of the Permitted Receivables Transaction.
"Interest Period" means, relative to any LIBO Rate Loans, the period
beginning on (and including) the date on which such LIBO Rate Loan is made or
continued as, or converted into, a LIBO Rate Loan pursuant to Section 2.3.1 or
2.4 and shall end on (but exclude) the day which numerically corresponds to such
date one, two, three or six (or, if available to all relevant Lenders and at the
discretion of the Administrative Agent, nine or twelve) months thereafter (or,
if such month has no numerically corresponding day, on the last Business Day of
such month), in either case as the Borrower may select in its relevant notice
pursuant to Section 2.3 or 2.4; provided, however, that
(a) the Borrower shall not be permitted to select Interest Periods to
be in effect at any one time which have expiration dates occurring on more
than ten different dates;
(b) Interest Periods commencing on the same date for Loans comprising
part of the same Borrowing shall be of the same duration;
(c) if such Interest Period would otherwise end on a day which is not
a Business Day, such Interest Period shall end on the next following
Business Day (unless such next following Business Day is the first Business
Day of a calendar month, in which case such Interest Period shall end on
the Business Day next preceding such numerically corresponding day); and
(d) no Interest Period for any Loan may end later than the Stated
Maturity Date for such Loan.
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"Inventory" means, any "inventory" (as that term is defined in Section
9-109(4) of the UCC) of the Borrower or any of its wholly-owned U.S.
Subsidiaries (other than the Designated Subsidiaries).
"Investment" means, relative to any Person,
(a) any loan or advance made by such Person to any other Person
(excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business); and
(b) any ownership or similar interest held by such Person in any other
Person.
The amount of any Investment shall be the original principal or capital amount
thereof less all returns of principal or equity thereon (and without adjustment
by reason of the financial condition of such other Person) and shall, if made by
the transfer or exchange of property other than cash, be deemed to have been
made in an original principal or capital amount equal to the fair market value
of such property at the time of such transfer or exchange.
"Issuance Request" means a Letter of Credit request and certificate duly
executed by an Authorized Officer of the Borrower, substantially in the form of
Exhibit B-2 hereto.
"Issuer" means, collectively, Scotiabank in its individual capacity
hereunder as issuer of the Letters of Credit and such other Lender as may be
designated by Scotiabank (and agreed to by the Borrower and such Lender) in its
individual capacity as the issuer of Letters of Credit.
"Keebler Acquisition" is defined in the third recital.
"Keebler Purchase Agreement" is defined in the third recital.
"Keebler Transaction" means the Keebler Acquisition, the Merger, the Equity
Contribution, the execution of the Bridge Note Agreement and issuance of the
Bridge Notes, the execution of the Existing Credit Agreement and the making of
the initial Credit Extension thereunder, and any and all transactions relating
to any of the foregoing.
"Lender Assignment Agreement" means a Lender Assignment Agreement
substantially in the form of Exhibit J hereto.
"Lenders" is defined in the preamble.
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"Letter of Credit" is defined in Section 2.1.3.
"Letter of Credit Commitment" means, with respect to the Issuer, the
Issuer's obligation to issue Letters of Credit pursuant to Section 2.1.3 and,
with respect to each of the other Lenders that has a Revolving Loan Commitment,
the obligations of each such Lender to participate in such Letters of Credit
pursuant to Section 2.6.1.
"Letter of Credit Commitment Amount" means, on any date, a maximum amount
of $45,000,000, as such amount may be reduced from time to time pursuant to
Section 2.2.
"Letter of Credit Outstandings" means, on any date, an amount equal to the
sum of
(a) the then aggregate amount which is undrawn and available under all
issued and outstanding Letters of Credit,
plus
(b) the then aggregate amount of all unpaid and outstanding
Reimbursement Obligations in respect of such Letters of Credit.
"LIBO Rate" means, relative to any Interest Period for LIBO Rate Loans, the
rate of interest equal to the average (rounded upwards, if necessary, to the
nearest 1/16 of 1%) of the rates per annum at which Dollar deposits in
immediately available funds are offered to the Administrative Agent's LIBOR
Office in the London interbank market as at or about 11:00 a.m. London time two
Business Days prior to the beginning of such Interest Period for delivery on the
first day of such Interest Period, and in an amount approximately equal to the
amount of the Administrative Agent's LIBO Rate Loan and for a period
approximately equal to such Interest Period.
"LIBO Rate Loan" means a Loan bearing interest, at all times during an
Interest Period applicable to such Loan, at a fixed rate of interest determined
by reference to the LIBO Rate (Reserve Adjusted).
"LIBO Rate (Reserve Adjusted)" means, relative to any Loan to be made,
continued or maintained as, or converted into, a LIBO Rate Loan for any Interest
Period, a rate per annum (rounded upwards, if necessary, to the nearest 1/100 of
1%) determined pursuant to the following formula:
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LIBO Rate = LIBO Rate
(Reserve Adjusted) _______________________________
1.00 - LIBOR Reserve Percentage
The LIBO Rate (Reserve Adjusted) for any Interest Period for LIBO Rate
Loans will be determined by the Administrative Agent on the basis of the LIBOR
Reserve Percentage in effect on, and the applicable rates furnished to and
received by the Administrative Agent from Scotiabank, two Business Days before
the first day of such Interest Period.
"LIBOR Office" means, relative to any Lender, the office of such Lender
designated as such on Schedule III hereto or designated in the Lender Assignment
Agreement or such other office of a Lender as designated from time to time by
notice from such Lender to the Borrower and the Administrative Agent, whether or
not outside the United States, which shall be making or maintaining LIBO Rate
Loans of such Lender hereunder.
"LIBOR Reserve Percentage" means, relative to any Interest Period for LIBO
Rate Loans, the reserve percentage (expressed as a decimal) equal to the maximum
aggregate reserve requirements (including all basic, emergency, supplemental,
marginal and other reserves and taking into account any transitional adjustments
or other scheduled changes in reserve requirements) specified under regulations
issued from time to time by the F.R.S. Board and then applicable to assets or
liabilities consisting of and including "Eurocurrency Liabilities", as currently
defined in Regulation D of the F.R.S. Board, having a term approximately equal
or comparable to such Interest Period.
"Lien" means any security interest, mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
charge against or interest in property, or any filing or recording of any
instrument or document in respect of the foregoing, to secure payment of a debt
or performance of an obligation or other priority or preferential arrangement of
any kind or nature whatsoever.
"Loan" means, as the context may require, a Revolving Loan, a Swing Line
Loan, a Term-A Loan, a Term-B Loan or a Term-C Loan, of any type.
"Loan Document" means this Agreement, the Notes, the Letters of Credit,
each Borrowing Base Certificate, each Fee Letter, each Pledge Agreement, the
Subsidiary Guaranty, the Holdings Guaranty, each Mortgage, the Intercompany
Subordination Agreement, each Security Agreement, each Patent Security
Agreement, each Trademark Security Agreement, each Copyright Security Agreement,
and each other agreement, document or instrument delivered in connection with
this Agreement or any other Loan Document, whether or not specifically mentioned
herein or therein.
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"Material Adverse Effect" means (a) a material adverse effect on the
financial condition, operations, assets, business or properties of Holdings and
its Subsidiaries, taken as a whole, or the Borrower and its Subsidiaries, taken
as a whole, (b) a material impairment of the ability of the Borrower or any
other Obligor (other than any Immaterial Subsidiary) to perform its respective
material obligations under the Loan Documents to which it is or will be a party,
or (c) an impairment of the validity or enforceability of, or a material
impairment of the rights, remedies or benefits available to the Administrative
Agent, the Issuer or the Lenders under, this Agreement or any other Loan
Document.
"Merger" is defined in the preamble.
"Moody's" means Moody's Investors Service, Inc.
"Mortgage" means, collectively, each Mortgage or Deed of Trust executed and
delivered pursuant to the terms of the Existing Credit Agreement or this
Agreement, including Section 5.1.11 or Section 7.1.9(b), substantially in the
form of Exhibit I hereto, as amended, supplemented, restated or otherwise
modified from time to time in accordance with its terms.
"Net Asset Value" means, at any time of any determination thereof
(a) with respect to Accounts, 85% of an amount equal to (x) the book
value of all Eligible Accounts as reflected on the books of the Borrower
and its Subsidiaries in accordance with GAAP, net of (y) all credits,
discounts and allowances (and net of all unissued credits in the form of
competitive allowances or otherwise); and
(b) with respect to Inventory, an amount equal to 50% of the lesser of
the market value and the cost of goods (determined on a first-in, first-out
basis) of all Eligible Inventory as reflected on the books of the Borrower
and its Subsidiaries as at such time, valued in accordance with GAAP.
"Net Debt Proceeds" means, with respect to the incurrence, sale or issuance
(to the extent permitted by the terms of this Agreement) by the Borrower or any
of its Subsidiaries to any Person of any Debt (other than Debt permitted by
Section 7.2.2 (except under clause (h)(iii)(B) of Section 7.2.2) as in effect on
the date hereof (or as hereafter permitted under such Section with the consent
of the Required Lenders), including (i) the Bridge Notes, (ii) the Exchange
Notes (if any), to the extent the proceeds thereof are used to repay and
refinance the Bridge Notes, (iii) the Refinancing Notes (if any), to the extent
the
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proceeds thereof are used to repay and refinance (as applicable), the Bridge
Notes, the Exchange Notes or, to the extent otherwise permitted pursuant to this
Agreement, other Refinancing Notes and (iv) Debt arising in connection with the
Permitted Receivables Transaction), the excess of:
(a) the gross cash proceeds received by the Borrower or any of its
Subsidiaries from such sale or issuance,
over
(b) all reasonable and customary underwriting commissions and legal,
investment banking, brokerage and accounting and other professional fees,
sales commissions and disbursements and all other reasonable fees, expenses
and charges, in each case actually incurred in connection with such
incurrence, sale or issuance which have not been paid to Affiliates of the
Borrower in connection therewith.
"Net Disposition Proceeds" means, with respect to a Permitted Disposition
of the assets of the Borrower or any of its Subsidiaries, the excess of
(a) the gross cash proceeds received by the Borrower or any of its
Subsidiaries from any Permitted Disposition and any cash payments received
in respect of promissory notes or other non-cash consideration delivered to
the Borrower or such Subsidiary in respect of any Permitted Disposition,
less
(b) the sum of
(i) all reasonable and customary fees and expenses with respect
to legal, investment banking, brokerage and accounting and other
professional fees, sales commissions and disbursements and all other
reasonable fees, expenses and charges, in each case actually incurred
in connection with such Permitted Disposition which have not been paid
to Affiliates of the Borrower,
(ii) all taxes and other governmental costs and expenses actually
paid or estimated by the Borrower (in good faith) to be payable in
cash in connection with such Permitted Disposition, and
(iii) payments made by the Borrower or any of its Subsidiaries to
retire Indebtedness (other than the Loans) of the Borrower or any of
its Subsidiaries where
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payment of such Indebtedness is required in connection with such
Permitted Disposition;
provided, however, that if, after the payment of all taxes with respect to such
Permitted Disposition, the amount of estimated taxes, if any, pursuant to clause
(b)(ii) above exceeded the tax amount actually paid in cash in respect of such
Permitted Disposition, the aggregate amount of such excess shall be immediately
payable, pursuant to clause (c) of Section 3.1.1, as Net Disposition Proceeds.
"Net Equity Proceeds" means with respect to the sale or issuance by
Holdings to any Person of any stock, warrants or options or the exercise of any
such warrants or options after the Amendment Effective Date (other than pursuant
to (i) capital contributions (from other than an Initial Public Offering or in
connection with a Refinancing) which are concurrently contributed to the
Borrower, (ii) the issuance of the Warrants, or (iii) any subscription
agreement, incentive plan or similar arrangement with any officer or employee of
Holdings or any of its Subsidiaries), the excess of:
(a) the gross cash proceeds received by Holdings from such sale,
exercise or issuance,
over
(b) all reasonable and customary underwriting commissions and legal,
investment banking, brokerage and accounting and other professional fees,
sales commissions and disbursements and all other reasonable fees, expenses
and charges, in each case actually incurred in connection with such sale or
issuance which have not been paid to Affiliates of Holdings in connection
therewith;
provided, that notwithstanding the foregoing, Net Equity Proceeds shall not
include up to a maximum amount of $25,000,000 plus reasonable and customary
costs, fees and expenses incurred in connection with the sale or issuance of the
Refinancing Notes referred to below (or, if the Exchange Notes are then
outstanding, $28,750,000 plus reasonable and customary costs, fees and expenses
incurred in connection with the sale or issuance of the Refinancing Notes
referred to below) of proceeds (referred to as "Excluded Proceeds") received by
Holdings in connection with any such sale or issuance of any stock, warrants or
options (or exercise of such warrants or options) if the Excluded Proceeds are
received within ten Business Days prior to or following the private placement or
public offering of Refinancing Notes in which the Borrower receives gross cash
proceeds of no less than $100,000,000, but only to the extent that such Excluded
Proceeds are applied to repay a like principal
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amount of the Bridge Notes (or, if the Exchange Notes have been issued, the
Exchange Notes) and (in each case) accrued interest and fees and expenses
thereon in accordance with clause (h)(iii) of Section 7.2.2; provided, that any
Excluded Proceeds received prior to the consummation of such private placement
or public offering of Refinancing Notes shall be held, at the option of the
Administrative Agent, either in a cash collateral account maintained with the
Administrative Agent upon terms and conditions satisfactory to it, or in a
special segregated account of Holdings until the proceeds of such private
placement or public offering are received by the Borrower, at which time such
Excluded Proceeds shall be applied in accordance with clause (h)(iii) of Section
7.2.2.
"Net Income" means, for any period, the net income of the Borrower and its
Subsidiaries for such period on a consolidated basis, excluding extraordinary
gains.
"Net Worth" means the consolidated net worth of the Borrower and its
Subsidiaries; provided, that Net Worth shall be increased (without duplication)
by cumulative non-cash charges and purchase accounting adjustments as a result
of the write-up of certain fixed assets and inventory in connection with the
allocation of the purchase price of the Keebler Acquisition and the Sunshine
Acquisition, as the case may be.
"Non-U.S. Lender" means any Lender (including each Assignee Lender) that is
not (i) a citizen or resident of the United States, (ii) a corporation,
partnership or other entity created or organized in or under the laws of the
United States or any state thereof, or (iii) any estate or trust that is subject
to U.S. Federal income taxation regardless of the source of its income.
"Non-U.S. Subsidiary" means any Subsidiary of the Borrower that is not
incorporated or organized in or under the laws of the United States or any state
thereof.
"Note" means, as the context may require, a Revolving Note, a Swing Line
Note, a Registered Note, a Term-A Note, a Term-B Note or a Term-C Note.
"Oakland Property" is defined in clause (a)(viii) of Section 7.2.9.
"Obligations" means all obligations (monetary or otherwise) of the Borrower
and each other Obligor arising under or in connection with this Agreement, the
Notes, each Letter of Credit and each other Loan Document, and Hedging
Obligations (in respect of the Loans) owed to a Lender or an Affiliate thereof
(or a Person that was a Lender or an Affiliate of a Lender at the time
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the applicable Rate Protection Agreement was entered into), unless the Lender or
such Affiliate (or other Person) otherwise agrees.
"Obligor" means the Borrower or any other Person (other than the
Administrative Agent or any Lender) obligated under any Loan Document.
"Organic Document" means, relative to any Obligor, its certificate of
incorporation, its by-laws and all shareholder agreements, voting trusts and
similar arrangements applicable to any of its authorized shares of Capital
Stock.
"Participant" is defined in Section 10.11.2.
"Patent Security Agreement" means any Patent Security Agreement executed
and delivered by any Obligor in substantially the form of Exhibit A to any
Security Agreement, as amended, supplemented, amended and restated or otherwise
modified.
"PBGC" means the Pension Benefit Guaranty Corporation and any successor
entity.
"Pension Plan" means a "pension plan", as such term is defined in section
3(2) of ERISA, which is subject to Title IV of ERISA (other than a multiemployer
plan as defined in section 4001(a)(3) of ERISA), and to which the Borrower or
any corporation, trade or business that is, along with the Borrower, a member of
a Controlled Group, has or within the prior six years has had any liability,
including any liability by reason of having been a substantial employer within
the meaning of section 4063 of ERISA at any time during the preceding five
years, or by reason of being deemed to be a contributing sponsor under section
4069 of ERISA.
"Percentage" means, relative to any Lender, the applicable percentage
relating to Term-A Loans, Term-B Loans, Term-C Loans or Revolving Loans, as the
case may be, as set forth opposite its name on Schedule III hereto under the
applicable column heading or set forth in Lender Assignment Agreement(s) under
the applicable column heading, as such percentage may be adjusted from time to
time pursuant to Lender Assignment Agreement(s) executed by such Lender and its
Assignee Lender(s) and delivered pursuant to Section 10.11. A Lender shall not
have any Commitment to make Revolving Loans, Term-A Loans, Term-B Loans or
Term-C Loans (as the case may be) if its percentage under the respective column
heading is zero.
"Permitted ARTAL Investor Group" means ARTAL or any of its direct or
indirect wholly-owned Subsidiaries and ARTAL Group
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S.A., a Luxembourg corporation or any of its direct or indirect wholly-owned
Subsidiaries.
"Permitted Disposition" means a sale, disposition or other conveyance of
assets by the Borrower or any of its Subsidiaries in accordance with the terms
of clause (b) (other than as permitted by clause (a) or (c)) of Section 7.2.9.
"Permitted Receivables Transaction" means any transaction providing for the
sale or financing of Accounts with customary limited recourse based on the
collectability of the Accounts sold; provided, however, that the expiration
date, term, conditions and structure (including the legal and organizational
structure of Receivables Co. and the restrictions imposed on its activities) of,
and the documentation relating to, the Permitted Receivables Transaction must be
on terms and conditions satisfactory to the Administrative Agent.
"Person" means any natural person, corporation, partnership, firm,
association, trust, government, governmental agency, limited liability company
or any other entity, whether acting in an individual, fiduciary or other
capacity.
"Plan" means any Pension Plan or Welfare Plan.
"Pledge Agreement" means, as the context may require, the Holdings Pledge
Agreement, the Borrower Pledge Agreement or the Subsidiary Pledge Agreement.
"Pro Forma Balance Sheet" is defined in clause (b) of Section 5.1.13.
"Qualified Assets" is defined in clause (c) of Section 3.1.1.
"Quarterly Payment Date" means the last day of each January, April, July
and October, or, if any such day is not a Business Day, the next succeeding
Business Day.
"Rate Protection Agreement" means, collectively, any interest rate swap,
cap, collar or similar agreement entered into by the Borrower pursuant to the
terms of this Agreement under which the counterparty to such agreement is (or at
the time such Rate Protection Agreement was entered into, was) a Lender or an
Affiliate of a Lender.
"Receivables Co." means any special purpose, bankruptcy- remote
wholly-owned Subsidiary of the Borrower organized after the date hereof (or such
other Person agreed to by the Administrative Agent) that purchases Accounts
generated by the
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Borrower or any of its Subsidiaries in connection with the Permitted Receivables
Transaction.
"Receivables Facility Outstandings" means, at any date of determination,
with respect to the Permitted Receivables Transaction, the aggregate cash
proceeds received by the Borrower or any of its Subsidiaries from the sale or
financing of Accounts pursuant to the Permitted Receivables Transaction which
are outstanding on the date of determination.
"Receivables Proceeds" means, with respect to the Permitted Receivables
Transaction, the maximum amount of the commitment to purchase Accounts under the
Permitted Receivables Transaction.
"Refinancing" means, the sale by public offering or private placement by
the Borrower of the Refinancing Notes in order to refinance all or any portion
of the then outstanding principal amount of the Bridge Notes (or, if the
Exchange Notes have been issued by the Borrower, then all or any portion of the
outstanding principal amount of the Exchange Notes) or other Refinancing Notes
in up to the amounts permitted pursuant to clause (h) of Section 7.2.2, in
accordance with the terms of the Bridge Note Agreement and this Agreement.
"Refinancing Note Indenture" means, collectively, each indenture, if any,
to be executed by the Borrower and a trustee to be named therein, pursuant to
which the Refinancing Notes are issued and governed by, which Refinancing Note
Indenture shall (i) contain subordination provisions that are no less favorable
to the holders of "Senior Indebtedness", "Senior Debt" or terms of similar
import as used in such Refinancing Note Indenture than the subordination
provisions contained in the Exchange Note Indenture, (ii) not provide for any
amortization (in whole or in part) of the Refinancing Notes prior to July 26,
2005, (iii) provide for accrued interest on the Refinancing Notes at a maximum
rate per annum not in excess of the rate of interest then prevailing in the
unsecured senior subordinated debt capital markets (as reasonably determined in
good faith by the Administrative Agent) for companies comparable to the Borrower
(based upon, inter alia, historical and current financial performance, credit
ratios and the industry in which the Borrower participates) at the time of the
Refinancing, and (iv) contain such other terms and conditions which, taken as a
whole, are comparable to those contained in indentures then prevailing in the
unsecured senior subordinated debt capital markets (as reasonably determined in
good faith by the Required Lenders) for companies comparable to the Borrower
(based upon, inter alia, historical and current financial performance, credit
ratios and the industry in which the Borrower participates) at the time of the
Refinancing, as such indenture may be amended, supplemented,
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amended and restated or otherwise modified pursuant to
Section 7.2.10.
"Refinancing Notes" means, collectively, the unsecured senior subordinated
notes, if any, to be issued by the Borrower pursuant to the Refinancing Note
Indenture in connection with a Refinancing of the Bridge Notes (or, if the
Exchange Notes have been issued in exchange for the Bridge Notes, then in
connection with a refinancing of the Exchange Notes) or other Refinancing Notes
in up to the amounts permitted pursuant to clause (h) of Section 7.2.2 which
Refinancing Notes shall not have any terms that are inconsistent with the
Refinancing Note Indenture pursuant to which they were issued.
"Refunded Swing Line Loans" is defined in clause (b) of Section 2.3.2.
"Register" is defined in clause (b) of Section 2.8.
"Registered Note" means a promissory note of the Borrower payable to any
Registered Noteholder, in the form of Exhibit A-6 hereto (as such promissory
note may be amended, endorsed or otherwise modified from time to time),
evidencing the aggregate Indebtedness of the Borrower to such Lender resulting
from outstanding Term Loans, and also means all other promissory notes accepted
from time to time in substitution therefor or renewal thereof.
"Registered Noteholder" means any Lender that has been issued a Registered
Note.
"Reimbursement Obligation" is defined in Section 2.6.3.
"Release" means a "release", as such term is defined in CERCLA.
"Reporting Period" means, in the case of the first Reporting Period, the
period beginning on January 26, 1996 and ending on February 24, 1996, and in the
case of each other Reporting Period, each four week period thereafter, other
than the 13th Reporting Period of Fiscal Year 1997 (which shall be the five week
period ending January 3, 1998) and the 13th Reporting Period of Fiscal Year 2003
(which shall be the five week period ending January 3, 2004).
"Required Lenders" means, at any time, Lenders holding at least 51% of the
Total Exposure Amount.
"Resource Conservation and Recovery Act" means the Resource Conservation
and Recovery Act, 42 U.S.C. Section 6901, et seq., as in effect from time to
time.
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"Restricted Payments" is defined in Section 7.2.6.
"Restructuring Charges" means the charges to be incurred in an amount not
to exceed (after giving effect to the Sunshine Acquisition) an aggregate amount
of $132,000,000 in cash in connection with the restructuring of the ongoing
business and operations of the Borrower and its Subsidiaries following January
26, 1996, as more fully described in each Bank Confidential Offering Memorandum.
"Revolving Loan" is defined in clause (a) of Section 2.1.2.
"Revolving Loan Commitment" is defined in clause (a) of Section 2.1.2.
"Revolving Loan Commitment Amount" means, on any date, $155,000,000, as
such amount may be reduced from time to time pursuant to Section 2.2.
"Revolving Loan Commitment Termination Date" means the earliest of
(a) January 31, 2002;
(b) the date on which the Revolving Loan Commitment Amount is
terminated in full or reduced to zero pursuant to Section 2.2; and
(c) the date on which any Commitment Termination Event occurs.
Upon the occurrence of any event described in clause (b) or (c), the Revolving
Loan Commitments shall terminate automatically and without any further action.
"Revolving Loan Lenders" means Lenders with a Revolving Loan Commitment.
"Revolving Note" means a promissory note of the Borrower payable to any
Lender, substantially in the form of Exhibit A-1 hereto (as such promissory note
may be amended, endorsed or otherwise modified from time to time), evidencing
the aggregate Indebtedness of the Borrower to such Lender resulting from
outstanding Revolving Loans, and also means all other promissory notes accepted
from time to time in substitution therefor or renewal thereof.
"Santa Fe Property" is defined in clause (a)(vii) of Section 7.2.9.
"S&P" means Standard & Poor's Ratings Services.
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"Scotiabank" is defined in the preamble.
"Security Agreement" means, as the context may require, the Borrower
Security Agreement or the Subsidiary Security Agreement.
"Seller" is defined in the third recital.
"Seller Note" means the unsecured promissory note of Holdings in a
principal amount equal to $32,500,000 payable to the Seller (or its assignee)
pursuant to the Keebler Purchase Agreement, in the form attached hereto as
Exhibit M.
"Shares" means 1,000,000 shares of common stock, par value $1.00 per share,
of UBI.
"Solvent" means, with respect to any Person on a particular date, that on
such date (a) the fair value of the property of such Person is greater than the
total amount of liabilities, including contingent liabilities, of such Person,
(b) the present fair salable value of the assets of such Person is not less than
the amount that will be required to pay the probable liability of such Person on
its debts as they become absolute and matured, (c) such Person does not intend
to, and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature, and (d) such
Person is not engaged in business or a transaction, and such person is not about
to engage in business or a transaction, for which such Person's property would
constitute an unreasonably small capital. The amount of contingent liabilities
at any time shall be computed as the amount that, in the light of all the facts
and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
"Stated Amount" of each Letter of Credit means the total amount available
to be drawn under such Letter of Credit upon the issuance thereof.
"Stated Expiry Date" is defined in Section 2.6.
"Stated Maturity Date" means
(a) in the case of any Revolving Loan or Swing Line Loan, January 31,
2002;
(b) in the case of any Term-A Loan, January 31, 2002;
(c) in the case of any Term-B Loan, July 31, 2003; and
(d) in the case of any Term-C Loan, July 31, 2004.
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"Subordinated Debt" means, as the context may require, (i) the unsecured
Debt of the Borrower evidenced by the Bridge Notes and, if and when issued, the
Exchange Notes and, if and when issued, the Refinancing Notes and (ii) to the
extent permitted by the Required Lenders, any other unsecured Debt of the
Borrower subordinated in right of payment to the Obligations pursuant to
documentation containing maturities, amortization schedules, covenants,
defaults, remedies, subordination provisions and other material terms in form
and substance satisfactory to the Administrative Agent and Required Lenders.
"Subordinated Guaranty" means, collectively, (i) the Guarantee executed and
delivered by Holdings and each Subsidiary of the Borrower (other than the
Designated Subsidiaries) in the form of Exhibit B on January 26, 1996 to the
Bridge Note Agreement, (ii) the Guarantee, if any, executed by Holdings and each
Subsidiary of the Borrower (other than the Designated Subsidiaries) in the form
attached on January 26, 1996 to the Exchange Note Indenture and (iii) each other
guaranty, if any, executed from time to time by Holdings or any Subsidiary of
the Borrower (other than the Designated Subsidiaries and Receivables Co.)
pursuant to which the guarantor thereunder has any Contingent Liability with
respect to any Subordinated Debt.
"Subordinated Note" means, as the context may require, (i) the Bridge
Notes, (ii) the Exchange Notes and (iii) the Refinancing Notes, and collectively
means all of the above notes, as, in each case, amended, supplemented, amended
and restated or otherwise modified from time to time in accordance with Section
7.2.10 or refinanced in accordance with clause (h) of Section 7.2.2.
"Subordinated Note Indenture" means, as the context may require, the Bridge
Note Agreement, the Exchange Note Indenture and each Refinancing Note Indenture,
and collectively means all of the above agreements and indentures, in each case,
as such agreements or indentures may hereafter be amended, supplemented,
restated or otherwise modified from time to time in accordance with Section
7.2.10.
"Subordinated Noteholder" means, at any time, any holder of a Subordinated
Note.
"Subordination Provisions" is defined in Section 8.1.11.
"Subsidiary" means, with respect to any Person, any corporation,
partnership or other business entity of which more than 50% of the outstanding
Capital Stock (or other ownership interest) having ordinary voting power to
elect a majority of the board of directors, managers or other voting members of
the governing body of such entity (irrespective of whether at the
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time Capital Stock (or other ownership interest) of any other class or classes
of such entity shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned by such Person, by such
Person and one or more other Subsidiaries of such Person, or by one or more
other Subsidiaries of such Person.
"Subsidiary Guarantor" means, on the Amendment Effective Date, each
Subsidiary of the Borrower (other than the Designated Subsidiaries) after giving
effect to the Sunshine Acquisition, and thereafter, each Subsidiary of the
Borrower that is required, pursuant to clause (a) of Section 7.1.7, to execute
and deliver a supplement to the Subsidiary Guaranty.
"Subsidiary Guaranty" means, collectively, each Guaranty executed and
delivered by each Subsidiary Guarantor pursuant to the terms of the Existing
Credit Agreement and this Agreement, substantially in the form of Exhibit H-1
hereto, as amended, supplemented, amended and restated or otherwise modified
from time to time in accordance with its terms.
"Subsidiary Pledge Agreement" means, collectively, each Pledge Agreement
executed and delivered by certain Subsidiaries of the Borrower pursuant to the
terms of the Existing Credit Agreement and this Agreement, substantially in the
form of Exhibit G-3 hereto, as amended, supplemented, amended and restated or
otherwise modified from time to time in accordance with its terms.
"Subsidiary Security Agreement" means, collectively, each Security
Agreement executed and delivered by certain Subsidiaries of the Borrower
pursuant to the terms of the Existing Credit Agreement and this Agreement,
substantially in the form of Exhibit F-2 hereto, as amended, supplemented,
amended and restated or otherwise modified from time to time in accordance with
its terms.
"Sunshine" is defined in the fourth recital.
"Sunshine Acquisition" is defined in the fourth recital.
"Sunshine Acquisition Date" means a Business Day on which the Sunshine
Acquisition is consummated and the initial Credit Extension hereunder is made.
"Sunshine Purchase Agreement" is defined in the fourth recital.
"Sunshine Shares" means 100 shares of common stock, no par value, of
Sunshine.
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"Sunshine Transaction" means the Sunshine Acquisition, the issuance of the
Sunshine Warrants and the issuance of common stock of Holdings to GFI in
connection therewith.
"Sunshine Warrants" means warrants to acquire up to 7.5% of the Capital
Stock of Holdings issued in connection with the Sunshine Acquisition.
"Swing Line Lender" means Scotiabank (or another Lender designated by
Scotiabank with the consent of the Borrower, if such Lender agrees to be the
Swing Line Lender hereunder), in such Person's capacity as the maker of Swing
Line Loans.
"Swing Line Loan" is defined in clause (b) of Section 2.1.2.
"Swing Line Loan Commitment" means, with respect to the Swing Line Lender,
the Swing Line Lender's obligation pursuant to clause (b) of Section 2.1.2 to
make Swing Line Loans and, with respect to each Lender with a Commitment to make
Revolving Loans (other than the Swing Line Lender), such Lender's obligation to
participate in Swing Line Loans pursuant to Section 2.3.2.
"Swing Line Loan Commitment Amount" means, on any date, $20,000,000, as
such amount may be reduced from time to time pursuant to Section 2.2.
"Swing Line Note" means a promissory note of the Borrower payable to the
Swing Line Lender, in substantially the form of Exhibit A-2 hereto (as such
promissory note may be amended, endorsed or otherwise modified from time to
time), evidencing the aggregate Indebtedness of the Borrower to the Swing Line
Lender resulting from outstanding Swing Line Loans, and also means all other
promissory notes accepted from time to time in substitution therefor or renewal
thereof.
"Taxes" is defined in Section 4.6.
"Term-A Loan" means, collectively, the Existing Term-A Loans and the
Incremental Term-A Loans.
"Term-A Loan Commitment" is defined in clause (a) of Section 2.1.1.
"Term-A Loan Commitment Amount" means, on any date, $138,125,000 (which
gives effect to scheduled amortization payments of Existing Term-A Loans made on
April 30, 1996 under the Existing Credit Agreement).
"Term-A Loan Commitment Termination Date" means, with respect to the
Incremental Term-A Loans, the earlier of
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(a) the Sunshine Acquisition Date (immediately after the making of the
Incremental Term-A Loans on such date); or
(b) the date on which any Commitment Termination Event occurs.
Upon the occurrence of any event described in clause (a) or (b), the Term-A Loan
Commitments shall terminate automatically and without any further action.
"Term-A Note" means a promissory note of the Borrower payable to the order
of any Lender, in the form of Exhibit A-3 hereto (as such promissory note may be
amended, endorsed or otherwise modified from time to time), evidencing the
aggregate Indebtedness of the Borrower to such Lender resulting from outstanding
Term-A Loans, and also means all other promissory notes accepted from time to
time in substitution therefor or renewal thereof.
"Term-B Loan" means, collectively, the Existing Term-B Loans and the
Incremental Term-B Loans.
"Term-B Loan Commitment" is defined in clause (b) of Section 2.1.1.
"Term-B Loan Commitment Amount" means, on any date, $89,850,000 (which
gives effect to scheduled amortization payments of Existing Term-B Loans made on
April 30, 1996 under the Existing Credit Agreement).
"Term-B Loan Commitment Termination Date" means, with respect to the
Incremental Term-B Loans, the earliest of
(a) the Sunshine Acquisition Date (immediately after the making of the
Incremental Term-B Loans on such date); and
(b) the date on which any Commitment Termination Event occurs.
Upon the occurrence of any event described in clause (a) or (b), the Term-B Loan
Commitments shall terminate automatically and without any further action.
"Term-B Note" means a promissory note of the Borrower payable to the order
of any Lender, in the form of Exhibit A-4 hereto (as such promissory note may be
amended, endorsed or otherwise modified from time to time), evidencing the
aggregate Indebtedness of the Borrower to such Lender resulting from outstanding
Term-B Loans, and also means all other promissory
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notes accepted from time to time in substitution therefor or
renewal thereof.
"Term-C Loan" means, collectively, the Existing Term-C Loans and the
Incremental Term-C Loans.
"Term-C Loan Commitment" is defined in clause (c) of Section 2.1.1.
"Term-C Loan Commitment Amount" means, on any date, $64,900,000 (which
gives effect to scheduled amortization payments of Existing Term-C Loans made on
April 30, 1996 under the Existing Credit Agreement).
"Term-C Loan Commitment Termination Date" means, with respect to the
Incremental Term-C Loans, the earliest of
(a) the Sunshine Acquisition Date (immediately after the making of the
Incremental Term-C Loans on such date); and
(b) the date on which any Commitment Termination Event occurs.
Upon the occurrence of any event described in clause (a) or (b), the Term-C Loan
Commitments shall terminate automatically and without any further action.
"Term-C Note" means a promissory note of the Borrower payable to the order
of any Lender, in the form of Exhibit A-5 hereto (as such promissory note may be
amended, endorsed or otherwise modified from time to time), evidencing the
aggregate Indebtedness of the Borrower to such Lender resulting from outstanding
Term-C Loans, and also means all other promissory notes accepted from time to
time in substitution therefor or renewal thereof.
"Term Loans" means collectively, the Existing Term Loans and the
Incremental Term Loans.
"Term Loan Commitment Termination Date" means, as the context may require,
the Term-A Loan Commitment Termination Date, the Term-B Loan Commitment
Termination Date or the Term-C Loan Commitment Termination Date.
"Total Exposure Amount" means, on any date of determination, the then
outstanding principal amount of all Term Loans and the then effective Revolving
Loan Commitment Amount.
"Trademark Security Agreement" means any Trademark Security Agreement
executed and delivered by any Obligor substantially in
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the form of Exhibit B to any Security Agreement, as amended, supplemented,
amended and restated or otherwise modified from time to time in accordance with
the terms of such Security Agreement.
"Tranche" means, as the context may require, the Loans constituting Term-A
Loans, Term-B Loans, Term-C Loans, Swing Line Loans or Revolving Loans.
"Truck Sale Proceeds" means the aggregate amount of cash or other
consideration received by the Borrower or any of its Subsidiaries from (i) the
transactions described in clause (b)(i) of Section 7.2.7 and (ii) up to
$10,000,000 of the amount of proceeds generated by the sale or other disposition
of trucks to the extent such proceeds are paid to the Seller or any of its
Affiliates as required pursuant to the terms of the Keebler Purchase Agreement.
"type" means, relative to any Loan, the portion thereof, if any, being
maintained as a Base Rate Loan or a LIBO Rate Loan.
"UBI" is defined in the preamble.
"UCC" means the Uniform Commercial Code as in effect from time to time in
the State of New York.
"United Biscuits" means United Biscuits (Holdings) plc., a corporation
organized under the laws of the United Kingdom.
"United States" or "U.S." means the United States of America, its fifty
States and the District of Columbia.
"Waiver" means an agreement in favor of the Administrative Agent for the
benefit of the Lenders and the Issuer in form and substance reasonably
satisfactory to the Administrative Agent.
"Warrants" has the meaning set forth as of January 26, 1996 in the Bridge
Note Agreement.
"Welfare Plan" means a "welfare plan", as such term is defined in section
3(1) of ERISA, and to which the Borrower has any liability.
"wholly-owned Subsidiary" shall mean, with respect to any Person, any
Subsidiary of such Person all of the Capital Stock (and all rights and options
to purchase such Capital Stock) of which, other than directors' qualifying
shares, are owned, beneficially and of record, by such Person and/or one or more
wholly-owned Subsidiaries of such Person.
"Year 1" is defined in clause (a) of Section 7.2.7.
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"Year 2" is defined in clause (a) of Section 7.2.7.
SECTION 1.2. Use of Defined Terms. Unless otherwise defined or the context
otherwise requires, terms for which meanings are provided in this Agreement
shall have such meanings when used in the Disclosure Schedule and in each other
Loan Document, notice and other communication delivered from time to time in
connection with this Agreement or any other Loan Document.
SECTION 1.3. Cross-References. Unless otherwise specified, references in
this Agreement and in each other Loan Document to any Article or Section are
references to such Article or Section of this Agreement or such other Loan
Document, as the case may be, and, unless otherwise specified, references in any
Article, Section or definition to any clause are references to such clause of
such Article, Section or definition.
SECTION 1.4. Accounting and Financial Determinations. Unless otherwise
specified, all accounting terms used herein or in any other Loan Document shall
be interpreted, all accounting determinations and computations hereunder or
thereunder (including under Section 7.2.4) shall be made, and all financial
statements required to be delivered hereunder or thereunder shall be prepared in
accordance with, those generally accepted accounting principles ("GAAP") as in
effect as of December 30, 1995.
ARTICLE II
CONTINUATION AND REALLOCATION OF EXISTING LOANS
AND EXISTING LETTERS OF CREDIT;
COMMITMENTS, BORROWING AND ISSUANCE PROCEDURES,
NOTES AND LETTERS OF CREDIT
SECTION 2.1. Commitments. On the terms and subject to the conditions of
this Agreement (including Article V),
(a) each Lender severally agrees to the continuation and reallocation
(as the case may be) of Existing Loans and Existing Commitments and to make
Loans (other than Swing Line Loans) pursuant to the Commitments and the
Swing Line Lender agrees to make Swing Line Loans pursuant to the Swing
Line Loan Commitment in each case as described in this Section 2.1; and
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(b) each Issuer severally agrees that it will issue Letters of Credit
pursuant to Section 2.1.3, and each other Lender that has a Revolving Loan
Commitment severally agrees that it will purchase participation interests
in such Letters of Credit pursuant to Section 2.6.1.
SECTION 2.1.1. Term Loan Commitments. Each of the parties hereto
acknowledges and agrees that the Existing Term Loans shall continue as Term
Loans for all purposes under this Agreement and the Loan Documents. In addition,
subject to compliance by the Borrower with the terms of Sections 2.1.4, 5.1 and
5.2, in a single Borrowing on the Sunshine Acquisition Date (which shall be a
Business Day) occurring on or prior to the Commitment Termination Date, each
Lender, as applicable,
(a) will make loans (relative to such Lender, its "Incremental Term-A
Loans") to the Borrower equal to that percentage set forth opposite such
Lender's name on Schedule VII hereto of the aggregate amount of the
Borrowing of Incremental Term-A Loans requested by the Borrower to be made
on the Sunshine Acquisition Date (with the commitment of each such Lender
described in this clause (a) herein referred to as its "Term-A Loan
Commitment");
(b) will make loans (relative to such Lender, its "Incremental Term-B
Loans") to the Borrower equal to that percentage set forth opposite such
Lender's name on Schedule VII hereto of the aggregate amount of the
Borrowing of Incremental Term-B Loans requested by the Borrower to be made
on the Sunshine Acquisition Date (with the commitment of each such Lender
described in this clause (b) herein referred to as its "Term-B Loan
Commitment"); and
(c) will make loans (relative to such Lender, its "Incremental Term-C
Loans") to the Borrower equal to that percentage set forth opposite such
Lender's name on Schedule VII hereto of the aggregate amount of the
Borrowing of Incremental Term-C Loans requested by the Borrower to be made
on the Sunshine Acquisition Date (with the commitment of each such Lender
described in this clause (c) herein referred to as its "Term-C Loan
Commitment").
No amounts paid or prepaid with respect to Term-A Loans, Term-B Loans or Term-C
Loans may be reborrowed.
SECTION 2.1.2. Revolving Loan Commitment and Swing Line Loan Commitment.
Each of the parties hereto acknowledge and agree that the Existing Revolving
Loans and Existing Swing Line Loans shall continue as Revolving Loans and Swing
Line Loans for all purposes under this Agreement and the Loan Documents. In
addition, subject to compliance by the Borrower with the terms of
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Section 2.1.4, Section 5.1 and Section 5.2, the Revolving Loans and Swing Line
Loans will be made as set forth below.
(a) From time to time on any Business Day occurring concurrently with
(or after) the making of the Incremental Term Loans but prior to the
Revolving Loan Commitment Termination Date, each Lender that has a
Percentage of the Revolving Loan Commitment in excess of zero will make
loans (relative to such Lender, its "Revolving Loans") to the Borrower
equal to such Lender's Percentage of the aggregate amount of the Borrowing
of the Revolving Loans requested by the Borrower to be made on such day.
The Commitment of each Lender described in this clause (a) is herein
referred to as its "Revolving Loan Commitment". On the terms and subject to
the conditions hereof, the Borrower may from time to time borrow, prepay
and reborrow the Revolving Loans.
(b) From time to time on any Business Day occurring concurrently with
(or after) the making of the Incremental Term Loans, but prior to the
Revolving Loan Commitment Termination Date, the Swing Line Lender will make
Loans (relative to the Swing Line Lender, its "Swing Line Loans") to the
Borrower equal to the principal amount of the Swing Line Loans requested by
the Borrower. On the terms and subject to the conditions hereof, the
Borrower may from time to time borrow, prepay and reborrow such Swing Line
Loans.
SECTION 2.1.3. Letter of Credit Commitment. Each of the parties hereto
acknowledge and agree that all Existing Letters of Credit shall continue as
Letters of Credit for all purposes under this Agreement and the Loan Documents.
In addition, subject to compliance by the Borrower with the terms of Section
2.1.5, Section 5.1 and Section 5.2, from time to time on any Business Day
occurring from and after the Sunshine Acquisition Date but prior to the
Revolving Loan Commitment Termination Date, the Issuer will
(a) issue one or more standby (including direct pay) or documentary
letters of credit (each referred to as a "Letter of Credit") for the
account of the Borrower or its Subsidiaries in the Stated Amount requested
by the Borrower on such day; or
(b) extend the Stated Expiry Date of an existing standby (including
direct pay) Letter of Credit previously issued hereunder to a date not
later than the earlier of (x) the Revolving Loan Commitment Termination
Date and (y) one year from the date of such extension.
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SECTION 2.1.4. Lenders Not Permitted or Required To Make the Loans. No
Lender shall be permitted or required to, and the Borrower shall not request
that any Lender, make
(a) any Incremental Term-A Loan, Incremental Term-B Loan or
Incremental Term-C Loan (as the case may be) if, after giving effect
thereto, the aggregate original principal amount of all the Incremental
Term-A Loans, Incremental Term-B Loans or Incremental Term-C Loans (as the
case may be):
(i) of all Lenders would exceed $40,000,000 (in the case of
Incremental Term-A Loans), $30,000,000 (in the case of Incremental
Term-B Loans) or $25,000,000 (in the case of Incremental Term-C
Loans); or
(ii) of such Lender would exceed the amount set forth opposite
such Lender's name on Schedule VII hereto for Incremental Term-A Loans
(in the case of Incremental Term-A Loans), Incremental Term-B Loans
(in the case of Incremental Term-B Loans) or Incremental Term-C Loans
(in the case of Incremental Term-C Loans);
(b) any Revolving Loan or Swing Line Loan if, after giving effect
thereto, the aggregate outstanding principal amount of all the Revolving
Loans and Swing Line Loans
(i) of all the Revolving Loan Lenders, together with the
aggregate amount of all Letter of Credit Outstandings, would exceed
the lesser of (x) the Revolving Loan Commitment Amount and (y) subject
to clause (b) of Section 2.3.2, the then existing Borrowing Base
Amount; or
(ii) of such Revolving Loan Lender (other than the Swing Line
Lender), together with such Lender's Percentage of the aggregate
amount of all Letter of Credit Outstandings, would exceed such
Lender's Percentage of the lesser of (x) the Revolving Loan Commitment
Amount and (y) subject to clause (b) of Section 2.3.2, the then
existing Borrowing Base Amount; or
(c) any Swing Line Loan if after giving effect to the making of such
Swing Line Loan, the outstanding principal amount of all Swing Line Loans
would exceed the then existing Swing Line Loan Commitment Amount.
SECTION 2.1.5. Issuer Not Permitted or Required to Issue Letters of Credit.
No Issuer shall be permitted or required to issue any Letter of Credit if, after
giving effect thereto,
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(a) the aggregate amount of all Letter of Credit Outstandings would exceed the
Letter of Credit Commitment Amount or (b) the sum of the aggregate amount of all
Letter of Credit Outstandings plus the aggregate principal amount of all
Revolving Loans and Swing Line Loans then outstanding would exceed the lesser of
(x) the Revolving Loan Commitment Amount and (y) the then existing Borrowing
Base Amount.
SECTION 2.1.6. Assignment and Reallocation of Existing Commitments and
Existing Loans. Each of the parties hereto severally and for itself agrees to
the assignment and reallocation of Existing Commitments (as defined below) and
Existing Loans as set forth below.
(a) Upon the occurrence of the Amendment Effective Date,
(i) each of the Existing Lenders shall sell and assign to the
Administrative Agent (and the Administrative Agent shall purchase) the
portion (if any) of such Existing Lender's Existing Loans and Commitments
under (and as defined in) the Existing Credit Agreement (referred to as the
"Existing Commitments"), including participating interests in Existing
Swing Line Loans and Letter of Credit Outstandings under (and as defined
in) the Existing Credit Agreement (referred to as "Existing Letter of
Credit Outstandings") which in the amount set forth on Item B of Schedule
VI hereto is in excess of the amount of such Existing Lender's outstanding
Loans and Commitments (including, in the case of Revolving Loan Lenders,
participating interests in Swing Line Loans and Letter of Credit
Outstandings) respectively, under this Agreement after giving effect to the
effectiveness hereof and immediately before the making of any Loans
hereunder pursuant to Sections 2.1.1, 2.1.2 or 2.1.3;
(ii) each of the Existing Lenders that will continue to have Loans and
Commitments under this Agreement shall be deemed to have converted that
portion (if any) of its Existing Loans (and, in the case of Revolving Loan
Lenders, participating interests in Existing Swing Line Loans and Existing
Letter of Credit Outstandings) which were not sold and assigned pursuant to
clause (a)(i) into its outstanding Loans of a corresponding Tranche and
corresponding Commitment under this Agreement, as set forth on Item C of
Schedule VI hereto; and
(iii) the Administrative Agent shall (A) purchase and assume that
portion of the Existing Loans and Existing Commitments (including
participating interests in Existing Swing Line Loans and Existing Letter of
Credit Outstandings) of each Existing Lender which are being assigned and
sold
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pursuant to clause (a)(i) above, and (B) reallocate, sell and assign such
portions to the Lenders that will continue to have Loans and Commitments
under this Agreement, and such Lenders shall purchase and assume that
portion of the Existing Loans and Existing Commitments (including, in the
case of Revolving Loan Lenders, participating interests in Existing Swing
Line Loans and Existing Letter of Credit Outstandings) of the
Administrative Agent which are being assigned and sold pursuant to this
clause (a)(iii) in such a manner and in the amounts set forth on Item D of
Schedule VI hereto so as to cause such Lender's outstanding Loans (and, in
the case of Revolving Loan Lenders, Revolving Loan Commitment, including
participating interest in Swing Line Loans and Letter of Credit
Outstandings), when taken together with such Lender's Loans and Commitments
retained in accordance with clause (a)(ii), to be in each case as set forth
on Item E of Schedule VI hereto.
(b) Each Existing Lender hereby represents and warrants to each Lender
that, immediately before giving effect to the effectiveness of this Agreement,
(i) its Existing Commitments under the Existing Credit Agreement and
the outstanding principal amount of its Existing Loans (including, in the
case of Existing Lenders that have made Existing Revolving Loans,
participating interests in Existing Swing Line Loans and "Letters of Credit
Outstandings" (as such term is defined in the Existing Credit Agreement))
are in the amounts set forth on Item A of Schedule VI hereto, and that it
is the legal and beneficial owner thereof; and
(ii) to the extent that such Existing Lender is making a sale and
assignment pursuant to clause (a)(i) above, the rights and interests being
assigned and sold are free and clear of any adverse claim or encumbrance
created by it (other than any encumbrance to be released automatically upon
receipt of payment in respect of such sale and assignment), and without
recourse or representation or warranty of any kind whatsoever except for
the representations and warranties set forth in this clause.
(c) The Administrative Agent hereby represents and warrants to each Lender
that immediately before giving effect to the effectiveness of clause (a)(iii),
to the extent that the Administrative Agent is making a sale and assignment
pursuant to such clause, the rights and interests being assigned and sold are
free and clear of any adverse claim or encumbrance created by it (other than any
encumbrance to be released automatically upon receipt of payment in respect of
such sale and assignment), and without recourse or representation or warranty of
any kind
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whatsoever other than for the representations and warranties set
forth in this clause.
(d) Each of the Lenders acknowledges and agrees that:
(i) other than the representations and warranties contained in clauses
(b) and (c), none of the Existing Lenders, the Administrative Agent or the
other Agents have made representations or warranties or assumed any
responsibility with respect to
(A) any statements, warranties or representations made in or in
connection with this Agreement or the execution, legality, validity,
enforceability, genuineness or sufficiency of this Agreement, the
Existing Credit Agreement, or any other Loan Document (as defined
hereunder and under the Existing Credit Agreement), or
(B) the financial condition of the Borrower or any other Obligor
or the performance by the Borrower or any other Obligor of the
Obligations (as defined under this Agreement and under the Existing
Credit Agreement);
(ii) it has reviewed the financial information of the Borrower, this
Agreement, the other Loan Documents (the terms and provisions of which
being satisfactory to such Lender) and such other documents, information
and investigations as such Lender has deemed appropriate to make its own
credit analysis and decision to enter into this Agreement; and
(iii) it has made and continues to make its own credit decisions in
taking or not taking action under this Agreement or any other Loan
Document, independently and without reliance upon the Administrative Agent,
the Co-Agents, any Lender or any Existing Lender.
(e) Each of the parties hereto agrees that each Existing Lender which is
making a sale and assignment pursuant to this Section shall, as of the Amendment
Effective Date, relinquish its rights and be discharged and released from its
obligations under this Agreement and the Existing Credit Agreement to the extent
of the rights and interests so sold and assigned.
(f) Concurrently with the occurrence of the Amendment Effective Date,
(i) each Lender which is purchasing any portion of the Existing Loans
and/or Existing Commitments (including, in
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the case of Revolving Loan Lenders, participating interests in Existing
Letter of Credit Outstandings and Existing Swing Line Loans), pursuant to
clause (a)(iii) shall deliver to the Administrative Agent immediately
available funds in the full amount of the purchase made by it; and
(ii) the Administrative Agent shall, to the extent of the funds so
received, disburse such funds to the Existing Lenders which are making
sales and assignments pursuant to clause (a)(i) in the amount of the
portions so sold and assigned.
(g) The Administrative Agent hereby agrees that it will waive the
processing fee pursuant to Section 10.11.1 in connection with this Section
2.1.6.
SECTION 2.2. Reduction of the Commitment Amounts. The Commitment Amounts
are subject to reductions from time to time pursuant to this Section 2.2.
SECTION 2.2.1. Optional. The Borrower may, from time to time on any
Business Day occurring after the time of the initial Credit Extension hereunder,
voluntarily reduce the Swing Line Loan Commitment Amount, the Letter of Credit
Commitment Amount or the Revolving Loan Commitment Amount; provided, however,
that all such reductions shall require at least three Business Days' prior
notice to the Administrative Agent and be permanent, and any partial reduction
of any Commitment Amount shall be in a minimum amount of $5,000,000 and in an
integral multiple of $1,000,000. Any reduction of the Revolving Loan Commitment
Amount which reduces the Revolving Loan Commitment Amount below the sum of (i)
the Swing Line Loan Commitment Amount and (ii) the Letter of Credit Commitment
Amount shall result in an automatic and corresponding reduction of the Swing
Line Loan Commitment Amount and/or Letter of Credit Commitment Amount (as
directed by the Borrower in a notice to the Administrative Agent delivered
together with the notice of such voluntary reduction in the Revolving Loan
Commitment Amount) to an aggregate amount not in excess of the Revolving Loan
Commitment Amount, as so reduced, without any further action on the part of the
Swing Line Lender or the Issuer.
SECTION 2.2.2. Mandatory. The Revolving Loan Commitment Amount shall be
reduced as set forth below.
(a) Following the prepayment in full of the Term Loans, the Revolving
Loan Commitment Amount shall, without any further action, automatically and
permanently be reduced on the date the Term Loans would otherwise have been
required to be prepaid with any Net Disposition Proceeds, Net Equity
Proceeds, Net Debt Proceeds or 75% of Excess Cash
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Flow, in an amount equal to the amount by which the Term Loans would
otherwise be required to be prepaid if Term Loans had been outstanding.
(b) The Revolving Loan Commitment Amount shall be reduced on the
Business Day on which the Permitted Receivables Transaction is consummated
in an amount equal to the Receivables Proceeds.
(c) Any reduction of the Revolving Loan Commitment Amount which
reduces the Revolving Loan Commitment Amount below the sum of (i) the Swing
Line Loan Commitment Amount and (ii) the Letter of Credit Commitment Amount
shall result in an automatic and corresponding reduction of the Swing Line
Loan Commitment Amount and/or Letter of Credit Commitment Amount (as
directed by the Borrower in a notice to the Administrative Agent) to an
aggregate amount not in excess of the Revolving Loan Commitment Amount, as
so reduced, without any further action on the part of the Swing Line Lender
or the Issuer.
SECTION 2.3. Borrowing Procedures and Funding Maintenance. Loans shall be
made by the Lenders in accordance with this Section.
SECTION 2.3.1. Incremental Term Loans and Revolving Loans. By delivering a
Borrowing Request to the Administrative Agent on or before 12:00 noon, New York
time, on a Business Day, the Borrower may from time to time irrevocably request,
on not less than one (in the case of Base Rate Loans) and three (in the case of
LIBO Rate Loans) nor more than (in each case) five Business Days' notice, that a
Borrowing be made, in the case of LIBO Rate Loans, in a minimum amount of
$5,000,000 and an integral multiple of $1,000,000, and in the case of Base Rate
Loans, in a minimum amount of $1,000,000 and an integral multiple thereof, or,
in either case, in the unused amount of the applicable Commitment. On the terms
and subject to the conditions of this Agreement, each Borrowing shall be
comprised of the type of Loans, and shall be made on the Business Day, specified
in such Borrowing Request. On or before 11:00 a.m., New York time, on such
Business Day each Lender shall deposit with the Administrative Agent same day
funds in an amount equal to such Lender's Percentage of the requested Borrowing.
Such deposit will be made to an account which the Administrative Agent shall
specify from time to time by notice to the Lenders. To the extent funds are
received from the Lenders, the Administrative Agent shall make such funds
available to the Borrower by wire transfer to the accounts the Borrower shall
have specified in its Borrowing Request. No Lender's obligation to make any Loan
shall be affected by any other Lender's failure to make any Loan.
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SECTION 2.3.2. Swing Line Loans.
(a) By telephonic notice, promptly followed (within three Business
Days) by the delivery of a confirming Borrowing Request, to the Swing Line
Lender on or before 11:00 a.m., New York time, on a Business Day, the
Borrower may from time to time irrevocably request that Swing Line Loans be
made by the Swing Line Lender in an aggregate minimum principal amount of
$200,000 and an integral multiple of $100,000. Each request by the Borrower
for a Swing Line Loan shall constitute a representation and warranty by the
Borrower that on the date of such request and (if different) the date of
the making of the Swing Line Loan, both immediately before and after giving
effect to such Swing Line Loan and the application of the proceeds thereof,
the statements made in Section 5.2.1 are true and correct. All Swing Line
Loans shall be made as Base Rate Loans and shall not be entitled to be
converted into LIBO Rate Loans. The proceeds of each Swing Line Loan shall
be made available by the Swing Line Lender, by its close of business on the
Business Day telephonic notice is received by it as provided in the
preceding sentences, to the Borrower by wire transfer to the accounts the
Borrower shall have specified in its notice therefor.
(b) If (i) any Swing Line Loan shall be outstanding for more than four
full Business Days or (ii) after giving effect to any request for a Swing
Line Loan or a Revolving Loan the aggregate principal amount of Revolving
Loans and Swing Line Loans outstanding to the Swing Line Lender, together
with the Swing Line Lender's Percentage of all Letter of Credit
Outstandings, would exceed the Swing Line Lender's Percentage of the
Revolving Loan Commitment Amount, the Swing Line Lender, at any time in its
sole and absolute discretion, may request each Lender that has a Revolving
Loan Commitment, and each such Lender, including the Swing Line Lender
hereby agrees, to make a Revolving Loan (which shall always be initially
funded as a Base Rate Loan) in an amount equal to such Lender's Percentage
of the amount of the Swing Line Loans ("Refunded Swing Line Loans")
outstanding on the date such notice is given. On or before 11:00 a.m. (New
York time) on the first Business Day following receipt by each Lender of a
request to make Revolving Loans as provided in the preceding sentence, each
such Lender (other than the Swing Line Lender) shall deposit in an account
specified by the Administrative Agent to the Lenders from time to time the
amount so requested in same day funds, whereupon such funds shall be
immediately delivered to the Swing Line Lender (and not the Borrower) and
applied to repay the Refunded Swing Line Loans. On the day such Revolving
Loans are made, the Swing Line Lender's
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Percentage of the Refunded Swing Line Loans shall be deemed to be paid.
Upon the making of any Revolving Loan pursuant to this clause, the amount
so funded shall become due under such Lender's Revolving Note and shall no
longer be owed under the Swing Line Note. Each Lender's obligation to make
the Revolving Loans referred to in this clause shall be absolute and
unconditional and shall not be affected by any circumstance, including,
without limitation, (i) any set-off, counterclaim, recoupment, defense or
other right which such Lender may have against the Swing Line Lender, the
Borrower or any other Person for any reason whatsoever; (ii) the occurrence
or continuance of any Default; (iii) any adverse change in the condition
(financial or otherwise) of the Borrower or any other Obligor, including a
reduction in the Borrowing Base Amount subsequent to the date of the making
of a Swing Line Loan; (iv) the acceleration or maturity of any Loans or the
termination of the Revolving Loan Commitment after the making of any Swing
Line Loan; (v) any breach of this Agreement by the Borrower or any other
Lender; or (vi) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing.
(c) In the event that (i) the Borrower or any Subsidiary is subject to
any bankruptcy or insolvency proceedings as provided in Section 8.1.9 or
(ii) the Swing Line Lender otherwise requests, each Lender with a Revolving
Loan Commitment shall acquire without recourse or warranty an undivided
participation interest equal to such Lender's Percentage of any Swing Line
Loan otherwise required to be repaid by such Lender pursuant to the
preceding clause by paying to the Swing Line Lender on the date on which
such Lender would otherwise have been required to make a Revolving Loan in
respect of such Swing Line Loan pursuant to the preceding clause, in same
day funds, an amount equal to such Lender's Percentage of such Swing Line
Loan, and no Revolving Loans shall be made by such Lender pursuant to the
preceding clause. From and after the date on which any Lender purchases an
undivided participation interest in a Swing Line Loan pursuant to this
clause, the Swing Line Lender shall distribute to such Lender
(appropriately adjusted, in the case of interest payments, to reflect the
period of time during which such Lender's participation interest is
outstanding and funded) its ratable amount of all payments of principal and
interest in respect of such Swing Line Loan in like funds as received;
provided, however, that in the event such payment received by the Swing
Line Lender is required to be returned to the Borrower, such Lender shall
return to the Swing Line Lender the portion of any amounts which such
Lender had received from the Swing Line Lender in like funds.
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(d) Notwithstanding anything herein to the contrary, the Swing Line
Lender shall not be obligated to make any Swing Line Loans if it has
elected after the occurrence of a Default not to make Swing Line Loans and
has notified the Borrower in writing or by telephone of such election. The
Swing Line Lender shall promptly give notice to the Lenders of such
election not to make Swing Line Loans.
SECTION 2.4. Continuation and Conversion Elections. By delivering a
Continuation/Conversion Notice to the Administrative Agent on or before 12:00
noon, New York time, on a Business Day, the Borrower may from time to time
irrevocably elect, on not less than one (in the case of a conversion of LIBO
Rate Loans to Base Rate Loans) and three (in the case of a continuation of LIBO
Rate Loans or a conversion of Base Rate Loans into LIBO Rate Loans) nor more
than (in each case) five Business Days' notice that all, or any portion in an
aggregate minimum amount of $5,000,000 and an integral multiple of $1,000,000,
in the case of the continuation of, or conversion into, LIBO Rate Loans, or an
aggregate minimum amount of $1,000,000 and an integral multiple thereof, in the
case of the conversion into Base Rate Loans, (other than Swing Line Loans as
provided in clause (a) of Section 2.3.2) be, in the case of Base Rate Loans,
converted into LIBO Rate Loans or, in the case of LIBO Rate Loans, be converted
into a Base Rate Loan or continued as a LIBO Rate Loan (in the absence of
delivery of a Continuation/Conversion Notice with respect to any LIBO Rate Loan
at least three Business Days before the last day of the then current Interest
Period with respect thereto, such LIBO Rate Loan shall, on such last day,
automatically convert to a Base Rate Loan); provided, however, that (x) each
such conversion or continuation shall be pro rated among the applicable
outstanding Loans of the relevant Lenders, and (y) no portion of the outstanding
principal amount of any Loans may be continued as, or be converted into, LIBO
Rate Loans when any Default has occurred and is continuing.
SECTION 2.5. Funding. Each Lender may, if it so elects, fulfill its
obligation to make, continue or convert LIBO Rate Loans hereunder by causing one
of its foreign branches or Affiliates (or an international banking facility
created by such Lender) to make or maintain such LIBO Rate Loan, so long as such
action does not result in increased costs to the Borrower; provided, however,
that such LIBO Rate Loan shall nonetheless be deemed to have been made and to be
held by such Lender, and the obligation of the Borrower to repay such LIBO Rate
Loan shall nevertheless be to such Lender for the account of such foreign
branch, Affiliate or international banking facility; and provided, further,
however, that such Lender shall cause such foreign branch, Affiliate or
international banking facility to comply with the applicable provisions of
clause (b) of Section 4.6 with respect to such LIBO Rate Loan. In addition,
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the Borrower hereby consents and agrees that, for purposes of any determination
to be made for purposes of Section 4.1, 4.2, 4.3 or 4.4, it shall be
conclusively assumed that each Lender elected to fund all LIBO Rate Loans by
purchasing Dollar deposits in its LIBOR Office's interbank eurodollar market.
SECTION 2.6. Issuance Procedures. By delivering to the Administrative Agent
an Issuance Request on or before 12:00 noon, New York time, on a Business Day,
the Borrower may, from time to time irrevocably request, on not less than three
nor more than ten Business Days' notice (or such other notice as may be
acceptable to the Issuer in its sole discretion), in the case of an initial
issuance of a Letter of Credit, and not less than three nor more than ten
Business Days' notice prior to the then existing Stated Expiry Date of a Letter
of Credit (unless a shorter or longer notice period is acceptable to the Issuer
in its sole discretion), in the case of a request for the extension of the
Stated Expiry Date of a Letter of Credit, that the Issuer issue, or extend the
Stated Expiry Date of, as the case may be, an irrevocable Letter of Credit for
the Borrower's account or for the account of any wholly-owned Subsidiary of the
Borrower that is a signatory to the Subsidiary Guaranty and Subsidiary Security
Agreement and whose outstanding Capital Stock is pledged to the Administrative
Agent for the benefit of the Lenders pursuant to a Pledge Agreement, in such
form as may be requested by the Borrower and approved by the Issuer, solely for
the purposes described in Section 7.1.9. Notwithstanding anything to the
contrary contained herein or in any separate application for any Letter of
Credit, the Borrower hereby acknowledges and agrees that it shall be obligated
to reimburse the Issuer upon each Disbursement of a Letter of Credit, and it
shall be deemed to be the obligor for purposes of each such Letter of Credit
issued hereunder (whether the account party on such Letter of Credit is the
Borrower or a Subsidiary of the Borrower). Upon receipt of an Issuance Request,
the Administrative Agent shall promptly notify the Issuer and each Lender
thereof. Each Letter of Credit shall by its terms be stated to expire on a date
(its "Stated Expiry Date") no later than the earlier to occur of (i) the
Revolving Loan Commitment Termination Date or (ii) in the case of standby
(including direct pay) Letters of Credit, one year from the date of its issuance
and, in the case of documentary Letters of Credit, 180 days from the date of its
issuance. The Issuer will make available to the beneficiary thereof the original
of each Letter of Credit which it issues hereunder.
SECTION 2.6.1. Other Lenders' Participation. Upon the issuance of each
Letter of Credit issued by the Issuer pursuant hereto, and without further
action, each Lender (other than the Issuer) that has a Revolving Loan Commitment
shall be deemed to have irrevocably purchased from the Issuer, to the extent of
its Percentage to make Revolving Loans, and the Issuer shall be
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deemed to have irrevocably granted and sold to such Lender a participation
interest in such Letter of Credit (including the Contingent Liability and any
Reimbursement Obligation and all rights with respect thereto), and such Lender
shall, to the extent of its Revolving Loan Commitment Percentage, be responsible
for reimbursing promptly (and in any event within one Business Day) the Issuer
for Reimbursement Obligations which have not been reimbursed by the Borrower in
accordance with Section 2.6.3. In addition, such Lender shall, to the extent of
its Percentage to make Revolving Loans, be entitled to receive a ratable portion
of the Letter of Credit fees payable pursuant to Section 3.3.3 with respect to
each Letter of Credit and of interest payable pursuant to Section 3.2 with
respect to any Reimbursement Obligation. To the extent that any Lender has
reimbursed the Issuer for a Disbursement as required by this Section, such
Lender shall be entitled to receive its ratable portion of any amounts
subsequently received (from the Borrower or otherwise) in respect of such
Disbursement.
SECTION 2.6.2. Disbursements; Conversion to Revolving Loans. The Issuer
will notify the Borrower and the Administrative Agent promptly of the
presentment for payment of any Letter of Credit issued by the Issuer, together
with notice of the date (the "Disbursement Date") such payment shall be made
(each such payment, a "Disbursement"). Subject to the terms and provisions of
such Letter of Credit and this Agreement, the Issuer shall make such payment to
the beneficiary (or its designee) of such Letter of Credit. Prior to 12:00 noon,
New York time, on the first Business Day following the Disbursement Date (the
"Disbursement Due Date"), the Borrower will reimburse the Administrative Agent,
for the account of the Issuer, for all amounts which the Issuer has disbursed
under such Letter of Credit, together with interest thereon at the rate per
annum otherwise applicable to Revolving Loans (made as Base Rate Loans) from and
including the Disbursement Date to but excluding the Disbursement Due Date and,
thereafter (unless such Disbursement is converted into a Base Rate Loan on the
Disbursement Due Date), at a rate per annum equal to the rate per annum then in
effect with respect to overdue Revolving Loans (made as Base Rate Loans)
pursuant to Section 3.2.2 for the period from the Disbursement Due Date through
the date of such reimbursement; provided, however, that, if no Default shall
have then occurred and be continuing, unless the Borrower has notified the
Administrative Agent no later than one Business Day prior to the Disbursement
Due Date that it will reimburse the Issuer for the applicable Disbursement, then
the amount of the Disbursement shall be deemed to be a Revolving Loan
constituting a Base Rate Loan and following the giving of notice thereof by the
Administrative Agent to the Lenders, each Lender with a commitment to make
Revolving Loans (other than the Issuer) will deliver to the Issuer on the
Disbursement Due Date immediately
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available funds in an amount equal to such Lender's Percentage of such Revolving
Loan. Each conversion of Disbursement amounts into Revolving Loans shall
constitute a representation and warranty by the Borrower that on the date of the
making of such Revolving Loan all of the statements set forth in Section 5.2.1
are true and correct.
SECTION 2.6.3. Reimbursement. The obligation (a "Reimbursement Obligation")
of the Borrower under Section 2.6.2 to reimburse the Issuer with respect to each
Disbursement (including interest thereon) not converted into a Base Rate Loan
pursuant to Section 2.6.2, and, upon the failure of the Borrower to reimburse
the Issuer and the giving of notice thereof by the Administrative Agent to the
Lenders, each Lender's (to the extent it has a Revolving Loan Commitment)
obligation under Section 2.6.1 to reimburse the Issuer or fund its Percentage of
any Disbursement converted into a Base Rate Loan, shall be absolute and
unconditional under any and all circumstances and irrespective of any setoff,
counterclaim or defense to payment which the Borrower or such Lender, as the
case may be, may have or have had against the Issuer or any such Lender,
including any defense based upon the failure of any Disbursement to conform to
the terms of the applicable Letter of Credit (if, in the Issuer's good faith
opinion, such Disbursement is determined to be appropriate) or any
non-application or misapplication by the beneficiary of the proceeds of such
Letter of Credit; provided, however, that after paying in full its Reimbursement
Obligation hereunder, nothing herein shall adversely affect the right of the
Borrower or such Lender, as the case may be, to commence any proceeding against
the Issuer for any wrongful Disbursement made by the Issuer under a Letter of
Credit as a result of acts or omissions constituting gross negligence or willful
misconduct on the part of the Issuer.
SECTION 2.6.4. Deemed Disbursements. Upon the occurrence and during the
continuation of any Event of Default of the type described in Section 8.1.9 or,
with notice from the Administrative Agent acting at the direction of the
Required Lenders, upon the occurrence and during the continuation of any other
Event of Default,
(a) an amount equal to that portion of all Letter of Credit
Outstandings attributable to the then aggregate amount which is undrawn and
available under all Letters of Credit issued and outstanding shall, without
demand upon or notice to the Borrower or any other Person, be deemed to
have been paid or disbursed by the Issuer under such Letters of Credit
(notwithstanding that such amount may not in fact have been so paid or
disbursed); and
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(b) upon notification by the Administrative Agent to the Borrower of
its obligations under this Section, the Borrower shall be immediately
obligated to reimburse the Issuer for the amount deemed to have been so
paid or disbursed by the Issuer.
Any amounts so payable by the Borrower pursuant to this Section shall be
deposited in cash with the Administrative Agent and held as collateral security
for the Obligations in connection with the Letters of Credit issued by the
Issuer. At such time when the Events of Default giving rise to the deemed
disbursements hereunder shall have been cured or waived, the Administrative
Agent shall return to the Borrower all amounts then on deposit with the
Administrative Agent pursuant to this Section, together with accrued interest at
the Federal Funds Rate, which have not been applied to the satisfaction of such
Obligations.
SECTION 2.6.5. Nature of Reimbursement Obligations. The Borrower and, to
the extent set forth in Section 2.6.1, each Lender with a Revolving Loan
Commitment, shall assume all risks of the acts, omissions or misuse of any
Letter of Credit by the beneficiary thereof. The Issuer (except to the extent of
its own gross negligence or willful misconduct) shall not be responsible for:
(a) the form, validity, sufficiency, accuracy, genuineness or legal
effect of any Letter of Credit or any document submitted by any party in
connection with the application for and issuance of a Letter of Credit,
even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged;
(b) the form, validity, sufficiency, accuracy, genuineness or legal
effect of any instrument transferring or assigning or purporting to
transfer or assign a Letter of Credit or the rights or benefits thereunder
or the proceeds thereof in whole or in part, which may prove to be invalid
or ineffective for any reason;
(c) failure of the beneficiary to comply fully with conditions
required in order to demand payment under a Letter of Credit;
(d) errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or otherwise; or
(e) any loss or delay in the transmission or otherwise of any document
or draft required in order to make a Disbursement under a Letter of Credit.
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None of the foregoing shall affect, impair or prevent the vesting of any of the
rights or powers granted to the Issuer or any Lender with a Revolving Loan
Commitment hereunder. In furtherance and extension and not in limitation or
derogation of any of the foregoing, any action taken or omitted to be taken by
the Issuer in good faith (and not constituting gross negligence or willful
misconduct) shall be binding upon the Borrower, each Obligor and each such
Lender, and shall not put the Issuer under any resulting liability to the
Borrower, any Obligor or any such Lender, as the case may be.
SECTION 2.7. Notes. Each Lender's Loans under a Commitment shall be
evidenced by a Note payable to the order of such Lender in a maximum principal
amount equal to such Lender's Percentage of the applicable Commitment Amount.
All Swing Line Loans made by the Swing Line Lender shall be evidenced by a Swing
Line Note payable to the order of the Swing Line Lender in a maximum principal
amount equal to the Swing Line Loan Commitment Amount. The Borrower hereby
irrevocably authorizes each Lender to make (or cause to be made) appropriate
notations on the grid attached to such Lender's Notes (or on any continuation of
such grid), which notations, if made, shall evidence, inter alia, the date of,
the outstanding principal of, and the interest rate and Interest Period
applicable to the Loans evidenced thereby. Such notations shall be conclusive
and binding on the Borrower absent manifest error; provided, however, that the
failure of any Lender to make any such notations shall not limit or otherwise
affect any Obligations of the Borrower or any other Obligor.
SECTION 2.8. Registered Notes. (a) Any Non-U.S. Lender that could become
completely exempt from withholding of any Taxes in respect of payment of any
interest due to such Non-U.S. Lender under this Agreement if the Notes held by
such Lender were in registered form for U.S. Federal income tax purposes may
request the Borrower (through the Administrative Agent), and the Borrower agrees
(i) to exchange for any Notes held by such Lender, or (ii) to issue to such
Lender on the date it becomes a Lender, promissory notes(s) registered as
provided in clause (b) of this Section 2.8 (each, a "Registered Note", to be in
substantially the form of Exhibit A-6 hereto). Registered Notes may not be
exchanged for Notes that are not Registered Notes.
(b) The Borrower shall maintain, or cause to be maintained, a register (the
"Register") (which, at the request of the Borrower, shall be kept by the
Administrative Agent on behalf of the Borrower at no extra charge to the
Borrower at the address to which notices to the Administrative Agent are to be
sent under this Agreement) on which it enters the name of the registered owner
of the Non-U.S. Lender Obligation(s) evidenced by a Registered Note.
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(c) The Register shall be available for inspection by the Borrower and any
Lender at any reasonable time upon reasonable prior notice.
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1. Repayments and Prepayments; Application.
SECTION 3.1.1. Repayments and Prepayments. The Borrower shall repay in full
the unpaid principal amount of each Loan upon the Stated Maturity Date therefor.
Prior thereto, the Borrower
(a) may, from time to time on any Business Day, make a voluntary
prepayment, in whole or in part, of the outstanding principal amount of any
(i) Loans (other than Swing Line Loans), provided, however, that
(A) any such prepayment of the Term-A Loans, Term-B Loans or
Term-C Loans shall be made pro rata among Term-A Loans, Term-B
Loans and Term-C Loans, as applicable, of the same type and if
applicable, having the same Interest Period of all Lenders that
have made such Term-A Loans, Term-B Loans or Term-C Loans, and
any such prepayment of Revolving Loans shall be made pro rata
among the Revolving Loans of the same type and, if applicable,
having the same Interest Period of all Lenders that have made
such Revolving Loans;
(B) the Borrower shall comply with Section 4.4 in the event
that any LIBO Rate Loan is prepaid on any day other than the last
day of the Interest Period for such Loan;
(C) all such voluntary prepayments shall require at least
three but no more than five Business Days' prior written notice
to the Administrative Agent; and
(D) all such voluntary partial prepayments shall be, in the
case of LIBO Rate Loans, in an aggregate minimum amount of
$5,000,000 and an integral multiple of $1,000,000 and, in the
case of Base Rate Loans, in an aggregate minimum amount of
$1,000,000 and an integral multiple of $500,000; or
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(ii) Swing Line Loans, provided that all such voluntary
prepayments shall require prior telephonic notice to the Swing Line
Lender on or before 1:00 p.m., New York time, on the day of such
prepayment (such notice to be confirmed in writing within 24 hours
thereafter);
(b) shall, on each date when any reduction in the then existing
Borrowing Base Amount shall become effective, make a mandatory prepayment
of Revolving Loans and (if necessary) Swing Line Loans and (if necessary)
deposit with the Administrative Agent cash collateral for Letter of Credit
Outstandings, in an aggregate amount equal to the excess, if any, of the
aggregate, outstanding principal amount of all Revolving Loans, Swing Line
Loans and Letter of Credit Outstandings over the then existing Borrowing
Base Amount;
(c) shall, no later than one Business Day following the receipt of any
Net Disposition Proceeds, deliver to the Administrative Agent a calculation
of the amount of such Net Disposition Proceeds and, subject to the
following proviso, make a mandatory prepayment of the Term Loans in an
amount equal to 100% of such Net Disposition Proceeds, to be applied as set
forth in Section 3.1.2; provided, that, at the option of the Borrower and
so long as no Default shall have occurred and be continuing, the Borrower
may use or cause the appropriate Subsidiary to use the Net Disposition
Proceeds to pay Restructuring Charges or to purchase assets useful in the
business of the Borrower and its Subsidiaries or to purchase a majority
controlling interest in a Person owning such assets or to increase any such
controlling interest already maintained by it (with such assets or
interests collectively referred to as "Qualified Assets") within 365 days
after the consummation (and with the Net Disposition Proceeds) of such
sale, conveyance or disposition, and in the event the Borrower elects to
exercise its right to purchase Qualified Assets or pay Restructuring
Charges with the Net Disposition Proceeds pursuant to this clause, the
Borrower shall deliver a certificate of an Authorized Officer to the
Administrative Agent within 30 days following the receipt of Net
Disposition Proceeds setting forth the amount of the Net Disposition
Proceeds which the Borrower expects to use to purchase Qualified Assets or
apply to a payment of Restructuring Charges during such 365 day period;
provided, further, that the Borrower and its Subsidiaries shall only be
permitted to pay Restructuring Charges out of Net Disposition Proceeds
and/or reinvest Net Disposition Proceeds in Qualified Assets in an
aggregate amount of up to $30,000,000, to the extent permitted by Section
7.2.5, from
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the Amendment Effective Date through the remaining term of this Agreement.
If and to the extent that the Borrower has elected to reinvest Net
Disposition Proceeds as permitted above, then on the date which is 365 days
(in the case of clause (c)(i) below) and 370 days (in the case of clause
(c)(ii) below) after the relevant sale, conveyance or disposition, the
Borrower shall (i) deliver a certificate of an Authorized Officer to the
Administrative Agent certifying as to the amount and use of such Net
Disposition Proceeds actually used to purchase Qualified Assets or pay
Restructuring Charges and (ii) deliver to the Administrative Agent, for
application in accordance with this clause and Section 3.1.2, an amount
equal to the remaining unused Net Disposition Proceeds;
(d) shall, no later than 5 Business Days following the delivery of the
Borrower's annual audited financial reports required pursuant to clause (b)
of Section 7.1.1 (beginning with the financial reports delivered in respect
of the 1996 Fiscal Year), deliver to the Administrative Agent a calculation
of the Excess Cash Flow for the prior Fiscal Year and no later than 5
Business Days following the delivery of such calculation, make a mandatory
prepayment of the Term Loans in an amount equal to 75% of the Excess Cash
Flow (if any) for such Fiscal Year (but, in the case of the 1996 Fiscal
Year, only for the portion thereof following January 26, 1996), to be
applied as set forth in Section 3.1.2;
(e) shall, concurrently with the receipt by Holdings of any Net Equity
Proceeds or the Borrower or any of its Subsidiaries of any Net Debt
Proceeds, deliver to the Administrative Agent a calculation of the amount
of such Net Debt Proceeds or Net Equity Proceeds, and no later than 5
Business Days following the delivery of such calculation, make a mandatory
prepayment of the Term Loans in an amount equal to 100% of such Net Equity
Proceeds or Net Debt Proceeds, as the case may be, to be applied as set
forth in Section 3.1.2; provided, that all Net Debt Proceeds and Net Equity
Proceeds shall be deposited in a cash collateral account with the
Administrative Agent upon receipt pending application to the Loans pursuant
to this clause;
(f) shall, within 60 days following the receipt by the Borrower or any
of its Subsidiaries of any Casualty Proceeds in excess of $1,000,000
(individually or in the aggregate over the course of a Fiscal Year), make a
mandatory prepayment of the Term Loans in an amount equal to 100% of such
Casualty Proceeds, to be applied as set forth in Section 3.1.2; provided,
that no mandatory prepayment of Casualty Proceeds shall be required under
this clause if
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(i) the Borrower informs the Administrative Agent no later than 60 days
following the occurrence of the Casualty Event resulting in such Casualty
Proceeds of its or its Subsidiary's good faith intention to apply such
Casualty Proceeds to the rebuilding or replacement of such damaged,
destroyed or condemned assets or property and in fact uses such Casualty
Proceeds to rebuild or replace the damaged, destroyed or condemned asset or
property within 365 days following the receipt of such Casualty Proceeds,
with the amount of Casualty Proceeds unused after such 365 day period being
applied to the Loans pursuant to Section 3.1.2; provided, further, however,
that at any time when any Default shall have occurred and be continuing or
Casualty Proceeds not applied as provided above shall exceed $5,000,000,
such Casualty Proceeds will be deposited in an account maintained with the
Administrative Agent for disbursement at the request of the Borrower to pay
for such rebuilding or replacement;
(g) shall, on each date when any reduction in the Revolving Loan
Commitment Amount shall become effective, including pursuant to Section 2.2
or Section 3.1.2, make a mandatory prepayment of Revolving Loans and (if
necessary) Swing Line Loans, and (if necessary) deposit with the
Administrative Agent cash collateral for Letter of Credit Outstandings) in
an aggregate amount equal to the excess, if any, of the aggregate
outstanding principal amount of all Revolving Loans, Swing Line Loans and
Letters of Credit Outstanding over the Revolving Loan Commitment Amount as
so reduced;
(h) shall, on the Stated Maturity Date and on each Quarterly Payment
Date occurring on or during any period set forth below, make a scheduled
repayment of the aggregate outstanding principal amount, if any, of all
Term-A Loans in an amount equal to the amount set forth below opposite the
Stated Maturity Date or such Quarterly Payment Date (as such amounts may
have otherwise been reduced pursuant to this Agreement), as applicable:
07/31/96 through (and including)
01/31/97 $2,625,000
04/30/97 through (and including)
01/31/98 $4,375,000
04/30/98 through (and including)
01/31/99 $5,250,000
04/30/99 through (and including)
01/31/00 $7,000,000
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04/30/00 through (and including)
10/31/01 $7,875,000
Stated Maturity Date for
Term-A Loans $8,625,000, or the
then outstanding
principal amount of
all Term-A Loans, if
different;
(i) shall, on the Stated Maturity Date and on each Quarterly Payment
Date occurring on or during any period set forth below, make a scheduled
repayment of the aggregate outstanding principal amount, if any, of all
Term-B Loans in an amount equal to the amount set forth below opposite the
Stated Maturity Date or such Quarterly Payment Date, as applicable (as such
amounts may have otherwise been reduced pursuant to this Agreement):
07/31/96 through (and including)
01/31/01 $ 225,000
04/30/01 through (and including)
01/31/02 $ 2,475,000
04/30/02 through (and including)
01/31/03 $12,825,000
04/30/03 $12,150,000
Stated Maturity Date for
Term-B Loans $12,225,000, or the
then outstanding
principal amount of
all Term-B Loans, if
different;
(j) shall, on the Stated Maturity Date and on each Quarterly Payment
Date occurring on or during any period set forth below, make a scheduled
repayment of the aggregate outstanding principal amount, if any, of all
Term-C Loans in an amount equal to the amount set forth below opposite the
Stated Maturity Date or such Quarterly Payment Date, as applicable (as such
amounts may have otherwise been reduced pursuant to this Agreement):
07/31/96 through (and including)
01/31/02 $ 162,500
04/30/02 through (and including)
01/31/03 $ 1,178,125
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04/30/03 through (and including)
07/31/03 $ 1,218,750
10/31/03 through (and including)
01/31/04 $13,975,000
04/30/04 $13,000,000
Stated Maturity Date for
Term-C Loans $13,062,500, or the
then outstanding
principal amount of
all Term-C Loans, if
different;
(k) shall, within one Business Day following the receipt of any
Working Capital Adjustment Amount (as defined in the Keebler Purchase
Agreement) after the Amendment Effective Date, make a mandatory prepayment
of the Revolving Loans (if any) in an amount equal to 100% of the amount so
received;
(l) shall, on the first anniversary of the consummation (if at all) of
the sale/leaseback of the DaVinci Project, inform the Administrative Agent
of the amount of net proceeds from such sale/leaseback not reinvested in
Qualified Assets and, 5 Business Days thereafter, make a mandatory
prepayment of the Term Loans in an amount equal to 100% of such net
proceeds not reinvested in Qualified Assets or applied to pay Restructuring
Charges prior to such date; and
(m) shall, immediately upon any acceleration of the Stated Maturity
Date of any Loans or Obligations pursuant to Section 8.2 or Section 8.3,
repay all Loans and provide the Administrative Agent with cash collateral
in an amount equal to the Letter of Credit Outstandings, unless, pursuant
to Section 8.3, only a portion of all Loans and Obligations are so
accelerated (in which case the portion so accelerated shall be so prepaid
or cash collateralized with the Administrative Agent).
Each prepayment of any Loans made pursuant to this Section shall be without
premium or penalty, except as may be required by Section 4.4. No prepayment of
principal of any Revolving Loans or Swing Line Loans pursuant to clauses (a) or
(k) of Section 3.1.1 shall cause a reduction in the Revolving Loan Commitment
Amount or the Swing Line Loan Commitment Amount, as the case may be.
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SECTION 3.1.2. Application. (a) Subject to clause (b), each prepayment or
repayment of the principal of the Loans shall be applied, to the extent of such
prepayment or repayment, first, to the principal amount thereof being maintained
as Base Rate Loans, and second, to the principal amount thereof being maintained
as LIBO Rate Loans.
(b) Each voluntary prepayment of Term Loans and each prepayment of Term
Loans made pursuant to clauses (c), (d), (e), (f) and (l) of Section 3.1.1 shall
be applied pro rata to a mandatory prepayment of the outstanding principal
amount of all Term-A Loans, Term-B Loans and Term-C Loans (with the amount of
such prepayment of the Term-A Loans, the Term-B Loans and the Term-C Loans being
applied to the remaining Term-A Loan, Term-B Loan or Term-C Loan amortization
payments required pursuant to clauses (h), (i) and (j) of Section 3.1.1, in each
case pro rata in accordance with the amount of each such remaining Term Loan
amortization payment), until all such Term-A Loans, Term-B Loans and Term-C
Loans have been paid in full; provided, however, that in the case of each
prepayment of Term Loans required pursuant to clauses (c), (d), (e), (f) and (l)
of Section 3.1.1, (i) any Lender that has Term-B Loans outstanding may, by
delivering a notice to the Administrative Agent at least one Business Day prior
to the date that such prepayment is to be made, elect not to have its pro rata
share of Term-B Loans prepaid, and upon any such election the Administrative
Agent shall apply the amount that otherwise would have prepaid such Lender's
Term-B Loans first, to a mandatory prepayment of the Term-A Loans (until repaid
in full), second, to a prepayment of Term-B Loans and Term-C Loans owing to
those Lenders that agree to accept such additional prepayments, pro rata among
such Lenders, and third, to a reduction in the Revolving Loan Commitment Amount
and (ii) any Lender that has Term-C Loans outstanding may, by delivering a
notice to the Administrative Agent at least one Business Day prior to the date
that such prepayment is to be made, elect not to have its pro rata share of
Term-C Loans prepaid, and upon any such election the Administrative Agent shall
apply the amount that otherwise would have prepaid such Lender's Term-C Loans
first, to a mandatory prepayment of the Term-A Loans (until repaid in full),
second, to a prepayment of Term-B Loans and Term-C Loans owing to those Lenders
that agree to accept such additional prepayments, pro rata among such Lenders,
and third, to a reduction in the Revolving Loan Commitment Amount.
SECTION 3.2. Interest Provisions. Interest on the outstanding principal
amount of Loans shall accrue and be payable in accordance with this Section 3.2.
SECTION 3.2.1. Rates. Pursuant to an appropriately delivered Borrowing
Request or Continuation/Conversion Notice,
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the Borrower may elect that Loans comprising a Borrowing accrue interest at a
rate per annum:
(a) with respect to Revolving Loans and Term-A Loans,
(i) on that portion maintained from time to time as a Base Rate
Loan, equal to the sum of the Alternate Base Rate from time to time in
effect plus the Applicable Margin; and
(ii) on that portion maintained as a LIBO Rate Loan, during each
Interest Period applicable thereto, equal to the sum of the LIBO Rate
(Reserve Adjusted) for such Interest Period plus the Applicable
Margin; and
(b) with respect to Term-B Loans,
(i) on that portion maintained from time to time as a Base Rate
Loan, equal to the sum of the Alternate Base Rate from time to time in
effect plus the Applicable Margin for such Loans; and
(ii) on that portion maintained as a LIBO Rate Loan, during each
Interest Period applicable thereto, equal to the sum of the LIBO Rate
(Reserve Adjusted) for such Interest Period plus the Applicable Margin
for such Loans;
(c) with respect to Term-C Loans,
(i) on that portion maintained from time to time as a Base Rate
Loan, equal to the sum of the Alternate Base Rate from time to time in
effect plus the Applicable Margin for such Loans; and
(ii) on that portion maintained as a LIBO Rate Loan, during each
Interest Period applicable thereto, equal to the sum of the LIBO Rate
(Reserve Adjusted) for such Interest Period plus the Applicable Margin
for such Loans; and
(d) with respect to Swing Line Loans, equal to the sum of the
Alternate Base Rate from time to time in effect plus the Applicable Margin
payable for Revolving Loans that are Base Rate Loans.
All LIBO Rate Loans shall bear interest from and including the first day of the
applicable Interest Period to (but not including) the last day of such Interest
Period at the interest rate determined as applicable to such LIBO Rate Loan.
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SECTION 3.2.2. Post-Maturity Rates. After the date any principal amount of
any Loan shall have become due and payable (whether on the Stated Maturity Date,
upon acceleration or otherwise), or any other monetary Obligation (other than
overdue Reimbursement Obligations which shall bear interest as provided in
Section 2.6.2) of the Borrower shall have become due and payable, the Borrower
shall pay, but only to the extent permitted by law, interest (after as well as
before judgment) on such amounts at a rate per annum equal to
(a) in the case of any overdue principal amount of Loans, overdue
interest thereon, overdue commitment fees or other overdue amounts owing in
respect of Loans or other obligations (or the related Commitments) under a
particular Tranche, the rate that would otherwise be applicable to Base
Rate Loans under such Tranche pursuant to Section 3.2.1 plus 2%; and
(b) in the case of overdue monetary Obligations (other than as
described in clause (a)), the Alternate Base Rate plus 4%.
SECTION 3.2.3. Payment Dates. Interest accrued on each Loan shall be
payable, without duplication:
(a) on the Stated Maturity Date therefor;
(b) on the date of any payment or prepayment, in whole or in part, of
principal outstanding on such Loan;
(c) with respect to Base Rate Loans, on each Quarterly Payment Date;
(d) with respect to LIBO Rate Loans, the last day of each applicable
Interest Period (and, if such Interest Period shall exceed three months, on
the third month anniversary of such Interest Period);
(e) with respect to any Base Rate Loans converted into LIBO Rate Loans
on a day when interest would not otherwise have been payable pursuant to
clause (c), on the date of such conversion; and
(f) on that portion of any Loans the Stated Maturity Date of which is
accelerated pursuant to Section 8.2 or Section 8.3, immediately upon such
acceleration.
Interest accrued on Loans, Reimbursement Obligations or other monetary
Obligations arising under this Agreement or any other Loan Document after the
date such amount is due and payable
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(whether on the Stated Maturity Date, upon acceleration or otherwise) shall be
payable upon demand.
SECTION 3.3. Fees. The Borrower agrees to pay the fees set forth in this
Section 3.3. All such fees shall be non-refundable.
SECTION 3.3.1. Commitment Fee. The Borrower agrees to pay to the
Administrative Agent for the account of each Lender that has a Revolving Loan
Commitment, for the period (including any portion thereof when any of the
Lender's Commitments are suspended by reason of the Borrower's inability to
satisfy any condition of Article V) commencing on January 26, 1996 and
continuing through the Revolving Loan Commitment Termination Date, a commitment
fee at the rate of the Applicable Commitment Fee Margin on such Lender's
Percentage of the average daily unused portion of the Revolving Loan Commitment
Amount (net of Letter of Credit Outstandings); provided, that prior to the
Amendment Effective Date, the commitment fee shall accrue based on the
"Revolving Loan Commitment Amount", as defined in the Existing Credit Agreement.
Such commitment fees shall be payable by the Borrower in arrears on each
Quarterly Payment Date and on the Revolving Loan Commitment Termination Date.
The making of Swing Line Loans by the Swing Line Lender shall constitute the
usage of the Revolving Loan Commitment with respect to the Swing Line Lender
only and the commitment fees to be paid by the Borrower to the Lenders (other
than the Swing Line Lender) shall be calculated and paid accordingly.
SECTION 3.3.2. Administrative Agent's Fee. The Borrower agrees to pay to
the Administrative Agent, for its own account, the non-refundable fees in the
amounts and on the dates set forth in the Fee Letter.
SECTION 3.3.3. Letter of Credit Fee. The Borrower agrees to pay to the
Administrative Agent, for the pro rata account of the Issuer and each other
Lender that has a Revolving Loan Commitment, a Letter of Credit fee in an amount
equal to (a) with respect to each standby (including direct pay) Letter of
Credit, the Applicable Margin per annum for Revolving Loans that are maintained
as LIBO Rate Loans multiplied by the Stated Amount of each such Letter of
Credit, and (b) with respect to each documentary Letter of Credit, 1 3/8% per
annum multiplied by the Stated Amount of each such Letter of Credit, such fees
being payable quarterly in arrears on each Quarterly Payment Date. The Borrower
further agrees to pay to the Issuer for its own account on the date of issuance
of each Letter of Credit an issuance fee in an amount equal to the greater of
(x) $100 and (y) 1/4 of 1% per annum of the Stated Amount thereof.
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SECTION 3.3.4. Amendment Fee. The Borrower agrees to pay to the
Administrative Agent, for the account of each Existing Lender (including
Scotiabank) that executes and delivers this Agreement and continues its Existing
Loans as Loans hereunder, an amendment fee in an amount equal to (a) 1/8 of 1%
multiplied by (b) the amount set forth opposite its name, on Schedule VIII
hereto which amount equals the sum of (i) the outstanding principal amount of
Existing Term Loans owing to such Lender under the Existing Credit Agreement,
but only to the extent that such Existing Term Loans are continued by such
Lender as Term Loans hereunder and (ii) an amount determined by such Existing
Lender's Percentage of the Revolving Loan Commitment Amount (in each case under,
and as defined in, the Existing Credit Agreement), but only to the extent of
such Existing Lender's continuation of its Revolving Loan Commitment under this
Agreement.
ARTICLE IV
CERTAIN LIBO RATE AND OTHER PROVISIONS
SECTION 4.1. LIBO Rate Lending Unlawful. If any Lender shall determine
(which determination shall, upon notice thereof to the Borrower and the Lenders,
be conclusive and binding on the Borrower) that the introduction of or any
change in or in the interpretation of any law makes it unlawful, or any central
bank or other governmental authority asserts that it is unlawful, for such
Lender to make, continue or maintain any Loan as, or to convert any Loan into, a
LIBO Rate Loan, the obligations of such Lender to make, continue, maintain or
convert any Loans as LIBO Rate Loans shall, upon such determination, forthwith
be suspended until such Lender shall notify the Administrative Agent that the
circumstances causing such suspension no longer exist (with the date of such
notice being the "Reinstatement Date"), and (i) all LIBO Rate Loans previously
made by such Lender shall automatically convert into Base Rate Loans at the end
of the then current Interest Periods with respect thereto or sooner, if required
by such law or assertion and (ii) all Loans thereafter made by such Lender and
outstanding prior to the Reinstatement Date shall be made as Base Rate Loans,
with interest thereon being payable on the same date that interest is payable
with respect to corresponding Borrowing of LIBO Rate Loans made by Lenders not
so affected.
SECTION 4.2. Deposits Unavailable. If the Administrative Agent shall have
determined that
(a) Dollar deposits in the relevant amount and for the relevant
Interest Period are not available to the Administrative Agent in its
relevant market; or
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(b) by reason of circumstances affecting the Administrative Agent's
relevant market, adequate means do not exist for ascertaining the interest
rate applicable hereunder to LIBO Rate Loans,
then, upon notice from the Administrative Agent to the Borrower and the Lenders,
the obligations of all Lenders under Section 2.3 and Section 2.4 to make or
continue any Loans as, or to convert any Loans into, LIBO Rate Loans shall
forthwith be suspended until the Administrative Agent shall notify the Borrower
and the Lenders that the circumstances causing such suspension no longer exist.
SECTION 4.3. Increased LIBO Rate Loan Costs, etc. The Borrower agrees to
reimburse each Lender for any increase in the cost to such Lender of, or any
reduction in the amount of any sum receivable by such Lender in respect of,
making, continuing or maintaining (or of its obligation to make, continue or
maintain) any Loans as, or of converting (or of its obligation to convert) any
Loans into, LIBO Rate Loans (excluding any amounts, whether or not constituting
Taxes, referred to in Section 4.6) arising after the date of any change in, or
the introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in of, any law or regulation, directive, guideline, decision or request
(whether or not having the force of law) of any court, central bank, regulator
or other governmental authority that results in such increase in cost or
reduction in amounts receivable. Such Lender shall promptly notify the
Administrative Agent and the Borrower in writing of the occurrence of any such
event, such notice to state, in reasonable detail, the reasons therefor and the
additional amount required fully to compensate such Lender for such increased
cost or reduced amount. Such additional amounts shall be payable by the Borrower
directly to such Lender within five days of its receipt of such notice, and such
notice shall, in the absence of manifest error, be conclusive and binding on the
Borrower.
SECTION 4.4. Funding Losses. In the event any Lender shall incur any loss
or expense (including any loss or expense incurred by reason of the liquidation
or reemployment of deposits or other funds acquired by such Lender to make,
continue or maintain any portion of the principal amount of any Loan as, or to
convert any portion of the principal amount of any Loan into, a LIBO Rate Loan)
as a result of
(a) any conversion or repayment or prepayment of the principal amount
of any LIBO Rate Loans on a date other than the scheduled last day of the
Interest Period applicable thereto, whether pursuant to Section 3.1 or
otherwise;
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(b) any Loans not being made as LIBO Rate Loans in accordance with the
Borrowing Request therefor; or
(c) any Loans not being continued as, or converted into, LIBO Rate
Loans in accordance with the Continuation/Conversion Notice therefor,
then, upon the written notice of such Lender to the Borrower (with a copy to the
Administrative Agent), the Borrower shall, within five days of its receipt
thereof, pay directly to such Lender such amount as will (in the reasonable
determination of such Lender) reimburse such Lender for such loss or expense.
Such written notice (which shall include calculations in reasonable detail)
shall, in the absence of manifest error, be conclusive and binding on the
Borrower.
SECTION 4.5. Increased Capital Costs. If any change in, or the
introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in of, any law or regulation, directive, guideline, decision or request
(whether or not having the force of law) of any court, central bank, regulator
or other governmental authority affects or would affect the amount of capital
required or expected to be maintained by any Lender or any Person controlling
such Lender, and such Lender determines (in its sole and absolute discretion)
that the rate of return on its or such controlling Person's capital as a
consequence of its Commitments, participation in Letters of Credit or the Loans
made by such Lender is reduced to a level below that which such Lender or such
controlling Person could have achieved but for the occurrence of any such
circumstance, then, in any such case upon notice from time to time by such
Lender to the Borrower, the Borrower shall immediately pay directly to such
Lender additional amounts sufficient to compensate such Lender or such
controlling Person for such reduction in rate of return. A statement of such
Lender as to any such additional amount or amounts (including calculations
thereof in reasonable detail) shall, in the absence of manifest error, be
conclusive and binding on the Borrower. In determining such amount, such Lender
may use any method of averaging and attribution that it (in its sole and
absolute discretion) shall deem applicable.
SECTION 4.6. Taxes. (a) All payments by the Borrower of principal of, and
interest on, the Loans and all other amounts payable hereunder (including
Reimbursement Obligations and fees) shall be made free and clear of and without
deduction for any present or future income, excise, stamp or franchise taxes and
other taxes, fees, duties, withholdings or other charges of any nature
whatsoever imposed by any taxing authority, but excluding (i) Taxes imposed on
the Administrative Agent as a result of a present or former connection between
the applicable lending office of the Administrative Agent, and Taxes imposed on
any
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Lender as a result of a present or former connection between the applicable
lending office of a Lender, in each case and the jurisdiction of the
governmental authority imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any such connection arising solely from
the Administrative Agent or such Lender having executed, delivered or performed
its obligations or received a payment under, or taken any action to enforce,
this Agreement) or (ii) any taxes to the extent that they are in effect and
would apply as of the date any Person becomes a Lender or Assignee Lender, or as
of the date that any Lender changes its applicable lending office, to the extent
such taxes become applicable as a result of such change (other than a change in
an applicable lending office made pursuant to Section 4.10 below) (such
non-excluded items being called "Taxes"). In the event that any withholding or
deduction from any payment to be made by the Borrower hereunder is required in
respect of any Taxes pursuant to any applicable law, rule or regulation, then
the Borrower will
(i) pay directly to the relevant authority the full amount required to
be so withheld or deducted;
(ii) promptly forward to the Administrative Agent an official receipt
or other documentation satisfactory to the Administrative Agent evidencing
such payment to such authority; and
(iii) pay to the Administrative Agent for the account of the Lenders
such additional amount or amounts as is necessary to ensure that the net
amount actually received by each Lender will equal the full amount such
Lender would have received had no such withholding or deduction been
required, provided, however, that the Borrower shall not be required to
increase any such amounts payable to any Lender that is not organized under
the laws of the United States or a state thereof if such Lender fails to
comply with the requirements of clause (b) of Section 4.6.
Moreover, if any Taxes are directly asserted against the Administrative Agent or
any Lender with respect to any payment received by the Administrative Agent or
such Lender hereunder, the Administrative Agent or such Lender may pay such
Taxes and the Borrower will promptly pay to such Person such additional amounts
(including any penalties, interest or expenses) as is necessary in order that
the net amount received by such Person (including any Taxes on such additional
amount) shall equal the amount of such Taxes paid by such Person.
If the Borrower fails to pay any Taxes when due to the appropriate taxing
authority or fails to remit to the Administrative Agent, for the account of the
respective Lenders,
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the required receipts or other required documentary evidence, the Borrower shall
indemnify the Lenders for any incremental Taxes, interest or penalties that may
become payable by any Lender as a result of any such failure.
(b) Each Non-U.S. Lender shall, (i) on or prior to the date of the
execution and delivery of this Agreement, in the case of each Lender listed on
the signature pages hereof, or, in the case of an Assignee Lender, on or prior
to the date it becomes a Lender, execute and deliver to the Borrower and the
Administrative Agent, two or more (as the Borrower or the Administrative Agent
may reasonably request) United States Internal Revenue Service Forms 4224 or
Forms 1001 or, solely if such Lender is claiming exemption from United States
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of "portfolio interest", United States Internal Revenue Service Forms
W-8 and a certificate signed by a duly authorized officer of such Lender
representing that such Lender is not a "bank" within the meaning of Section
881(c)(3)(A) of the Code, or such other forms or documents (or successor forms
or documents), appropriately completed, as may be applicable to establish the
extent, if any, to which a payment to such Lender is exempt from withholding or
deduction of Taxes; and (ii) deliver to the Borrower and the Administrative
Agent two further copies of any such form or documents on or before the date
that any such form or document expires or becomes obsolete and after the
occurrence of any event requiring a change in the most recent such form or
document previously delivered by it to the Borrower.
(c) If the Borrower determines in good faith that a reasonable basis exists
for contesting the imposition of a Tax with respect to a Lender or the
Administrative Agent, the relevant Lender or the Administrative Agent, as
applicable, shall cooperate with the Borrower in challenging such Tax at the
Borrower's expense if requested by the Borrower.
SECTION 4.7. Payments, Computations, etc. Unless otherwise expressly
provided, all payments by or on behalf of the Borrower pursuant to this
Agreement, the Notes, each Letter of Credit or any other Loan Document shall be
made by the Borrower to the Administrative Agent for the pro rata account of the
Lenders entitled to receive such payment. All such payments required to be made
to the Administrative Agent shall be made, without setoff, deduction or
counterclaim, not later than 12:00 noon, New York time, on the date due, in same
day or immediately available funds, to such account as the Administrative Agent
shall specify from time to time by notice to the Borrower. Funds received after
that time shall be deemed to have been received by the Administrative Agent on
the next succeeding Business Day. The Administrative Agent shall promptly remit
in same day funds to each Lender its share, if any, of such payments received by
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the Administrative Agent for the account of such Lender. All interest and fees
shall be computed on the basis of the actual number of days (including the first
day but excluding the last day) occurring during the period for which such
interest or fee is payable over a year comprised of 360 days (or, in the case of
interest on a Base Rate Loan, 365 days or, if appropriate, 366 days). Whenever
any payment to be made shall otherwise be due on a day which is not a Business
Day, such payment shall (except as otherwise required by clause (c) of the
definition of the term "Interest Period") be made on the next succeeding
Business Day and such extension of time shall be included in computing interest
and fees, if any, in connection with such payment.
SECTION 4.8. Sharing of Payments. If any Lender shall obtain any payment or
other recovery (whether voluntary, involuntary, by application of setoff or
otherwise) on account of any Loan or Reimbursement Obligation (other than
pursuant to the terms of Sections 4.3, 4.4 and 4.5) in excess of its pro rata
share of payments then or therewith obtained by all Lenders entitled thereto,
such Lender shall purchase from the other Lenders such participation in Credit
Extensions made by them as shall be necessary to cause such purchasing Lender to
share the excess payment or other recovery ratably with each of them; provided,
however, that if all or any portion of the excess payment or other recovery is
thereafter recovered from such purchasing Lender, the purchase shall be
rescinded and each Lender which has sold a participation to the purchasing
Lender shall repay to the purchasing Lender the purchase price to the ratable
extent of such recovery together with an amount equal to such selling Lender's
ratable share (according to the proportion of
(a) the amount of such selling Lender's required repayment to the
purchasing Lender
to
(b) the total amount so recovered from the purchasing Lender)
of any interest or other amount paid or payable by the purchasing Lender in
respect of the total amount so recovered. The Borrower agrees that any Lender so
purchasing a participation from another Lender pursuant to this Section may, to
the fullest extent permitted by law, exercise all its rights of payment
(including pursuant to Section 4.9) with respect to such participation as fully
as if such Lender were the direct creditor of the Borrower in the amount of such
participation. If under any applicable bankruptcy, insolvency or other similar
law, any Lender receives a secured claim in lieu of a setoff to which this
Section
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applies, such Lender shall, to the extent practicable, exercise its rights in
respect of such secured claim in a manner consistent with the rights of the
Lenders entitled under this Section to share in the benefits of any recovery on
such secured claim.
SECTION 4.9. Setoff. Each Lender shall, upon the occurrence of any Default
described in clauses (a) through (d) of Section 8.1.9 or, with the consent of
the Required Lenders, upon the occurrence of any other Event of Default, have
the right to appropriate and apply to the payment of the Obligations owing to it
(whether or not then due), and (as security for such Obligations) the Borrower
hereby grants to each Lender a continuing security interest in, any and all
balances, credits, deposits, accounts or moneys of the Borrower then or
thereafter maintained with or otherwise held by such Lender; provided, however,
that any such appropriation and application shall be subject to the provisions
of Section 4.8. Each Lender agrees promptly to notify the Borrower and the
Administrative Agent after any such setoff and application made by such Lender;
provided, however, that the failure to give such notice shall not affect the
validity of such setoff and application. The rights of each Lender under this
Section are in addition to other rights and remedies (including other rights of
setoff under applicable law or otherwise) which such Lender may have.
SECTION 4.10. Mitigation. Each Lender agrees that if it makes any demand
for payment under Sections 4.3, 4.4, 4.5, or 4.6, or if any adoption or change
of the type described in Section 4.1 shall occur with respect to it, it will use
reasonable efforts (consistent with its internal policy and legal and regulatory
restrictions and so long as such efforts would not be disadvantageous to it, as
determined in its sole discretion) to designate a different lending office if
the making of such a designation would reduce or obviate the need for the
Borrower to make payments under Sections 4.3, 4.4, 4.5, or 4.6, or would
eliminate or reduce the effect of any adoption or change described in Section
4.1.
ARTICLE V
CONDITIONS TO CREDIT EXTENSIONS
SECTION 5.1. Initial Credit Extension. The obligations of (i) the Existing
Lenders to continue Existing Loans as Loans under this Agreement, (ii) the
Issuer to continue Existing Letters of Credit as Letters of Credit under this
Agreement and (iii) the Lenders to fund the initial Credit Extensions hereunder
shall be subject to the prior or concurrent satisfaction of each of the
conditions precedent set forth in this Section 5.1.
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SECTION 5.1.1. Resolutions, etc. The Administrative Agent shall have
received from each Obligor other than a natural Person a certificate, dated the
date of the initial Credit Extension hereunder, of its Secretary or Assistant
Secretary as to
(a) resolutions of its Board of Directors then in full force and
effect authorizing the execution, delivery and performance of this
Agreement, the Notes and each other Loan Document to be executed by it; and
(b) the incumbency and signatures of those of its officers authorized
to act with respect to this Agreement, the Notes and each other Loan
Document executed by it,
upon which certificate each Lender may conclusively rely until it shall have
received a further certificate of the Secretary of such Obligor canceling or
amending such prior certificate.
SECTION 5.1.2. Sunshine Acquisition Documents. The Administrative Agent
shall have received (with copies for each Lender) a fully executed copy of the
Sunshine Purchase Agreement, and, to the extent required by Section 5.1.3, all
other documents and instruments delivered in connection with the consummation of
the Sunshine Acquisition that are required to be delivered pursuant to the terms
of the Sunshine Purchase Agreement, and the Sunshine Purchase Agreement and such
other documents and instruments shall be satisfactory to the Administrative
Agent. The Sunshine Purchase Agreement shall be in full force and effect and
shall not have been modified or waived in any material respect, nor shall there
have been any forbearance to exercise any material rights with respect to any of
the terms or provisions relating to the conditions to the consummation of the
Sunshine Acquisition in the Sunshine Purchase Agreement unless otherwise agreed
to by the Required Lenders.
SECTION 5.1.3. Sunshine Acquisition Certificate. The Administrative Agent
shall have received a certificate, dated the date of the initial Credit
Extension, of an Authorized Officer of the Borrower certifying as to a true and
complete copy of the Sunshine Purchase Agreement and, to the extent requested by
the Administrative Agent, all other certificates, filings, documents, consents,
approvals, board of directors resolutions and opinions furnished pursuant to or
in connection with the Sunshine Purchase Agreement and the Sunshine Acquisition.
SECTION 5.1.4. Affirmation and Consent. The Administrative Agent shall have
received an affirmation and consent in form and substance satisfactory to it
executed and delivered by an Authorized Officer of each Obligor (other than the
Borrower) under the Existing Credit Agreement and related Loan Documents.
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SECTION 5.1.5. Closing Date Certificate. The Administrative Agent shall
have received, with counterparts for each Lender, the Closing Date Certificate,
substantially in the form of Exhibit D hereto, dated the date of the initial
Credit Extension hereunder and duly executed and delivered by the chief
executive, financial or accounting (or equivalent) Authorized Officer of the
Borrower, in which certificate the Borrower shall agree and acknowledge that the
statements made therein shall be deemed to be true and correct representations
and warranties of the Borrower made as of such date under this Agreement, and,
at the time such certificate is delivered, such statements shall in fact be true
and correct.
SECTION 5.1.6. Delivery of Notes. The Administrative Agent shall have
received, for the account of each Lender, its Notes, issued (in the case of
Existing Lenders) in substitution and exchange for, and not in satisfaction of,
the Notes delivered under the terms of the Existing Credit Agreement, duly
executed and delivered by the Borrower.
SECTION 5.1.7. Payment of Outstanding Indebtedness, etc. All Indebtedness
identified in Item 7.2.2(b) ("Indebtedness to be Paid") of the Disclosure
Schedule, in amounts which shall be satisfactory to the Administrative Agent,
together with all interest, all prepayment premiums and other amounts due and
payable with respect thereto, shall have been paid in full (including, to the
extent necessary, from proceeds of the initial Borrowing hereunder), and all
Liens securing payment of any such Indebtedness have been released and the
Administrative Agent shall have received all executed Uniform Commercial Code
Form UCC-3 termination statements or other instruments as may be suitable or
appropriate in connection therewith (or arrangements satisfactory to the
Administrative Agent shall have been entered into relating to such release
promptly following the initial Credit Extension hereunder).
SECTION 5.1.8. Supplement to Subsidiary Guaranty. The Administrative Agent
shall have received, with counterparts for each Lender, copies of a supplement
(in form and substance satisfactory to the Administrative Agent) to the
Subsidiary Guaranty, dated the date hereof, duly executed and delivered by an
Authorized Officer of Sunshine.
SECTION 5.1.9. Supplement to Borrower Pledge Agreement. The Administrative
Agent shall have received, with counterparts for each Lender, executed copies of
a supplement (in form and substance satisfactory to the Administrative Agent) to
the Borrower Pledge Agreement, dated as of the date hereof, duly executed by the
Borrower, together with the certificates evidencing all of the issued and
outstanding shares of Capital
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Stock of Sunshine, which certificates shall in each case be accompanied by
undated stock powers duly executed in blank.
If any securities pledged pursuant to the Borrower Pledge Agreement are
uncertificated securities, the Administrative Agent shall have received
confirmation and evidence satisfactory to it that the security interest in such
uncertificated securities has been transferred to and perfected by the
Administrative Agent for the benefit of the Lenders in accordance with Section
8-313 and Section 8-321 of the Uniform Commercial Code, as in effect in the
State of New York.
SECTION 5.1.10. Supplement to Subsidiary Security Agreement, etc. The
Administrative Agent shall have received, with counterparts for each Lender,
executed copies of a supplement (in form and substance satisfactory to the
Administrative Agent) to the Subsidiary Security Agreement, dated as of the date
hereof, duly executed by Sunshine, together with
(a) executed Uniform Commercial Code financing statements (Form UCC-1)
naming Sunshine as the debtor and the Administrative Agent as the secured
party, or other similar instruments or documents, to be filed under the
Uniform Commercial Code of all jurisdictions as may be necessary or, in the
opinion of the Administrative Agent, desirable to perfect the security
interest of the Administrative Agent pursuant to the Subsidiary Security
Agreement; and
(b) certified copies of Uniform Commercial Code Requests for
Information or Copies (Form UCC-11), or a similar search report certified
by a party acceptable to the Administrative Agent, dated a date reasonably
near to the date of the initial Borrowing hereunder, listing all effective
financing statements which name Sunshine (under its present name and any
previous names) as the debtor and which are filed in the jurisdictions in
which filings were made pursuant to clause (a) above, together with copies
of such financing statements.
SECTION 5.1.11. Mortgages. The Administrative Agent shall have received
counterparts of each Mortgage relating to each property preceded with an
asterisk on Item 5.1.11 ("Mortgaged Properties") of the Disclosure Schedule,
each dated as of the date hereof, duly executed by Sunshine, together with
(a) evidence of the completion (or satisfactory arrangements for the
completion) of all recordings and filings of such Mortgage as may be
necessary or, in the reasonable opinion of the Administrative Agent,
desirable
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effectively to create a valid, perfected first priority Lien against the
properties purported to be covered thereby;
(b) mortgagee's title insurance policies in favor of the
Administrative Agent and the Lenders in amounts and in form and substance
and issued by insurers, reasonably satisfactory to the Administrative
Agent, with respect to the property purported to be covered by such
Mortgage, insuring that title to such property is marketable and that the
interests created by the Mortgage constitute valid first Liens thereon free
and clear of all defects and encumbrances other than as approved by the
Administrative Agent, and such policies shall also include a revolving
credit endorsement and such other endorsements as the Administrative Agent
shall request and shall be accompanied by evidence of the payment in full
of all premiums thereon; and
(c) such other approvals, opinions, or documents as the Administrative
Agent may reasonably request.
SECTION 5.1.12. Amendments to Existing Mortgages. The Administrative Agent
shall have received
(a) amendments, in form and substance satisfactory to it, to each
Mortgage that was filed against real property of the Borrower or any of its
Subsidiaries pursuant to the terms of the Existing Credit Agreement,
executed and delivered by the applicable mortgagor thereunder;
(b) updated mortgagee's title insurance policies (or endorsements to
the existing mortgagee title insurance policies issued in connection with
the Mortgages dated January 26, 1996) in favor of the Administrative Agent
and the Lenders in form and substance and issued by insurers, reasonably
satisfactory to the Administrative Agent, with respect to the property
purported to be covered by such existing Mortgage, insuring that title to
such property is marketable and that the interests created by the amendment
to such Mortgage constitute valid first Liens thereon free and clear of all
defects and encumbrances other than as approved by the Administrative
Agent, and such policies shall also include a revolving credit endorsement
and such other endorsements as the Administrative Agent shall request and
shall be accompanied by evidence of the payment in full of all premiums
thereon; and
(c) such other approvals, opinions, or documents as the Administrative
Agent may reasonably request.
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SECTION 5.1.13. Financial Information, etc. The Administrative Agent shall
have received, with counterparts for each Lender,
(a) the audited consolidated balance sheets of Sunshine for the fiscal
years ended March 31, 1994, March 31, 1995 and March 31, 1996 and the
related consolidated statements of earnings and cash flow, none of which
shall contain any Impermissible Qualification; and
(b) a pro forma consolidated balance sheet of the Borrower and its
Subsidiaries, as of the date of the initial Credit Extension hereunder (the
"Pro Forma Balance Sheet"), certified by the chief financial or accounting
Authorized Officer of the Borrower, giving effect to the consummation of
the Sunshine Acquisition and all the transactions contemplated by this
Agreement (including the increased Commitment Amounts hereunder) and the
proposed legal and capital structure of the Borrower, which shall be
satisfactory in all respects to the Administrative Agent.
SECTION 5.1.14. Solvency Certificate. The Administrative Agent shall have
received a solvency certificate from the chief financial Authorized Officer of
the Borrower, dated the date of the initial Credit Extension hereunder, in form
and substance satisfactory to the Administrative Agent.
SECTION 5.1.15. Amendments to the Subordinated Debt Agreements. The
Administrative Agent shall have received evidence satisfactory to it that the
Bridge Note Agreement and, if necessary, the form of Exchange Note Indenture and
such other documents, instruments and agreements delivered (or to be delivered,
in the case of the Exchange Note Indenture) in connection therewith shall have
been amended by the requisite number of Subordinated Noteholders on terms and
conditions satisfactory in all respects to the Administrative Agent.
SECTION 5.1.16. Closing Fees, Expenses, etc. The Administrative Agent shall
have received for its own account, or for the account of each Lender, as the
case may be, all fees, costs and expenses due and payable pursuant to Sections
3.3 and 10.3, if then invoiced.
SECTION 5.1.17. Trademark Security Agreement, Copyright Security Agreement,
Patent Security Agreement. The Administrative Agent shall have received each
Trademark Security Agreement, Copyright Security Agreement and Patent Security
Agreement, each dated as of the date hereof, duly executed and delivered by
Sunshine.
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SECTION 5.1.18. Litigation. The Administrative Agent shall be satisfied in
all respects that there exists no litigation, inquiry or investigation
contesting the Sunshine Acquisition, this Agreement or the amendments to the
Subordinated Debt documents required pursuant to Section 5.1.15 or any other
aspect of the Sunshine Transaction, or which would have a material adverse
effect on the property, assets, financial condition, operations, prospects or
business of the Borrower and its Subsidiaries, taken as a whole, or Sunshine and
its Subsidiaries, taken as a whole.
SECTION 5.1.19. Material Adverse Change. The Lenders shall be satisfied (as
evidenced by the delivery of their respective executed signature page to this
Agreement) that there has been no material adverse change in the property,
assets, financial condition, operations, prospects or business of (i) Keebler
and its Subsidiaries, taken as a whole, since December 30, 1995 or (ii) Sunshine
and its Subsidiaries, taken as a whole, since March 31, 1996.
SECTION 5.1.20. Continuation of Existing Loans/Commitments. The
Administrative Agent shall have received evidence satisfactory to it that the
Existing Lenders or, in place of one or more Existing Lenders, other financial
institutions satisfactory to the Administrative Agent and the Borrower (such
consent not to be unreasonably withheld), shall have committed to continue all
Existing Loans and Commitments under (and as defined in) the Existing Credit
Agreement in the same respective amounts under this Agreement (without giving
effect to the increase in the Commitment Amounts hereunder).
SECTION 5.1.21. No Liens. The Administrative Agent shall be satisfied that
the Capital Stock and assets of Sunshine and of the Borrower and its
Subsidiaries, shall be free and clear of all Liens (other than (i) Liens in
favor of the Administrative Agent pursuant to a Loan Document and (ii) in the
case of assets other than the Capital Stock of Sunshine, Liens existing on the
Amendment Effective Date permitted under the terms of this Agreement, in each
case approved by the Administrative Agent).
SECTION 5.1.22. Reliance Letters. The Administrative Agent shall, unless it
otherwise agrees, have received reliance letters, dated the date of the making
of the initial Credit Extension hereunder and addressed to each Lender and the
Administrative Agent, in respect of each of the legal opinions delivered in
connection with the Sunshine Acquisition.
SECTION 5.1.23. Opinions of Counsel. The Administrative Agent shall have
received opinions, dated the date of the initial Credit Extension and addressed
to the Administrative Agent and all Lenders, from
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(a) Simpson Thacher & Bartlett, special New York counsel to the
Borrower and each Obligor, substantially in the form of Exhibit L hereto;
(b) Freeman & Hawkins, Georgia counsel to the Obligors, in form and
substance satisfactory to the Administrative Agent;
(c) Taft, Stettinius & Hollister, Ohio counsel to the Obligors, in
form and substance satisfactory to the Administrative Agent;
(d) Bearman, Talesnick & Clowdus, Colorado counsel to the Obligors, in
form and substance satisfactory to the Administrative Agent;
(e) Lewis, Clay & Munday, P.C., Michigan counsel to the Obligors, in
form and substance satisfactory to the Administrative Agent;
(f) Rudnick & Wolfe, Illinois counsel to the Obligors, in form and
substance satisfactory to the Administrative Agent;
(g) Taft, Stettinius & Hollister, Kentucky counsel to the Obligors, in
form and substance satisfactory to the Administrative Agent;
(h) Beattie Padovano, New Jersey counsel to the Obligors, in form and
substance satisfactory to the Administrative Agent;
(i) Bryan Cave LLP, Kansas counsel to the Obligors, in form and
substance satisfactory to the Administrative Agent; and
(j) Cowan, Liebowitz & Latman, special intellectual property counsel
to the Obligors, in form and substance satisfactory to the Administrative
Agent.
SECTION 5.1.24. Amendment to Holdings Guaranty. The Administrative Agent
shall have received an amendment to the Holdings Guaranty in form and substance
satisfactory to it executed and delivered by Holdings and the Administrative
Agent relating to Indebtedness that may be incurred by Holdings pursuant to
clause (j) of Section 7.2.5.
SECTION 5.2. All Credit Extensions. The obligation of each Lender and the
Issuer to make any Credit Extension (including the initial Credit Extension
hereunder, but subject to clauses (b)
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and (c) of Section 2.3.2) shall be subject to the satisfaction of each of the
conditions precedent set forth in this Section 5.2.
SECTION 5.2.1. Compliance with Warranties, No Default, etc. Both before and
after giving effect to any Credit Extension the following statements shall be
true and correct:
(a) both before and after giving effect to the Sunshine Acquisition,
the representations and warranties set forth in Article VI and in each
other Loan Document shall, in each case, be true and correct in all
material respects with the same effect as if then made (unless stated to
relate solely to an earlier date, in which case such representations and
warranties shall be true and correct in all material respects as of such
earlier date);
(b) no material adverse development shall have occurred in any
litigation, action, proceeding, labor controversy, arbitration or
governmental investigation disclosed pursuant to Section 6.7;
(c) the sum of (x) the aggregate outstanding principal amount of all
Revolving Loans and Swing Line Loans and (y) all Letter of Credit
Outstandings does not exceed the then existing Borrowing Base Amount;
(d) the sum of (x) the aggregate outstanding principal amount of all
Revolving Loans and Swing Line Loans and (y) all Letter of Credit
Outstandings does not exceed the Revolving Loan Commitment Amount; and
(e) no Default hereunder (and, on the Amendment Effective Date, no
Default under (and as defined in) the Existing Credit Agreement) shall have
then occurred and be continuing.
SECTION 5.2.2. Credit Extension Request. The Administrative Agent shall
have received a Borrowing Request, if Loans (other than Swing Line Loans) are
being requested, or an Issuance Request, if a Letter of Credit is being issued
or extended. Each of the delivery of a Borrowing Request or Issuance Request and
the acceptance by the Borrower of the proceeds of such Credit Extension shall
constitute a representation and warranty by the Borrower that on the date of
such Credit Extension (both immediately before and after giving effect to such
Credit Extension and the application of the proceeds thereof) the statements
made in Section 5.2.1 are true and correct.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders, the Issuer and the Administrative Agent to
enter into this Agreement, continue the Existing Loans as Loans hereunder,
continue the Existing Letters of Credit as Letters of Credit hereunder and to
make Credit Extensions hereunder, each of Holdings and the Borrower represents
and warrants unto the Administrative Agent, the Issuer and each Lender as set
forth in this Article VI.
SECTION 6.1. Organization, etc. Each of Holdings, the Borrower and each of
the Borrower's Subsidiaries (a) is a corporation validly organized and existing
and in good standing under the laws of the State of its incorporation, is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction where the nature of its business requires such qualification,
except to the extent that the failure to qualify would not reasonably be
expected to result in a Material Adverse Effect, and (b) has full power and
authority and holds all requisite governmental licenses, permits and other
approvals to (i) enter into and perform its Obligations in connection with the
Keebler Transaction, the Sunshine Transaction and under this Agreement, the
Notes and each other Loan Document to which it is a party and (ii) own and hold
under lease its property and to conduct its business substantially as currently
conducted by it except, in the case of this clause (b)(ii), where the failure
could not reasonably be expected to result in a Material Adverse Effect.
SECTION 6.2. Due Authorization, Non-Contravention, etc. The execution,
delivery and performance by the Borrower of this Agreement, the Notes and each
other Loan Document executed or to be executed by it, and the execution,
delivery and performance by each other Obligor of each Loan Document executed or
to be executed by it and the Borrower's and, where applicable, each such other
Obligor's participation in the consummation of the Keebler Transaction and the
Sunshine Transaction are within the Borrower's and each such Obligor's corporate
powers, have been duly authorized by all necessary corporate action, and do not
(a) contravene the Borrower's or any such Obligor's Organic Documents;
(b) contravene any contractual restriction, law or governmental
regulation or court decree or order binding on or affecting Holdings, the
Borrower or any such Obligor, where such contravention, individually or in
the aggregate, could reasonably be expected to have a Material Adverse
Effect; or
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(c) result in, or require the creation or imposition of, any Lien on
any of the Borrower's or any other Obligor's properties, except pursuant to
the terms of a Loan Document.
SECTION 6.3. Government Approval, Regulation, etc. No authorization or
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body or other Person, is required for the due execution,
delivery or performance by the Borrower or any other Obligor of this Agreement,
the Notes or any other Loan Document to which it is a party, or for the
Borrower's and each such other Obligor's participation in the consummation of
the Keebler Transaction or the Sunshine Transaction, except as have been duly
obtained or made and are in full force and effect or those which the failure to
obtain or make could not reasonably be expected to have a Material Adverse
Effect. Neither Holdings, the Borrower nor any of the Borrower's Subsidiaries is
an "investment company" within the meaning of the Investment Company Act of
1940, as amended, or 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", within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
SECTION 6.4. Validity, etc. This Agreement constitutes, and the Notes and
each other Loan Document executed by the Borrower will, on the due execution and
delivery thereof, constitute, the legal, valid and binding obligations of the
Borrower enforceable in accordance with their respective terms; and each Loan
Document executed pursuant hereto by each other Obligor will, on the due
execution and delivery thereof by such Obligor, be the legal, valid and binding
obligation of such Obligor enforceable in accordance with its terms, in each
case with respect to this Section 6.4 subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
SECTION 6.5. Financial Information. The
(a) audited consolidated balance sheet of the Acquired Businesses as
at December 30, 1995 and the related consolidated statements of earnings
and cash flow; and
(b) audited consolidated balance sheet of Sunshine as at March 31,
1996 and the related consolidated statements of earnings and cash flow;
copies of which have been furnished to the Administrative Agent and each Lender,
have, in each case, been prepared in accordance
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with GAAP consistently applied, and present fairly the consolidated financial
condition of the corporations covered thereby as at the dates thereof and the
results of their operations for the periods then ended.
SECTION 6.6. No Material Adverse Change. Since December 30, 1995, there has
been no material adverse change in the financial condition, operations, assets,
business or properties of the Borrower and its Subsidiaries, taken as a whole.
SECTION 6.7. Litigation, Labor Controversies, etc. There is no pending or,
to the knowledge of the Borrower, threatened litigation, action, proceeding,
labor controversy arbitration or governmental investigation affecting any
Obligor, or any of their respective properties, businesses, assets or revenues,
which (a) could reasonably be expected to result in a Material Adverse Effect,
or (b) purports to affect the legality, validity or enforceability of the
Keebler Acquisition, the Merger, the Sunshine Acquisition, the Equity
Contribution, the issuance of the Subordinated Notes, this Agreement, the Notes
or any other Loan Document, except as disclosed in Item 6.7 ("Litigation") of
the Disclosure Schedule.
SECTION 6.8. Subsidiaries. Neither Holdings nor the Borrower has any
Subsidiaries, except those Subsidiaries
(a) which are identified in Item 6.8 ("Existing Subsidiaries") of the
Disclosure Schedule; or
(b) which are permitted to have been acquired in accordance with
Section 7.2.5 or 7.2.8.
SECTION 6.9. Ownership of Properties. The Borrower and each of its
Subsidiaries owns good title to all of its properties and assets (other than
insignificant properties and assets), real and personal, tangible and
intangible, of any nature whatsoever (including patents, trademarks, trade
names, service marks and copyrights), free and clear of all Liens or material
claims (including material infringement claims with respect to patents,
trademarks, copyrights and the like) except as permitted pursuant to Section
7.2.3.
SECTION 6.10. Taxes. Each of Holdings, the Borrower and each of the
Borrower's Subsidiaries has filed all Federal, State and other material tax
returns and reports required by law to have been filed by it and has paid all
taxes and governmental charges thereby shown to be owing, except any such taxes
or charges which are being contested in good faith by appropriate proceedings
and for which adequate reserves in accordance with GAAP shall have been set
aside on its books.
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SECTION 6.11. Pension and Welfare Plans. During the
twelve-consecutive-month period prior to the date of the execution and delivery
of the Existing Credit Agreement and prior to the date of any Credit Extension
hereunder, no Pension Plan has been terminated that has resulted in a liability
to the Borrower of more than $5,000,000, and no contribution failure has
occurred with respect to any Pension Plan sufficient to give rise to a Lien
under section 302(f) of ERISA in excess of $5,000,000. No condition exists or
event or transaction has occurred with respect to any Pension Plan which could
reasonably be expected to result in the incurrence by the Borrower of any
material liability, fine or penalty other than such condition, event or
transaction which would not reasonably be expected to have a Material Adverse
Effect. Except as disclosed in Item 6.11 ("Employee Benefit Plans") of the
Disclosure Schedule, since the date of the last financial statement the Borrower
has not materially increased any contingent liability with respect to any
post-retirement benefit under a Welfare Plan, other than liability for
continuation coverage described in Part 6 of Subtitle B of Title I of ERISA.
SECTION 6.12. Environmental Warranties. Except as set forth in Item 6.12
("Environmental Matters") of the Disclosure Schedule or as, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect:
(a) all facilities and property (including underlying groundwater)
owned or leased by the Borrower or any of its Subsidiaries have been, and
continue to be, owned or leased by the Borrower and its Subsidiaries in
compliance with all Environmental Laws;
(b) there have been no past, and there are no pending or threatened
(i) written claims, complaints, notices or requests for
information received by the Borrower or any of its Subsidiaries with
respect to any alleged violation of any Environmental Law, or
(ii) written complaints, notices or inquiries to the Borrower or
any of its Subsidiaries regarding potential liability under any
Environmental Law;
(c) to the best knowledge of the Borrower, there have been no Releases
of Hazardous Materials at, on or under any property now or previously owned
or leased by the Borrower or any of its Subsidiaries;
(d) the Borrower and its Subsidiaries have been issued and are in
compliance with all permits, certificates,
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approvals, licenses and other authorizations relating to environmental
matters and necessary or desirable for their businesses;
(e) no property now or previously owned or leased by the Borrower or
any of its Subsidiaries is listed or, to the knowledge of the Borrower or
any of its Subsidiaries, proposed for listing (with respect to owned
property only) on the National Priorities List pursuant to CERCLA, on the
CERCLIS or on any similar state list of sites requiring investigation or
clean-up;
(f) to the best knowledge of the Borrower, there are no underground
storage tanks, active or abandoned, including petroleum storage tanks, on
or under any property now or previously owned or leased by the Borrower or
any of its Subsidiaries;
(g) the Borrower and its Subsidiaries have not directly transported or
directly arranged for the transportation of any Hazardous Material to any
location (i) which is listed or to the knowledge of the Borrower or any of
its Subsidiaries, proposed for listing on the National Priorities List
pursuant to CERCLA, on the CERCLIS or on any similar state list, or (ii)
which is the subject of federal, state or local enforcement actions or
other investigations;
(h) to the best knowledge of the Borrower, there are no
polychlorinated biphenyls or friable asbestos present in a manner or
condition at any property now or previously owned or leased by the Borrower
or any Subsidiary of the Borrower; and
(i) to the best knowledge of the Borrower, no conditions exist at, on
or under any property now or previously owned or leased by the Borrower or
any of its Subsidiaries which, with the passage of time, or the giving of
notice or both, would give rise to liability under any Environmental Law.
SECTION 6.13. Regulations G, U and X. Neither Holdings nor the Borrower is
engaged in the business of extending credit for the purpose of purchasing or
carrying margin stock, and no proceeds of any Credit Extensions will be used to
acquire any equity security of a class which is registered pursuant to Section
12 of the Securities Exchange Act of 1934 or any "margin stock". Terms for which
meanings are provided in F.R.S. Board Regulation G, U or X or any regulations
substituted therefor, as from time to time in effect, are used in this Section
with such meanings.
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SECTION 6.14. Accuracy of Information. All material factual information
concerning the financial condition, operations or prospects of Holdings, the
Borrower and the Borrower's Subsidiaries heretofore or contemporaneously
furnished by or on behalf of Holdings or the Borrower in writing to the
Administrative Agent, the Issuer or any Lender for purposes of or in connection
with the Existing Credit Agreement, this Agreement or any transaction
contemplated thereby or hereby or with respect to the Keebler Transaction or the
Sunshine Transaction (including such information contained in each Bank
Confidential Offering Memorandum) is, and all other such factual information
hereafter furnished by or on behalf of Holdings or the Borrower to the
Administrative Agent, the Issuer or any Lender will be, true and accurate in
every material respect on the date as of which such information is dated or
certified and such information is not, or shall not be, as the case may be,
incomplete by omitting to state any material fact necessary to make such
information not misleading.
Any term or provision of this section to the contrary notwithstanding,
insofar as any of the factual information described above includes assumptions,
estimates, projections or opinions, no representation or warranty is made herein
with respect thereto; provided, however, that to the extent any such
assumptions, estimates, projections or opinions are based on factual matters,
each of Holdings and the Borrower has reviewed such factual matters and nothing
has come to its attention in the context of such review which would lead it to
believe that such factual matters were not or are not true and correct in all
material respects or that such factual matters omit to state any material fact
necessary to make such assumptions, estimates, projections or opinions not
misleading in any material respect.
SECTION 6.15. Seniority of Obligations, etc. The Borrower has the power and
authority to incur the Indebtedness evidenced by the Subordinated Notes as
provided for under each Subordinated Note Indenture and has (or will have) duly
authorized, executed and delivered each Subordinated Note Indenture, as
applicable. The Borrower has (or will have) issued, pursuant to due
authorization, the Subordinated Notes under each Subordinated Note Indenture.
Once executed and delivered by the Borrower, each Subordinated Note Indenture
will constitute the legal, valid and binding obligation of the Borrower
enforceable against the Borrower in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing. The
subordination provisions of the Subordinated Notes and contained in each
Subordinated Note Indenture will be enforceable against
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the holders of the Subordinated Notes by the holder of any "Senior
Indebtedness", "Senior Debt" or similar term referring to the Obligations, as
applicable in such Subordinated Note Indenture, which has not effectively waived
the benefits thereof. All monetary Obligations, including those to pay principal
of and interest (including post-petition interest, whether or not permitted as a
claim) on the Loans and Reimbursement Obligations, and fees and expenses in
connection therewith, constitute "Senior Indebtedness", "Senior Debt" or similar
term referring to the Obligations, as applicable in such Subordinated Note
Indenture, and all such Obligations are entitled to the benefits of the
subordination created by such Subordinated Note Indenture. The Borrower
acknowledges that the Administrative Agent and each Lender is entering into this
Agreement, and is extending its Commitments, in reliance upon the subordination
provisions of (or to be contained in) each Subordinated Note Indenture, the
Subordinated Notes and this Section.
SECTION 6.16. Solvency. The Keebler Transaction and the Sunshine
Transaction (including the incurrence of the Credit Extensions hereunder, the
issuance and sale of the Bridge Notes, the incurrence by the Borrower of the
Indebtedness represented by the Notes and the Bridge Notes, the execution and
delivery by Holdings and the Subsidiary Guarantors of the Holdings Guaranty and
the Subsidiary Guaranty and the application of the proceeds of the Credit
Extensions and loans under the Bridge Notes), will not involve or result in any
fraudulent transfer or fraudulent conveyance under the provisions of Section 548
of the Bankruptcy Code (11 U.S.C. ss.101 et seq., as from time to time hereafter
amended, and any successor or similar statute) or any applicable state law
respecting fraudulent transfers or fraudulent conveyances. After giving effect
to the Keebler Transaction and the Sunshine Transaction, each of the Borrower,
Holdings and the Subsidiary Guarantors is Solvent.
ARTICLE VII
COVENANTS
SECTION 7.1. Affirmative Covenants. The Borrower agrees with the
Administrative Agent, the Issuer and each Lender that, until all Commitments
have terminated, all Letters of Credit have terminated or expired and all
Obligations have been paid and performed in full, the Borrower will perform the
obligations set forth in this Section 7.1.
SECTION 7.1.1. Financial Information, Reports, Notices, etc. The Borrower
will furnish, or will cause to be furnished, to each Lender, the Issuer and the
Administrative Agent copies of
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the following financial statements, reports, notices and
information:
(a) as soon as available and in any event within 60 days after the end
of each of the first three Fiscal Quarters of each Fiscal Year of the
Borrower (or, if the Borrower is required to file such information on a
Form 10-Q with the Securities and Exchange Commission, promptly following
such filing), a consolidated balance sheet of the Borrower and its
Subsidiaries as of the end of such Fiscal Quarter, together with the
related consolidated statement of earnings and cash flow for such Fiscal
Quarter and for the period commencing at the end of the previous Fiscal
Year and ending with the end of such Fiscal Quarter (it being understood
that the foregoing requirement may be satisfied by delivery of the
Borrower's report to the Securities and Exchange Commission on Form 10-Q),
certified by the chief financial Authorized Officer of the Borrower;
(b) as soon as available and in any event within 120 days after the
end of each Fiscal Year of the Borrower (or, if the Borrower is required to
file such information on a Form 10-K with the Securities and Exchange
Commission, promptly following such filing), a copy of the annual audit
report for such Fiscal Year for the Borrower and its Subsidiaries,
including therein a consolidated balance sheet for the Borrower and its
Subsidiaries as of the end of such Fiscal Year, together with the related
consolidated statement of earnings and cash flow of the Borrower and its
Subsidiaries for such Fiscal Year (it being understood that the foregoing
requirement may be satisfied by delivery of the Borrower's report to the
Securities and Exchange Commission on Form 10-K), in each case certified
(without any Impermissible Qualification) by Coopers & Lybrand or another
"Big Six" firm of independent public accountants, together with a
certificate from such accountants to the effect that, in making the
examination necessary for the signing of such annual report by such
accountants, they have not become aware of any Default that has occurred
and is continuing, or, if they have become aware of such Default,
describing such Default and the steps, if any, being taken to cure it;
(c) together with the delivery of the financial information required
pursuant to clauses (a) and (b), a Compliance Certificate, in substantially
the form of Exhibit E, executed by the chief financial Authorized Officer
of the Borrower, showing (in reasonable detail and with appropriate
calculations and computations in all respects satisfactory to the
Administrative Agent)
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compliance with the financial covenants set forth in Section 7.2.4;
(d) as soon as possible and in any event within three Business Days
after obtaining knowledge of the occurrence of each Default, a statement of
the chief financial Authorized Officer of the Borrower setting forth
details of such Default and the action which the Borrower has taken and
proposes to take with respect thereto;
(e) as soon as possible and in any event within five Business Days
after (x) the occurrence of any material adverse development with respect
to any litigation, action, proceeding, or labor controversy described in
Section 6.7 and the action which the Borrower has taken and proposes to
take with respect thereto or (y) the commencement of any labor controversy,
litigation, action, proceeding of the type described in Section 6.7, notice
thereof and of the action which the Borrower has taken and proposes to take
with respect thereto;
(f) promptly after the sending or filing thereof, copies of all
reports and registration statements which Holdings, the Borrower or any of
its Subsidiaries files with the Securities and Exchange Commission or any
national securities exchange;
(g) as soon as practicable after the chief financial officer or the
chief executive officer of the Borrower or a member of the Borrower's
Controlled Group becomes aware of (i) formal steps in writing to terminate
any Pension Plan or (ii) the occurrence of any event with respect to a
Pension Plan which, in the case of (i) or (ii), could reasonably be
expected to result in a contribution to such Pension Plan by (or a
liability to) the Borrower or a member of the Borrower's Controlled Group
in excess of $5,000,000, (iii) the failure to make a required contribution
to any Pension Plan if such failure is sufficient to give rise to a Lien
under section 302(f) of ERISA, (iv) the taking of any action with respect
to a Pension Plan which could reasonably be expected to result in the
requirement that the Borrower furnish a bond to the PBGC or such Pension
Plan or (v) any material increase in the contingent liability of the
Borrower with respect to any post-retirement Welfare Plan benefit, notice
thereof and copies of all documentation relating thereto;
(h) promptly upon receipt or delivery (as the case may be) thereof,
all material notices or reports required to be delivered under the Keebler
Purchase Agreement or the Sunshine Purchase Agreement, including copies of
the Net
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Current Assets Schedule (under the Keebler Purchase Agreement), as defined
in clause (b) of Section 1.3 of the Keebler Purchase Agreement and any
reports or notices otherwise delivered pursuant to such Sections;
(i) promptly when available and in any event within 45 days following
the last day of each Fiscal Year of the Borrower, financial projections for
the current Fiscal Year, prepared in reasonable detail by the chief
accounting, financial or executive Authorized Officer of the Borrower;
(j) promptly following the delivery or receipt, as the case may be, of
any material written notice or communication pursuant to or in connection
with any Subordinated Note Indenture or any of the Subordinated Notes, a
copy of such notice or communication;
(k) within 27 days after the end of each Reporting Period, a Borrowing
Base Certificate for such Reporting Period that is calculated as of the
last day of such Reporting Period; and
(l) such other information respecting the condition or operations,
financial or otherwise, of the Borrower or any of its Subsidiaries as any
Lender or the Issuer through the Administrative Agent may from time to time
reasonably request.
SECTION 7.1.2. Compliance with Laws, etc. The Borrower will, and will cause
each of its Subsidiaries to, comply in all material respects with all applicable
laws, rules, regulations and orders, such compliance to include (without
limitation):
(a) the maintenance and preservation of its corporate existence and
qualification as a foreign corporation, except where the failure to so
qualify could not reasonably be expected to have a Material Adverse Effect;
and
(b) the payment, before the same become delinquent, of all material
taxes, assessments and governmental charges imposed upon it or upon its
property except to the extent being contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall
have been set aside on its books.
SECTION 7.1.3. Maintenance of Properties. The Borrower will, and will cause
each of its Subsidiaries to, maintain, preserve, protect and keep its properties
(other than insignificant properties) in good repair, working order and
condition (ordinary wear and tear excepted), and make necessary and proper
repairs, renewals and replacements so that its
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business carried on in connection therewith may be properly conducted at all
times unless the Borrower determines in good faith that the continued
maintenance of any of its properties is no longer economically desirable.
SECTION 7.1.4. Insurance. The Borrower will, and will cause each of its
Subsidiaries to, maintain or cause to be maintained with responsible insurance
companies insurance with respect to its properties and business against such
casualties and contingencies and of such types and in such amounts as is
customary in the case of similar businesses and will, upon request of the
Administrative Agent, furnish to the Issuer and each Lender at reasonable
intervals a certificate of an Authorized Officer of the Borrower setting forth
the nature and extent of all insurance maintained by the Borrower and its
Subsidiaries in accordance with this Section.
SECTION 7.1.5. Books and Records. The Borrower will, and will cause each of
its Subsidiaries to, keep books and records which accurately reflect in all
material respects all of its business affairs and transactions and permit the
Administrative Agent, the Issuer and each Lender or any of their respective
representatives, at reasonable times and intervals, and upon reasonable notice,
to visit all of its offices, to discuss its financial matters with its officers
and independent public accountant (and the Borrower hereby authorizes such
independent public accountant to discuss the Borrower's financial matters with
the Issuer and each Lender or its representatives whether or not any
representative of the Borrower is present) and to examine, and photocopy
extracts from, any of its books or other corporate records.
SECTION 7.1.6. Environmental Covenant. The Borrower will and will cause
each of its Subsidiaries to,
(a) use and operate all of its facilities and properties in compliance
with all Environmental Laws, keep all necessary permits, approvals,
certificates, licenses and other authorizations relating to environmental
matters in effect and remain in compliance therewith, and handle all
Hazardous Materials in compliance with all applicable Environmental Laws,
in each case except where the failure to comply with the terms of this
clause could not reasonably be expected to have a Material Adverse Effect;
(b) promptly notify the Administrative Agent and provide copies of all
written claims, complaints, notices or inquiries relating to the condition
of its facilities and properties or compliance with Environmental Laws
which relate to environmental matters which would have, or would reasonably
be expected to have, a Material Adverse Effect,
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and promptly cure and have dismissed with prejudice any material actions
and proceedings relating to compliance with Environmental Laws, except to
the extent being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP have
been set aside on its books; and
(c) provide such information and certifications which the
Administrative Agent may reasonably request from time to time to evidence
compliance with this Section 7.1.6.
SECTION 7.1.7. Future Subsidiaries. Upon any Person becoming, after the
Amendment Effective Date, a Subsidiary of the Borrower, or upon the Borrower or
any Subsidiary acquiring additional Capital Stock of any existing Subsidiary
(other than the Designated Subsidiaries that are not-for-profit corporations and
Receivables Co.), the Borrower shall notify the Administrative Agent of such
acquisition, and
(a) the Borrower shall promptly cause such Subsidiary to execute and
deliver to the Administrative Agent, with counterparts for each Lender, a
supplement to the Subsidiary Guaranty and a supplement to the Subsidiary
Security Agreement (and, if such Subsidiary owns any real property having a
value as determined in good faith by the Administrative Agent in excess of
$2,000,000, a Mortgage (other than, in the case of Sunshine, the Exempted
Properties), together with acknowledgement copies of Uniform Commercial
Code financing statements (form UCC-1) executed and delivered by the
Subsidiary naming the Subsidiary as the debtor and the Administrative Agent
as the secured party, or other similar instruments or documents, filed
under the Uniform Commercial Code and any other applicable recording
statutes, in the case of real property, of all jurisdictions as may be
necessary or, in the opinion of the Administrative Agent, desirable to
perfect the security interest of the Administrative Agent pursuant to the
Subsidiary Security Agreement or a Mortgage, as the case may be; and
(b) the Borrower shall promptly deliver, or cause to be delivered, to
the Administrative Agent under a Pledge Agreement (or a supplement thereto)
certificates (if any) representing all of the issued and outstanding shares
of Capital Stock of such Subsidiary owned by the Borrower or any Subsidiary
of the Borrower, as the case may be, along with undated stock powers for
such certificates, executed in blank, or, if any securities subject thereto
are uncertificated securities, confirmation and evidence satisfactory to
the Administrative Agent that appropriate book entries have been made in
the relevant books or records of a financial intermediary or the issuer of
such
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securities, as the case may be, under applicable law resulting in the
perfection of the security interest granted in favor of the Administrative
Agent pursuant to the terms of a Pledge Agreement;
together, in each case, with such opinions, in form and substance and from
counsel satisfactory to the Administrative Agent, as the Administrative Agent
may reasonably require; provided, that notwithstanding the foregoing, no
Non-U.S. Subsidiary shall be required to execute and deliver a Mortgage, a
supplement to the Subsidiary Guaranty or a supplement to the Security Agreement,
nor will the Borrower or any Subsidiary of the Borrower be required to deliver
in pledge pursuant to a Pledge Agreement in excess of 65% of the total combined
voting power of all classes of Capital Stock of a Non-U.S. Subsidiary entitled
to vote, if the Borrower has delivered evidence satisfactory to the
Administrative Agent that such actions would result in material adverse tax
consequences to the Borrower and its Subsidiaries (after giving effect to the
utilization of any available tax credits).
SECTION 7.1.8. Future Leased Property and Future Acquisitions of Real
Property. (a) Prior to entering into any new lease of real property or renewing
any existing lease of real property, the Borrower shall, and shall cause each of
its Subsidiaries to, use its (and their) best efforts (which shall not require
the expenditure of cash or the making of any material concessions under the
relevant lease) to deliver to the Administrative Agent a Waiver executed by the
lessor of any real property that is to be leased by the Borrower or such
Subsidiary for a term in excess of one year in any state which by statute grants
such lessor a "landlord's" (or similar) Lien which is superior to the
Administrative Agent's, to the extent the value of any personal property of the
Borrower or its Subsidiaries to be held at such leased property exceeds (or it
is anticipated that the value of such personal property will, at any point in
time during the term of such leasehold term, exceed) $5,000,000.
(b) In the event that the Borrower or any of its Subsidiaries shall acquire
any real property having a value as determined in good faith by the
Administrative Agent in excess of $2,000,000 (other than in the case of
Sunshine, the Exempted Properties), the Borrower or the applicable Subsidiary
shall, promptly after such acquisition, execute a Mortgage and provide the
Administrative Agent with
(i) evidence of the completion (or satisfactory arrangements for the
completion) of all recordings and filings of such Mortgage as may be
necessary or, in the reasonable opinion of the Administrative Agent,
desirable effectively to create a valid, perfected first priority
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Lien, subject to Liens permitted by Section 7.2.3, against the properties
purported to be covered thereby;
(ii) mortgagee's title insurance policies in favor of the
Administrative Agent and the Lenders in amounts and in form and substance
and issued by insurers, reasonably satisfactory to the Administrative
Agent, with respect to the property purported to be covered by such
Mortgage, insuring that title to such property is marketable and that the
interests created by the Mortgage constitute valid first Liens thereon free
and clear of all defects and encumbrances other than as approved by the
Administrative Agent, and such policies shall also include a revolving
credit endorsement and such other endorsements as the Administrative Agent
shall request and shall be accompanied by evidence of the payment in full
of all premiums thereon; and
(iii) such other approvals, opinions, or documents as the
Administrative Agent may reasonably request.
SECTION 7.1.9. Use of Proceeds, etc. The Borrower shall apply the proceeds
of the Credit Extensions made on and following the Amendment Effective Date
(i) to pay in part the cash portion of its purchase price obligations
in connection with the Sunshine Acquisition,
(ii) for working capital and general corporate purposes of the
Borrower and its Subsidiaries,
(iii) to pay the transaction fees, costs and expenses associated with
the Sunshine Acquisition and this Agreement and related Loan Documents,
(iv) to repay the Indebtedness identified in Item 7.2.2(b)
("Indebtedness to be Paid") of the Disclosure Schedule, and
(v) in the case of Letters of Credit, for issuing documentary and
standby (including direct pay) Letters of Credit for working capital and
general corporate purposes.
SECTION 7.1.10. Exchange of Bridge Notes. The Borrower covenants and agrees
that
(a) if the Bridge Notes have not theretofore been refinanced with
Refinancing Notes on or prior to the Initial Maturity Date (as defined in
the Bridge Note Agreement), it will deliver to the Purchasers (as defined
in the Bridge Note Agreement), with a copy to the Administrative Agent,
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the notice required pursuant to (and within the period of time required by)
Section 2.8 of the Bridge Note Agreement in order to extend the maturity of
the Bridge Notes to the Extended Maturity Date (as defined in the Bridge
Note Agreement); and
(b) it shall, on the Exchange Date (if the Bridge Notes remain
outstanding on such date), exchange, refinance and replace the aggregate
outstanding principal amount of the Bridge Notes into and with the Exchange
Notes in a principal amount not in excess of 103% of the amount of the
Bridge Notes then outstanding for which they are exchanged which Exchange
Notes shall be governed by the terms of the Exchange Note Indenture.
SECTION 7.1.11. Hedging Obligations. The Borrower shall maintain in a
notional amount equal to at least 50% of the outstanding principal amount of the
Term Loans incurred pursuant to the Existing Credit Agreement an interest rate
swap, cap, collar or similar arrangement on the terms contained in the Rate
Protection Agreement that it entered into pursuant to Section 7.1.11 of the
Existing Credit Agreement (or such other terms as shall be reasonably
satisfactory to the Administrative Agent) through January 26, 1999.
SECTION 7.1.12. Interest on Exchange Notes. The Borrower covenants and
agrees that it will pay the portion of interest on the Exchange Notes in excess
of 15.5% per annum through the issuance of additional Exchange Notes, and will
not pay any interest on the Exchange Notes in excess of 15.5% per annum in cash;
provided, however, that the Borrower may pay such interest in cash with the
proceeds of Refinancing Notes or in connection with any required repayment of
Exchange Notes permitted hereunder.
SECTION 7.1.13. Borrower Pledge Agreement. The Borrower covenants and
agrees that, in its capacity as a Pledged Share Issuer under (and as defined in)
the Holdings Pledge Agreement, the Borrower agrees that it will cooperate in all
reasonable respects necessary to enable the Administrative Agent to exercise its
rights and remedies under the terms of the Holdings Pledge Agreement and agrees
to comply with the last sentence of Section 4.2 of the Holdings Pledge
Agreement.
SECTION 7.2. Negative Covenants. The Borrower agrees with the
Administrative Agent, the Issuer and each Lender that, until all Commitments
have terminated, all Letters of Credit have terminated or expired and all
Obligations have been paid and performed in full, the Borrower will perform the
obligations set forth in this Section 7.2.
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SECTION 7.2.1. Business Activities. The Borrower will not, and will not
permit any of its Subsidiaries to, engage in any business activity, except
business activities of the type in which the Borrower and its Subsidiaries are
engaged on the date hereof (after giving effect to the Sunshine Acquisition) and
such activities as may be incidental, similar or related thereto.
SECTION 7.2.2. Indebtedness. The Borrower will not, and will not permit any
of its Subsidiaries to, create, incur, assume or suffer to exist or otherwise
become or be liable in respect of any Indebtedness, other than, without
duplication, the following:
(a) Indebtedness in respect of the Credit Extensions and other
Obligations;
(b) until the date of the initial Credit Extension hereunder,
Indebtedness identified in Item 7.2.2(b) ("Indebtedness to be Paid") of the
Disclosure Schedule;
(c) Indebtedness existing as of the Amendment Effective Date which is
identified in Item 7.2.2(c) ("Ongoing Indebtedness") of the Disclosure
Schedule, and any refinancing or replacement thereof, but only in amounts
not in excess of the outstanding amounts on the date of such refinancing
(which shall not exceed the committed amount on the Amendment Effective
Date);
(d) to the extent not prohibited in whole or in part by the terms of
any Subordinated Note Indenture, Indebtedness incurred by the Borrower or
any of its Subsidiaries (i) to any Person providing financing for the
acquisition of any assets permitted to be acquired pursuant to Section
7.2.7 to finance its acquisition of such assets, (ii) in respect of
Capitalized Lease Liabilities (but only to the extent otherwise permitted
by Section 7.2.7) and (iii) from time to time for general corporate
purposes; provided, that the maximum aggregate amount of all Indebtedness
permitted under this clause (d) shall not at any time exceed $40,000,000;
(e) Hedging Obligations of the Borrower or any of its Subsidiaries;
(f) intercompany Indebtedness of any Subsidiary of the Borrower owing
to the Borrower or any other Subsidiary of the Borrower, which Indebtedness
(i) shall (except in the case of Indebtedness of Receivables Co.)
be evidenced by one or more promissory notes in form and substance
satisfactory to the Administrative Agent which have been duly executed
and
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delivered to (and endorsed to the order of) the Administrative Agent
in pledge pursuant to a Pledge Agreement;
(ii) shall not be forgiven or otherwise discharged for any
consideration other than payment (Dollar for Dollar) in cash unless
the Administrative Agent otherwise consents; and
(iii) shall, in the case of Receivables Co. be incurred only in
connection with the Permitted Receivables Transaction on terms
satisfactory to the Administrative Agent;
(g) unsecured intercompany Indebtedness of the Borrower owing to a
Subsidiary of the Borrower that has previously executed and delivered to
the Administrative Agent the Intercompany Subordination Agreement, which
shall be evidenced by one or more promissory notes in form and substance
satisfactory to the Administrative Agent that have been duly executed and
delivered to (and endorsed to the order of) the Administrative Agent in
pledge pursuant to a Pledge Agreement;
(h) unsecured Subordinated Debt of the Borrower owing to the
Subordinated Noteholders
(i) in an aggregate outstanding principal amount not to exceed
$125,000,000 evidenced by the Bridge Notes and governed by the terms
of the Bridge Note Indenture;
(ii) in an aggregate outstanding principal amount not to exceed
$128,750,000 evidenced by the Exchange Notes and governed by the terms
of the Exchange Note Indenture, but only to the extent such
Subordinated Debt has been incurred to refinance the outstanding
principal amount of the Bridge Notes in accordance with the terms of
the Bridge Note Agreement;
(iii) in an aggregate outstanding principal amount not to exceed
the sum of (A) the amount necessary to yield net proceeds (after
payment of all amounts of the type described in clause (b) of the
definition of "Net Debt Proceeds") equal to the outstanding principal
amount of Bridge Notes (or, if applicable, Exchange Notes), and all
interest and fees accrued thereon, less the amount of Excluded
Proceeds that are applied to repay the Bridge Notes (or, if
applicable, the Exchange Notes) but only to the extent such
Subordinated Debt has been incurred to refinance
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and repay in whole or in part a corresponding principal amount of the
Bridge Notes (or, if applicable, the Exchange Notes), plus (B)
$25,000,000 (provided, that any amount of Subordinated Debt incurred
pursuant to this clause (h)(iii)(B) is applied to prepay the Loans in
accordance with clause (e) of Section 3.1.1), in all cases evidenced
by the Refinancing Notes and governed by the terms of the Refinancing
Note Indenture; and
(iv) in an aggregate outstanding principal amount not to exceed
the amount necessary to yield net proceeds (after payment of all
amounts of the type described in clause (b) of the definition of "Net
Debt Proceeds") equal to the outstanding principal amount of any
Refinancing Notes, and all interest and fees accrued thereon, but only
to the extent such Subordinated Debt has been incurred to refinance
and repay in whole or in part a corresponding principal amount of the
Refinancing Notes and is evidenced by Refinancing Notes and governed
by the terms of the Refinancing Note Indenture;
(i) Indebtedness of Receivables Co. incurred in connection with the
Permitted Receivables Transaction in an aggregate amount at any time not to
exceed $145,000,000, provided, that the provisions of clause (g) of Section
3.1.1 are complied with; and
(j) Indebtedness of Subsidiaries of the Borrower (other than the
Designated Subsidiaries and Receivables Co.) pursuant to the Subordinated
Guaranty;
provided, however, that no Indebtedness otherwise permitted by clause (d) or (f)
(as such clause relates to Loans made by the Borrower to its Subsidiaries may be
incurred if, after giving effect to the incurrence thereof, any Default shall
have occurred and be continuing.
SECTION 7.2.3. Liens. The Borrower will not, and will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any of
its property, revenues or assets, whether now owned or hereafter acquired,
except:
(a) Liens securing payment of the Obligations, granted pursuant to any
Loan Document;
(b) until the date of the initial Credit Extension hereunder, Liens
securing payment of Indebtedness of the type permitted and described in
clause (b) of Section 7.2.2;
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(c) Liens granted prior to the Amendment Effective Date to secure
payment of Indebtedness of the type permitted and described in clause (c)
of Section 7.2.2;
(d) Liens granted to secure payment of Indebtedness of the type
permitted and described in clause (d) of Section 7.2.2; provided, that the
obligations secured thereby do not exceed in the aggregate $25,000,000 at
any time outstanding;
(e) Liens for taxes, assessments or other governmental charges or
levies, including Liens pursuant to Section 107(l) of CERCLA or other
similar law, not at the time delinquent or thereafter payable without
penalty or being contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with GAAP shall have been set aside
on its books;
(f) Liens of carriers, warehousemen, mechanics, repairmen, materialmen
and landlords or other like liens incurred in the ordinary course of
business for sums not overdue for a period of more than 30 days or being
diligently contested in good faith by appropriate proceedings and for which
adequate reserves in accordance with GAAP shall have been set aside on its
books;
(g) Liens incurred in the ordinary course of business in connection
with workmen's compensation, unemployment insurance or other forms of
governmental insurance or benefits, or to secure performance of tenders,
statutory obligations, insurance obligations, leases and contracts (other
than for borrowed money) entered into in the ordinary course of business or
to secure obligations on surety or appeal bonds;
(h) judgment Liens in existence less than 30 days after the entry
thereof or with respect to which execution has been stayed or the payment
of which is covered in full by a bond or (subject to a customary
deductible) by insurance maintained with responsible insurance companies;
(i) Liens with respect to recorded minor imperfections of title and
easements, rights-of-way, restrictions, reservations, permits, servitudes
and other similar encumbrances on real property and fixtures which do not
materially detract from the value or materially impair the use by the
Borrower or any such Subsidiary in the ordinary course of their business of
the property subject thereto;
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(j) leases or subleases granted by the Borrower or any of its
Subsidiaries to any other Person in the ordinary course of business;
(k) Liens in the nature of trustees' Liens granted pursuant to any
indenture governing any Indebtedness permitted by Section 7.2.2, in each
case in favor of the trustee under such indenture and securing only
obligations to pay compensation to such trustee, to reimburse its expenses
and to indemnify it under the terms thereof; and
(l) Liens on Accounts of Receivables Co. created in connection with
the Permitted Receivables Transaction.
SECTION 7.2.4. Financial Condition.
(a) Net Worth. The Borrower will not permit Net Worth at any time
during any period set forth below to be less than the amount set forth
opposite such period:
Minimum
Period Net Worth
------ ---------
07/13/96 through 07/11/97 $159,000,000
07/12/97 through 07/17/98 $164,000,000
07/18/98 through 07/16/99 $202,000,000
07/17/99 through 07/14/00 $247,000,000
07/15/00 through 07/13/01 $287,000,000
07/14/01 through 07/12/02 $332,000,000
07/13/02 through 07/11/03 $377,000,000
07/12/03 through 07/16/04 $417,000,000
07/17/04 and thereafter $457,000,000.
(b) Debt to EBITDA Ratio. The Borrower will not permit the Debt to
EBITDA Ratio as of the end of any Fiscal Quarter occurring during any
period set forth below to be greater than the ratio set forth opposite such
period:
Debt to
Period EBITDA Ratio
------ ------------
04/21/96 through 12/28/96 5.75:1
12/29/96 through 04/19/97 5.40:1
04/20/97 through 07/12/97 5.05:1
07/13/97 through 10/04/97 4.90:1
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10/05/97 through 01/03/98 4.65:1
01/04/98 through 04/25/98 4.15:1
04/26/98 through 04/24/99 3.50:1
04/25/99 through 04/22/00 2.75:1
04/23/00 through 04/21/01 2.25:1
04/22/01 and thereafter 1.75:1.
(c) Interest Coverage Ratio. The Borrower will not permit the Interest
Coverage Ratio as of the end of any Fiscal Quarter occurring during any
period set forth below to be less than the ratio set forth opposite such
period:
Interest
Period Coverage Ratio
------ --------------
04/21/96 through 12/28/96 1.60:1
12/29/96 through 04/19/97 1.70:1
04/20/97 through 07/12/97 1.80:1
07/13/97 through 10/04/97 1.90:1
10/05/97 through 01/03/98 2.10:1
01/04/98 through 04/25/98 2.30:1
04/26/98 through 04/24/99 2.50:1
04/25/99 through 04/22/00 3.00:1
04/23/00 through 04/21/01 3.50:1
04/22/01 through 04/20/02 3.75:1
04/21/02 and thereafter 4.00:1.
(d) Cash Flow Coverage Ratio. The Borrower will not permit the Cash
Flow Coverage Ratio as of the end of any Fiscal Quarter occurring during
any period set forth below to be less than the ratio set forth opposite
such period:
Cash Flow
Period Coverage Ratio
------ --------------
04/21/96 through 12/28/96 1.00:1
12/29/96 through 04/19/97 1.10:1
04/20/97 through 07/12/97 1.15:1
07/13/97 through 04/22/00 1.20:1
04/23/00 and thereafter 1.50:1
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SECTION 7.2.5. Investments. The Borrower will not, and will not permit any
of its Subsidiaries to, make, incur, assume or suffer to exist any Investment in
any other Person, except:
(a) Investments existing on the Amendment Effective Date and
identified in Item 7.2.5(a) ("Ongoing Investments") of the Disclosure
Schedule;
(b) Cash Equivalent Investments;
(c) without duplication, Investments (i) permitted as Indebtedness
pursuant to Section 7.2.2 and (ii) to the extent that Receivables Co. is
not a Subsidiary of the Borrower, Investments in Receivables Co. in
connection with the Permitted Receivables Transaction made by the Borrower
and/or its Subsidiaries on terms satisfactory to the Administrative Agent;
(d) without duplication, Investments permitted as Capital Expenditures
pursuant to Section 7.2.7;
(e) Investments by the Borrower in any of its Subsidiaries, or by any
such Subsidiary in any of its Subsidiaries, by way of contributions to
capital; provided, that such Investments in Receivables Co. shall only be
made in connection with the Permitted Receivables Transaction on terms
satisfactory to the Administrative Agent;
(f) Investments made by the Borrower or any of its Subsidiaries,
solely with proceeds which either (i) have been contributed, directly or
indirectly, to the Borrower or such Subsidiary as cash equity from holders
of the Borrower's common stock for the purpose of making an Investment
identified in a notice to the Administrative Agent on or prior to the date
that such capital contribution is made or (ii) are Net Disposition Proceeds
which are being reinvested by the Borrower or such Subsidiary of the
Borrower in Qualified Assets in accordance with the terms of clause (c) of
Section 3.1.1 and (in the case of this clause (f)(ii) only), which
Investments shall result in the Borrower or such Subsidiary acquiring a
majority controlling interest in the Person in which such Investment was
made or increasing any such controlling interest already maintained by it;
(g) to the extent not restricted by the terms of any Subordinated
Debt, a one time Investment by way of a loan or advance by the Borrower to
ARTAL and/or Flowers and/or any of their respective Affiliates in a
principal amount which, when aggregated with the amount of the dividend or
distribution (if any) made pursuant to clause (e) of
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Section 7.2.6 on or prior to the date the Investment permitted pursuant to
this clause is made, shall not exceed $25,000,000; provided, that such
Investment may only be made if (i) after giving effect to the making of
such Investment, the Debt to EBITDA Ratio shall be less than 3.0:1.0 on a
pro forma basis for the most recent two full Fiscal Quarters immediately
preceding the date of the payment of such Investment for which the relevant
financial information has been delivered pursuant to clause (a) or clause
(b) of Section 7.1.1, and (ii) an Authorized Officer of the Borrower shall
have delivered a certificate to the Administrative Agent in form and
substance satisfactory to the Administrative Agent (including a calculation
of the Debt to EBITDA Ratio in reasonable detail) certifying to the
accuracy of clause (g)(i) above and certifying that no Default shall have
occurred and be continuing on the date such Investment is made, nor would a
Default result from the making of such Investment;
(h) Investments to the extent the consideration received pursuant to
clause (b)(i) of Section 7.2.9 is not all cash;
(i) other Investments made by the Borrower or any of its Subsidiaries
(other than Receivables Co.) in an aggregate amount, when aggregated with
the amounts of Capital Expenditures made or committed to be made pursuant
to clause (b)(v) of Section 7.2.7, not to exceed $30,000,000 (net, for so
long as such amount is restricted pursuant to the terms of any Subordinated
Note Indenture, of Investments made in Qualified Assets with Net
Disposition Proceeds pursuant to clause (f)(ii) above), which Investments
shall result in the Borrower or the relevant Subsidiary acquiring (subject
to Section 7.2.1) a majority controlling interest in the Person in which
such Investment was made or increasing any such controlling interest
maintained by it in such Person; and
(j) Investments in the form of loans or advances made to Holdings or
to management or employees of Holdings, the Borrower or any of their
respective Subsidiaries in an aggregate outstanding amount not to exceed
$2,500,000 at any time;
provided, however, that
(k) any Investment which when made complies with the requirements of
the definition of the term "Cash Equivalent Investment" may continue to be
held notwithstanding that such Investment if made thereafter would not
comply with such requirements;
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(l) the Investments permitted above shall only be permitted to be made
to the extent not prohibited in whole or in part by the terms of any
Subordinated Note Indenture; and
(m) no Investment otherwise permitted by clause (e), (f), (g), (i) or
(j) shall be permitted to be made if, immediately before or after giving
effect thereto, any Default shall have occurred and be continuing.
SECTION 7.2.6. Restricted Payments, etc. On and at all times after January
26, 1996:
(a) the Borrower will not declare, pay or make any dividend or
distribution (in cash, property or obligations) on any shares of any class
of Capital Stock (now or hereafter outstanding) of the Borrower or on any
warrants, options or other rights with respect to any shares of any class
of Capital Stock (now or hereafter outstanding) of the Borrower (other than
dividends or distributions payable in its common stock or warrants to
purchase its common stock or splits or reclassifications of its stock into
additional or other shares of its common stock) or apply, or permit any of
its Subsidiaries to apply, any of its funds, property or assets to the
purchase, redemption, sinking fund or other retirement of, or agree or
permit any of its Subsidiaries to purchase or redeem, any shares of any
class of Capital Stock (now or hereafter outstanding) of the Borrower, or
warrants, options or other rights with respect to any shares of any class
of Capital Stock (now or hereafter outstanding) of the Borrower
(collectively, "Restricted Payments");
(b) the Borrower will not, and will not permit any of its Subsidiaries
to
(i) make any payment or prepayment of principal of, or interest
on, any Subordinated Notes (A) on any day other than, in the case of
interest only, the stated, scheduled date for such payment of interest
set forth in the applicable Subordinated Notes or in the applicable
Subordinated Note Indenture, or (B) which would violate the terms of
this Agreement or the subordination provisions of such Subordinated
Note Indenture; or
(ii) redeem, purchase or defease, any Subordinated Notes; and
(c) the Borrower will not, and will not permit any Subsidiary to, make
any deposit for any of the foregoing purposes;
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provided, however, that,
(d) notwithstanding the provisions of clause (a) above, the Borrower
shall be permitted to make Restricted Payments to Holdings (in the case of
clause (d)(iv) below, commencing on February 1, 2002, and then only to the
extent not prohibited in whole or in part by the terms of any Subordinated
Debt), to the extent necessary to enable Holdings (i) to pay its overhead
expenses in an amount not to exceed $50,000 in any Fiscal Year, (ii) to pay
its taxes, (iii) so long as (A) no Default shall have occurred and be
continuing on the date such Restricted Payment is declared or to be made,
nor would a Default result from the making of such Restricted Payment, (B)
after giving effect to the making of such Restricted Payment the Borrower
shall be in pro forma compliance with the covenants set forth in Section
7.2.4 for the most recent full Fiscal Quarter immediately preceding the
date of the payment of such Restricted Payment for which the relevant
financial information has been delivered pursuant to clause (a) or clause
(b) of Section 7.1.1, and (C) an Authorized Officer of the Borrower shall
have delivered a certificate to the Administrative Agent in form and
substance satisfactory to the Administrative Agent (including a calculation
of the compliance with the covenants set forth in Section 7.2.4) certifying
as to the accuracy of clause (d)(iii)(A) and (d)(iii)(B) above, to
purchase, redeem, acquire or otherwise retire for value shares of Capital
Stock of Holdings held by officers or employees of Holdings or any of its
Subsidiaries, or options on any such shares or related stock appreciation
rights or similar securities owned by officers or employees (or their
estates of beneficiaries under their estates), in all cases only upon
death, disability, retirement, termination of employment or pursuant to the
terms of such stock option plan or any other agreement under which such
shares of Capital Stock, options, related rights or similar securities were
issued (collectively referred to as a "Redemption"), in an aggregate
amount, in the case of this clause (d)(iii), not to exceed $1,000,000 in
any Fiscal Year; provided, that the Borrower can carry forward to each
succeeding Fiscal Year the aggregate amount of Restricted Payments
permitted (but not made) pursuant to this clause (d)(iii) in prior Fiscal
Years, with up to a maximum amount of $4,000,000 of Restricted Payments
over the term of this Agreement permitted to be made pursuant to this
clause (d)(iii) (net of any amounts contributed in cash to the capital of
the Borrower by a replacement officer or employee following a Redemption as
the result of the death, disability, retirement or termination of
employment of another officer or employee of Holdings or any of its
Subsidiaries after January 26, 1996); and (iv) to pay, on a
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quarterly basis, accrued interest then due and payable in cash pursuant to
the terms of the Seller Note, but only if (A) no Default shall have
occurred and be continuing on the date such dividend is declared or to be
made, nor would a Default result from the making of such dividend, (B)
after giving effect to the making of such dividend, the Debt to EBITDA
Ratio shall be less than 2.0:1.0 on a pro forma basis for the most recent
two full Fiscal Quarters immediately preceding the date of the payment of
such dividend for which the relevant financial information has been
delivered pursuant to clause (a) or clause (b) of Section 7.1.1, and (C) an
Authorized Officer of the Borrower shall have delivered a certificate to
the Administrative Agent in form and substance satisfactory to the
Administrative Agent (including a calculation of the Debt to EBITDA Ratio
in reasonable detail) certifying to the accuracy of clause (d)(iv)(A) and
(d)(iv)(B) above;
(e) notwithstanding the provisions of clause (a) above, the Borrower
shall, to the extent not prohibited in whole or in part by the terms of any
Subordinated Debt, be permitted to declare and pay a one time cash dividend
in an amount which, when aggregated with the amount of the Investment (if
any) made pursuant to clause (g) of Section 7.2.5 on or prior to the date
the dividend or distribution permitted pursuant to this clause is made,
shall not exceed $25,000,000 if (i) no Default shall have occurred and be
continuing on the date such dividend is declared or to be made, nor would a
Default result from the making of such dividend, (ii) after giving effect
to the making of such dividend, the Debt to EBITDA Ratio shall be less than
3.0:1.0 on a pro forma basis for the most recent two full Fiscal Quarters
immediately preceding the date of the payment of such dividend for which
the relevant financial information has been delivered pursuant to clause
(a) or clause (b) of Section 7.1.1, and (iii) an Authorized Officer of the
Borrower shall have delivered a certificate to the Administrative Agent in
form and substance satisfactory to the Administrative Agent (including a
calculation of the Debt to EBITDA Ratio in reasonable detail) certifying to
the accuracy of clause (e)(i) and (e)(ii) above; and
(f) notwithstanding the provisions of clause (b) above, the Borrower
shall be permitted to
(i) refinance and convert the Bridge Notes with and into the
Exchange Notes, as permitted pursuant to clause (h)(i) of Section
7.2.2; and
(ii) refinance and repay Dollar for Dollar the Bridge Notes and
accrued interest and fees thereon or,
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if issued, the Exchange Notes and accrued interest and fees thereon
with all the net proceeds of a private placement or public offering of
the Refinancing Notes (and, if applicable, the amount of any Excluded
Proceeds), as permitted pursuant to clause (h)(iii) of Section 7.2.2;
and
(iii) refinance and repay Dollar for Dollar the Refinancing Notes
and accrued interest and fees thereon with the net proceeds of other
unsecured Subordinated Debt with all terms and conditions reasonably
satisfactory to the Required Lenders, as permitted pursuant to clause
(h)(iv) of Section 7.2.2, upon which issuance such other Subordinated
Debt shall be deemed for all purposes of this Agreement and the Loan
Documents to be "Refinancing Notes" issued pursuant to the
"Refinancing Note Indenture".
SECTION 7.2.7. Capital Expenditures, etc. (a) The Borrower will not, and
will not permit any of its Subsidiaries to, make or commit to make Capital
Expenditures in any Fiscal Year, except, to the extent not prohibited in whole
or in part by the terms of any Subordinated Note Indenture, Capital Expenditures
which do not aggregate in excess of the amount set forth below opposite such
Fiscal Year:
Maximum Capital
Fiscal Year Expenditures
----------- ------------
1996 $32,000,000
1997 $40,000,000
1998 $40,000,000
1999 through 2001 $45,000,000
2002 and thereafter $50,000,000;
provided, that to the extent the amount of Capital Expenditures permitted to be
made in any Fiscal Year ("Year 1") pursuant to this clause exceeds the aggregate
amount of Capital Expenditures actually made during such Fiscal Year, such
excess amount may be carried forward to (but only to) and, to the extent not
prohibited in whole or in part by the terms of any Subordinated Note Indenture,
made in the next succeeding Fiscal Year ("Year 2") (any such amount to be
certified by the Borrower to the Administrative Agent in the Compliance
Certificate delivered for the last Fiscal Quarter of Year 1), and any such
amount carried forward to Year 2 shall be deemed to be used only after the
Borrower and its Subsidiaries have fully used the amount of Capital Expenditures
permitted by this Section without giving effect to such carry-forward; provided,
however, that so long as the Borrower or any of its Subsidiaries has committed
to make Capital Expenditures in Year 2 with the amount carried forward to
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such year pursuant to this clause, such committed amount can actually be
expended in the Fiscal Year immediately succeeding Year 2.
(b) The parties acknowledge and agree that the permitted Capital
Expenditure levels set forth in clause (a) above shall be exclusive of:
(i) the aggregate Dollar amount of the purchase price of trucks
leased by the Borrower or any of its Subsidiaries on January 26, 1996
which are determined in the good faith judgment of the Borrower to be
unnecessary to its ongoing operations and which are then purchased
from the lessor and promptly thereafter sold to third parties;
(ii) Net Disposition Proceeds which have been reinvested by the
Borrower or a Subsidiary of the Borrower in Qualified Assets in
accordance with the terms of clause (c) of Section 3.1.1 and Casualty
Proceeds to the extent applied to rebuild or replace property in
accordance with the terms of clause (f) of Section 3.1.1;
(iii) the amount of Capital Expenditures actually made with cash
capital contributions (other than capital contributions made by the
Borrower in any of its Subsidiaries or by any Subsidiary of the
Borrower in another Subsidiary of the Borrower, except to the extent
the source thereof is a capital contribution from Holdings) after
January 26, 1996 to the Borrower or any of its Subsidiaries and
specifically identified in a certificate delivered by an Authorized
Officer of the Borrower to the Administrative Agent on or about the
time such capital contribution is made;
(iv) the amount of Capital Expenditures resulting from the
Restructuring Charges as certified to the Administrative Agent by the
Borrower in the first Compliance Certificate delivered by the Borrower
following such Capital Expenditure; and
(v) Capital Expenditures in an amount which, when aggregated with
the amount of Investments made pursuant to clause (i) of Section
7.2.5, shall not exceed $30,000,000 over the term of this Agreement.
SECTION 7.2.8. Consolidation, Merger, etc. The Borrower will not, and will
not permit any of its Subsidiaries to, liquidate or dissolve, consolidate with,
or merge into or with, any other corporation, or purchase or otherwise acquire
all or
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substantially all of the assets of any Person (or of any division
thereof) except
(a) any such Subsidiary (other than Receivables Co.) may liquidate or
dissolve voluntarily into, and may merge with and into, the Borrower (so
long as the Borrower is the surviving corporation of such combination or
merger) or any other Subsidiary (other than Receivables Co.), and the
assets or stock of any Subsidiary may be purchased or otherwise acquired by
the Borrower or any other Subsidiary (other than a Designated Subsidiary
and Receivables Co.); provided, that notwithstanding the above, a
Subsidiary may only liquidate or dissolve into, or merge with and into,
another Subsidiary of the Borrower (other than a Designated Subsidiary and
Receivables Co.) if, after giving effect to such combination or merger, the
Borrower continues to own (directly or indirectly), and the Administrative
Agent continues to have pledged to it pursuant to a Pledge Agreement, a
percentage of the issued and outstanding shares of Capital Stock (on a
fully diluted basis) of the Subsidiary surviving such combination or merger
that is equal to or in excess of the percentage of the issued and
outstanding shares of Capital Stock (on a fully diluted basis) of the
Subsidiary that does not survive such combination or merger that was
(immediately prior to the combination or merger) owned by the Borrower or
pledged to the Administrative Agent; and
(b) so long as no Default has occurred and is continuing or would
occur after giving effect thereto, the Borrower or any of its Subsidiaries
may purchase all or substantially all of the assets of any Person (or any
division thereof) not then a Subsidiary, or acquire such Person by merger,
if permitted (without duplication) pursuant to the provisos contained in
clause (c) of Section 3.1.1, Section 7.2.7 or clauses (f) or (i) of Section
7.2.5.
SECTION 7.2.9. Asset Dispositions, etc. The Borrower will not, and will
not permit any of its Subsidiaries to, sell, transfer, lease, contribute or
otherwise convey, or grant options, warrants or other rights with respect to,
all or any part of its assets, whether now owned or hereafter acquired
(including accounts receivable and Capital Stock of Subsidiaries) to any Person,
unless
(a) such sale, transfer, lease, contribution or conveyance of such
assets is (i) in the ordinary course of its business (and does not
constitute a sale, transfer, lease, contribution or other conveyance of all
or a substantial part of the Borrower's or such Subsidiary's
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assets) or is of obsolete or worn out property, (ii) permitted by Section
7.2.8, (iii) the sale or other disposition of trucks as described in the
definition of "Truck Sale Proceeds", (iv) the sale/leaseback associated
with the DaVinci Project pursuant to Section 7.2.14, (v) one constituting
all or a portion of the assets comprising the Borrower's bakery located in
Atlanta, Georgia, (vi) between Subsidiary Guarantors or from a Subsidiary
to the Borrower, (vii) the sale or conveyance of Sunshine's real and
personal property located in Santa Fe Springs, California (collectively
referred to as the "Santa Fe Property") in an amount not to exceed
$3,000,000 or (viii) the sale or conveyance of Sunshine's real and personal
property used as a bakery and located in Oakland, California (collectively
referred to as the "Oakland Property"; the Oakland Property and the Santa
Fe Property collectively referred to as the "Exempted Properties") in an
amount not to exceed $3,500,000;
(b) (i) such sale, transfer, lease, contribution or conveyance of such
assets is for fair market value and the consideration consists of no less
than 80% (or, in the case of the Borrower's (or its Subsidiary's) factory
and related assets in Chicago, Illinois used in the production of ice cream
cones, 50%) in cash, (ii) the Net Disposition Proceeds received from such
assets, together with the Net Disposition Proceeds of all other assets
sold, transferred, leased, contributed or conveyed pursuant to this clause
(b) since January 26, 1996, does not exceed (individually or in the
aggregate) $100,000,000 over the term of this Agreement and (iii) the Net
Disposition Proceeds generated from such sale, transfer, lease,
contribution or conveyance not theretofore reinvested in Qualified Assets
in accordance with clause (c) of Section 3.1.1 (with the amount permitted
to be so reinvested in Qualified Assets in any event not to exceed
$30,000,000 over the term of this Agreement) is applied as Net Disposition
Proceeds to prepay the Loans pursuant to the terms of clause (c) of Section
3.1.1 and Section 3.1.2; or
(c) such sale is of Accounts pursuant to the Permitted Receivables
Transaction.
SECTION 7.2.10. Modification of Certain Agreements.
(a) Without the prior written consent of the Required Lenders, the Borrower
will not, and will not permit any of its Subsidiaries to, consent to any
amendment, supplement, amendment and restatement, waiver or other modification
of any of the terms or provisions contained in, or applicable to, the
Certificate of Merger or the Keebler Purchase Agreement or the Sunshine Purchase
Agreement or any schedules, exhibits or agreements related (in
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each case) thereto, in each case which would adversely affect the rights or
remedies of the Lenders, or the Borrower's or any Subsidiary's ability to
perform hereunder or under any Loan Document or which would increase the
purchase price with respect to the Keebler Acquisition or the Sunshine
Acquisition or, in the case of the Keebler Purchase Agreement and the Sunshine
Purchase Agreement, which would increase the Borrower's or any of its
Subsidiaries' obligations or liabilities, contingent or otherwise (other than
adjustments to the purchase price made pursuant to the terms of such Purchase
Agreements).
(b) Except as otherwise permitted pursuant to the terms of this Agreement,
without the prior written consent of the Required Lenders, the Borrower will not
consent to any amendment, supplement or other modification of any of the terms
or provisions contained in, or applicable to, any Subordinated Debt (including
any Subordinated Note Indenture or any of the Subordinated Notes), or any
guarantees delivered in connection with any Subordinated Debt (including any
Subordinated Guaranty) (collectively, the "Restricted Agreements"), or make any
payment in order to obtain an amendment thereof or change thereto, if the effect
of such amendment, supplement, modification or change is to (i) increase the
principal amount of, or increase the interest rate on, or add or increase any
fee with respect to such Subordinated Debt or any such Restricted Agreement,
advance any dates upon which payments of principal or interest are due thereon
or change any of the covenants with respect thereto in a manner which is more
restrictive to the Borrower or any of its Subsidiaries or (ii) change any event
of default or condition to an event of default with respect thereto, change the
redemption, prepayment or defeasance provisions thereof, change the
subordination provisions thereof, or change any collateral therefor (other than
to release such collateral), if (in the case of this clause (b)(ii)), the effect
of such amendment or change, individually or together with all other amendments
or changes made, is to increase the obligations of the obligor thereunder or to
confer any additional rights on the holders of such Subordinated Debt, or any
such Restricted Agreement (or a trustee or other representative on their
behalf).
(c) Without the prior written consent of the Administrative Agent, the
Borrower will not, and will not permit any of its Subsidiaries to, (i)
optionally terminate the Permitted Receivables Transaction, or (ii) consent to
any amendment, supplement, or other modification to any of the terms of the
documents, instruments and agreements delivered in connection with the Permitted
Receivables Transaction, other than any such amendment, modification or change
which (A) would extend the maturity thereof or (B) does not in any way adversely
affect the interests of the Agents, the Lenders or the Issuer hereunder or
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under the Loan Documents or (C) is of a technical or clarifying
nature).
SECTION 7.2.11. Transactions with Affiliates. The Borrower will not, and
will not permit any of its Subsidiaries to, enter into, or cause, suffer or
permit to exist any arrangement or contract with any of its other Affiliates
(other than any Obligor) unless such arrangement or contract is fair and
equitable to the Borrower or such Subsidiary and is an arrangement or contract
of the kind which would be entered into by a prudent Person in the position of
the Borrower or such Subsidiary with a Person which is not one of its
Affiliates; provided, however, that notwithstanding the foregoing, (a) the
Borrower may pay to The Invus Group Ltd. and/or Flowers management and
consulting fees in an amount not to exceed in the aggregate $1,500,000 per
annum, provided, further, that no such payment shall be made during the
occurrence and continuation of a Default, or if such payment would result in a
Default and (b) Indebtedness permitted by clause (f)(iii) of Section 7.2.2,
Investments permitted by clause (c)(ii), (e) or (g) of Section 7.2.5 and
Restricted Payments permitted by Section 7.2.6 shall not be restricted by this
Section 7.2.11.
SECTION 7.2.12. Negative Pledges, Restrictive Agreements, etc. The Borrower
will not, and will not permit any of its Subsidiaries to, enter into any
agreement (excluding (i) any restrictions existing under the Loan Documents or,
in the case of clauses (a)(i) and (b), any other agreements in effect on January
26, 1996, (ii) in the case of clauses (a)(i) and (b), any restrictions with
respect to a Subsidiary imposed pursuant to an agreement which has been entered
into in connection with the sale or disposition of all or substantially all of
the Capital Stock or assets of such Subsidiary pursuant to a transaction
otherwise permitted hereby, (iii) in the case of clause (a)(i), restrictions (A)
in respect of Indebtedness secured by Liens permitted by Section 7.2.3, but only
to the extent such restrictions apply to the assets encumbered thereby, or (B)
contained in documents or agreements delivered in connection with the Permitted
Receivables Transaction, provided that such restrictions are only effective
against the Accounts financed or acquired thereby), (iv) in the case of clause
(a), restrictions under a Subordinated Note Indenture, (v) in the case of clause
(b), restrictions on Receivables Co. contained in documentation delivered for
the Permitted Receivables Transaction, or (vi) any restrictions existing under
any agreement that amends, refinances or replaces any agreement containing the
restrictions referred to in clause (i), (ii), (iii) or (v) above; provided, that
the terms and conditions of any such agreement referred to in clause (i), (ii),
(iii) or (v) are not materially less favorable to the Lenders or materially
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more restrictive to any Obligor a party thereto than those under
the agreement so amended, refinanced or replaced) prohibiting
(a) the (i) creation or assumption of any Lien upon its properties,
revenues or assets, whether now owned or hereafter acquired, or (ii)
ability of the Borrower or any other Obligor to amend or otherwise modify
this Agreement or any other Loan Document; or
(b) the ability of any Subsidiary to make any payments, directly or
indirectly, to the Borrower by way of dividends, advances, repayments of
loans or advances, reimbursements of management and other intercompany
charges, expenses and accruals or other returns on investments, or any
other agreement or arrangement which restricts the ability of any such
Subsidiary to make any payment, directly or indirectly, to the Borrower.
SECTION 7.2.13. Stock of Subsidiaries. The Borrower will not permit any
Subsidiary to issue any Capital Stock (whether for value or otherwise) to any
Person other than the Borrower or another wholly-owned Subsidiary (other than a
Designated Subsidiary) of the Borrower.
SECTION 7.2.14. Sale and Leaseback. The Borrower will not, and will not
permit any of its Subsidiaries to, enter into any agreement or arrangement with
any other Person providing for the leasing by the Borrower or any of its
Subsidiaries of real or personal property which has been or is to be sold or
transferred by the Borrower or any of its Subsidiaries to such other Person or
to any other Person to whom funds have been or are to be advanced by such Person
on the security of such property or rental obligations of the Borrower or any of
its Subsidiaries; provided, that the foregoing will not prohibit the Borrower or
any of its Subsidiaries from consummating the DaVinci Project with proceeds
thereof in an amount of approximately $15,000,000 or a sale/leaseback between
Subsidiary Guarantors.
SECTION 7.2.15. No Investments, etc. in Designated Subsidiaries.
Notwithstanding anything to the contrary in this Agreement, in no event shall
the aggregate amount of Investments by the Borrower and its Subsidiaries in, or
transfers of cash or property by the Borrower or its Subsidiaries to, the
Designated Subsidiaries in the aggregate exceed $200,000 in any Fiscal Year.
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ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1. Listing of Events of Default. Each of the following events or
occurrences described in this Section 8.1 shall constitute an "Event of
Default".
SECTION 8.1.1. Non-Payment of Obligations. (a) The Borrower shall default
in the payment or prepayment of (i) any Reimbursement Obligation (including
pursuant to Sections 2.6 and 2.6.2) on the applicable Disbursement Due Date or
any deposit of cash for collateral purposes on the date required pursuant to
Section 2.6.4 or (ii) any principal of any Loan when due, or (b) any Obligor
(including the Borrower) shall default (and such default shall continue
unremedied for a period of three Business Days) in the payment when due of any
interest or commitment fee or of any other monetary Obligation.
SECTION 8.1.2. Breach of Warranty. Any representation or warranty of the
Borrower or any other Obligor made or deemed to be made hereunder or in any
other Loan Document executed by it or any other writing or certificate
(including the Closing Date Certificate) furnished by or on behalf of the
Borrower or any other Obligor to the Administrative Agent, the Issuer or any
Lender for the purposes of or in connection with this Agreement or any such
other Loan Document (including any certificates delivered pursuant to Article V)
is or shall be incorrect when made in any material respect.
SECTION 8.1.3. Non-Performance of Certain Covenants and Obligations. The
Borrower shall default in the due performance and observance of any of its
obligations under Section 7.1.9, Section 7.1.10, Section 7.1.12, Section 7.2, or
Sections 4.1.4 through (and including) 4.1.12 of the Holdings Guaranty.
SECTION 8.1.4. Non-Performance of Other Covenants and Obligations. Any
Obligor shall default in the due performance and observance of any other
agreement contained herein or in any other Loan Document executed by it, and
such default shall continue unremedied for a period of 30 days after notice
thereof shall have been given to the Borrower by the Administrative Agent at the
direction of the Required Lenders.
SECTION 8.1.5. Default on Other Indebtedness. A default shall occur (i) in
the payment when due (subject to any applicable grace period), whether by
acceleration or otherwise, of any Indebtedness (which, for purposes of this
Section, shall also include all other items which, in accordance with GAAP,
would be included as liabilities on the liability side of the balance sheet of
Holdings and its Subsidiaries as of the date at
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which Indebtedness is to be determined), other than Indebtedness described in
Section 8.1.1, of the Borrower or any of its Subsidiaries or any other Obligor
having a principal amount, individually or in the aggregate, in excess of
$1,000,000, or (ii) a default shall occur in the performance or observance of
any obligation or condition with respect to such Indebtedness having a principal
amount, individually or in the aggregate, in excess of $5,000,000 if the effect
of such default is to accelerate the maturity of any such Indebtedness or such
default shall continue unremedied for any applicable period of time sufficient
to permit the holder or holders of such Indebtedness, or any trustee or agent
for such holders, to cause such Indebtedness to become due and payable prior to
its expressed maturity.
SECTION 8.1.6. Judgments. Any judgment or order for the payment of money in
excess of $1,000,000 (not covered by insurance from a responsible insurance
company that is not denying its liability with respect thereto) shall be
rendered against the Borrower or any of its Subsidiaries or any other Obligor
and remain unpaid and either
(a) enforcement proceedings shall have been commenced by any creditor
upon such judgment or order; or
(b) there shall be any period of 60 consecutive days during which a
stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect.
SECTION 8.1.7. Pension Plans. Any of the following events shall occur with
respect to any Pension Plan
(a) the termination of any Pension Plan if, as a result of such
termination, the Borrower would be required to make a contribution to such
Pension Plan, or would reasonably expect to incur a liability or obligation
to such Pension Plan, in excess of $5,000,000; or
(b) a contribution failure occurs with respect to any Pension Plan
sufficient to give rise to a Lien under section 302(f) of ERISA in an
amount in excess of $5,000,000.
SECTION 8.1.8. Change in Control. Any Change in Control shall occur.
SECTION 8.1.9. Bankruptcy, Insolvency, etc. The Borrower or any of its
Subsidiaries or any other Obligor (other than one or more Immaterial
Subsidiaries) shall
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(a) become insolvent or generally fail to pay, or admit in writing its
inability or unwillingness to pay, debts as they become due;
(b) apply for, consent to, or acquiesce in, the appointment of a
trustee, receiver, sequestrator or other custodian for the Borrower or any
of its Subsidiaries or any other Obligor (other than such Immaterial
Subsidiaries) or any property of any thereof, or make a general assignment
for the benefit of creditors;
(c) in the absence of such application, consent or acquiescence,
permit or suffer to exist the appointment of a trustee, receiver,
sequestrator or other custodian for the Borrower or any of its Subsidiaries
or any other Obligor (other than such Immaterial Subsidiaries) or for a
substantial part of the property of any thereof, and such trustee,
receiver, sequestrator or other custodian shall not be discharged within 60
days, provided that the Borrower, each Subsidiary and each other Obligor
hereby expressly authorizes the Administrative Agent, the Issuer and each
Lender to appear in any court conducting any relevant proceeding during
such 60-day period to preserve, protect and defend their rights under the
Loan Documents;
(d) permit or suffer to exist the commencement of any bankruptcy,
reorganization, debt arrangement or other case or proceeding under any
bankruptcy or insolvency law, or any dissolution, winding up or liquidation
proceeding, in respect of the Borrower or any of its Subsidiaries or any
other Obligor (other than such Immaterial Subsidiaries), and, if any such
case or proceeding is not commenced by the Borrower or such Subsidiary or
such other Obligor, such case or proceeding shall be consented to or
acquiesced in by the Borrower or such Subsidiary or such other Obligor or
shall result in the entry of an order for relief or shall remain for 60
days undismissed, provided that the Borrower, each Subsidiary and each
other Obligor hereby expressly authorizes the Administrative Agent, the
Issuer and each Lender to appear in any court conducting any such case or
proceeding during such 60-day period to preserve, protect and defend their
rights under the Loan Documents; or
(e) take any action (corporate or otherwise) authorizing, or in
furtherance of, any of the foregoing.
SECTION 8.1.10. Impairment of Security, etc. Any Loan Document, or any Lien
granted thereunder, shall (except in accordance with its terms), in whole or in
part, terminate, cease to be in full force and effect or cease to be the legally
valid, binding and enforceable obligation of any Obligor party thereto;
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the Borrower or any other Obligor shall, directly or indirectly, contest in any
manner the effectiveness, validity, binding nature or enforceability thereof; or
any Lien securing any Obligation shall, in whole or in part, cease to be a
perfected first priority Lien, subject only to those exceptions expressly
permitted by such Loan Document, except to the extent any event referred to
above (a) relates to assets of the Borrower or any of its Subsidiaries which are
immaterial, (b) results from the failure of the Administrative Agent to maintain
possession of certificates representing securities pledged under any Pledge
Agreement or to file continuation statements under the Uniform Commercial Code
of any applicable jurisdiction or (c) is covered by a lender's title insurance
policy and the relevant insurer promptly after the occurrence thereof shall have
acknowledged in writing that the same is covered by such title insurance policy.
SECTION 8.1.11. Subordinated Notes. The subordination provisions relating
to the Seller Note or to any Subordinated Note Indenture (the "Subordination
Provisions") shall fail to be enforceable by the Lenders (which have not
effectively waived the benefits thereof) in accordance with the terms thereof,
or the principal or interest on any Loan, Reimbursement Obligation or other
monetary Obligations shall fail to constitute Senior Indebtedness (as defined in
the Bridge Note Agreement), "Senior Debt" (as defined in the Exchange Note
Indenture), or the same (or any other similar term) used to define the monetary
Obligations (as set forth in the Refinancing Note Indenture or any other
agreement or indenture governing Subordinated Debt); or Holdings or any of its
Subsidiaries shall, directly or indirectly, disavow or contest in any manner (i)
the effectiveness, validity or enforceability of any of the Subordination
Provisions, or (ii) that any of such Subordination Provisions exist for the
benefit of the Administrative Agent, the Issuer and the Lenders.
SECTION 8.1.12. Redemption. Any holder of the Seller Note or any
Subordinated Noteholder of any Subordinated Debt evidenced by the Bridge Notes,
and if and when issued, the Exchange Notes, the Refinancing Notes or any other
Subordinated Debt shall file an action seeking the rescission thereof or damages
or injunctive relief relating thereto; or any event shall occur which, under the
terms of the Seller Note, the Bridge Note Agreement, the Exchange Note
Indenture, the Refinancing Note Indenture or any other agreement or indenture
relating to Subordinated Debt, as the case may be, shall require Holdings, the
Borrower or any of its Subsidiaries to purchase, redeem or otherwise acquire or
offer to purchase, redeem or otherwise acquire all or any portion of the
principal amount of the Seller Note or any such Subordinated Debt (other than
with Excluded Proceeds in accordance with the terms hereof or as permitted
pursuant to clause (h) of Section 7.2.2); or Holdings, the Borrower or any of
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its Subsidiaries shall for any other reason purchase, redeem or otherwise
acquire or offer to purchase, redeem or otherwise acquire, or make any other
payments in respect of the principal amount of any such Subordinated Debt (in
each case other than with Excluded Proceeds in accordance with the terms hereof
as permitted by clause (h) of Section 7.2.2) or the Seller Note.
SECTION 8.1.13. Termination of Receivables Facility. Any event or
circumstance shall occur which permits or requires the Persons purchasing, or
financing the purchase of, eligible Accounts under the Permitted Receivables
Transaction to stop so purchasing or financing such Accounts, other than by
reason of the occurrence of the stated expiry date of the Permitted Receivables
Transaction; provided, that any notices or cure periods that are conditions to
the rights of such Persons to stop purchasing, or financing the purchase of,
such Accounts have been given or have expired, as the case may be.
SECTION 8.2. Action if Bankruptcy, etc. If any Event of Default described
in Section 8.1.3 (as it relates to Section 7.1.10) or in clauses (a) through (d)
of Section 8.1.9 shall occur with respect to the Borrower, any Subsidiary or any
other Obligor, the Commitments (if not theretofore terminated) shall
automatically terminate and the outstanding principal amount of all outstanding
Loans and all other Obligations shall automatically be and become immediately
due and payable, without notice or demand.
SECTION 8.3. Action if Other Event of Default. If any Event of Default
(other than any Event of Default described in Section 8.1.3 (as it relates to
Section 7.1.10) or clauses (a) through (d) of Section 8.1.9 with respect to the
Borrower or any Subsidiary or any other Obligor) shall occur for any reason,
whether voluntary or involuntary, and be continuing, the Administrative Agent,
upon the direction of the Required Lenders, shall by notice to the Borrower
declare all or any portion of the outstanding principal amount of the Loans and
other Obligations to be due and payable, require the Borrower to provide cash
collateral to be deposited with the Administrative Agent in an amount equal to
the Stated Amount of all issued Letters of Credit and/or declare the Commitments
(if not theretofore terminated) to be terminated, whereupon the full unpaid
amount of such Loans and other Obligations which shall be so declared due and
payable shall be and become immediately due and payable, without further notice,
demand or presentment, the Borrower shall deposit with the Administrative Agent
cash collateral in an amount equal to the Stated Amount of all issued Letters of
Credit and/or, as the case may be, the Commitments shall terminate.
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ARTICLE IX
THE AGENTS
SECTION 9.1. Actions. Each Lender hereby appoints The First National Bank
of Chicago, Pearl Street L.P., Bank of Montreal, BHF-Bank, Aktiengesellschaft
and NationsBank, N.A. (South), each as a Co-Agent and Scotiabank as its
Administrative Agent under and for purposes of this Agreement, the Notes and
each other Loan Document. Each Lender authorizes the Administrative Agent to act
on behalf of such Lender under this Agreement, the Notes and each other Loan
Document and, in the absence of other written instructions from the Required
Lenders received from time to time by the Administrative Agent (with respect to
which the Administrative Agent agrees that it will comply, except as otherwise
provided in this Section or as otherwise advised by counsel), to exercise such
powers hereunder and thereunder as are specifically delegated to or required of
the Administrative Agent by the terms hereof and thereof, together with such
powers as may be reasonably incidental thereto. Each Lender hereby indemnifies
(which indemnity shall survive any termination of this Agreement) the
Administrative Agent, ratably in accordance with their respective Term Loans
outstanding and Commitments (or, if no Term Loans or Commitments are at the time
outstanding and in effect, then ratably in accordance with the principal amount
of Term Loans held by such Lender, and their respective Commitments as in effect
in each case on the date of the termination of this Agreement), from and against
any and all liabilities, obligations, losses, damages, claims, costs or expenses
of any kind or nature whatsoever which may at any time be imposed on, incurred
by, or asserted against, the Administrative Agent in any way relating to or
arising out of this Agreement, the Notes and any other Loan Document, including
reasonable attorneys' fees, and as to which the Administrative Agent is not
reimbursed by the Borrower or any other Obligor (and without limiting the
obligation of the Borrower or any other Obligor to do so); provided, however,
that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, claims, costs or expenses which are
determined by a court of competent jurisdiction in a final proceeding to have
resulted solely from the Administrative Agent's gross negligence or willful
misconduct. The Administrative Agent shall not be required to take any action
hereunder, under the Notes or under any other Loan Document, or to prosecute or
defend any suit in respect of this Agreement, the Notes or any other Loan
Document, unless it is indemnified hereunder to its satisfaction. If any
indemnity in favor of the Administrative Agent shall be or become, in the
Administrative Agent's determination, inadequate, the Administrative Agent may
call for additional indemnification from the Lenders and cease to
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do the acts indemnified against hereunder until such additional
indemnity is given.
SECTION 9.2. Funding Reliance, etc. Unless the Administrative Agent shall
have been notified by telephone, confirmed in writing, by any Lender by 5:00
p.m., New York time, on the day prior to a Borrowing that such Lender will not
make available the amount which would constitute its Percentage of such
Borrowing on the date specified therefor, the Administrative Agent may assume
that such Lender has made such amount available to the Administrative Agent and,
in reliance upon such assumption, make available to the Borrower a corresponding
amount. If and to the extent that such Lender shall not have made such amount
available to the Administrative Agent, such Lender severally agrees and the
Borrower agrees to repay the Administrative Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
the Administrative Agent made such amount available to the Borrower to the date
such amount is repaid to the Administrative Agent, at the interest rate
applicable at the time to Loans comprising such Borrowing.
SECTION 9.3. Exculpation. Neither the Administrative Agent or any Co-Agent
nor any of their respective directors, officers, employees or agents shall be
liable to any Lender for any action taken or omitted to be taken by it under
this Agreement or any other Loan Document, or in connection herewith or
therewith, except for its own willful misconduct or gross negligence, nor
responsible for any recitals or warranties herein or therein, nor for the
effectiveness, enforceability, validity or due execution of this Agreement or
any other Loan Document, nor for the creation, perfection or priority of any
Liens purported to be created by any of the Loan Documents, or the validity,
genuineness, enforceability, existence, value or sufficiency of any collateral
security, nor to make any inquiry respecting the performance by the Borrower of
its obligations hereunder or under any other Loan Document. Any such inquiry
which may be made by any Agent shall not obligate it to make any further inquiry
or to take any action. The Administrative Agent shall be entitled to rely upon
advice of counsel concerning legal matters and upon any notice, consent,
certificate, statement or writing which the Administrative Agent believes to be
genuine and to have been presented by a proper Person.
SECTION 9.4. Successor. Any Co-Agent may resign as such upon one Business
Day's notice to the Borrower and the Administrative Agent. The Administrative
Agent may resign as such at any time upon at least 30 days' prior notice to the
Borrower and all Lenders. If the Administrative Agent at any time shall resign,
the Required Lenders may, with the prior consent of the Borrower (which consent
shall not be unreasonably
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withheld), appoint another Lender as a successor Administrative Agent which
shall thereupon become the Administrative Agent hereunder. If no successor
Administrative Agent shall have been so appointed by the Required Lenders, and
shall have accepted such appointment, within 30 days after the retiring
Administrative Agent's giving notice of resignation, then the retiring
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent, which shall be one of the Lenders or a commercial banking
institution organized under the laws of the U.S. (or any State thereof) or a
U.S. branch or agency of a commercial banking institution, and having a combined
capital and surplus of at least $500,000,000. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall be entitled to receive from the
retiring Administrative Agent such documents of transfer and assignment as such
successor Administrative Agent may reasonably request, and shall thereupon
succeed to and become vested with all rights, powers, privileges and duties of
the retiring Administrative Agent, and the retiring Administrative Agent shall
be discharged from its duties and obligations under this Agreement. After any
retiring Administrative Agent's resignation hereunder as the Administrative
Agent, the provisions of
(a) this Article IX shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was the Administrative Agent under
this Agreement; and
(b) Section 10.3 and Section 10.4 shall continue to inure to its
benefit.
SECTION 9.5. Credit Extensions by each Agent. Each Agent shall have the
same rights and powers with respect to (x) the Credit Extensions made by it or
any of its Affiliates, and (y) the Notes held by it or any of its Affiliates as
any other Lender and may exercise the same as if it were not an Agent. Each
Agent and its respective Affiliates may accept deposits from, lend money to, and
generally engage in any kind of business with the Borrower or any Subsidiary or
Affiliate of the Borrower as if such Agent were not an Agent hereunder.
SECTION 9.6. Credit Decisions. Each Lender acknowledges that it has,
independently of each Agent and each other Lender, and based on such Lender's
review of the financial information of the Borrower, this Agreement, the other
Loan Documents (the terms and provisions of which being satisfactory to such
Lender) and such other documents, information and investigations as such Lender
has deemed appropriate, made its own credit decision to extend its Commitments.
Each Lender also acknowledges that it will, independently of each Agent and each
other Lender, and based on such other documents, information and investigations
as
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it shall deem appropriate at any time, continue to make its own credit decisions
as to exercising or not exercising from time to time any rights and privileges
available to it under this Agreement or any other Loan Document.
SECTION 9.7. Copies, etc. The Administrative Agent shall give prompt notice
to each Lender of each notice or request required or permitted to be given to
the Administrative Agent by the Borrower pursuant to the terms of this Agreement
(unless concurrently delivered to the Lenders by the Borrower). The
Administrative Agent will distribute to each Lender each document or instrument
received for its account and copies of all other communications received by the
Administrative Agent from the Borrower for distribution to the Lenders by the
Administrative Agent in accordance with the terms of this Agreement.
SECTION 9.8. The Co-Agents. Notwithstanding anything else to the contrary
contained in this Agreement or any other Loan Document, none of the Co-Agents,
in such capacity, shall have any rights, duties or responsibilities under this
Agreement or any other Loan Document, or any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or otherwise exist
against any of such Co-Agent in such capacity.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. Waivers, Amendments, etc. The provisions of this Agreement
and of each other Loan Document may from time to time be amended, modified or
waived, if such amendment, modification or waiver is in writing and consented to
by the Borrower and the Required Lenders; provided, however, that no such
amendment, modification or waiver which would:
(a) modify any requirement hereunder that any particular action be
taken by all the Lenders or by the Required Lenders shall be effective
unless consented to by each Lender;
(b) modify this Section 10.1, or clause (a) of Section 10.10, change
the definition of "Required Lenders", change the definition of "Net Asset
Value" (if the effect of such change would be to require a Lender to make
or participate in a Credit Extension in an amount that is greater than such
Lender would have had to make or participate in immediately prior to such
amendment, modification or waiver), increase any Commitment Amount or
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the Percentage of any Lender, reduce any fees described in Article III,
amend or modify the relative application among the relevant Tranches of
mandatory prepayments of the Term Loans pursuant to Section 3.1.2(b) (it
being understood that the foregoing does not apply to any amendment,
modification or waiver described in clause (d) below), release Holdings
from its obligations under the Holdings Guaranty or any Subsidiary
Guarantor from its obligations under the Subsidiary Guaranty or all or
substantially all of collateral security (except in each case as otherwise
specifically provided in this Agreement (including the sale or transfer of
Accounts in accordance with the Permitted Receivables Transaction), the
Subsidiary Guaranty, a Security Agreement or a Pledge Agreement) or extend
any Commitment Termination Date shall be made without the consent of each
Lender adversely affected thereby;
(c) extend the due date for, or reduce the amount of, any scheduled
repayment of principal of or interest on or fees payable in respect of any
Loan (or reduce the principal amount of or rate of interest on or fees
payable in respect of any Loan) or any Reimbursement Obligation (which
shall in each case include the conversion of all or any part of the
Obligations into equity of any Obligor) shall be made without the consent
of the holder of the Note evidencing such Loan or, in the case of a
Reimbursement Obligation, the Issuer owed, and those, Lenders participating
in, such Reimbursement Obligation;
(d) extend the due date for, or reduce the amount of, any mandatory
prepayment of principal of any Loan or any mandatory reduction in the
Revolving Loan Commitment Amount shall be made unless consented to by, so
long as any such Loans are outstanding (or, in the case of Revolving Loan
Lenders, the Revolving Loan Commitment is in effect), Lenders holding at
least 51% of the outstanding principal amount of the Tranche of Loans (or
Revolving Loan Commitments, in the case of Revolving Loan Lenders)
adversely affected by such amendment, modification or waiver;
(e) affect adversely the interests, rights or obligations of the
Administrative Agent (in its capacity as Administrative Agent), the Issuer
(in its capacity as Issuer), or the Swing Line Lender (in its capacity as
Swing Line Lender) shall be effective unless consented to by the
Administrative Agent, the Issuer or the Swing Line Lender, as the case may
be; or
(f) (i) change the definition of "Borrowing Base Amount", "Eligible
Account" or "Eligible Inventory" (in each
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case if the effect of such change would be to require a Lender to make or
participate in a Credit Extension in an amount that is greater than such
Lender would have had to make or participate in immediately prior to such
amendment, modification or waiver) or (ii) have the effect (either
immediately or at some later time) of enabling the Borrower to satisfy a
condition precedent to the making of a Revolving Loan or the issuance of a
Letter of Credit without the consent of Lenders holding at least 51% of the
aggregate outstanding principal amount of the Revolving Loans or, if no
Revolving Loans are outstanding, at least 51% of the Revolving Loan
Commitments.
No failure or delay on the part of the Administrative Agent, the Issuer, any
Lender or the holder of any Note in exercising any power or right under this
Agreement or any other Loan Document shall operate as a waiver thereof, nor
shall any single or partial exercise of any such power or right preclude any
other or further exercise thereof or the exercise of any other power or right.
No notice to or demand on the Borrower in any case shall entitle it to any
notice or demand in similar or other circumstances. No waiver or approval by the
Administrative Agent, the Issuer, any Lender or the holder of any Note under
this Agreement or any other Loan Document shall, except as may be otherwise
stated in such waiver or approval, be applicable to subsequent transactions. No
waiver or approval hereunder shall require any similar or dissimilar waiver or
approval thereafter to be granted hereunder.
SECTION 10.2. Notices. All notices and other communications provided to any
party hereto under this Agreement or any other Loan Document shall be in writing
or by facsimile and addressed, delivered or transmitted to such party, in the
case of the Borrower or the Administrative Agent, at its address or facsimile
number set forth below its signatures in this Agreement, and if to any other
party, as set forth on Schedule III hereto or set forth in the Lender Assignment
Agreement or at such other address or facsimile number as may be designated by
such party in a notice to the other parties. Any notice, if mailed and properly
addressed with postage prepaid or if properly addressed and sent by pre-paid
courier service, shall be deemed given when received; any notice, if transmitted
by facsimile, shall be deemed given when transmitted (telephonic confirmation in
the case of facsimile).
SECTION 10.3. Payment of Costs and Expenses. The Borrower agrees to pay on
demand all reasonable expenses of the Administrative Agent (including the
reasonable fees and out-of-pocket expenses of counsel to the Administrative
Agent and of local counsel, if any, who may be retained by counsel to the
Administrative Agent) in connection with
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(a) the syndication by the Administrative Agent of the Loans, the
negotiation, preparation, execution and delivery of this Agreement and of
each other Loan Document, including schedules and exhibits, and any
amendments, waivers, consents, supplements or other modifications to this
Agreement or any other Loan Document as may from time to time hereafter be
required, whether or not the transactions contemplated hereby are
consummated;
(b) the filing, recording, refiling or rerecording of each Mortgage,
each Pledge Agreement and each Security Agreement and/or any Uniform
Commercial Code financing statements relating thereto and all amendments,
supplements and modifications to any thereof and any and all other
documents or instruments of further assurance required to be filed or
recorded or refiled or rerecorded by the terms hereof or of such Mortgage,
Pledge Agreement or Security Agreement; and
(c) the preparation and review of the form of any document or
instrument relevant to this Agreement or any other Loan Document.
The Borrower further agrees to pay, and to save the Administrative Agent, the
Issuer and the Lenders harmless from all liability for, any stamp or other
similar taxes which may be payable in connection with the execution or delivery
of this Agreement, the Credit Extensions made hereunder, or the issuance of the
Notes and Letters of Credit or any other Loan Documents. The Borrower also
agrees to reimburse the Administrative Agent, the Issuer and each Lender upon
demand for all reasonable out-of-pocket expenses (including attorneys' fees and
legal expenses) incurred by the Administrative Agent, the Issuer or such Lender
in connection with (x) the negotiation of any restructuring or "work-out",
whether or not consummated, of any Obligations and (y) the enforcement of any
Obligations.
SECTION 10.4. Indemnification. In consideration of the execution and
delivery of this Agreement by each Lender and the extension of the Commitments,
the Borrower hereby indemnifies, exonerates and holds the Administrative Agent,
the Issuer and each Lender and each of their respective Affiliates, and each of
their respective partners, officers, directors, employees and agents, and each
other Person controlling any of the foregoing within the meaning of either
Section 15 of the Securities Act of 1933, as amended, or Section 20 of the
Securities Exchange Act of 1934, as amended (collectively, the "Indemnified
Parties"), free and harmless from and against any and all actions, causes of
action, suits, losses, costs, liabilities and damages, fees, and expenses
actually incurred in connection therewith (irrespective of whether any such
Indemnified Party is a party to the action
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for which indemnification hereunder is sought), including reasonable attorneys'
fees and disbursements (collectively, the "Indemnified Liabilities"), incurred
by the Indemnified Parties or any of them as a result of, or arising out of, or
relating to
(a) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of any Credit Extension hereunder
and under (or as defined in) the Existing Credit Agreement;
(b) the entering into and performance of the Existing Credit
Agreement, this Agreement and any other Loan Document hereunder and also as
such term is defined in the Existing Credit Agreement by any of the
Indemnified Parties (including any action brought by or on behalf of the
Borrower as the result of any determination by the Required Lenders
pursuant to Article V not to make any Credit Extension);
(c) any investigation, litigation or proceeding related to any
acquisition or proposed acquisition by the Borrower or any of its
Subsidiaries of all or any portion of the stock or assets of any Person,
whether or not the Administrative Agent, the Issuer or such Lender is party
thereto;
(d) any investigation, litigation or proceeding related to any
environmental cleanup, audit, compliance or other matter relating to the
Borrower's or any of its Subsidiaries' compliance with or liability under
Environmental Law or the Release by the Borrower or any of its Subsidiaries
of any Hazardous Material; or
(e) the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission, discharging or releases from, any real
property owned or operated by the Borrower or any Subsidiary thereof of any
Hazardous Material present on or under such property in a manner giving
rise to liability at or prior to the time the Borrower or such Subsidiary
owned or operated such property (including any losses, liabilities,
damages, injuries, costs, expenses or claims asserted or arising under any
Environmental Law), regardless of whether caused by, or within the control
of, the Borrower or such Subsidiary,
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant Indemnified Party's gross
negligence or willful misconduct. The Borrower and its permitted successors and
assigns hereby waive, release and agree not to make any claim, or bring any cost
recovery action against, the Administrative Agent,
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the Issuer or any Lender under CERCLA or any state equivalent, or any similar
law now existing or hereafter enacted, except to the extent arising out of the
gross negligence or willful misconduct of any Indemnified Party. It is expressly
understood and agreed that to the extent that any of such Persons is strictly
liable under any Environmental Laws, the Borrower's obligation to such Person
under this indemnity shall likewise be without regard to fault on the part of
the Borrower with respect to the violation or condition which results in
liability of such Person. If and to the extent that the foregoing undertaking
may be unenforceable for any reason, the Borrower hereby agrees to make the
maximum contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law.
SECTION 10.5. Survival. The obligations of the Borrower under Sections 4.3,
4.4, 4.5, 4.6, 10.3 and 10.4, and the obligations of the Lenders under Sections
4.8 and 9.1, shall in each case survive any termination of this Agreement, the
payment in full of all Obligations, the termination or expiration of all Letters
of Credit and the termination of all Commitments. The representations and
warranties made by the Borrower and each other Obligor in this Agreement and in
each other Loan Document shall survive the execution and delivery of this
Agreement and each such other Loan Document. In addition, the Borrower
acknowledges and agrees that all provisions of the Existing Credit Agreement and
Loan Documents (as defined in the Existing Credit Agreement) that by their terms
survive termination of the Existing Credit Agreement shall continue to survive
and that its obligations in respect thereof shall be included as "Obligations".
SECTION 10.6. Severability. Any provision of this Agreement or any other
Loan Document which is prohibited or unenforceable in any jurisdiction shall, as
to such provision and such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions of
this Agreement or such Loan Document or affecting the validity or enforceability
of such provision in any other jurisdiction.
SECTION 10.7. Headings. The various headings of this Agreement and of each
other Loan Document are inserted for convenience only and shall not affect the
meaning or interpretation of this Agreement or such other Loan Document or any
provisions hereof or thereof.
SECTION 10.8. Execution in Counterparts, Effectiveness, etc. This Agreement
may be executed by the parties hereto in several counterparts, each of which
shall be executed by the Borrower and the Administrative Agent and be deemed to
be an
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original and all of which shall constitute together but one and the same
agreement. This Agreement shall become effective when counterparts hereof
executed on behalf of the Borrower, the Issuer and each Lender (or notice
thereof satisfactory to the Administrative Agent) shall have been received by
the Administrative Agent and notice thereof shall have been given by the
Administrative Agent to the Borrower, the Issuer and each Lender.
SECTION 10.9. Governing Law; Entire Agreement. THIS AGREEMENT, THE NOTES
AND EACH OTHER LOAN DOCUMENT SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER
AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. This Agreement, the
Notes and the other Loan Documents constitute the entire understanding among the
parties hereto with respect to the subject matter hereof and supersede any prior
agreements, written or oral, with respect thereto.
SECTION 10.10. Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that:
(a) the Borrower may not assign or transfer its rights or obligations
hereunder without the prior written consent of the Administrative Agent and
all Lenders; and
(b) the rights of sale, assignment and transfer of the Lenders are
subject to Section 10.11.
SECTION 10.11. Sale and Transfer of Loans and Notes; Participations in
Loans and Notes. Each Lender may assign, or sell participations in, its Loans,
Letters of Credit and Commitments to one or more other Persons, on a non pro
rata basis, in accordance with this Section 10.11.
SECTION 10.11.1. Assignments. Any Lender,
(a) with the written consents of the Borrower and the Administrative
Agent (which consents shall not be unreasonably delayed or withheld and
which consent, in the case of the Borrower, shall be deemed to have been
given in the absence of a written notice delivered by the Borrower to the
Administrative Agent, on or before the fifth Business Day after receipt by
the Borrower of such Lender's request for such consent), may at any time
assign and delegate to one or more commercial banks or other financial
institutions, and
(b) with notice to the Borrower and the Administrative Agent, but
without the consent of either the Borrower or the
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Administrative Agent, may assign and delegate to any of its Affiliates or
to any other Lender
(each Person described in either of the foregoing clauses as being the Person to
whom such assignment and delegation is to be made, being hereinafter referred to
as an "Assignee Lender"), all or any fraction of such Lender's total Loans,
participations in Letters of Credit and Letter of Credit Outstandings with
respect thereto and Commitments (which assignment and delegation shall be, as
among Revolving Loan Commitments, Revolving Loans, participations in Letters of
Credit and Swing Line Loans and Term-A Loans, of a constant, and not a varying,
percentage) in a minimum aggregate amount of (i) $1,000,000 (if such assignment
and delegation is to a then existing Lender) and (ii) $5,000,000 (if such
assignment and delegation is to a Person not then a Lender) or the then
remaining amount of a Lender's Loans and Commitments; provided, however, that
any such Assignee Lender will comply, if applicable, with the provisions
contained in Section 4.6 and the Borrower, each other Obligor and the
Administrative Agent shall be entitled to continue to deal solely and directly
with such Lender in connection with the interests so assigned and delegated to
an Assignee Lender until
(c) written notice of such assignment and delegation, together with
payment instructions, addresses and related information with respect to
such Assignee Lender, shall have been given to the Borrower and the
Administrative Agent by such Lender and such Assignee Lender;
(d) such Assignee Lender shall have executed and delivered to the
Borrower and the Administrative Agent a Lender Assignment Agreement,
accepted by the Administrative Agent; and
(e) the processing fees described below shall have been paid.
From and after the date that the Administrative Agent accepts such Lender
Assignment Agreement, (x) the Assignee Lender thereunder shall be deemed
automatically to have become a party hereto and to the extent that rights and
obligations hereunder have been assigned and delegated to such Assignee Lender
in connection with such Lender Assignment Agreement, shall have the rights and
obligations of a Lender hereunder and under the other Loan Documents, and (y)
the assignor Lender, to the extent that rights and obligations hereunder have
been assigned and delegated by it in connection with such Lender Assignment
Agreement, shall be released from its obligations hereunder and under the other
Loan Documents. Within ten Business Days after its receipt of notice that the
Administrative Agent has received an executed Lender Assignment Agreement, the
Borrower shall execute and
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deliver to the Administrative Agent (for delivery to the relevant Assignee
Lender) new Notes evidencing such Assignee Lender's assigned Loans and
Commitments and, if the assignor Lender has retained Loans and Commitments
hereunder, replacement Notes in the principal amount of the Loans and
Commitments retained by the assignor Lender hereunder (such Notes to be in
exchange for, but not in payment of, those Notes then held by such assignor
Lender). Each such Note shall be dated the date of the predecessor Notes. The
assignor Lender shall mark the predecessor Notes "exchanged" and deliver them to
the Borrower. Accrued interest on that part of the predecessor Notes evidenced
by the new Notes, and accrued fees, shall be paid as provided in the Lender
Assignment Agreement. Accrued interest on that part of the predecessor Notes
evidenced by the replacement Notes shall be paid to the assignor Lender. Accrued
interest and accrued fees shall be paid at the same time or times provided in
the predecessor Notes and in this Agreement. Such assignor Lender or such
Assignee Lender must also pay a processing fee to the Administrative Agent upon
delivery of any Lender Assignment Agreement in the amount of $3,500, unless such
assignment and delegation is by a Lender to its Affiliate or if such assignment
and delegation is by a Lender to the Federal Reserve Bank, as provided below.
Any attempted assignment and delegation not made in accordance with this Section
10.11.1 shall be null and void. Notwithstanding any other term of this Section
10.11.1, the agreement of the Swing Line Lender to provide the Swing Line Loan
Commitment shall not impair or otherwise restrict in any manner the ability of
the Swing Line Lender to make any assignment of its Loans or Commitments, it
being understood and agreed that the Swing Line Lender may terminate its Swing
Line Loan Commitment, to the extent such Swing Line Commitment would exceed its
Revolving Loan Commitment after giving effect to such assignment, in connection
with the making of any assignment. Nothing contained in this Section 10.11.1
shall prevent or prohibit any Lender from pledging its rights (but not its
obligations to make Loans) under this Agreement and/or its Loans and/or its
Notes hereunder to a Federal Reserve Bank in support of borrowings made by such
Lender from such Federal Reserve Bank. In the event that S&P, Moody's or
Thompson's BankWatch (or InsuranceWatch Ratings Service, in the case of Lenders
that are insurance companies (or Best's Insurance Reports, if such insurance
company is not rated by Insurance Watch Ratings Service)) shall, after the date
that any Lender with a Commitment to make Revolving Loans or participate in
Letters of Credit or Swing Line Loans becomes a Lender, downgrade the long-term
certificate of deposit rating or long-term senior unsecured debt rating of such
Lender, and the resulting rating shall be below BBB-, Baa3 or C (or BB, in the
case of Lender that is an insurance company (or B, in the case of an insurance
company not rated by InsuranceWatch Ratings Service)), then each of the Issuer
and (if different) the Swing Line Lender shall have the right, but not the
obligation, upon
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notice to such Lender and the Administrative Agent, to replace such Lender with
an Assignee Lender in accordance with and subject to the restrictions contained
in this Section, and such Lender hereby agrees to transfer and assign without
recourse (in accordance with and subject to the restrictions contained in this
Section) all its interests, rights and obligations in respect of its Revolving
Loan Commitment under this Agreement to such Assignee Lender; provided, however,
that (i) no such assignment shall conflict with any law, rule and regulation or
order of any governmental authority and (ii) such Assignee Lender shall pay to
such Lender in immediately available funds on the date of such assignment the
principal of and interest and fees (if any) accrued to the date of payment on
the Loans made, and Letters of Credit participated in, by such Lender hereunder
and all other amounts accrued for such Lender's account or owed to it hereunder.
SECTION 10.11.2. Participations. Any Lender may at any time sell to one or
more commercial banks or other Persons (each of such commercial banks and other
Persons being herein called a "Participant") participating interests in any of
the Loans, Commitments, or other interests of such Lender hereunder; provided,
however, that
(a) no participation contemplated in this Section shall relieve such
Lender from its Commitments or its other obligations hereunder or under any
other Loan Document;
(b) such Lender shall remain solely responsible for the performance of
its Commitments and such other obligations;
(c) the Borrower and each other Obligor and the Administrative Agent
shall continue to deal solely and directly with such Lender in connection
with such Lender's rights and obligations under this Agreement and each of
the other Loan Documents;
(d) no Participant, unless such Participant is an Affiliate of such
Lender, or is itself a Lender, shall be entitled to require such Lender to
take or refrain from taking any action hereunder or under any other Loan
Document, except that such Lender may agree with any Participant that such
Lender will not, without such Participant's consent, agree to (i) any
reduction in the interest rate or amount of fees that such Participant is
otherwise entitled to, (ii) a decrease in the principal amount, or an
extension of the final Stated Maturity Date, of any Loan in which such
Participant has purchased a participating interest or (iii) a release of
all or
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substantially all of the collateral security under the Loan Documents or
all or substantially all of the Subsidiary Guarantors under the Subsidiary
Guaranty, in each case except as otherwise specifically provided in a Loan
Document; and
(e) the Borrower shall not be required to pay any amount under
Sections 4.3, 4.4, 4.5, 4.6, 10.3 and 10.4 that is greater than the amount
which it would have been required to pay had no participating interest been
sold.
The Borrower acknowledges and agrees, subject to clause (e) above, that each
Participant, for purposes of Sections 4.3, 4.4, 4.5, 4.6, 4.8, 4.9, 10.3 and
10.4, shall be considered a Lender.
SECTION 10.11.3. Assignment of Registered Notes. A Registered Note and the
Obligation(s) evidenced thereby may be assigned or otherwise transferred in
whole or in part pursuant to the terms of Section 10.11.1 and only by
registration of such assignment or transfer of such Registered Note and the
Obligation(s) evidenced thereby on the Register (and each Registered Note shall
expressly so provide). Any assignment or transfer of all or part of such
Obligation(s) and the Registered Note(s) evidencing the same shall be registered
on the Register only upon surrender for registration of assignment or transfer
of the Registered Note(s) evidencing such Obligation(s), duly endorsed by (or
accompanied by a written instrument of assignment or transfer duly executed by)
the Registered Noteholder thereof, and thereupon one or more new Registered
Note(s) in the same aggregate principal amount shall be issued to the designated
Assignee Lender, and the old Registered Note shall be returned by the
Administrative Agent to the Borrower marked "cancelled." Prior to the due
presentment for registration of assignment or transfer of any Registered Note,
the Borrower and the Administrative Agent shall treat the Person in whose name
such Obligation(s) and the Registered Note(s) evidencing the same is registered
as the owner thereof for the purpose of receiving all payments thereon and for
all other purposes, notwithstanding any notice to the contrary.
SECTION 10.12. Other Transactions. Nothing contained herein shall preclude
the Administrative Agent, the Issuer or any other Lender from engaging in any
transaction, in addition to those contemplated by this Agreement or any other
Loan Document, with the Borrower or any of its Affiliates in which the Borrower
or such Affiliate is not restricted hereby from engaging with any other Person.
SECTION 10.13. Forum Selection and Consent to Jurisdiction. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT, OR
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ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN)
OR ACTIONS OF THE ADMINISTRATIVE AGENT, THE LENDERS OR THE BORROWER SHALL BE
BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK, NEW
YORK COUNTY OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE ADMINISTRATIVE AGENT'S
OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER
PROPERTY MAY BE FOUND. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, NEW YORK COUNTY AND OF
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE
PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE
BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. THE
BORROWER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL,
POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK.
THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE
LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO
ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. TO THE EXTENT THAT THE BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY
FROM JURISDICTION OF ANY COURT OF FROM ANY LEGAL PROCESS (WHETHER THROUGH
SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION
OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE BORROWER HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.
SECTION 10.14. Waiver of Jury Trial. THE ADMINISTRATIVE AGENT, THE ISSUER,
THE LENDERS AND THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE ADMINISTRATIVE AGENT, THE LENDERS OR
THE BORROWER. THE BORROWER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND
SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH
OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE ADMINISTRATIVE AGENT, THE ISSUER AND THE LENDERS
ENTERING INTO THIS AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT.
SECTION 10.15. Confidentiality. The Lenders shall hold all non-public
information obtained pursuant to or in connection with this Agreement or
obtained by such Lender based on a review of the books and records of the
Borrower or any of its Subsidiaries in accordance with their customary
procedures for handling
-143-
<PAGE>
confidential information of this nature, but may make disclosure to any of their
examiners, Affiliates, outside auditors, counsel and other professional advisors
in connection with this Agreement or as reasonably required by any potential
bona fide transferee, participant or assignee, or in connection with the
exercise of remedies under a Loan Document, or as requested by any governmental
agency or representative thereof or pursuant to legal process; provided,
however, that
(a) unless specifically prohibited by applicable law or court order,
each Lender shall notify the Borrower of any request by any governmental
agency or representative thereof (other than any such request in connection
with an examination of the financial condition of such Lender by such
governmental agency) for disclosure of any such non-public information
prior to disclosure of such information;
(b) prior to any such disclosure pursuant to this Section 10.15, each
Lender shall require any such bona fide transferee, participant and
assignee receiving a disclosure of non-public information to agree in
writing
(i) to be bound by this Section 10.15; and
(ii) to require such Person to require any other Person to whom
such Person discloses such non-public information to be similarly
bound by this Section 10.15; and
(c) except as may be required by an order of a court of competent
jurisdiction and to the extent set forth therein, no Lender shall be
obligated or required to return any materials furnished by the Borrower or
any Subsidiary.
SECTION 10.16. Disclosure Schedule Amendment. By their signature below each
of the parties hereto agree that the Disclosure Schedule is amended in its
entirety to read as set forth on Schedule I hereto.
SECTION 10.17. Consent to Holdings Guaranty Amendment. Each of the parties
hereto agrees to terms of the first amendment to the Holdings Guaranty that is
to be delivered pursuant to Section 5.1.24.
-144-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
KEEBLER HOLDING CORP.
By:________________________________
Title:
Address: 677 Larch Avenue
Elmhurst, Illinois 60126
Facsimile No.: (708) 833-3372
Attention: E. Nichol McCully
THE BANK OF NOVA SCOTIA,
as the Administrative Agent
By:________________________________
Title:
Address: One Liberty Plaza
New York, New York 10006
Facsimile No.: (212) 225-5090
Attention: Donald McWeeney
-145-
<PAGE>
CO-AGENTS
THE FIRST NATIONAL BANK OF CHICAGO
By:________________________________
Name:
Title:
PEARL STREET L.P.
By:________________________________
Name:
Title:
BANK OF MONTREAL
By:________________________________
Name:
Title:
BHF-BANK, AKTIENGESELLSCHAFT
By:________________________________
Name:
Title:
By:________________________________
Name:
Title:
NATIONSBANK, N.A. (SOUTH)
By:________________________________
Name: Kathryn W. Robinson
Title: Senior Vice President
-146-
<PAGE>
LENDERS
THE BANK OF NOVA SCOTIA
By:________________________________
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By:________________________________
Name:
Title:
PEARL STREET L.P.
By:________________________________
Name:
Title:
BANK OF MONTREAL
By:________________________________
Name:
Title:
BHF-BANK, AKTIENGESELLSCHAFT
By:________________________________
Name:
Title:
By:________________________________
Name:
Title:
-147-
<PAGE>
NATIONSBANK, N.A. (SOUTH)
By:________________________________
Name: Kathryn W. Robinson
Title: Senior Vice President
COOPERATIVE CENTRALE RAIFFEISEN-
BOERENLEENBANK, B.A., NEW YORK
BRANCH
By:________________________________
Name:
Title:
By:________________________________
Name:
Title:
BANQUE NATIONALE DE PARIS
By:________________________________
Name:
Title:
CIBC INC.
By:________________________________
Name:
Title:
THE FUJI BANK, LIMITED
By:________________________________
Name: Peter L. Chinnici
Title: Joint General Manager
-148-
<PAGE>
COMERICA BANK
By:________________________________
Name: Gregory N. Block
Title: Vice President
ABN AMRO BANK N.V., NEW YORK BRANCH
By:________________________________
Name:
Title:
By:________________________________
Name:
Title:
SOCIETE GENERALE
By:________________________________
Name: Erick R. Rinner
Title: Assistant Vice President
SUNTRUST BANK, ATLANTA
By:________________________________
Name:
Title:
By:________________________________
Name:
Title:
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD.
By:________________________________
Name: Armund H. Schoen, Jr.
Title: Vice President & Deputy
General Manager
-149-
<PAGE>
HIBERNIA NATIONAL BANK
By:________________________________
Name: Colleen Lacy
Title: Vice President
BANQUE FRANCAISE DU COMMERCE
EXTERIEUR
By:________________________________
Name: Pieter van Tulder
Title: Vice President & Manager
By:________________________________
Name: Jean Y. Richard
Title: SVP - Deputy General
Manager - USA
GENERALE BANK, NEW YORK BRANCH
By:________________________________
Name:
Title:
By:________________________________
Name:
Title:
CITIBANK, N.A.
By:________________________________
Name: Hans L. Christensen
Title: Vice President
BANK OF AMERICA ILLINOIS
By:________________________________
Name: Eric Rosen
Title: Vice President
-150-
<PAGE>
IMPERIAL BANK, A CALIFORNIA BANKING
CORPORATION
By:________________________________
By:
Title:
WACHOVIA BANK OF GEORGIA, N.A.
By:________________________________
Name: J. Timothy Toler
Title: Vice President
THE NORTHERN TRUST COMPANY
By:________________________________
Name: J. Mark Berry
Title: Vice President
AERIES FINANCE LTD.
By:________________________________
By:
Title:
CRESCENT/MACH I PARTNERS, L.P.
By: TCW Asset Management Company,
its Investment Manager
By:________________________________
Name: Justin Driscoll
Title: Vice President
-151-
<PAGE>
FIRST SOURCE FINANCIAL LLP
By: First Source Financial, Inc.,
its Agent
By:________________________________
Name:
Title:
JACKSON NATIONAL LIFE INSURANCE
COMPANY
By: PPM America, Inc.
as Attorney-in-Fact,
on behalf of Jackson
National Life Insurance
Company
By:________________________________
Name:
Title:
KEYPORT LIFE INSURANCE COMPANY
By:________________________________
Name:
Title:
PRIME INCOME TRUST
By:________________________________
By:
Title:
-152-
<PAGE>
RESTRUCTURED OBLIGATIONS BACKED BY
SENIOR ASSETS, B.V.
By: Its Managing Director, ABN
TRUST COMPANY (NEDERLAND)
B.V.
By:________________________________
Name:
Title:
By:________________________________
Name:
Title:
SENIOR DEBT PORTFOLIO
By: Boston Management and
Research, as Investment
Manager
By:________________________________
Name:
Title:
TCW ASSET MANAGEMENT COMPANY
as Attorney-in-Fact for
Integon Life Insurance Company
By:________________________________
Name: Justin Driscoll
Title: Vice President
TCW ASSET MANAGEMENT COMPANY
as Attorney-in-Fact for
Occidental Life Insurance
Company of North Carolina
By:________________________________
Name: Justin Driscoll
Title: Vice President
-153-
<PAGE>
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST
By:________________________________
Name:
Title:
-154-
<PAGE>
SCHEDULE I
DISCLOSURE SCHEDULE*
- --------
* ITEM NUMBERS ARE KEYED TO REFER TO SECTIONS WHERE THE ITEM
IS PRINCIPALLY REFERRED TO AND WILL HAVE TO BE REVISED AS
SUCH SECTIONS ARE RENUMBERED.
<PAGE>
SCHEDULE II
PROJECT DA VINCI
Da Vinci Project (the "Project") has involved the conversion of Keebler
Company's ("Keebler") computer system from a mainframe to a pre-based platform.
In order to effectuate this conversion, Keebler has purchased an extensive
amount of computer hardware as well as software (together, the "Computer
Equipment") from a variety of independent contractors who have been providing
installation and consulting services in connection with the Project. Several
contractors have proposed sale-leaseback transactions to Keebler with respect to
the Computer Equipment, or specifically enumerate pieces of equipment thereof,
but to date none of these proposals has been accepted by Keebler.
II-1
<PAGE>
SCHEDULE III to
Credit Agreement
PERCENTAGES AND ADMINISTRATIVE INFORMATION
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage of Percentage of Percentage of Percentage of
Revolving Loans Term-A Loans Term-B Loans Term-C Loans
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
THE BANK OF NOVA SCOTIA 8.000077219355% 8.005745310407% 17.823703599135% 20.419504131780%
- -----------------------------------------------------------------------------------------------------------------------------------
DOMESTIC OFFICE: LIBOR OFFICE:
One Liberty Plaza One Liberty Plaza
New York, NY 10006 New York, NY 10006
Facsimile No.: Facsimile No.:
(212) 225-5090 (212) 225-5090
Attention: Attention:
Donald McWeeney Donald McWeeney
- -----------------------------------------------------------------------------------------------------------------------------------
THE FIRST NATIONAL BANK OF 6.097738000000% 6.097362316742% 0.000000000000% 10.980777195686%
CHICAGO
- -----------------------------------------------------------------------------------------------------------------------------------
DOMESTIC OFFICE: LIBOR OFFICE:
One First National Plaza One First National Plaza
Chicago, IL 60670 Chicago, IL 60670
Facsimile No.: Facsimile No.:
(312) 732-4840 (312) 732-4840
Attention: Attention:
Yvette Thompkins Yvette Thompkins
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE III
(cont'd)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage of Percentage of Percentage of Percentage of
Revolving Loans Term-A Loans Term-B Loans Term-C Loans
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PEARL STREET L.P. 5.889296774194% 5.888933936652% 5.000000000000% 5.000000000000%
- -----------------------------------------------------------------------------------------------------------------------------------
DOMESTIC OFFICE: LIBOR OFFICE:
85 Broad Street 85 Broad Street
6th Floor 6th Floor
New York, NY 10004 New York, NY 10004
Facsimile No.: Facsimile No.:
(212) 357-4597 (212) 357-4597
Attention: Attention:
Kathy King Kathy King
- -----------------------------------------------------------------------------------------------------------------------------------
BANK OF MONTREAL 8.529032258065% 8.528506787330% 0.000000000000% 0.000000000000%
- -----------------------------------------------------------------------------------------------------------------------------------
DOMESTIC OFFICE: LIBOR OFFICE:
115 South LaSalle St., 12th Fl. 115 South LaSalle St., 12th Fl.
Chicago, IL 60603 Chicago, IL 60603
Facsimile No.: Facsimile No.:
(312) 750-6057 (312) 750-6057
Attention: Attention:
Marc R. Heyden Marc R. Heyden
Director Director
- -----------------------------------------------------------------------------------------------------------------------------------
BHF-BANK, 8.529032258065% 8.528506787330% 0.000000000000% 0.000000000000%
AKTIENGESELLSCHAFT
</TABLE>
III-2
<PAGE>
SCHEDULE III
(cont'd)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage of Percentage of Percentage of Percentage of
Revolving Loans Term-A Loans Term-B Loans Term-C Loans
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DOMESTIC OFFICE: LIBOR OFFICE:
590 Madison Avenue 590 Madison Avenue
New York, NY 10020 New York, NY 10020
Facsimile No.: Facsimile No.:
(212) 756-5536 (212) 756-5536
Attention: Attention:
Renate Boston Renate Boston
Assistant Treasurer Assistant Treasurer
- -----------------------------------------------------------------------------------------------------------------------------------
NATIONSBANK, N.A. (SOUTH) 6.823225806452% 6.822805429864% 0.000000000000% 0.000000000000%
- -----------------------------------------------------------------------------------------------------------------------------------
DOMESTIC OFFICE: LIBOR OFFICE:
NC1-001-15-03 NC1-001-15-03
One Independence Center One Independence Center
101 North Tryon Street 101 North Tryon Street
Charlotte, NC 28255-0001 Charlotte, NC 28255-0001
Facsimile No.: Facsimile No.:
(704) 386-8694 (704) 386-8694
Attention: Attention:
Judy Dudley Judy Dudley
Corporate Credit Services Corporate Credit Services
- -----------------------------------------------------------------------------------------------------------------------------------
COOPERATIVE CENTRALE 4.435096774194% 4.434823529412% 0.000000000000% 0.000000000000%
RAIFFEISEN-
BOERENLEENBANK,
B.A., New York Branch
</TABLE>
III-3
<PAGE>
SCHEDULE III
(cont'd)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage of Percentage of Percentage of Percentage of
Revolving Loans Term-A Loans Term-B Loans Term-C Loans
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DOMESTIC OFFICE: LIBOR OFFICE:
245 Park Avenue 245 Park Avenue
New York, NY 10167 New York, NY 10167
Facsimile No.: Facsimile No.:
(212) 916-7930 (212) 916-7930
Attention: Attention:
D. Rivers D. Rivers
Corporate Services Dept. Corporate Services Dept.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
III-4
<PAGE>
SCHEDULE III
(cont'd)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage of Percentage of Percentage of Percentage of
Revolving Loans Term-A Loans Term-B Loans Term-C Loans
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BANQUE NATIONALE DE PARIS 3.752774193548% 3.752542986425% 0.000000000000% 0.000000000000%
- -----------------------------------------------------------------------------------------------------------------------------------
DOMESTIC OFFICE: LIBOR OFFICE:
209 S. LaSalle 209 S. LaSalle
Chicago, IL 60604 Chicago, IL 60604
Facsimile No.: Facsimile No.:
(312) 977-1380 (312) 977-1380
Attention: Attention:
Michelle Tolliver Michelle Tolliver
Vice President Vice President
- -----------------------------------------------------------------------------------------------------------------------------------
CIBC INC. 3.752774193548% 3.752542986425% 0.000000000000% 0.000000000000%
- -----------------------------------------------------------------------------------------------------------------------------------
DOMESTIC OFFICE: LIBOR OFFICE:
Two Paces West Two Paces West
2727 Paces Ferry Road 2727 Paces Ferry Road
Suite 1200 Suite 1200
Atlanta, GA 30339 Atlanta, GA 30339
Facsimile No.: Facsimile No.:
(707) 319-4950 (707) 319-4950
Attention: Attention:
Debra Quintero Debra Quintero
Credit Operations Credit Operations
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
III-5
<PAGE>
SCHEDULE III
(cont'd)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage of Percentage of Percentage of Percentage of
Revolving Loans Term-A Loans Term-B Loans Term-C Loans
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
THE FUJI BANK LIMITED 3.752774193548% 3.752542986425% 0.000000000000% 0.000000000000%
- -----------------------------------------------------------------------------------------------------------------------------------
DOMESTIC OFFICE: LIBOR OFFICE:
225 W. Wacker Drive 225 W. Wacker Drive
Suite 2000 Suite 2000
Chicago, IL 60606 Chicago, IL 60606
Facsimile No.: Facsimile No.:
(312) 621-0539/419-3677 (312) 621-0539/419-3677
Attention: Attention:
Cely Navarro Cely Navarro
- -----------------------------------------------------------------------------------------------------------------------------------
COMERICA BANK 3.752774193548% 3.752542986425% 0.000000000000% 0.000000000000%
- -----------------------------------------------------------------------------------------------------------------------------------
DOMESTIC OFFICE: LIBOR OFFICE:
4747 West Dempster Street P.O. Box 75000
Skokie, IL 60076 Detroit, MI 48275-3269
Facsimile No.: Facsimile No.:
(708) 933-2209 (313) 222-3351
Attention: Attention:
Gregory N. Block Beverly Jones
- -----------------------------------------------------------------------------------------------------------------------------------
ABN AMRO BANK N.V., 3.752774193548% 3.752542986425% 0.000000000000% 0.000000000000%
NEW YORK BRANCH
- -----------------------------------------------------------------------------------------------------------------------------------
DOMESTIC OFFICE: LIBOR OFFICE:
500 Park Avenue 500 Park Avenue
New York, NY 10022 New York, NY 10022
Facsimile No.: Facsimile No.:
(212) 754-6114 (212) 754-6114
Attention: Attention:
Barbara Tsiakaros Barbara Tsiakaros
</TABLE>
III-6
<PAGE>
SCHEDULE III
(cont'd)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage of Percentage of Percentage of Percentage of
Revolving Loans Term-A Loans Term-B Loans Term-C Loans
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SOCIETE GENERALE 3.752774193548% 3.752542986425% 0.000000000000% 0.000000000000%
- -----------------------------------------------------------------------------------------------------------------------------------
DOMESTIC OFFICE: LIBOR OFFICE:
1221 Avenue of the Americas 1221 Avenue of the Americas
New York, NY 10020 New York, NY 10020
Facsimile No.: Facsimile No.:
(212) 278-6178 (212) 278-6178
Attention: Attention:
Erick Rinner Erick Rinner
Ricky Tretola Ricky Tretola
- -----------------------------------------------------------------------------------------------------------------------------------
SUNTRUST BANK, ATLANTA 3.411612903226% 3.411402714932% 0.000000000000% 0.000000000000%
- -----------------------------------------------------------------------------------------------------------------------------------
DOMESTIC OFFICE: LIBOR OFFICE:
P.O. Box 4418 P.O. Box 4418
Mail Code 126 Mail Code 126
Atlanta, GA 30302-4418 Atlanta, GA 30302-4418
Facsimile No.: Facsimile No.:
(404) 588-8833 (404) 588-8833
Attention: Attention:
Tom Banks Tom Banks
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
III-7
<PAGE>
SCHEDULE III
(cont'd)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage of Percentage of Percentage of Percentage of
Revolving Loans Term-A Loans Term-B Loans Term-C Loans
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
THE LONG-TERM CREDIT 3.411612903226% 3.411402714932% 0.000000000000% 0.000000000000%
BANK OF JAPAN, LTD.
- -----------------------------------------------------------------------------------------------------------------------------------
DOMESTIC OFFICE: LIBOR OFFICE:
190 South LaSalle Street 190 South LaSalle Street
Suite 800 Suite 800
Chicago, IL 60603 Chicago, IL 60603
Facsimile No.: Facsimile No.:
(312) 704-8505 (312) 704-8505
Attention: Attention:
Jon C. Otterberg Jon C. Otterberg
Assistant Vice President Assistant Vice President
- -----------------------------------------------------------------------------------------------------------------------------------
HIBERNIA NATIONAL BANK 3.411612903226% 3.411402714932% 0.000000000000% 0.000000000000%
- -----------------------------------------------------------------------------------------------------------------------------------
DOMESTIC OFFICE: LIBOR OFFICE:
313 Carondelet Street 313 Carondelet Street
New Orleans, LA 70130 New Orleans, LA 70130
Facsimile No.: Facsimile No.:
(504) 533-5344 (504) 533-5344
Attention: Attention:
Colleen Lacy Colleen Lacy
National Accounts National Accounts
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
III-8
<PAGE>
SCHEDULE III
(cont'd)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage of Percentage of Percentage of Percentage of
Revolving Loans Term-A Loans Term-B Loans Term-C Loans
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BANQUE FRANCAISE DU 3.411612903226% 3.411402714932% 0.000000000000% 0.000000000000%
COMMERCE EXTERIEUR
- -----------------------------------------------------------------------------------------------------------------------------------
DOMESTIC OFFICE: LIBOR OFFICE:
645 Fifth Avenue 645 Fifth Avenue
New York, NY 10022 New York, NY 10022
Facsimile No.: Facsimile No.:
(212) 872-5045 (212) 872-5045
Attention: Attention:
Pieter van Tulder Pieter van Tulder
- -----------------------------------------------------------------------------------------------------------------------------------
GENERALE BANK, 3.411612903226% 3.411402714932% 0.000000000000% 0.000000000000%
NEW YORK BRANCH
- -----------------------------------------------------------------------------------------------------------------------------------
DOMESTIC OFFICE: LIBOR OFFICE:
520 Madison Avenue 520 Madison Avenue
New York, NY 10022 New York, NY 10022
Facsimile No.: Facsimile No.:
(212) 750-9597 (212) 750-9597
Attention: Attention:
Florence J. Mauchant Florence J. Mauchant
- -----------------------------------------------------------------------------------------------------------------------------------
CITIBANK, N.A. 1.364645161290% 1.364561085973% 3.338898163606% 3.081664098613%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
III-9
<PAGE>
SCHEDULE III
(cont'd)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage of Percentage of Percentage of Percentage of
Revolving Loans Term-A Loans Term-B Loans Term-C Loans
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DOMESTIC OFFICE: LIBOR OFFICE:
One Court Square One Court Square
7th Floor 7th Floor
Long Island City, NY 11120 Long Island City, NY 11120
Facsimile No.: Facsimile No.:
(718) 248-4844/45 (718) 248-4844/45
Attention: Attention:
Larry Benison Larry Benison
</TABLE>
III-10
<PAGE>
SCHEDULE III
(cont'd)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage of Percentage of Percentage of Percentage of
Revolving Loans Term-A Loans Term-B Loans Term-C Loans
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BANK OF AMERICA ILLINOIS 2.558709677419% 2.558552036199% 0.000000000000% 0.000000000000%
- -----------------------------------------------------------------------------------------------------------------------------------
DOMESTIC OFFICE: LIBOR OFFICE:
231 S. LaSalle Street 231 LaSalle Street
Chicago, IL 60657 Chicago, IL 60657
Facsimile No.: Facsimile No.:
(312) 828-7448 (312) 828-5100
Attention: Attention:
Pamela E. Minish Susan Martin/
Angelina Menarrez
- ----------------------------------------------------------------------------------------------------------------------------------
IMPERIAL BANK, A CALIFORNIA 2.164209980645% 2.164076647964% 0.000000000000% 0.000000000000%
BANKING CORPORATION
- -----------------------------------------------------------------------------------------------------------------------------------
DOMESTIC OFFICE: LIBOR OFFICE:
9920 South La Cienega Blvd. 9920 South La Cienega Blvd.
Suite 1015 Suite 1015
Inglewood, CA 90301 Inglewood, CA 90301
Facsimile No.: Facsimile No.:
(310) 417-5997 (310) 417-5997
Attention: Attention:
Judy Varner Judy Varner
Assistant Vice President Assistant Vice President
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
III-11
<PAGE>
SCHEDULE III
(cont'd)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage of Percentage of Percentage of Percentage of
Revolving Loans Term-A Loans Term-B Loans Term-C Loans
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
WACHOVIA BANK OF GEORGIA, 2.164209980645% 2.164076640724% 0.000000000000% 0.000000000000%
N.A.
- -----------------------------------------------------------------------------------------------------------------------------------
DOMESTIC OFFICE: LIBOR OFFICE:
Southeast Corporate Division Southeast Corporate Division
191 Peachtree Street, N.E. 191 Peachtree Street, N.E.
Atlanta, GA 30303 Atlanta, GA 30303
Facsimile No: Facsimile No:
(404) 332-5016 (404) 332-5016
Attention: Attention:
J. Timothy Toler J. Timothy Toler
Vice President Vice President
- -----------------------------------------------------------------------------------------------------------------------------------
THE NORTHERN TRUST COMPANY 2.164209980645% 2.164076640724% 0.000000000000% 0.000000000000%
- -----------------------------------------------------------------------------------------------------------------------------------
DOMESTIC OFFICE: LIBOR OFFICE:
50 South LaSalle Street 50 South LaSalle Street
Chicago, IL 60675 Chicago, IL 60675
Inglewood, CA 90301 Inglewood, CA 90301
Facsimile No.: Facsimile No.:
(312) 444-5055 (312) 444-5055
Attention: Attention:
Diane Baer Diane Baer
- -----------------------------------------------------------------------------------------------------------------------------------
AERIES FINANCE LTD. 0.000000000000% 0.000000000000% 2.013095763501% 2.677281739621%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
III-12
<PAGE>
SCHEDULE III
(cont'd)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage of Percentage of Percentage of Percentage of
Revolving Loans Term-A Loans Term-B Loans Term-C Loans
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LIBOR OFFICE:
Aries Finance Ltd.
c/o Centurion Management
Services Ltd.
Centurion House
Beresford Street
St. Heller, Jersey JE4 8ZZ
Channel Islands, Great Britain
- -----------------------------------------------------------------------------------------------------------------------------------
CRESCENT/MACH I PARTNERS, L.P. 0.000000000000% 0.000000000000% 5.815692821369% 5.816024653313%
- -----------------------------------------------------------------------------------------------------------------------------------
DOMESTIC OFFICE: LIBOR OFFICE:
TCW Asset Management Company TCW Asset Management Company
200 Park Avenue, Suite 2200 200 Park Avenue, Suite 2200
New York, NY 10166-0228 New York, NY 10166-0228
Facsimile No.: Facsimile No.:
(212) 297-4159 (212) 297-4159
Attention: Attention:
Mark L. Gold Mark L. Gold
Justin Driscoll Justin Driscoll
- -----------------------------------------------------------------------------------------------------------------------------------
With copies to:
Crescent/Mach I Partners, L.P.
c/o State Street Bank & Trust Co.
Two International Place
Boston, MA 02110
Facsimile No.:
(617) 664-5366
Attention:
Jackie Sweeney
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
III-13
<PAGE>
SCHEDULE III
(cont'd)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage of Percentage of Percentage of Percentage of
Revolving Loans Term-A Loans Term-B Loans Term-C Loans
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FIRST SOURCE FINANCIAL, LLP 1.705806451613% 1.705701357466% 5.564830272677% 0.000000000000%
- -----------------------------------------------------------------------------------------------------------------------------------
DOMESTIC OFFICE: LIBOR OFFICE:
2850 W. Golf Road 2850 W. Golf Road,
5th Floor 5th Floor
Rolling Meadows, IL 60008 Rolling Meadows, IL 60008
Facsimile No.: Facsimile No.:
(847) 734-7910 (847) 734-7910
Attention: Attention:
Janet Haack Janet Haack
Loan Administration Loan Administration
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
III-14
<PAGE>
SCHEDULE III
(cont'd)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage of Percentage of Percentage of Percentage of
Revolving Loans Term-A Loans Term-B Loans Term-C Loans
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
JACKSON NATIONAL LIFE 0.000000000000% 0.000000000000% 14.862326099054% 14.216949152542%
INSURANCE COMPANY
- -----------------------------------------------------------------------------------------------------------------------------------
DOMESTIC OFFICE: LIBOR OFFICE:
PPM AMERICA INC. PPM AMERICA INC.
225 West Wacker Drive 225 West Wacker Drive
Suite 1200 Suite 1200
Chicago, IL 60606-1228 Chicago, IL 60606-1228
Facsimile No.: Facsimile No.:
(312) 634-0054 (312) 634-0054
Attention: Attention:
Michael DiRe Michael DiRe
Guy Petrelli Guy Petrelli
Private Placements Private Placements
- -----------------------------------------------------------------------------------------------------------------------------------
With copies to:
Oscell Owens, Northern Trust
801 S. Canal, Floor C1N
Chicago, IL 60607
Facsimile No.:
(312) 630-8179
Attention:
Operations Contact
</TABLE>
III-15
<PAGE>
SCHEDULE III
(cont'd)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage of Percentage of Percentage of Percentage of
Revolving Loans Term-A Loans Term-B Loans Term-C Loans
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
KEYPORT LIFE INSURANCE 0.000000000000% 0.000000000000% 4.551789782972% 7.052208551618%
COMPANY
- -----------------------------------------------------------------------------------------------------------------------------------
DOMESTIC OFFICE: LIBOR OFFICE:
125 High Street 125 High Street
Boston, MA 02110 Boston, MA 02110
Facsimile No.: Facsimile No.:
(617) 526-1769 (617) 526-1769
Attention: Attention:
Dan Yin Dan Yin
AVP-Investments AVP-Investments
- -----------------------------------------------------------------------------------------------------------------------------------
PRIME INCOME TRUST 0.000000000000% 0.000000000000% 11.867556961603% 12.481403805855%
- -----------------------------------------------------------------------------------------------------------------------------------
DOMESTIC OFFICE: LIBOR OFFICE:
2 World Trade Center 2 World Trade Center
72nd Floor 72nd Floor
New York, NY 10048 New York, NY 10048
Facsimile No.: Facsimile No.:
(212) 392-5345 (212) 392-5345
Attention: Attention:
April Chrysostomas April Chrysostomas
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
III-16
<PAGE>
SCHEDULE III
(cont'd)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage of Percentage of Percentage of Percentage of
Revolving Loans Term-A Loans Term-B Loans Term-C Loans
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
RESTRUCTURED OBLIGATIONS 0.000000000000% 0.000000000000% 4.108359380046 0.000000000000%
BACKED BY SENIOR ASSETS, B.V.
- -----------------------------------------------------------------------------------------------------------------------------------
DOMESTIC OFFICE: LIBOR OFFICE:
c/o State Street Bank and c/o State Street Bank
Trust Company and Trust Company
Corporate Trust Department Corporate Trust Department
2 International Place 2 International Place
Boston, MA 02110 Boston, MA 02110
Facsimile No.: Facsimile No.:
(617) 664-5366 (617) 664-5366
Attention: Attention:
Michael Abril Michael Abril
- -----------------------------------------------------------------------------------------------------------------------------------
SENIOR DEBT PORTFOLIO 0.000000000000% 0.000000000000% 12.267325341903% 11.322876963730%
- -----------------------------------------------------------------------------------------------------------------------------------
DOMESTIC OFFICE: LIBOR OFFICE:
c/o Boston Management & Research c/o Boston Management & Research
24 Federal Street 24 Federal Street
6th Floor 6th Floor
Boston, MA 02110 Boston, MA 02110
Facsimile No.: Facsimile No.:
(617) 695-9594 (617) 695-9594
Attention: Attention:
Philip C. Robbins Philip C. Robbins
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
III-17
<PAGE>
SCHEDULE III
(cont'd)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage of Percentage of Percentage of Percentage of
Revolving Loans Term-A Loans Term-B Loans Term-C Loans
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEGON LIFE INSURANCE 0.000000000000% 0.000000000000% 3.230940456316% 3.231124807396%
CORPORATION
- -----------------------------------------------------------------------------------------------------------------------------------
DOMESTIC OFFICE: LIBOR OFFICE:
Conning & Company Conning & Company
CityPlace II CityPlace II
185 Asylum Street 185 Asylum Street
Hartford, Connecticut 06103 Hartford, Connecticut 06103
Facsimile No.: Facsimile No.:
(212) 758-5442 (212) 758-5442
Attention: Attention:
Laurie Ereshena Laurie Ereshena
- -----------------------------------------------------------------------------------------------------------------------------------
With copies to:
TCW Asset Management Company 200 Park Avenue, Suite 2200
New York, NY 10166-0228 Facsimile No.:
(212) 297-4159
Attention:
Mark L. Gold
Justin Driscoll
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
III-18
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage of Percentage of Percentage of Percentage of
Revolving Loans Term-A Loans Term-B Loans Term-C Loans
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OCCIDENTAL LIFE INSURANCE 0.000000000000% 0.000000000000% 0.646188091263% 0.646224961479%
COMPANY OF NORTH CAROLINA
- -----------------------------------------------------------------------------------------------------------------------------------
DOMESTIC OFFICE: LIBOR OFFICE:
Conning & Company Conning & Company
CityPlace II CityPlace II
185 Asylum Street 185 Asylum Street
Hartford, Connecticut 06103 Hartford, Connecticut 06103
Facsimile No.: Facsimile No.:
(212) 758-5442 (212) 758-5442
Attention: Attention:
Laurie Ereshena Laurie Ereshena
- -----------------------------------------------------------------------------------------------------------------------------------
VAN KAMPEN AMERICAN CAPITAL 0.000000000000% 0.000000000000% 8.909293266555% 3.073959938367%
PRIME RATE INCOME TRUST
- -----------------------------------------------------------------------------------------------------------------------------------
DOMESTIC OFFICE: LIBOR OFFICE:
One Parkview Plaza One Parkview Plaza
Oakbrook Terrace, IL 60181 Oakbrook Terrace, IL 60181
Fax: (708) 684-6740/6741 Fax: (708) 684-6740/6741
Attention: Attention:
Jeffrey Maillet Jeffrey Maillet
Senior Vice President Senior Vice President
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
III-19
<PAGE>
SCHEDULE IV
--------------------------------------------------------
FISCAL QUARTERS
--------------------------------------------------------
1996
--------------------------------------------------------
1/26/96 through (and including) 04/20/96
4/21/96 through (and including) 07/13/96
07/14/96 through (and including) 10/05/96
10/06/96 through (and including) 12/28/96
--------------------------------------------------------
1997
--------------------------------------------------------
12/29/96 through (and including) 04/19/97
04/20/97 through (and including) 07/12/97
07/13/97 through (and including) 10/04/97
10/05/97 through (and including) 01/03/98
--------------------------------------------------------
1998
--------------------------------------------------------
01/04/98 through (and including) 04/25/98
04/26/98 through (and including) 07/18/98
07/19/98 through (and including) 10/10/98
10/11/98 through (and including) 01/02/99
--------------------------------------------------------
1999
--------------------------------------------------------
01/03/99 through (and including) 04/24/99
04/25/99 through (and including) 07/17/99
07/18/99 through (and including) 10/09/99
10/10/99 through (and including) 01/01/00
--------------------------------------------------------
2000
--------------------------------------------------------
01/02/00 through (and including) 04/22/00
04/23/00 through (and including) 07/15/00
07/16/00 through (and including) 10/07/00
10/08/00 through (and including) 12/30/00
--------------------------------------------------------
2001
--------------------------------------------------------
12/31/00 through (and including) 04/21/01
04/22/01 through (and including) 07/14/01
07/15/01 through (and including) 10/06/01
<PAGE>
10/07/01 through (and including) 12/29/01
--------------------------------------------------------
2002
--------------------------------------------------------
12/30/01 through (and including) 04/20/02
04/21/02 through (and including) 07/13/02
07/14/02 through (and including) 10/05/02
10/06/02 through (and including) 12/28/02
--------------------------------------------------------
2003
--------------------------------------------------------
12/29/02 through (and including) 04/19/03
04/20/03 through (and including) 07/12/03
07/13/03 through (and including) 10/04/03
10/05/03 through (and including) 01/03/04
--------------------------------------------------------
2004
--------------------------------------------------------
01/04/04 through (and including) 04/24/04
04/25/04 through (and including) 07/17/04
07/18/04 through (and including) 10/09/04
10/10/04 through (and including) 01/01/05
--------------------------------------------------------
2005
--------------------------------------------------------
01/02/05 through (and including) 04/23/05
04/24/05 through (and including) 07/16/05
07/17/05 through (and including) 10/08/05
10/09/05 through (and including) 12/31/05
--------------------------------------------------------
2006
--------------------------------------------------------
01/01/06 through (and including) 04/22/06
04/23/06 through (and including) 07/15/06
07/16/06 through (and including) 10/07/06
10/08/06 through (and including) 12/30/06
--------------------------------------------------------
2007
--------------------------------------------------------
12/31/06 through (and including) 04/21/07
04/22/07 through (and including) 07/14/07
07/15/07 through (and including) 10/06/07
10/07/07 through (and including) 12/29/07
IV-2
<PAGE>
SCHEDULE V
ITEM A: Existing Letters of Credit.
Beneficiary Stated Amount Date of Issuance Expiry Date
- ----------- ------------- ---------------- -----------
Fort Wayne $514,962 March 13, 1996 February 15, 1997
National Bank
First Trust of $571,047 March 13, 1996 February 15, 1997
Illinois,
National
Association
First Trust of $1,014,628 March 13, 1996 February 15, 1997
Illinois,
National
Association
First Trust of $3,823,973 March 13, 1996 February 15, 1997
Illinois,
National
Association
First-Citizens $4,977,000 April 25, 1996 April 25, 1997
Bank & Trust
Company
ITEM B: Existing Swing Line Loans.
$0
ITEM C: Outstanding Existing Loans.
1. Existing Revolving Loans.
$0
2. Existing Term-A Loans.
$98,125,000
3. Existing Term-B Loans.
$59,850,000
4. Existing Term-C Loans.
<PAGE>
$39,900,000
V-2
<PAGE>
SCHEDULE VIII to
Credit Agreement
Amendment Fee
Lenders Calculation Amount
- ------- ------------------
THE BANK OF NOVA SCOTIA $31,311,344.21
THE FIRST NATIONAL BANK OF CHICAGO $17,373,170.73
PEARL STREET L.P. $17,373,170.73
BANK OF MONTREAL $17,339,939.02
BHF-BANK, AKTIENGESELLSCHAFT $17,339,939.02
NATIONSBANK, N.A. (SOUTH) $9,908,536.59
COOPERATIVE CENTRALE RAIFFEISEN-BOERENLEENBANK,
B.A., NEW YORK BRANCH $11,890,243.90
BANQUE NATIONALE DE PARIS $6,935,975.61
CIBC INC. $9,908,536.59
THE FUJI BANK, LIMITED $9,413,109.76
COMERICA BANK $6,935,975.61
ABN AMRO BANK N.V., NEW YORK BRANCH $9,908,536.59
SOCIETE GENERALE $9,908,536.59
SUNTRUST BANK, ATLANTA $6,935,975.61
THE LONG-TERM CREDIT BANK OF JAPAN, LTD. $6,935,975.61
HIBERNIA NATIONAL BANK $6,935,975.61
BANQUE FRANCAISE DU COMMERCE EXTERIOR $6,935,975.61
GENERALE BANK, NEW YORK BRANCH $6,935,975.61
CITIBANK, N.A. $4,987,500.00
BANK OF AMERICA ILLINOIS $7,500,000.00
IMPERIAL BANK, A CALIFORNIA BANKING CORPORATION $4,954,268.30
WACHOVIA BANK OF GEORGIA, N.A. $0.00
THE NORTHERN TRUST COMPANY $0.00
SENIOR DEBT PORTFOLIO $18,370,738.97
RESTRUCTURED OBLIGATIONS BACKED
BY SENIOR ASSETS, B.V. $3,691,360.90
AERIES FINANCE LTD. $3,546,322.39
KEYPORT LIFE INSURANCE COMPANY $5,541,666.44
CRESCENT/MACH I PARTNERS, L.P. $3,491,250.00
INTEGON LIFE INSURANCE COMPANY $2,493,750.00
JACKSON NATIONAL LIFE INSURANCE COMPANY $14,131,250.00
PRIME INCOME TRUST $13,965,000.00
FIRST SOURCE FINANCIAL LLP $4,987,500.00
VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME TRUST $4,987,500.00
==============
TOTAL $302,875,000.00
Exhibit 10.7(a)
[EXECUTION COPY]
BORROWER SECURITY AGREEMENT
This SECURITY AGREEMENT (this "Security Agreement"), dated as of January
26, 1996, is made by KEEBLER ACQUISITION CORP., a Delaware corporation (to be
merged with and into UB Investments US Inc. and to become known as Keebler
Holding Corp.) (the "Grantor"), in favor of THE BANK OF NOVA SCOTIA, as
administrative agent (together with any successor(s) thereto in such capacity,
the "Administrative Agent") for each of the Lender Parties (as defined below).
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement, dated as of January 26, 1996, (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Credit Agreement"), among the Grantor, the various financial
institutions as are, or may from time to time become, parties thereto (the
"Lenders"), the Co-Agents named therein and the Administrative Agent, the
Lenders and the Issuer have extended Commitments to make Credit Extensions to
the Grantor; and
WHEREAS, as a condition precedent to the making of each Credit Extension
(including the initial Credit Extension) under the Credit Agreement, the Grantor
is required to execute and deliver this Security Agreement; and
WHEREAS, the Grantor has duly authorized the execution, delivery and
performance of this Security Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce the Lenders
and the Issuer to make each Credit Extension (including the initial Credit
Extension) to the Grantor pursuant to the Credit Agreement, the Grantor agrees,
for the benefit of each Lender Party, as follows:
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Terms. The following terms (whether or not
underscored) when used in this Security Agreement, including its preamble and
recitals, shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof):
"Administrative Agent" is defined in the preamble.
"Collateral" is defined in Section 2.1.
"Collateral Account" is defined in Section 4.1.2(c).
"Computer Hardware and Software Collateral" means:
(a) all computer and other electronic data processing hardware,
integrated computer systems, central processing units, memory units,
display terminals, printers, features, computer elements, card readers,
tape drives, hard and soft disk drives, cables, electrical supply hardware,
generators, power equalizers, accessories and all peripheral devices and
other related computer hardware;
(b) all software programs (including both source code, object code and
all related applications and data files), whether now owned, licensed or
leased or hereafter acquired by the Grantor, designed for use on the
computers and electronic data processing hardware described in clause (a)
above;
(c) all firmware associated therewith;
(d) all documentation (including flow charts, logic diagrams, manuals,
guides and specifications) with respect to such hardware, software and
firmware described in the preceding clauses (a) through (c); and
(e) all rights with respect to all of the foregoing, including,
without limitation, any and all copyrights, licenses, options, warranties,
service contracts, program services, test rights, maintenance rights,
support rights, improvement rights, renewal rights and indemnifications and
any substitutions, replacements, additions or model conversions of any of
the foregoing.
"Copyright Collateral" means:
(a) all copyrights (including without limitation copyrights for
semi-conductor chip product mask works) of
-2-
<PAGE>
the Grantor, whether statutory or common law, registered or unregistered,
now or hereafter in force throughout the world including, without
limitation, all of the Grantor's right, title and interest in and to all
copyrights registered in the United States Copyright Office or anywhere
else in the world and also including, without limitation, the copyrights
referred to in Item A of Schedule IV attached hereto, and all applications
for registration thereof (including pending applications), including the
copyright registrations and applications referred to in Item A of Schedule
IV attached hereto, if any, and all copyrights resulting from such
applications;
(b) all extensions and renewals of any thereof;
(c) all copyright licenses and other agreements providing the Grantor
with the right to use any of the items of the type referred to in clauses
(a) and (b), including each copyright license referred to in Item B of
Schedule IV attached hereto, if any;
(d) the right to sue for past, present and future infringements of any
of the Copyright Collateral referred to in clauses (a) and (b) and, to the
extent applicable, clause (c); and
(e) all proceeds of the foregoing, including, without limitation,
licenses, royalties, income, payments, claims, damages and proceeds of suit
and all rights corresponding thereto throughout the world.
"Credit Agreement" is defined in the first recital.
"Deposit Accounts" means any and all demand, time, savings, passbook or
other accounts with a bank or other financial institution, including general
deposit and cash concentration accounts, in which any cash, payments or receipts
of or for the benefit of the Grantor are or are to be deposited, and all
deposits therein and investments thereof, whether now or at any time hereafter
existing.
"Equipment" is defined in clause (a) of Section 2.1.
"Grantor" is defined in the preamble.
"Intellectual Property Collateral" means, collectively, the Computer
Hardware and Software Collateral, the Copyright Collateral, the Patent
Collateral, the Trademark Collateral and the Trade Secrets Collateral.
"Inventory" is defined in clause (b) of Section 2.1
-3-
<PAGE>
"Lender Party" means, as the context may require, each Lender, the Issuer,
each Co-Agent and the Administrative Agent and each of its respective
successors, transferees and assigns.
"Lenders" is defined in the first recital.
"Patent Collateral" means:
(a) all letters patent and applications for letters patent throughout
the world and including each patent and patent application referred to in
Item A of Schedule II attached hereto;
(b) all reissues, divisions, continuations, continuations-in-part,
extensions, renewals and reexaminations of any of the items described in
clause (a);
(c) all patent licenses and other agreements providing the Grantor
with the right to use any of the items of the type referred to in clauses
(a) and (b), including each patent license referred to in Item B of
Schedule II attached hereto;
(d) the right to sue third parties for past, present or future
infringements of any Patent Collateral described in clauses (a) and (b)
and, to the extent applicable, clause (c); and
(e) all proceeds of, and rights associated with, the foregoing
(including license royalties and proceeds of infringement suits), and all
rights corresponding thereto throughout the world.
"Receivables" is defined in clause (c) of Section 2.1.
"Related Contracts" is defined in clause (c) of Section 2.1.
"Security Agreement" is defined in the preamble.
"Trademark Collateral" means:
(a) all trademarks, trade names, trade dress, service marks, logos,
other source of business identifiers, and designs (all of the foregoing
items in this clause (a) being collectively called a "Trademark"), now
existing in the United States or hereafter adopted or acquired in the
United States, and all registrations and recordings thereof and all
applications in connection therewith, including registrations, recordings
and applications in the United States Patent and Trademarks Office,
including those referred to in Item A of Schedule III attached hereto, and
all renewals thereof;
-4-
<PAGE>
(b) all Trademark licenses and other agreements providing the Grantor
with the right to use any items of the type described in clause (a),
including each Trademark license referred to in Item B of Schedule III
attached hereto;
(c) all of the goodwill of the business connected with the use of, and
symbolized by the items described in, clause (a);
(d) the right to sue third parties for past, present and future
infringements of any Trademark Collateral described in clause (a) and, to
the extent applicable, clause (b); and
(e) all proceeds of, and rights associated with, the foregoing,
including any claim by the Grantor against third parties for past, present
or future infringement or dilution of any Trademark, Trademark registration
or Trademark license, including any Trademark, Trademark registration or
Trademark license referred to in Item A and Item B of Schedule III attached
hereto, or for any injury to the goodwill associated with the use of any
such Trademark or for breach or enforcement of any Trademark license and
all rights corresponding thereto throughout the world.
"Trade Secrets Collateral" means all common law and statutory trade secrets
and all other confidential or proprietary or useful information (to the extent
such confidential, proprietary or useful information is protected by the Grantor
against disclosure and is not readily ascertainable) and all know-how obtained
by or used in or contemplated at any time for use in the business of the Grantor
(all of the foregoing being collectively called a "Trade Secret"), whether or
not such Trade Secret has been reduced to a writing or other tangible form,
including all documents and things embodying, incorporating or referring in any
way to such Trade Secret, all Trade Secret licenses, including each Trade Secret
license referred to in Schedule V attached hereto, and including the right to
sue for and to enjoin and to collect damages for the actual or threatened
misappropriation of any Trade Secret and for the breach or enforcement of any
such Trade Secret license.
"U.C.C." means the Uniform Commercial Code, as in effect in the State of
New York.
SECTION 1.2. Credit Agreement Definitions. Unless otherwise defined herein
or the context otherwise requires, terms used in this Security Agreement,
including its preamble and recitals, have the meanings provided in the Credit
Agreement.
-5-
<PAGE>
SECTION 1.3. U.C.C. Definitions. Unless otherwise defined herein or the
context otherwise requires, terms for which meanings are provided in the U.C.C.
are used in this Security Agreement, including its preamble and recitals, with
such meanings.
ARTICLE II
SECURITY INTEREST
SECTION 2.1. Grant of Security. The Grantor hereby assigns and pledges to
the Administrative Agent for its benefit and the ratable benefit of each of the
Lender Parties, and hereby grants to the Administrative Agent for its benefit
and the ratable benefit of each of the Lender Parties a security interest in,
all of the following, whether now or hereafter existing or acquired (the
"Collateral"):
(a) all equipment in all of its forms of the Grantor, wherever
located, including all parts thereof and all accessions, additions,
attachments, improvements, substitutions and replacements thereto and
therefor (any and all of the foregoing being the "Equipment");
(b) all inventory in all of its forms of the Grantor, wherever
located, including
(i) all raw materials and work in process therefor, finished
goods thereof, and materials used or consumed in the manufacture or
production thereof,
(ii) all goods in which the Grantor has an interest in mass or a
joint or other interest or right of any kind (including goods in which
the Grantor has an interest or right as consignee), and
(iii) all goods which are returned to or repossessed by the
Grantor,
and all accessions thereto, products thereof and documents therefor (any
and all such inventory, materials, goods, accessions, products and
documents being the "Inventory");
(c) all accounts, contracts, contract rights, chattel paper,
documents, and general intangibles of the Grantor, whether or not arising
out of or in connection with the sale or lease of goods or the rendering of
services, and all rights of the Grantor now or hereafter existing in and to
all security agreements, guaranties, leases and other contracts securing or
otherwise relating to any such accounts, contracts, contract rights,
chattel paper,
-6-
<PAGE>
documents, instruments, and general intangibles (any and all such accounts,
contracts, contract rights, chattel paper, documents, instruments, and
general intangibles being the "Receivables", and any and all such security
agreements, guaranties, leases and other contracts being the "Related
Contracts");
(d) all Intellectual Property Collateral of the Grantor;
(e) all books, records, writings, data bases, information and other
property relating to, used or useful in connection with, evidencing,
embodying, incorporating or referring to, any of the foregoing in this
Section 2.1;
(f) all of the Grantor's other property and rights of every kind and
description and interests therein (including all Deposit Accounts); and
(g) all products, offspring, rents, issues, profits, returns, income
and proceeds of and from any and all of the foregoing Collateral (including
proceeds which constitute property of the types described in clauses (a),
(b), (c), (d), (e) and (f), proceeds deposited from time to time in the
Collateral Account and in any lock boxes of the Grantor, and, to the extent
not otherwise included, all payments under insurance (whether or not the
Administrative Agent is the loss payee thereof), or any indemnity, warranty
or guaranty, payable by reason of loss or damage to or otherwise with
respect to any of the foregoing Collateral).
Notwithstanding the foregoing, "Collateral" shall not include any general
intangibles or other rights arising under contracts as to which the grant of a
security interest would constitute a violation of a valid and enforceable
restriction on such grant, unless and until any required consents shall have
been obtained. The Grantor agrees to use its best efforts to obtain any such
required consent to the extent reasonably requested by the Administrative Agent.
SECTION 2.2. Security for Obligations. This Security Agreement secures the
payment of all Obligations now or hereafter existing under the Credit Agreement,
the Notes and each other Loan Document to which the Grantor is or may become a
party, whether for principal, interest, costs, fees, expenses or otherwise.
SECTION 2.3. Continuing Security Interest; Transfer of Notes. This Security
Agreement shall create a continuing security interest in the Collateral and
shall
-7-
<PAGE>
(a) remain in full force and effect until payment in full of all
Obligations and the termination of all Commitments,
(b) be binding upon the Grantor, its successors, transferees and
assigns, and
(c) inure, together with the rights and remedies of the Administrative
Agent hereunder, to the benefit of the Administrative Agent and each other
Lender Party.
Without limiting the generality of the foregoing clause (c), any Lender may
assign or otherwise transfer (in whole or in part) any Note or Loan held by it
to any other Person or entity, and such other Person or entity shall thereupon
become vested with all the rights and benefits in respect thereof granted to
such Lender under any Loan Document (including this Security Agreement) or
otherwise, subject, however, to any contrary provisions in such assignment or
transfer, and to the provisions of Section 10.11 and Article IX of the Credit
Agreement. Upon (i) the sale, transfer or other disposition of Collateral in
accordance with the Credit Agreement or (ii) the payment in full of all
Obligations, the termination or expiration of all Letters of Credit and the
termination of all Commitments, the security interest granted herein shall
automatically terminate with respect to (x) such Collateral (in the case of
clause (i)) or (y) all Collateral (in the case of clause (ii)). Upon any such
termination, the Administrative Agent will, at the Grantor's sole expense,
execute and deliver to the Grantor such documents as the Grantor shall
reasonably request to evidence such termination.
SECTION 2.4. Grantor Remains Liable. Anything herein to the contrary
notwithstanding
(a) the Grantor shall remain liable under the contracts and agreements
included in the Collateral to the extent set forth therein, and shall
perform all of its duties and obligations under such contracts and
agreements to the same extent as if this Security Agreement had not been
executed,
(b) the exercise by the Administrative Agent of any of its rights
hereunder shall not release the Grantor from any of its duties or
obligations under any such contracts or agreements included in the
Collateral, and
(c) neither the Administrative Agent nor any other Lender Party shall
have any obligation or liability under any such contracts or agreements
included in the Collateral by reason of this Security Agreement, nor shall
the Administrative Agent or any other Lender Party be obligated to perform
any of the obligations or duties of the Grantor
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thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties. The Grantor represents and
warrants unto each Lender Party as set forth in this Article.
SECTION 3.1.1. Location of Collateral, etc. All of the Equipment and
Inventory (other than Inventory in transit) of the Grantor are located at the
places specified in Item A and Item B, respectively, of Schedule I hereto, and
at such other locations as are notified to the Administrative Agent pursuant to
clause (a) of Section 4.1.2. The place(s) of business and chief executive office
of the Grantor and the office(s) where the Grantor keeps its records concerning
the Receivables, and all originals of all chattel paper which evidence
Receivables, are located at the address as set forth in Item C of Schedule I
hereto, and at such other locations as are notified to the Administrative Agent
pursuant to clause (a) of Section 4.1.2. As of the date hereof, the Grantor has
no trade name, except as set forth in Item D of Schedule I hereto. During the
four months preceding the date hereof, the Grantor has not been known by any
legal name different from the one set forth on the signature page hereto, nor
has the Grantor been the subject of any merger or other corporate
reorganization, except as set forth in Item D of Schedule I hereto. If the
Collateral includes any Inventory located in the State of California, the
Grantor is not a "retail merchant" within the meaning of Section 9102 of the
Uniform Commercial Code - Secured Transactions of the State of California.
SECTION 3.1.2. Ownership, No Liens, etc. The Grantor owns the Collateral
free and clear of any Lien except for the security interest created by this
Security Agreement and except as permitted by the Credit Agreement. No effective
financing statement or other instrument similar in effect covering all or any
part of the Collateral is on file in any recording office, except such as may
have been filed in favor of the Administrative Agent relating to this Security
Agreement or as have been filed in connection with Liens permitted pursuant to
Section 7.2.3 of the Credit Agreement.
SECTION 3.1.3. Negotiable Documents, Instruments and Chattel Paper. The
Grantor has delivered to the Administrative Agent possession of all originals of
all negotiable documents, instruments and chattel paper (other than those
payable within 30 days of the date of issuance) currently owned or held by the
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Grantor (duly endorsed in blank, if requested by the Administrative Agent)
having a face amount in excess of $100,000 individually or $2,000,000 in the
aggregate with all other negotiable documents, instruments and chattel paper
then held or owned by other Obligors.
SECTION 3.1.4. Intellectual Property Collateral. With respect to any
Intellectual Property Collateral the loss, impairment or infringement of which
could reasonably be expected to have a Material Adverse Effect:
(a) such Intellectual Property Collateral is subsisting and has not
been adjudged invalid or unenforceable, in whole or in part;
(b) such Intellectual Property Collateral is valid and enforceable;
(c) the Grantor has made all necessary filings and recordations to
protect its interest in such Intellectual Property Collateral, including,
without limitation, recordations of all of its interests in the Patent
Collateral and Trademark Collateral in the United States Patent and
Trademark Office and its claims to the Copyright Collateral in the United
States Copyright Office;
(d) the Grantor is the exclusive owner of the entire and unencumbered
right, title and interest in and to such Intellectual Property Collateral
and no claim has been made that the use of such Intellectual Property
Collateral does or may violate the asserted rights of any third party; and
(e) except as permitted by Section 4.1.4, the Grantor has performed
and will continue to perform all acts and has paid and will continue to pay
all required fees and taxes to maintain such Intellectual Property
Collateral in full force and effect in the United States, as applicable.
SECTION 3.1.5. Validity, etc. This Security Agreement creates a valid first
priority security interest in the Collateral (subject to Section 9-306 of the
U.C.C. and Liens permitted pursuant to Section 7.2.3 of the Credit Agreement),
securing the payment of the Obligations, and all filings and other actions
necessary or desirable to perfect and protect such security interest have been
duly taken.
SECTION 3.1.6. Authorization, Approval, etc. Except as have been obtained
or made and are in full force and effect, no authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required (except in the case of Receivables owing to any
governmental authority) either
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(a) for the grant by the Grantor of the security interest granted
hereby or for the execution, delivery and performance of this Security
Agreement by the Grantor, or
(b) for the perfection of or the exercise by the Administrative Agent
of its rights and remedies hereunder.
ARTICLE IV
COVENANTS
SECTION 4.1. Certain Covenants. The Grantor covenants and agrees that, so
long as any portion of the Obligations shall remain unpaid or any Lender shall
have any outstanding Commitment, the Grantor will, unless the Required Lenders
shall otherwise consent in writing, perform the obligations set forth in this
Section.
SECTION 4.1.1. As to Equipment and Inventory. The Grantor hereby agrees
that it shall keep all the Equipment and Inventory (other than Equipment and
Inventory sold in accordance with the Credit Agreement) at the places therefor
specified in Section 3.1.1 or at such other places in a jurisdiction where all
representations and warranties set forth in Article III (including Section
3.1.6) shall be true and correct, and all action required pursuant to the first
sentence of Section 4.1.7 shall have been taken with respect to the Equipment
and Inventory.
SECTION 4.1.2. As to Receivables.
(a) The Grantor shall give the Administrative Agent a supplement to
Schedule I and Schedule IV hereto on each date a Compliance Certificate is
required to be delivered to the Administrative Agent under the Credit
Agreement, which shall set forth any changes to the information set forth
in Section 3.1.1. The Grantor shall keep its place(s) of business and chief
executive office and the office(s) where it keeps its records concerning
the Receivables located at the address set forth below its name on the
signature page hereof, or at such other locations in a jurisdiction where
all actions required by the first sentence of Section 4.1.7 shall have been
taken with respect to the Receivables, and shall not change its name except
upon 30 days' prior written notice to the Administrative Agent.
(b) The Grantor shall list each of its Deposit Accounts in Schedule VI
hereto, as such Schedule is supplemented by notice to the Administrative
Agent pursuant to clause (a) of Section 4.1.1. Subject to, and without
limiting the effect of, clause (c) of this Section 4.1.2,
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following the occurrence and continuance of an Event of Default and at the
direction of the Required Lenders, the Grantor shall make its best efforts
to maintain each of its Deposit Accounts pursuant to a deposit account
agreement which is in all respects satisfactory to the Administrative Agent
and which provides, among other things, that (i) until the deposit account
bank shall have received written notice from the Administrative Agent
pursuant to this clause, the deposit account bank will make all payments
from the Deposit Account as specified by the Grantor, and, after any such
notice, the deposit account bank will make all payments from the Deposit
Account to the Administrative Agent for credit to the Collateral Account,
(ii) the deposit account bank (if other than the Administrative Agent or a
Lender) waives all set off rights (other than setoff rights for reasonable
and customary account service charges and fees and amounts based on items
that are dishonored by the payor thereof and returned to the deposit
account bank), and (iii) such deposit account agreement may not be amended
without the written consent of the Administrative Agent. The Administrative
Agent will not give the notice referred to in the preceding clause (b)(i)
unless it has given, or is contemporaneously giving, notice pursuant to
clause (c) of this Section. In the event that a deposit account bank
refuses to enter into a deposit account agreement in accordance with the
above listed terms within 30 days of the Grantor's request, the
Administrative Agent shall have the right to direct the Grantor to transfer
the assets in that deposit account to a bank which will enter into a
deposit account agreement in accordance with the above listed terms.
(c) Upon written notice by the Administrative Agent to the Grantor
pursuant to this clause, all proceeds of Collateral received by the Grantor
shall be delivered in kind to the Administrative Agent for deposit to a
deposit account (the "Collateral Account") of the Grantor maintained with
the Administrative Agent, and the Grantor shall not commingle any such
proceeds, and shall hold separate and apart from all other property, all
such proceeds in express trust for the benefit of the Administrative Agent
until delivery thereof is made to the Administrative Agent. The
Administrative Agent will not give the notice referred to in the preceding
sentence unless there shall have occurred and be continuing a Default of
the nature set forth in Section 8.1.9 of the Credit Agreement or any other
Event of Default. No funds, other than proceeds of Collateral, will be
deposited in the Collateral Account.
(d) The Administrative Agent shall have the right to apply any amount
in the Collateral Account to the payment of any Obligations which are due
and payable or payable upon demand. The Administrative Agent may at any
time transfer
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to the Grantor's general demand deposit account at the Administrative Agent
any or all of the collected funds in the Collateral Account; provided,
however, that any such transfer shall not be deemed to be a waiver or
modification of any of the Administrative Agent's rights under this clause.
SECTION 4.1.3. As to Collateral.
(a) Until such time as the Administrative Agent shall notify the
Grantor of the revocation of such power and authority (which notice may not
be given unless there shall have occurred and be continuing a Default of
the nature set forth in Section 8.1.9 of the Credit Agreement or any other
Event of Default), the Grantor may, in accordance with the Credit
Agreement, at its own expense, sell, lease or furnish under the contracts
of service any of the Inventory, and use and consume, in accordance with
the Credit Agreement, any raw materials, work in process or materials. The
Administrative Agent, however, may, at any time after any such revocation
of such power and authority, notify any parties obligated on any of the
Collateral to make payment to the Administrative Agent of any amounts due
or to become due thereunder and enforce collection of any of the Collateral
by suit or otherwise and surrender, release, or exchange all or any part
thereof, or compromise or extend or renew for any period (whether or not
longer than the original period) any indebtedness thereunder or evidenced
thereby. Upon request of the Administrative Agent (which request may not be
made unless there shall have occurred and be continuing a Default of the
nature set forth in Section 8.1.9 of the Credit Agreement or any other
Event of Default), the Grantor will, at its own expense, notify any parties
obligated on any of the Collateral to make payment to the Administrative
Agent of any amounts due or to become due thereunder.
(b) The Administrative Agent is authorized to endorse, in the name of
the Grantor, any item, howsoever received by the Administrative Agent,
representing any payment on or other proceeds of any of the Collateral.
SECTION 4.1.4. As to Intellectual Property Collateral. The Grantor
covenants and agrees to comply with the following provisions as such provisions
relate to any Intellectual Property Collateral material to the operations or
business of the Grantor:
(a) The Grantor shall not, unless the Grantor shall have a valid
business purpose to do otherwise, do any act, or omit to do any act,
whereby any of the Patent Collateral may lapse or become abandoned or
dedicated to the public or unenforceable.
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(b) The Grantor shall not, and the Grantor shall not permit any of its
licensees to, unless the Grantor shall have a valid business purpose to do
otherwise,
(i) fail to continue to use any of the Trademark Collateral in
order to maintain all of the Trademark Collateral in full force free
from any claim of abandonment for non-use,
(ii) fail to maintain as in the past the quality of products and
services offered under all of the Trademark Collateral,
(iii) fail to use a notice of registration as appropriate in
connection with goods using any Trademark Collateral registered with
the United States Patent and Trademark Office or equivalent foreign
authority, and
(iv) do or permit any act or knowingly omit to do any act whereby
any of the Trademark Collateral may lapse or become invalid or
unenforceable.
(c) The Grantor shall not, unless the Grantor shall have a valid
business purpose to do otherwise, do or permit any act or knowingly omit to
do any act whereby any of the Copyright Collateral or any of the Trade
Secrets Collateral may lapse or become invalid or unenforceable or placed
in the public domain except upon expiration of the end of an unrenewable
term of a registration thereof.
(d) The Grantor shall notify the Administrative Agent upon each
delivery of a Compliance Certificate as required pursuant to the Credit
Agreement if it knows, or has reason to know, that any application or
registration relating to any material item of the Intellectual Property
Collateral may become abandoned or dedicated to the public or placed in the
public domain or invalid or unenforceable, or of any adverse determination
or development (including the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark
Office, the United States Copyright Office or any foreign counterpart
thereof or any court) regarding the Grantor's ownership of any of the
Intellectual Property Collateral, its right to register the same or to keep
and maintain and enforce the same.
(e) The Grantor shall notify the Administrative Agent with each
delivery of a Compliance Certificate, of the prior filing of any
application for the registration of any Intellectual Property Collateral
with the United States Patent and Trademark Office or the United States
Copyright
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Office, and upon request of the Administrative Agent, execute and deliver
any and all agreements, instruments, documents and papers as the
Administrative Agent may reasonably request to evidence the Administrative
Agent's security interest in such Intellectual Property Collateral and the
goodwill and general intangibles of the Grantor relating thereto or
represented thereby.
(f) The Grantor shall take all necessary steps, including in any
proceeding before the United States Patent and Trademark Office or the
United States Copyright Office to maintain and pursue any application (and
to obtain the relevant registration) filed with respect to, and to maintain
any registration of, the Intellectual Property Collateral, including the
filing of applications for renewal, affidavits of use, affidavits of
incontestability and opposition, interference and cancellation proceedings
and the payment of fees and taxes (except to the extent that dedication,
abandonment or invalidation is permitted under the foregoing clauses (a),
(b) and (c)).
(g) If the Grantor shall own any Intellectual Property, the Grantor
shall execute and deliver to the Administrative Agent a Patent Security
Agreement, a Trademark Security Agreement and a Copyright Security
Agreement in the forms of Exhibit A, Exhibit B and Exhibit C hereto, as
applicable, and shall execute and deliver to the Administrative Agent any
other document required to acknowledge or register or perfect the
Administrative Agent's interest in the U.S. in any part of the Intellectual
Property Collateral.
SECTION 4.1.5. Insurance. The Grantor will, and will cause each of its
Subsidiaries to, maintain or cause to be maintained with responsible insurance
companies insurance with respect to its properties and business as required
pursuant to the Credit Agreement. Without limiting the foregoing, the Grantor
further agrees as follows:
(a) Each policy for property insurance shall show the Administrative
Agent as loss payee.
(b) Each policy for liability insurance shall show the Administrative
Agent as an additional insured.
(c) Each insurance policy shall provide that at least 30 days' prior
written notice of cancellation or of lapse shall be given to the
Administrative Agent by the insured.
(d) The Grantor shall, if so requested by the Administrative Agent,
deliver to the Administrative Agent a copy of each insurance policy.
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SECTION 4.1.6. Transfers and Other Liens. The Grantor shall not:
(a) sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except as permitted by the Credit
Agreement; or
(b) create or suffer to exist any Lien upon or with respect to any of
the Collateral to secure Indebtedness of any Person or entity, except for
the security interest created by this Security Agreement and except as
permitted by the Credit Agreement.
SECTION 4.1.7. Further Assurances, etc. The Grantor agrees that, from time
to time at its own expense, the Grantor will promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or desirable, or that the Administrative Agent may reasonably request,
in order to perfect, preserve and protect any security interest granted or
purported to be granted hereby in Collateral located in the United States or to
enable the Administrative Agent to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. Without limiting the generality of the
foregoing, the Grantor will
(a) if any Receivable not payable within 30 days or less in excess of
$100,000 shall be evidenced by a promissory note or other instrument,
negotiable document or chattel paper, deliver and pledge to the
Administrative Agent hereunder such promissory note, instrument, negotiable
document or chattel paper duly endorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance reasonably
satisfactory to the Administrative Agent (provided, that no more than an
aggregate face amount of $2,000,000 of such Receivables not payable within
30 days from the date of issuance of the Grantor and the other Obligors so
evidenced shall at any time not be pledged and in the possession of the
Administrative Agent);
(b) execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices (including,
without limitation, any assignment of claim form under or pursuant to the
federal assignment of claims statute, 31 U.S.C. ss. 3726, any successor or
amended version thereof or any regulation promulgated under or pursuant to
any version thereof), as may be necessary or desirable, or as the
Administrative Agent may reasonably request, in order to perfect and
preserve the security interests and other rights granted or purported to be
granted to the Administrative Agent hereby;
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(c) furnish to the Administrative Agent, from time to time at the
Administrative Agent's reasonable request, statements and schedules further
identifying and describing the Collateral and such other reports in
connection with the Collateral as the Administrative Agent may reasonably
request, all in reasonable detail.
With respect to the foregoing and the grant of the security interest hereunder,
the Grantor hereby authorizes the Administrative Agent to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral without the signature of the Grantor where permitted
by law. A carbon, photographic or other reproduction of this Security Agreement
or any financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.
ARTICLE V
THE ADMINISTRATIVE AGENT
SECTION 5.1. Administrative Agent Appointed Attorney-in- Fact. The Grantor
hereby irrevocably appoints the Administrative Agent the Grantor's
attorney-in-fact, with full authority in the place and stead of the Grantor and
in the name of the Grantor or otherwise, from time to time in the Administrative
Agent's discretion following the occurrence and during the continuance of an
Event of Default and notice to the Grantor, to take any action and to execute
any instrument which the Administrative Agent may deem necessary or advisable to
accomplish the purposes of this Security Agreement, including, without
limitation:
(a) to ask, demand, collect, sue for, recover, compromise, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;
(b) to receive, endorse, and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (a) above;
(c) to file any claims or take any action or institute any proceedings
which the Administrative Agent may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of
the Administrative Agent with respect to any of the Collateral; and
(d) to perform the affirmative obligations of the Grantor hereunder
(including all obligations of the Grantor pursuant to Section 4.1.7).
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The Grantor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
SECTION 5.2. Administrative Agent May Perform. If the Grantor fails to
perform any agreement contained herein within 30 days after written notice from
the Administrative Agent, the Administrative Agent may itself perform, or cause
performance of, such agreement, and the expenses of the Administrative Agent
incurred in connection therewith shall be payable by the Grantor pursuant to
Section 6.2.
SECTION 5.3. Administrative Agent Has No Duty. In addition to, and not in
limitation of, Section 2.4, the powers conferred on the Administrative Agent
hereunder are solely to protect its interest (on behalf of the Lender Parties)
in the Collateral and shall not impose any duty on it to exercise any such
powers. Except for reasonable care of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Administrative
Agent shall have no duty as to any Collateral or as to the taking of any
necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral.
SECTION 5.4. Reasonable Care. The Administrative Agent is required to
exercise reasonable care in the custody and preservation of any of the
Collateral in its possession; provided, however, the Administrative Agent shall
be deemed to have exercised reasonable care in the custody and preservation of
any of the Collateral, if it takes such action for that purpose as the Grantor
reasonably requests in writing at times other than upon the occurrence and
during the continuance of any Event of Default, but failure of the
Administrative Agent to comply with any such request at any time shall not in
itself be deemed a failure to exercise reasonable care.
ARTICLE VI
REMEDIES
SECTION 6.1. Certain Remedies. If any Event of Default shall have occurred
and be continuing:
(a) The Administrative Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party
on default under the U.C.C. (whether or not the U.C.C. applies to the
affected Collateral) and also may
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(i) require the Grantor to, and the Grantor hereby agrees that it
will, at its expense and upon request of the Administrative Agent
forthwith, assemble all or part of the Collateral as directed by the
Administrative Agent and make it available to the Administrative Agent
at a place to be designated by the Administrative Agent which is
reasonably convenient to both parties and
(ii) without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or
private sale, at any of the Administrative Agent's offices or
elsewhere, for cash, on credit or for future delivery, and upon such
other terms as the Administrative Agent may deem commercially
reasonable. The Grantor agrees that, to the extent notice of sale
shall be required by law, at least ten days' prior notice to the
Grantor of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable
notification. The Administrative Agent shall not be obligated to make
any sale of Collateral regardless of notice of sale having been given.
The Administrative Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place
to which it was so adjourned.
(b) All cash proceeds received by the Administrative Agent in respect
of any sale of, collection from, or other realization upon all or any part
of the Collateral may, in the discretion of the Administrative Agent, be
held by the Administrative Agent as collateral for, and/or then or at any
time thereafter applied (after payment of any amounts payable to the
Administrative Agent pursuant to Section 6.2) in whole or in part by the
Administrative Agent for the benefit of the Lender Parties against, all or
any part of the Obligations as follows: (i) first, to the reasonable
out-of-pocket costs and expenses of the Administrative Agent in connection
with the retaking, holding, preparing for sale, selling or other
disposition of the Collateral, including, without limitation, all court
costs and the reasonable fees and expenses of its agents and legal counsel;
(ii) second, to the payment in full of the Obligations or in the event that
such proceeds are insufficient to pay in full the Obligations, equally and
ratably in accordance with each Lender's respective amounts owing to it
under or pursuant to the Credit Agreement or any other Loan Document, or
under or pursuant to any Rate Protection Agreement (as to each Lender,
applied first to fees and expense reimbursements then due to such Lender,
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then to interest due to such Lender, then to pay or prepay principal of the
Loans or owing to, or to reduce the "credit exposure" of, such Lender under
such Rate Protection Agreement, as the case may be, then to pay (or cash
collateralize) the remaining obligations; (iii) third, without duplication
of any amounts paid pursuant to clause (ii) above, to the Indemnified
Parties to the extent of any amounts owing pursuant to Section 10.4 of the
Credit Agreement; and (iv) fourth, to the Grantor, or its successors and
assigns, or as a court of competent jurisdiction may direct, of any surplus
then remaining. For purposes of this Agreement, the "credit exposure" at
any time of any Lender under a Rate Protection Agreement to which such
Lender is a party shall be determined at such time in accordance with the
customary methods of calculating credit exposure under similar arrangements
by the counterparty to such arrangements, taking into account potential
interest rate movements, mitigating factors such as other interest rate
swaps, caps, collars and hedges, and the respective termination provisions
and notional principal amount and term of such Rate Protection Agreement.
The Grantor shall remain liable to the Lenders for any deficiency. If the
Administrative Agent has funds available to apply to a portion of, but not
all of, one of the amounts described in clauses (i) through (iv) above,
then the Administrative Agent shall apply such funds to the applicable
parties in proportion to the amounts to which such parties would have been
entitled if the entire amount described in any such clause had been
available.
SECTION 6.2. Indemnity and Expenses.
(a) The Grantor agrees to indemnify the Administrative Agent from and
against any and all claims, losses and liabilities arising out of or
resulting from this Security Agreement (including, without limitation,
enforcement of this Security Agreement), except claims, losses or
liabilities resulting from the Administrative Agent's gross negligence or
wilful misconduct.
(b) The Grantor will upon demand pay to the Administrative Agent the
amount of any and all reasonable expenses, including the reasonable fees
and disbursements of its counsel and of any experts and agents, which the
Administrative Agent may incur in connection with
(i) the administration of this Security Agreement,
(ii) the custody, preservation, use or operation of, or the sale
of, collection from, or other realization upon, any of the Collateral,
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(iii) the exercise or enforcement of any of the rights of the
Administrative Agent or the Lender Parties hereunder, or
(iv) the failure by the Grantor to perform or observe any of the
provisions hereof.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.1. Loan Document. This Security Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions thereof.
SECTION 7.2. Amendments; etc. No amendment to or waiver of any provision of
this Security Agreement nor consent to any departure by the Grantor herefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Administrative Agent (on behalf of the Lenders or the Required Lenders,
as the case may be), and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
SECTION 7.3. Addresses for Notices. All notices and other communications
provided to the Grantor under this Security Agreement shall be in writing or by
facsimile and addressed, delivered or transmitted to the Grantor at its address
or facsimile number as set forth in the Credit Agreement, or at such other
address or facsimile number as may be designated by the Grantor in a notice to
the other parties. Any notice, if mailed and properly addressed with postage
prepaid or if properly addressed and sent by pre-paid courier service, shall be
deemed given when received; any notice, if transmitted by facsimile, shall be
deemed given when transmitted.
SECTION 7.4. Section Captions. Section captions used in this Security
Agreement are for convenience of reference only, and shall not affect the
construction of this Security Agreement.
SECTION 7.5. Severability. Wherever possible each provision of this
Security Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Security Agreement
shall be prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Security Agreement.
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SECTION 7.6. Governing Law, Entire Agreement, etc. THIS SECURITY AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE
SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
NEW YORK. THIS SECURITY AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE
ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER
HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT
THERETO.
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IN WITNESS WHEREOF, the Grantor has caused this Security Agreement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
KEEBLER ACQUISITION CORP.
By: __________________________
Title:
THE BANK OF NOVA SCOTIA,
as Administrative Agent
By: __________________________
Title:
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<PAGE>
SCHEDULE I
to
Borrower Security Agreement
Item A. Location of Equipment
Description Location
----------- --------
1.
2.
3.
4.
5.
Item B. Location of Inventory
Description Location
----------- --------
1.
2.
3.
4.
5.
Item C. Place of Business, etc. (Section 3.1.1)
Name of Grantor Address
--------------- -------
1.
2.
3.
4.
5.
<PAGE>
Item D. Trade Names
Name of Grantor Trade Name
--------------- ----------
1.
2.
3.
4.
5.
<PAGE>
SCHEDULE II
to
Borrower Security Agreement
Item A. Patents
Issued Patents
Patent No. Issue Date Inventor(s) Title
---------- ---------- ----------- -----
NONE
Pending Patent Applications
Serial No. Filing Date Inventor(s) Title
---------- ----------- ----------- -----
NONE
Item B. Patent Licenses
Effective Expiration Subject
Licensor Licensee Date Date Matter
-------- -------- ---- ---- ------
NONE
<PAGE>
SCHEDULE III
to
Borrower Security Agreement
Item A. Trademarks
Registered Trademarks
Trademark Registration No. Registration Date
--------- ---------------- -----------------
NONE
Pending Trademark Applications
Trademark Serial No. Filing Date
--------- ---------- -----------
NONE
Item B. Trademark Licenses
Effective Expiration
Trademark Licensor Licensee Date Date
--------- -------- -------- ---- ----
NONE
<PAGE>
SCHEDULE IV
to
Borrower Security Agreement
Item A. Copyrights/Mask Works
Registered Copyrights/Mask Works
Registration No. Registration Date Author(s) Title
---------------- ----------------- --------- -----
NONE
Copyright/Mask Work Pending Registration Applications
Serial No. Filing Date Author(s) Title
---------- ----------- --------- -----
NONE
Item B. Copyright/Mask Work Licenses
- ------- ----------------------------
Effective Expiration Subject
Licensor Licensee Date Date Matter
-------- -------- ---- ---- ------
NONE
<PAGE>
SCHEDULE V
to
Borrower Security Agreement
Trade Secret or Know-How Licenses
Effective Expiration Subject
Licensor Licensee Date Date Matter
-------- -------- ---- ---- ------
NONE
<PAGE>
SCHEDULE VI
to
Borrower Security Agreement
Account
Bank Address of Bank Type of Account Number
- ---- --------------- --------------- ------
The Bank of One Liberty Plaza Loan Servicing 02032-11
Nova Scotia New York, NY 10006 Account
<PAGE>
EXHIBIT A
to
Borrower Security Agreement
PATENT SECURITY AGREEMENT
THIS PATENT SECURITY AGREEMENT (this "Agreement"), dated as of ___________
__, _____, between KEEBLER ACQUISITION CORP., a Delaware corporation (to be
merged with and into UB Investments US Inc. and to become known as Keebler
Holding Corp.) (the "Grantor"), and THE BANK OF NOVA SCOTIA, as administrative
agent (together with any successor(s) thereto in such capacity, the
"Administrative Agent") for each of the Lender Parties (as defined below).
W I T N E S S E T H :
WHEREAS, pursuant to a Credit Agreement, dated as of January __, 1996 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Credit Agreement"), between the Grantor, the various financial
institutions as are, or may from time to time become, parties thereto
(collectively, the "Lenders"), the Co-Agents named therein and the
Administrative Agent, the Lenders and the Issuer have extended Commitments to
make Credit Extensions to the Grantor;
WHEREAS, in connection with the Credit Agreement, the Grantor has executed
and delivered a Security Agreement, dated as of the date hereof (together with
all amendments and other modifications, if any, from time to time thereafter
made thereto, the "Security Agreement");
WHEREAS, as a condition precedent to the making of each Credit Extension
(including the initial Credit Extension) under the Credit Agreement, the Grantor
is required to execute and deliver this Agreement and to grant to the
Administrative Agent a continuing security interest in all of the Patent
Collateral (as defined below) to secure all Obligations; and
WHEREAS, the Grantor has duly authorized the execution, delivery and
performance of this Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, and in order to induce the Lenders and the Issuer to
make each Credit Extension (including the initial Credit Extension) to the
Grantor pursuant to the Credit Agreement, the Grantor agrees, for the benefit of
each Lender Party, as follows:
SECTION 1. Definitions. Unless otherwise defined herein or the context
otherwise requires, terms used in this Agreement, including its preamble and
recitals, have the meanings provided in the Security Agreement.
<PAGE>
SECTION 2. Grant of Security Interest. For good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, to secure all of
the Obligations, the Grantor does hereby mortgage, pledge and hypothecate to the
Administrative Agent, and grant to the Administrative Agent a security interest
in, for its benefit and the benefit of each Lender Party, all of the following
property (the "Patent Collateral"), whether now owned or hereafter acquired or
existing:
(a) all United States letters patent and applications for letters
patent and including each patent and patent application referred to in
Item A of Attachment 1 hereto;
(b) all reissues, divisions, continuations,
continuations-in-part, extensions, renewals and reexaminations of any
of the items described in clause (a);
(c) all patent licenses and other agreements providing the
Grantor with the right to use any of the items of the type referred to
in clauses (a) and (b), including each patent license referred to in
Item B of Attachment 1 hereto;
(d) the right to sue third parties for past, present or future
infringements of any Patent Collateral described in clauses (a) and
(b) and, to the extent applicable, clause (c); and
(e) all proceeds of, and rights associated with, the foregoing
(including license royalties and proceeds of infringement suits), and
all rights corresponding thereto throughout the world.
SECTION 3. Security Agreement. This Agreement has been executed and
delivered by the Grantor for the purpose of registering the security interest of
the Administrative Agent in the Patent Collateral with the United States Patent
and Trademark Office. The security interest granted hereby has been granted as a
supplement to, and not in limitation of, the security interest granted to the
Administrative Agent for its benefit and the benefit of each Lender Party under
the Security Agreement. The Security Agreement (and all rights and remedies of
the Administrative Agent and each Lender Party thereunder) shall remain in full
force and effect in accordance with its terms.
SECTION 4. Release of Security Interest. Upon payment in full of all
Obligations and the termination of all Commitments, the Administrative Agent
shall, at the Grantor's expense, execute and deliver to the Grantor all
instruments and other documents as
A-2
<PAGE>
may be necessary or proper to release the lien on and security interest in the
Patent Collateral which has been granted hereunder.
SECTION 5. Acknowledgment. The Grantor does hereby further acknowledge and
affirm that the rights and remedies of the Administrative Agent with respect to
the security interest in the Patent Collateral granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which (including
the remedies provided for therein) are incorporated by reference herein as if
fully set forth herein.
SECTION 6. Loan Document, etc. This Agreement is a Loan Document executed
pursuant to the Credit Agreement and shall (unless otherwise expressly indicated
herein) be construed, administered and applied in accordance with the terms and
provisions of the Credit Agreement.
SECTION 7. Counterparts. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
and all of which shall constitute together but one and the same agreement.
A-3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.
KEEBLER ACQUISITION CORP.
By:_____________________________
Title:
Address:____________________
____________________
Attention:__________________
Telecopier:_________________
THE BANK OF NOVA SCOTIA,
as Administrative Agent
By:_____________________________
Title:
Address:____________________
____________________
Attention:__________________
Telecopier:_________________
A-4
<PAGE>
ATTACHMENT 1
to
Patent Security Agreement
Item A. Patents
Issued Patents
Patent No. Issue Date Inventor(s) Title
---------- ---------- ----------- -----
Pending Patent Applications
Serial No. Filing Date Inventor(s) Title
---------- ----------- ----------- 0-----
Item B. Patent Licenses
Effective Expiration Subject
Licensor Licensee Patent # Date Date Matter
-------- -------- -------- ---- ---- ------
<PAGE>
EXHIBIT B
to
Borrower Security Agreement
TRADEMARK SECURITY AGREEMENT
THIS TRADEMARK SECURITY AGREEMENT (this "Agreement"), dated as of ________
__, ____, between KEEBLER ACQUISITION CORP., a Delaware corporation (to be
merged with and into UB Investments US Inc. and to become known as Keebler
Holding Corp.) (the "Grantor"), and THE BANK OF NOVA SCOTIA, as administrative
agent (together with any successor(s) thereto in such capacity, the
"Administrative Agent") for each of the Lender Parties (as defined below).
W I T N E S S E T H :
WHEREAS, pursuant to a Credit Agreement, dated as of January __, 1996 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Credit Agreement"), between the Grantor, the various financial
institutions as are, or may from time to time become, parties thereto
(collectively, the "Lenders"), the Co-Agents named therein and the
Administrative Agent, the Lenders and the Issuer have extended Commitments to
make Credit Extensions to the Grantor;
WHEREAS, in connection with the Credit Agreement, the Grantor has executed
and delivered a Security Agreement, dated as of the date hereof (together with
all amendments and other modifications, if any, from time to time thereafter
made thereto, the "Security Agreement");
WHEREAS, as a condition precedent to the making of each Credit Extension
(including the initial Credit Extension) under the Credit Agreement, the Grantor
is required to execute and deliver this Agreement and to grant to the Agent a
continuing security interest in all of the Trademark Collateral (as defined
below) to secure all Obligations; and
WHEREAS, the Grantor has duly authorized the execution, delivery and
performance of this Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, and in order to induce the Lenders and the Issuer to
make each Credit Extension (including the initial Credit Extension) to the
Grantor pursuant to the Credit Agreement, the Grantor agrees, for the benefit of
each Lender Party, as follows:
<PAGE>
SECTION 1. Definitions. Unless otherwise defined herein or the context
otherwise requires, terms used in this Agreement, including its preamble and
recitals, have the meanings provided in the Security Agreement.
SECTION 2. Grant of Security Interest. For good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, to secure all of
the Obligations, the Grantor does hereby mortgage, pledge and hypothecate to the
Administrative Agent, and grant to the Administrative Agent a security interest
in, for its benefit and the benefit of each Lender Party, all of the following
property (the "Trademark Collateral"), whether now owned or hereafter acquired
or existing:
(a) all trademarks, trade names, trade dress, service marks, logos,
other source of business identifiers, and designs (all of the foregoing
items in this clause (a) being collectively called a "Trademark"), now
existing in the United States or hereafter adopted or acquired in the
United States, and all registrations and recordings thereof and all
applications in connection therewith, including registrations, recordings
and applications in the United States Patent and Trademarks Office,
including those referred to in Item A of Attachment 1 attached hereto, and
all renewals thereof;
(b) all Trademark licenses and other agreements providing the Grantor
with the right to use any items of the type described in clause (a),
including each Trademark license referred to in Item B of Attachment 1
hereto;
(c) all of the goodwill of the business connected with the use of, and
symbolized by the items described in, clause (a);
(d) the right to sue third parties for past, present and future
infringements of any Trademark Collateral described in clause (a) and, to
the extent applicable, clause (b); and
(e) all proceeds of, and rights associated with, the foregoing,
including any claim by the Grantor against third parties for past, present
or future infringement or dilution of any Trademark, Trademark registration
or Trademark license, including any Trademark, Trademark registration or
Trademark license referred to in Item A and Item B of Attachment 1 attached
hereto, or for any injury to the goodwill associated with the use of any
such Trademark or for breach or enforcement of any Trademark license and
all rights corresponding thereto throughout the world.
B-2
<PAGE>
SECTION 3. Security Agreement. This Agreement has been executed and
delivered by the Grantor for the purpose of registering the security interest of
the Administrative Agent in the Trademark Collateral with the United States
Patent and Trademark Office. The security interest granted hereby has been
granted as a supplement to, and not in limitation of, the security interest
granted to the Administrative Agent for its benefit and the benefit of each
Lender Party under the Security Agreement. The Security Agreement (and all
rights and remedies of the Administrative Agent and each Lender Party
thereunder) shall remain in full force and effect in accordance with its terms.
SECTION 4. Release of Security Interest. Upon payment in full of all
Obligations and the termination of all Commitments, the Administrative Agent
shall, at the Grantor's expense, execute and deliver to the Grantor all
instruments and other documents as may be necessary or proper to release the
lien on and security interest in the Trademark Collateral which has been granted
hereunder.
SECTION 5. Acknowledgment. The Grantor does hereby further acknowledge and
affirm that the rights and remedies of the Administrative Agent with respect to
the security interest in the Trademark Collateral granted hereby are more fully
set forth in the Security Agreement, the terms and provisions of which
(including the remedies provided for therein) are incorporated by reference
herein as if fully set forth herein.
SECTION 6. Loan Document, etc. This Agreement is a Loan Document executed
pursuant to the Credit Agreement and shall (unless otherwise expressly indicated
herein) be construed, administered and applied in accordance with the terms and
provisions of the Credit Agreement.
SECTION 7. Counterparts. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
and all of which shall constitute together but one and the same agreement.
B-3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.
KEEBLER ACQUISITION CORP.
By:_____________________________
Title:
Address:____________________
____________________
Attention:__________________
Telecopier:_________________
THE BANK OF NOVA SCOTIA, as
Administrative Agent
By:_____________________________
Title:
Address:____________________
____________________
Attention:__________________
Telecopier:_________________
B-4
<PAGE>
ATTACHMENT 1
to
Trademark Security Agreement
Item A. Trademarks
Registered Trademarks
Trademark Registration No. Registration Date
--------- ---------------- -----------------
Pending Trademark Applications
Trademark Serial No. Filing Date
--------- ---------- -----------
Item B. Trademark Licenses
Effective Expiration
Trademark Licensor Licensee Regis. # Date Date
--------- -------- -------- -------- ---- ----
<PAGE>
EXHIBIT C
to
Borrower Security Agreement
COPYRIGHT SECURITY AGREEMENT
THIS COPYRIGHT SECURITY AGREEMENT (this "Agreement"), dated as of ________
__, ____, between KEEBLER ACQUISITION CORP., a Delaware corporation (to be
merged with and into UB Investments US Inc. and to become known as Keebler
Holding Corp.) (the "Grantor"), and THE BANK OF NOVA SCOTIA, as administrative
agent (together with any successor(s) thereto in such capacity, the
"Administrative Agent") for each of the Lender Parties (as defined below).
W I T N E S E T H :
WHEREAS, pursuant to a Credit Agreement, dated as of January __, 1996 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Credit Agreement"), between the Grantor, the various financial
institutions as are, or may from time to time become, parties thereto
(collectively, the "Lenders"), the Co-Agents named therein and the
Administrative Agent, the Lenders and the Issuer have extended Commitments to
make Credit Extensions to the Grantor;
WHEREAS, in connection with the Credit Agreement, the Grantor has executed
and delivered a Security Agreement, dated as of the date hereof (together with
all amendments and other modifications, if any, from time to time thereafter
made thereto, the "Security Agreement");
WHEREAS, as a condition precedent to the making of each Credit Extension
(including the initial Credit Extension) under the Credit Agreement, the Grantor
is required to execute and deliver this Agreement and to grant to the
Administrative Agent a continuing security interest in all of the Copyright
Collateral (as defined below) to secure all Obligations; and
WHEREAS, the Grantor has duly authorized the execution, delivery and
performance of this Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, and in order to induce the Lenders and the Issuer to
make each Credit Extension (including the initial Credit Extension) to the
Grantor pursuant to the Credit Agreement, the Grantor agrees, for the benefit of
each Lender Party, as follows:
<PAGE>
SECTION 1. Definitions. Unless otherwise defined herein or the context
otherwise requires, terms used in this Agreement, including its preamble and
recitals, have the meanings provided in the Security Agreement.
SECTION 2. Grant of Security Interest. For good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, to secure all of
the Obligations, the Grantor does hereby mortgage, pledge and hypothecate to the
Administrative Agent, and grant to the Administrative Agent a security interest
in, for its benefit and the benefit of each Lender Party, all of the following
property (the "Copyright Collateral"), whether now owned or hereafter acquired
or existing:
(a) all United States copyrights and applications for copyrights and
including each copyright and each copyright application referred to in Item
A of Attachment 1 attached hereto;
(b) all reissues, divisions, continuations, continuations-in-part,
extensions, renewals and reexaminations of any of the items described in
clause (a);
(c) all copyright licenses and other agreements providing the Grantor
with the right to use any of the items of the type referred to in clauses
(a) and (b), including each copyright license referred to in Item B of
Attachment 1 attached hereto;
(d) the right to sue third parties for past, present or future
infringements of any Copyright Collateral described in clauses (a) and (b)
and, to the extent applicable, clause (c); and
(e) all proceeds of, and rights associated with, the foregoing
(including license royalties and proceeds of infringement suits), and all
rights corresponding thereto throughout the world.
SECTION 3. Security Agreement. This Agreement has been executed and
delivered by the Grantor for the purpose of registering the security interest of
the Administrative Agent in the Copyright Collateral with the United States
Copyright Office. The security interest granted hereby has been granted as a
supplement to, and not in limitation of, the security interest granted to the
Administrative Agent for its benefit and the benefit of each Lender Party under
the Security Agreement. The Security Agreement (and all rights and remedies of
the Administrative Agent and each Lender Party thereunder) shall remain in full
force and effect in accordance with its terms.
C-2
<PAGE>
SECTION 4. Release of Security Interest. Upon payment in full of all
Obligations and the termination of all Commitments, the Administrative Agent
shall, at the Grantor's expense, execute and deliver to the Grantor all
instruments and other documents as may be necessary or proper to release the
lien on and security interest in the Copyright Collateral which has been granted
hereunder.
SECTION 5. Acknowledgment. The Grantor does hereby further acknowledge and
affirm that the rights and remedies of the Administrative Agent with respect to
the security interest in the Copyright Collateral granted hereby are more fully
set forth in the Security Agreement, the terms and provisions of which
(including the remedies provided for therein) are incorporated by reference
herein as if fully set forth herein.
SECTION 6. Loan Document, etc. This Agreement is a Loan Document executed
pursuant to the Credit Agreement and shall (unless otherwise expressly indicated
herein) be construed, administered and applied in accordance with the terms and
provisions of the Credit Agreement.
SECTION 7. Counterparts. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
and all of which shall constitute together but one and the same agreement.
C-3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.
KEEBLER ACQUISITION CORP.
By:_____________________________
Title:
Address:____________________
____________________
Attention:__________________
Telecopier:_________________
THE BANK OF NOVA SCOTIA,
as Administrative Agent
By:_____________________________
Title:
Address:____________________
____________________
Attention:__________________
Telecopier:_________________
C-4
<PAGE>
ATTACHMENT 1
to
Copyright Security Agreement
Item A. Copyrights/Mask Works
Registered Copyrights/Mask Works
Registration No. Registration Date Author(s) Title
---------------- ----------------- --------- -----
Copyright/Mask Work Pending Registration Applications
Serial No. Filing Date Author(s) Title
---------- ----------- --------- -----
Item B. Copyright/Mask Work Licenses
Effective Expiration Subject
Licensor Licensee Date Date Matter
-------- -------- ---- ---- ------
Exhibit 10.7(b)
[EXECUTION COPY]
SUBSIDIARY SECURITY AGREEMENT
This SECURITY AGREEMENT (this "Security Agreement"), dated as of January
26, 1996, is made by each Subsidiary (as defined in the Credit Agreement
referred to below) a signatory hereto on the date hereof and each other
Subsidiary that may, from time to time become, pursuant to the terms of the
Credit Agreement, a party hereto (individually, a "Grantor" and collectively,
the "Grantors"), in favor of THE BANK OF NOVA SCOTIA, as administrative agent
(together with any successor(s) thereto in such capacity, the "Administrative
Agent") for each of the Lender Parties (as defined below).
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement, dated as of January 26, 1996 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Credit Agreement"), among Keebler Acquisition Corp., a Delaware
corporation (to be merged with and into UB Investments US Inc. and to become
known as Keebler Holding Corp.) (the "Borrower"), the various financial
institutions as are, or may from time to time become, parties thereto (the
"Lenders"), the Co-Agents named therein and the Administrative Agent, the
Lenders have and the Issuer extended Commitments to make Credit Extensions to
the Borrower; and
WHEREAS, as a condition precedent to the making of each Credit Extension
(including the initial Credit Extension) under the Credit Agreement, each
Grantor is required to execute and deliver this Security Agreement; and
WHEREAS, each Grantor has duly authorized the execution, delivery and
performance of this Security Agreement; and
WHEREAS, it is in the best interests of each Grantor to execute this
Security Agreement inasmuch as each Grantor will derive substantial direct and
indirect benefits from the Credit Extensions made from time to time to the
Borrower by the Lenders and the Issuer pursuant to the Credit Agreement;
<PAGE>
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce the Lenders
and the Issuer to make each Credit Extension (including the initial Credit
Extension) to the Borrower pursuant to the Credit Agreement, each Grantor
jointly and severally agrees, for the benefit of each Lender Party, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Terms. The following terms (whether or not
underscored) when used in this Security Agreement, including its preamble and
recitals, shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof):
"Administrative Agent" is defined in the preamble.
"Borrower" is defined in the first recital.
"Collateral" is defined in Section 2.1.
"Collateral Account" is defined in Section 4.1.2(c).
"Computer Hardware and Software Collateral" means:
(a) all computer and other electronic data processing hardware,
integrated computer systems, central processing units, memory units,
display terminals, printers, features, computer elements, card readers,
tape drives, hard and soft disk drives, cables, electrical supply hardware,
generators, power equalizers, accessories and all peripheral devices and
other related computer hardware;
(b) all software programs (including both source code, object code and
all related applications and data files), whether now owned, licensed or
leased or hereafter acquired by any Grantor, designed for use on the
computers and electronic data processing hardware described in clause (a)
above;
(c) all firmware associated therewith;
(d) all documentation (including flow charts, logic diagrams, manuals,
guides and specifications) with respect to such hardware, software and
firmware described in the preceding clauses (a) through (c); and
-2-
<PAGE>
(e) all rights with respect to all of the foregoing, including,
without limitation, any and all copyrights, licenses, options, warranties,
service contracts, program services, test rights, maintenance rights,
support rights, improvement rights, renewal rights and indemnifications and
any substitutions, replacements, additions or model conversions of any of
the foregoing.
"Copyright Collateral" means:
(a) all copyrights (including without limitation copyrights for
semi-conductor chip product mask works) of each Grantor, whether statutory
or common law, registered or unregistered, now or hereafter in force
throughout the world including, without limitation, all of each Grantor's
right, title and interest in and to all copyrights registered in the United
States Copyright Office or anywhere else in the world and also including,
without limitation, the copyrights referred to in Item A of Schedule IV
attached hereto, and all applications (including pending applications) for
registration thereof, including the copyright registrations and
applications referred to in Item A of Schedule IV attached hereto, if any,
and all copyrights resulting from such applications;
(b) all extensions and renewals of any thereof;
(c) all copyright licenses and other agreements providing each Grantor
with the right to use any of the items of the type referred to in clauses
(a) and (b), including each copyright license referred to in Item B of
Schedule IV attached hereto, if any;
(d) the right to sue for past, present and future infringements of any
of the Copyright Collateral referred to in clauses (a) and (b) and, to the
extent applicable, clause (c); and
(e) all proceeds of the foregoing, including, without limitation,
licenses, royalties, income, payments, claims, damages and proceeds of suit
and all rights corresponding thereto throughout the world.
"Credit Agreement" is defined in the first recital.
"Deposit Accounts" means any and all demand, time, savings, passbook or
other accounts with a bank or other financial institution, including general
deposit and cash concentration accounts, in which any cash, payments or receipts
of or for the benefit of any Grantor are or are to be deposited, and all
deposits therein and investments thereof, whether now or at any time hereafter
existing.
-3-
<PAGE>
"Equipment" is defined in clause (a) of Section 2.1.
"Grantor" is defined in the preamble.
"Intellectual Property Collateral" means, collectively, the Computer
Hardware and Software Collateral, the Copyright Collateral, the Patent
Collateral, the Trademark Collateral and the Trade Secrets Collateral.
"Inventory" is defined in clause (b) of Section 2.1
"Lender Party" means, as the context may require, each Lender, the Issuer,
each Co-Agent and the Administrative Agent and each of its respective
successors, transferees and assigns.
"Lenders" is defined in the first recital.
"Patent Collateral" means:
(a) all letters patent and applications for letters patent throughout
the world and including each patent and patent application referred to in
Item A of Schedule II attached hereto;
(b) all reissues, divisions, continuations, continuations-in-part,
extensions, renewals and reexaminations of any of the items described in
clause (a);
(c) all patent licenses and other agreements providing any Grantor
with the right to use any of the items of the type referred to in clauses
(a) and (b), including each patent license referred to in Item B of
Schedule II attached hereto;
(d) the right to sue third parties for past, present or future
infringements of any Patent Collateral described in clauses (a) and (b)
and, to the extent applicable, clause (c); and
(e) all proceeds of, and rights associated with, the foregoing
(including license royalties and proceeds of infringement suits), and all
rights corresponding thereto throughout the world.
"Receivables" is defined in clause (c) of Section 2.1.
"Related Contracts" is defined in clause (c) of Section 2.1.
"Secured Obligations" is defined in Section 2.2.
"Security Agreement" is defined in the preamble.
-4-
<PAGE>
"Trademark Collateral" means:
(a) all trademarks, trade names, trade dress, service marks, logos,
other source of business identifiers, and designs (all of the foregoing
items in this clause (a) being collectively called a "Trademark"), now
existing in the United States or hereafter adopted or acquired in the
United States, and all registrations and recordings thereof and all
applications in connection therewith, including registrations, recordings
and applications in the United States Patent and Trademarks Office,
including those referred to in Item A of Schedule III attached hereto, and
all renewals thereof;
(b) all Trademark licenses and other agreements providing any Grantor
with the right to use any items of the type described in clause (a),
including each Trademark license referred to in Item B of Schedule III
attached hereto;
(c) all of the goodwill of the business connected with the use of, and
symbolized by the items described in, clause (a);
(d) the right to sue third parties for past, present and future
infringements of any Trademark Collateral described in clause (a) and, to
the extent applicable, clause (b); and
(e) all proceeds of, and rights associated with, the foregoing,
including any claim by any Grantor against third parties for past, present
or future infringement or dilution of any Trademark, Trademark registration
or Trademark license, including any Trademark, Trademark registration or
Trademark license referred to in Item A and Item B of Schedule III attached
hereto, or for any injury to the goodwill associated with the use of any
such Trademark or for breach or enforcement of any Trademark license and
all rights corresponding thereto throughout the world.
"Trade Secrets Collateral" means all common law and statutory trade secrets
and all other confidential or proprietary or useful information (to the extent
such confidential, proprietary or useful information is protected by any Grantor
against disclosure and is not readily ascertainable) and all know-how obtained
by or used in or contemplated at any time for use in the business of any Grantor
(all of the foregoing being collectively called a "Trade Secret"), whether or
not such Trade Secret has been reduced to a writing or other tangible form,
including all documents and things embodying, incorporating or referring in any
way to such Trade Secret, all Trade Secret licenses, including each Trade Secret
license referred to in
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Schedule V attached hereto, and including the right to sue for and to enjoin and
to collect damages for the actual or threatened misappropriation of any Trade
Secret and for the breach or enforcement of any such Trade Secret license.
"U.C.C." means the Uniform Commercial Code, as in effect in the State of
New York.
SECTION 1.2. Credit Agreement Definitions. Unless otherwise defined herein
or the context otherwise requires, terms used in this Security Agreement,
including its preamble and recitals, have the meanings provided in the Credit
Agreement.
SECTION 1.3. U.C.C. Definitions. Unless otherwise defined herein or the
context otherwise requires, terms for which meanings are provided in the U.C.C.
are used in this Security Agreement, including its preamble and recitals, with
such meanings.
ARTICLE II
SECURITY INTEREST
SECTION 2.1. Grant of Security. Each Grantor to the extent it has any
interest whatsoever, hereby assigns and pledges to the Administrative Agent for
its benefit and the ratable benefit of each of the Lender Parties, and hereby
grants to the Administrative Agent for its benefit and the ratable benefit of
each of the Lender Parties a security interest in, all of the following, whether
now or hereafter existing or acquired by such Grantor (the "Collateral"):
(a) all equipment in all of its forms of such Grantor, wherever
located, including all parts thereof and all accessions, additions,
attachments, improvements, substitutions and replacements thereto and
therefor (any and all of the foregoing being the "Equipment");
(b) all inventory in all of its forms of such Grantor, wherever
located, including
(i) all raw materials and work in process therefor, finished
goods thereof, and materials used or consumed in the manufacture or
production thereof,
(ii) all goods in which such Grantor has an interest in mass
or a joint or other interest or right of any kind (including
goods in which such Grantor has an interest or right as
consignee), and
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(iii) all goods which are returned to or repossessed by such
Grantor,
and all accessions thereto, products thereof and documents therefor (any
and all such inventory, materials, goods, accessions, products and
documents being the "Inventory");
(c) all accounts, contracts, contract rights, chattel paper, documents
and general intangibles of such Grantor, whether or not arising out of or
in connection with the sale or lease of goods or the rendering of services,
and all rights of such Grantor now or hereafter existing in and to all
security agreements, guaranties, leases and other contracts securing or
otherwise relating to any such accounts, contracts, contract rights,
chattel paper, documents, instruments, and general intangibles (any and all
such accounts, contracts, contract rights, chattel paper, documents,
instruments, and general intangibles being the "Receivables", and any and
all such security agreements, guaranties, leases and other contracts being
the "Related Contracts");
(d) all Intellectual Property Collateral of such Grantor;
(e) all books, records, writings, data bases, information and other
property relating to, used or useful in connection with, evidencing,
embodying, incorporating or referring to, any of the foregoing in this
Section 2.1;
(f) all of the other property and rights of every kind and description
and interests therein of such Grantor (including all Deposit Accounts); and
(g) all products, offspring, rents, issues, profits, returns, income
and proceeds of and from any and all of the foregoing Collateral (including
proceeds which constitute property of the types described in clauses (a),
(b), (c), (d), (e) and (f), proceeds deposited from time to time in the
Collateral Account and in any lock boxes of such Grantor, and, to the
extent not otherwise included, all payments under insurance (whether or not
the Administrative Agent is the loss payee thereof), or any indemnity,
warranty or guaranty, payable by reason of loss or damage to or otherwise
with respect to any of the foregoing Collateral).
Notwithstanding the foregoing, "Collateral" shall not include any general
intangibles or other rights arising under contracts as to which the grant of a
security interest would constitute a violation of a valid and enforceable
restriction on such grant, unless and until any required consents shall have
been obtained. Each Grantor agrees to use its best efforts to obtain any such
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required consent to the extent reasonably requested by the Administrative Agent.
SECTION 2.2. Security for Obligations. This Security Agreement secures the
payment of all Obligations of the Borrower now or hereafter existing under the
Credit Agreement, the Notes and each other Loan Document to which the Borrower
is or may become a party, whether for principal, interest, costs, fees, expenses
or otherwise, and all obligations of each Grantor now or hereafter existing
under this Security Agreement and each other Loan Document to which it is or may
become a party (all such obligations of the Borrower and each Grantor being the
"Secured Obligations").
SECTION 2.3. Continuing Security Interest; Transfer of Notes. This Security
Agreement shall create a continuing security interest in the Collateral and
shall
(a) remain in full force and effect until payment in full of all
Secured Obligations and the termination of all Commitments,
(b) be binding upon each Grantor, its successors, transferees and
assigns, and
(c) inure, together with the rights and remedies of the Administrative
Agent hereunder, to the benefit of the Administrative Agent and each other
Lender Party.
Without limiting the generality of the foregoing clause (c), any Lender may
assign or otherwise transfer (in whole or in part) any Note or Credit Extension
held by it to any other Person or entity, and such other Person or entity shall
thereupon become vested with all the rights and benefits in respect thereof
granted to such Lender under any Loan Document (including this Security
Agreement) or otherwise, subject, however, to any contrary provisions in such
assignment or transfer, and to the provisions of Section 10.11 and Article IX of
the Credit Agreement. Upon (i) the sale, transfer or other disposition of
Collateral in accordance with the Credit Agreement or (ii) the payment in full
of all Secured Obligations, the termination or expiration of all Letters of
Credit and the termination of all Commitments, the security interest granted
herein shall automatically terminate with respect to (x) such Collateral (in the
case of clause (i)) or (y) all Collateral (in the case of clause (ii)). Upon any
such termination, the Administrative Agent will, at such Grantor's sole expense,
execute and deliver to such Grantor such documents as such Grantor shall
reasonably request to evidence such termination.
SECTION 2.4. Grantor Remains Liable. Anything herein to the contrary
notwithstanding
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(a) each Grantor shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein, and
shall perform all of its duties and obligations under such contracts and
agreements to the same extent as if this Security Agreement had not been
executed,
(b) the exercise by the Administrative Agent of any of its rights
hereunder shall not release any Grantor from any of its duties or
obligations under any such contracts or agreements included in the
Collateral, and
(c) neither the Administrative Agent nor any other Lender Party shall
have any obligation or liability under any such contracts or agreements
included in the Collateral by reason of this Security Agreement, nor shall
the Administrative Agent or any other Lender Party be obligated to perform
any of the obligations or duties of any Grantor thereunder or to take any
action to collect or enforce any claim for payment assigned hereunder.
SECTION 2.5. Security Interest Absolute. All rights of the Administrative
Agent and the security interests granted to the Administrative Agent hereunder,
and all obligations of each Grantor hereunder, shall be absolute and
unconditional, irrespective of
(a) any lack of validity or enforceability of the Credit Agreement,
any Note or any other Loan Document;
(b) the failure of any Lender Party or any holder of any Note
(i) to assert any claim or demand or to enforce any right or
remedy against the Borrower, any other Obligor or any other Person
under the provisions of the Credit Agreement, any Note, any other Loan
Document or otherwise, or
(ii) to exercise any right or remedy against any other guarantor
of, or collateral securing, any Obligations of the Borrower or any
other Obligor;
(c) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations or any other extension,
compromise or renewal of any Obligations of the Borrower or any other
Obligor;
(d) any reduction, limitation, impairment or termination of any
Obligations of the Borrower or any other Obligor for any reason, including
any claim of waiver, release, surrender, alteration or compromise, and
shall not
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be subject to (and each Grantor hereby waives any right to or claim of) any
defense or setoff, counterclaim, recoupment or termination whatsoever by
reason of the invalidity, illegality, nongenuineness, irregularity,
compromise, unenforceability of, or any other event or occurrence
affecting, any Obligations of the Borrower, any other Obligor or otherwise;
(e) any amendment to, rescission, waiver, or other modification of, or
any consent to departure from, any of the terms of the Credit Agreement,
any Note or any other Loan Document;
(f) any addition, exchange, release, surrender or non- perfection of
any collateral (including the Collateral), or any amendment to or waiver or
release of or addition to or consent to departure from any guaranty, for
any of the Obligations; or
(g) any other circumstances which might otherwise constitute a defense
available to, or a legal or equitable discharge of, the Borrower, any other
Obligor, any surety or any guarantor.
SECTION 2.6. Postponement of Subrogation, etc. Each Grantor agrees that it
will not exercise any rights which it may acquire by reason of any payment made
hereunder, whether by way of subrogation, reimbursement or otherwise, until the
prior payment, in full and in cash, of all Obligations of the Borrower and each
other Obligor. Any amount paid to any Grantor on account of any payment made
hereunder prior to the payment in full of all Obligations of the Borrower and
each other Obligor shall be held in trust for the benefit of the Lender Parties
and each holder of a Note and shall immediately be paid to the Lender Parties
and each holder of a Note and credited and applied against the Obligations of
the Borrower and each other Obligor, whether matured or unmatured, in accordance
with the terms of the Credit Agreement; provided, however, that if
(a) such Grantor has made payment to the Lender Parties and each
holder of a Note of all or any part of the Obligations of the Borrower or
any other Obligor, and
(b) all Obligations of the Borrower and each other Obligor have been
paid in full and all Commitments have been permanently terminated,
each Lender Party and each holder of a Note agrees that, at the requesting
Grantor's request, the Lender Parties and the holders of the Notes will execute
and deliver to such Grantor appropriate documents (without recourse and without
representation or warranty) necessary to evidence the transfer by subrogation to
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such Grantor of an interest in the Obligations of the Borrower and each other
Obligor resulting from such payment by such Grantor. In furtherance of the
foregoing, for so long as any Obligations or Commitments remain outstanding,
each Grantor shall refrain from taking any action or commencing any proceeding
against the Borrower or any other Obligor (or its successors or assigns, whether
in connection with a bankruptcy proceeding or otherwise) to recover any amounts
in respect of payments made under this Security Agreement to any Lender Party or
any holder of a Note.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties. Each Grantor represents and
warrants insofar as the representations and warranties contained herein are
applicable to such Grantor and its properties, to each Lender Party as set forth
in this Article.
SECTION 3.1.1. Location of Collateral, etc. All of the Equipment and
Inventory (other than Inventory in transit) of such Grantor are located at the
places specified in Item A and Item B, respectively, of Schedule I hereto, and
at such other locations as are notified to the Administration Agent pursuant to
clause (a) of Section 4.1.2.. The place(s) of business and chief executive
office of such Grantor and the office(s) where such Grantor keeps its records
concerning the Receivables, and all originals of all chattel paper which
evidence Receivables, are located at the address as set forth in Item C of
Schedule I hereto and at such other locations as are notified to the
Administration Agent pursuant to clause (a) of Section 4.1.2.. As of the date
hereof, such Grantor has no trade name except as set forth in Item D of Schedule
I hereto. During the four months preceding the date hereof, such Grantor has not
been known by any legal name different from the one set forth on the signature
page hereto, nor has such Grantor been the subject of any merger or other
corporate reorganization, except as set forth in Item D of Schedule I hereto. If
the Collateral includes any Inventory located in the State of California, such
Grantor is not a "retail merchant" within the meaning of Section 9102 of the
Uniform Commercial Code - Secured Transactions of the State of California.
SECTION 3.1.2. Ownership, No Liens, etc. Such Grantor owns the Collateral
free and clear of any Lien except for the security interest created by this
Security Agreement and except as permitted by the Credit Agreement. No effective
financing statement or other instrument similar in effect covering all or any
part of the Collateral is on file in any recording office,
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except such as may have been filed in favor of the Administrative Agent relating
to this Security Agreement or as have been filed in connection with Liens
permitted pursuant to Section 7.2.3 of the Credit Agreement.
SECTION 3.1.3. Negotiable Documents, Instruments and Chattel Paper. Such
Grantor has delivered to the Administrative Agent possession of all originals of
all negotiable documents, instruments and chattel paper (other than those
payable within 30 days of the date of issuance) currently owned or held by such
Grantor (duly endorsed in blank, if requested by the Administrative Agent)
having a face amount in excess of $100,000 individually or $2,000,000 in the
aggregate with all other negotiable documents, instruments and chattel paper
then held or owned by other Obligors.
SECTION 3.1.4. Intellectual Property Collateral. With respect to any
Intellectual Property Collateral the loss, impairment or infringement of which
could reasonably be expected to have a Material Adverse Effect:
(a) such Intellectual Property Collateral is subsisting and has not
been adjudged invalid or unenforceable, in whole or in part;
(b) such Intellectual Property Collateral is valid and enforceable;
(c) such Grantor has made all necessary filings and recordations to
protect its interest in such Intellectual Property Collateral, including,
without limitation, recordations of all of its interests in the Patent
Collateral and Trademark Collateral in the United States Patent and
Trademark Office and its claims to the Copyright Collateral in the United
States Copyright Office;
(d) such Grantor is the exclusive owner of the entire and unencumbered
right, title and interest in and to such Intellectual Property Collateral
and no claim has been made that the use of such Intellectual Property
Collateral does or may violate the asserted rights of any third party; and
(e) except as permitted by Section 4.1.4, such Grantor has performed
and will continue to perform all acts and has paid and will continue to pay
all required fees and taxes to maintain such Intellectual Property
Collateral in full force and effect in the United States, as applicable.
SECTION 3.1.5. Validity, etc. This Security Agreement creates a valid first
priority security interest in the Collateral (subject to Section 9-306 of the
U.C.C. and Liens permitted pursuant to Section 7.2.3 of the Credit Agreement),
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securing the payment of the Secured Obligations, and all filings and other
actions necessary or desirable to perfect and protect such security interest
have been duly taken.
SECTION 3.1.6. Authorization, Approval, etc. Except as have been obtained
or made and are in full force and effect, no authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required (except in the case of Receivables owing to any
governmental entity) either
(a) for the grant by such Grantor of the security interest granted
hereby or for the execution, delivery and performance of this Security
Agreement by such Grantor, or
(b) for the perfection of or the exercise by the Administrative Agent
of its rights and remedies hereunder.
ARTICLE IV
COVENANTS
SECTION 4.1. Certain Covenants. Each Grantor covenants and agrees insofar
as the covenants contained herein are applicable to such Grantor and its
properties, that, so long as any portion of the Secured Obligations shall remain
unpaid or any Lender shall have any outstanding Commitment, it will, unless the
Required Lenders shall otherwise consent in writing, perform the obligations set
forth in this Section.
SECTION 4.1.1. As to Equipment and Inventory. Such Grantor hereby agrees
that it shall keep all the Equipment and Inventory (other than Equipment and
Inventory sold in accordance with the Credit Agreement) at the places therefor
specified in Section 3.1.1 or at such other places in a jurisdiction where all
representations and warranties set forth in Article III (including Section
3.1.6) shall be true and correct, and all action required pursuant to the first
sentence of Section 4.1.7 shall have been taken with respect to the Equipment
and Inventory.
SECTION 4.1.2. As to Receivables.
(a) Such Grantor shall give the Administration Agent a supplement to
Schedule I and Schedule IV hereto on each date a Compliance Certificate is
required to be delivered to the Administrative Agent under the Credit
Agreement, which shall set forth any changes to the information set forth
in Section 3.1.1.. Such Grantor shall keep its place(s) of business and
chief executive office and the office(s) where it keeps its records
concerning the Receivables located at
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the address set forth below its name on the signature page hereof, or at
such other locations in a jurisdiction where all actions required by the
first sentence of Section 4.1.7 shall have been taken with respect to the
Receivables, and shall not change its name except upon 30 days' prior
written notice to the Administrative Agent.
(b) Such Grantor shall list each of its Deposit Accounts in Schedule
VI hereto, as such Schedule is supplemented by notice to the Administrative
Agent pursuant to clause (a) of Section 4.1.1.. Subject to and without
limiting the effect of clause (c) of this Section 4.1.2, following the
occurrence and continuance of an Event of Default and at the direction of
the Required Lenders, such Grantor shall make its best efforts to maintain
each of its Deposit Accounts pursuant to a deposit account agreement which
is in all respects satisfactory to the Administrative Agent and which
provides, among other things, that (i) until the deposit account bank shall
have received written notice from the Administrative Agent pursuant to this
clause, the deposit account bank will make all payments from the Deposit
Account as specified by such Grantor, and, after any such notice, the
deposit account bank will make all payments from the Deposit Account to the
Administrative Agent for credit to the Collateral Account, (ii) the deposit
account bank (if other than the Administrative Agent or a Lender) waives
all set off rights (other than setoff rights for reasonable and customary
account service charges and fees and amounts based on items that are
dishonored by the payor thereof and returned to the deposit account bank),
and (iii) such deposit account agreement may not be amended without the
written consent of the Administrative Agent. The Administrative Agent will
not give the notice referred to in the preceding clause (b)(i) unless it
has given, or is contemporaneously giving, notice pursuant to clause (c) of
this Section. In the event that a deposit account bank refuses to enter
into a deposit account agreement in accordance with the above listed terms
within 30 days of the requesting Grantor's request, the Administrative
Agent shall have the right to direct such Grantor to transfer the assets in
that deposit account to a bank which will enter into a deposit account
agreement in accordance with the above listed terms.
(c) Upon written notice by the Administrative Agent to such Grantor
pursuant to this clause, all proceeds of Collateral received by such
Grantor shall be delivered in kind to the Administrative Agent for deposit
to a deposit account (the "Collateral Account") of such Grantor maintained
with the Administrative Agent, and such Grantor shall not commingle any
such proceeds, and shall hold separate and apart from all other property,
all such
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proceeds in express trust for the benefit of the Administrative Agent until
delivery thereof is made to the Administrative Agent. The Administrative
Agent will not give the notice referred to in the preceding sentence unless
there shall have occurred and be continuing a Default of the nature set
forth in Section 8.1.9 of the Credit Agreement or any other Event of
Default. No funds, other than proceeds of Collateral, will be deposited in
the Collateral Account.
(d) The Administrative Agent shall have the right to apply any amount
in the Collateral Account to the payment of any Obligations which are due
and payable or payable upon demand. The Administrative Agent may at any
time transfer to the applicable Grantor's general demand deposit account at
the Administrative Agent any or all of the collected funds in the
Collateral Account; provided, however, that any such transfer shall not be
deemed to be a waiver or modification of any of the Administrative Agent's
rights under this clause.
SECTION 4.1.3. As to Collateral.
(a) Until such time as the Administrative Agent shall notify such
Grantor of the revocation of such power and authority (which notice may not
be given unless there shall not have occurred and be continuing a Default
of the nature set forth in Section 8.1.9 of the Credit Agreement or any
other Event of Default), such Grantor may, in accordance with the Credit
Agreement, at its own expense, sell, lease or furnish under the contracts
of service any of the Inventory, and use and consume, in accordance with
the Credit Agreement, any raw materials, work in process or materials. The
Administrative Agent, however, may, at any time after any such revocation
of such power and authority, notify any parties obligated on any of the
Collateral to make payment to the Administrative Agent of any amounts due
or to become due thereunder and enforce collection of any of the Collateral
by suit or otherwise and surrender, release, or exchange all or any part
thereof, or compromise or extend or renew for any period (whether or not
longer than the original period) any indebtedness thereunder or evidenced
thereby. Upon request of the Administrative Agent (which request may not be
made unless there shall have occurred and be continuing a Default of the
nature set forth in Section 8.1.9 of the Credit Agreement or any other
Event of Default), such Grantor will, at its own expense, notify any
parties obligated on any of the Collateral to make payment to the
Administrative Agent of any amounts due or to become due thereunder.
(b) The Administrative Agent is authorized to endorse, in the name of
such Grantor, any item, howsoever received by
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the Administrative Agent, representing any payment on or other proceeds of
any of the Collateral.
SECTION 4.1.4. As to Intellectual Property Collateral. Each Grantor
covenants and agrees to comply with the following provisions as such provisions
relate to any Intellectual Property Collateral material to the operations or
business of each Grantor:
(a) Such Grantor covenants and agrees that it will not, unless such
Grantor shall have a valid business purpose to do otherwise, do any act, or
omit to do any act, whereby any of the Patent Collateral may lapse or
become abandoned or dedicated to the public or unenforceable.
(b) Unless it has a valid business purpose, such Grantor covenants and
agrees that it will not, and that it will not permit any of its licensees
to:
(i) fail to continue to use any of the Trademark Collateral in
order to maintain all of the Trademark Collateral in full force free
from any claim of abandonment for non-use,
(ii) fail to maintain as in the past the quality of products and
services offered under all of the Trademark Collateral,
(iii) fail to use a notice of registration as appropriate in
connection with goods using any Trademark Collateral registered with
the United States Patent and Trademark Office or equivalent foreign
authority,
(iv) do or permit any act or knowingly omit to do any act whereby
any of the Trademark Collateral may lapse or become invalid or
unenforceable.
(c) Such Grantor covenants and agrees that it will not, unless such
Grantor shall have a valid business purpose to do otherwise, do or permit
any act or knowingly omit to do any act whereby any of the Copyright
Collateral or any of the Trade Secrets Collateral may lapse or become
invalid or unenforceable or placed in the public domain except upon
expiration of the end of an unrenewable term of a registration thereof.
(d) Such Grantor covenants and agrees that it shall notify the
Administrative Agent upon each delivery of a Compliance Certificate as
required pursuant to the Credit Agreement if it knows, or has reason to
know, that any application or registration relating to any material item of
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the Intellectual Property Collateral may become abandoned or dedicated to
the public or placed in the public domain or invalid or unenforceable, or
of any adverse determination or development (including the institution of,
or any such determination or development in, any proceeding in the United
States Patent and Trademark Office, the United States Copyright Office or
any foreign counterpart thereof or any court) regarding such Grantor's
ownership of any of the Intellectual Property Collateral, its right to
register the same or to keep and maintain and enforce the same.
(e) Such Grantor covenants and agrees that it shall notify the
Administrative Agent with each delivery of a Compliance Certificate, of the
prior filing of any application for the registration of any Intellectual
Property Collateral with the United States Patent and Trademark Office or
the United States Copyright Office, and upon request of the Administrative
Agent, execute and deliver any and all agreements, instruments, documents
and papers as the Administrative Agent may reasonably request to evidence
the Administrative Agent's security interest in such Intellectual Property
Collateral and the goodwill and general intangibles of such Grantor
relating thereto or represented thereby.
(f) Such Grantor shall take all necessary steps, including in any
proceeding before the United States Patent and Trademark Office or the
United States Copyright Office to maintain and pursue any application (and
to obtain the relevant registration) filed with respect to, and to maintain
any registration of, the Intellectual Property Collateral, including the
filing of applications for renewal, affidavits of use, affidavits of
incontestability and opposition, interference and cancellation proceedings
and the payment of fees and taxes (except to the extent that dedication,
abandonment or invalidation is permitted under the foregoing clauses (a),
(b) and (c)).
(g) Such Grantor shall execute and deliver to the Administrative Agent
a Patent Security Agreement, a Trademark Security Agreement and a Copyright
Security Agreement in the forms of Exhibit A, Exhibit B and Exhibit C
hereto, as applicable, and shall execute and deliver to the Administrative
Agent any other document required to acknowledge or register or perfect the
Administrative Agent's interest in the U.S. in any part of the Intellectual
Property Collateral.
SECTION 4.1.5. Insurance. Such Grantor will, and will cause each of its
Subsidiaries to, maintain or cause to be maintained with responsible insurance
companies insurance with respect to its properties and business as required
pursuant to
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the Credit Agreement. Without limiting the foregoing, such Grantor further
agrees as follows:
(a) Each policy for property insurance shall show the Administrative
Agent as loss payee.
(b) Each policy for liability insurance shall show the Administrative
Agent as an additional insured.
(c) Each insurance policy shall provide that at least 30 days' prior
written notice of cancellation or of lapse shall be given to the
Administrative Agent by the insured.
(d) Such Grantor shall, if so requested by the Administrative Agent,
deliver to the Administrative Agent a copy of each insurance policy.
SECTION 4.1.6. Transfers and Other Liens. Such Grantor covenants and agrees
that it will not:
(a) sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except as permitted by the Credit
Agreement; or
(b) create or suffer to exist any Lien upon or with respect to any of
the Collateral to secure Indebtedness of any Person or entity, except for
the security interest created by this Security Agreement and except as
permitted by the Credit Agreement.
SECTION 4.1.7. Further Assurances, etc. Such Grantor agrees that, from time
to time at its own expense, it will promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary or
desirable, or that the Administrative Agent may reasonably request, in order to
perfect, preserve and protect any security interest granted or purported to be
granted hereby in Collateral located in the United States or to enable the
Administrative Agent to exercise and enforce its rights and remedies hereunder
with respect to any Collateral. Without limiting the generality of the
foregoing, such Grantor will
(a) if any Receivable not payable within 30 days or less in excess of
$100,000 shall be evidenced by a promissory note or other instrument,
negotiable document or chattel paper, deliver and pledge to the
Administrative Agent hereunder such promissory note, instrument, negotiable
document or chattel paper duly endorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance reasonably
satisfactory to the Administrative Agent (provided, that no more than an
aggregate face amount of $2,000,000 of such Receivables not
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payable within 30 days from the date of issuance by such Grantor and the
other Obligors so evidenced shall at any time not be pledged and in the
possession of the Administrative Agent);
(b) execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices (including,
without limitation, any assignment of claim form under or pursuant to the
federal assignment of claims statute, 31 U.S.C. ss. 3726, any successor or
amended version thereof or any regulation promulgated under or pursuant to
any version thereof), as may be necessary or desirable, or as the
Administrative Agent may reasonably request, in order to perfect and
preserve the security interests and other rights granted or purported to be
granted to the Administrative Agent hereby; and
(c) furnish to the Administrative Agent, from time to time at the
Administrative Agent's reasonable request, statements and schedules further
identifying and describing the Collateral and such other reports in
connection with the Collateral as the Administrative Agent may reasonably
request, all in reasonable detail; and
With respect to the foregoing and the grant of the security interest hereunder,
such Grantor hereby authorizes the Agent to file one or more financing or
continuation statements, and amendments thereto, relative to all or any part of
the Collateral without the signature of such Grantor where permitted by law. A
carbon, photographic or other reproduction of this Security Agreement or any
financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.
ARTICLE V
THE ADMINISTRATIVE AGENT
SECTION 5.1. Administrative Agent Appointed Attorney-in- Fact. Each Grantor
hereby irrevocably appoints the Administrative Agent such Grantor's
attorney-in-fact, with full authority in the place and stead of such Grantor and
in the name of such Grantor or otherwise, from time to time in the
Administrative Agent's discretion following the occurrence and during the
continuance of an Event of Default and notice to such Grantor, to take any
action and to execute any instrument which the Administrative Agent may deem
necessary or advisable to accomplish the purposes of this Security Agreement,
including, without limitation:
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<PAGE>
(a) to ask, demand, collect, sue for, recover, compromise, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;
(b) to receive, endorse, and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (a) above;
(c) to file any claims or take any action or institute any proceedings
which the Administrative Agent may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of
the Administrative Agent with respect to any of the Collateral; and
(d) to perform the affirmative obligations of such Grantor hereunder
(including all obligations of such Grantor pursuant to Section 4.1.7).
Such Grantor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
SECTION 5.2. Administrative Agent May Perform. If any Grantor fails to
perform any agreement contained herein within 30 days after written notice from
the Administrative Agent, the Administrative Agent may itself perform, or cause
performance of, such agreement, and the expenses of the Administrative Agent
incurred in connection therewith shall be payable by such Grantor pursuant to
Section 6.2.
SECTION 5.3. Administrative Agent Has No Duty. In addition to, and not in
limitation of, Section 2.4, the powers conferred on the Administrative Agent
hereunder are solely to protect its interest (on behalf of the Lender Parties)
in the Collateral and shall not impose any duty on it to exercise any such
powers. Except for reasonable care of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Administrative
Agent shall have no duty as to any Collateral or as to the taking of any
necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral.
SECTION 5.4. Reasonable Care. The Administrative Agent is required to
exercise reasonable care in the custody and preservation of any of the
Collateral in its possession; provided, however, the Administrative Agent shall
be deemed to have exercised reasonable care in the custody and preservation of
any of the Collateral, if it takes such action for that purpose as such Grantor
reasonably requests in writing at times other than upon the occurrence and
during the continuance of any Event
-20-
<PAGE>
of Default, but failure of the Administrative Agent to comply with any such
request at any time shall not in itself be deemed a failure to exercise
reasonable care.
ARTICLE VI
REMEDIES
SECTION 6.1. Certain Remedies. If any Event of Default shall have occurred
and be continuing:
(a) The Administrative Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party
on default under the U.C.C. (whether or not the U.C.C. applies to the
affected Collateral) and also may
(i) require each Grantor to, and each Grantor hereby agrees that
it will, at its expense and upon request of the Administrative Agent
forthwith, assemble all or part of the Collateral as directed by the
Administrative Agent and make it available to the Administrative Agent
at a place to be designated by the Administrative Agent which is
reasonably convenient to both parties and
(ii) without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or
private sale, at any of the Administrative Agent's offices or
elsewhere, for cash, on credit or for future delivery, and upon such
other terms as the Administrative Agent may deem commercially
reasonable. Each Grantor agrees that, to the extent notice of sale
shall be required by law, at least ten days' prior notice to such
Grantor of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable
notification. The Administrative Agent shall not be obligated to make
any sale of Collateral regardless of notice of sale having been given.
The Administrative Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place
to which it was so adjourned.
(b) All cash proceeds received by the Administrative Agent in respect
of any sale of, collection from, or other realization upon all or any part
of the Collateral may, in the discretion of the Administrative Agent, be
held by the
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<PAGE>
Administrative Agent as collateral for, and/or then or at any time
thereafter applied (after payment of any amounts payable to the
Administrative Agent pursuant to Section 6.2) in whole or in part by the
Administrative Agent for the benefit of the Lender Parties against, all or
any part of the Secured Obligations as follows: (i) first, to the
reasonable out-of-pocket costs and expenses of the Administrative Agent in
connection with the retaking, holding, preparing for sale, selling or other
disposition of the Collateral, including, without limitation, all court
costs and the reasonable fees and expenses of its agents and legal counsel;
(ii) second, to the payment in full of the Obligations or in the event that
such proceeds are insufficient to pay in full the Obligations, equally and
ratably in accordance with each Lender's Obligations owing to it under or
pursuant to the Credit Agreement or any other Loan Document, or under or
pursuant to any Rate Protection Agreement (as to each Lender, applied first
to fees and expense reimbursements then due to such Lender, then to
interest due to such Lender, then to pay or prepay principal of the Loans
or owing to, or to reduce the "credit exposure" of, such Lender under such
Rate Protection Agreement, as the case may be, then to pay (or cash
collateralize) the remaining Obligations; (iii) third, without duplication
of any amounts paid pursuant to clause (ii) above, to the Indemnified
Parties to the extent of any amounts owing pursuant to Section 10.4 of the
Credit Agreement; and (iv) fourth, to each Grantor, or its successors and
assigns, or as a court of competent jurisdiction may direct, of any surplus
then remaining. For purposes of this Agreement, the "credit exposure" at
any time of any Lender under a Rate Protection Agreement to which such
Lender is a party shall be determined at such time in accordance with the
customary methods of calculating credit exposure under similar arrangements
by the counterparty to such arrangements, taking into account potential
interest rate movements, mitigating factors such as other interest rate
swaps, caps, collars and hedges, and the respective termination provisions
and notional principal amount and term of such Rate Protection Agreement.
Each Grantor shall remain liable to the Lenders for any deficiency. If the
Administrative Agent has funds available to apply to a portion of, but not
all of, one of the amounts described in clauses (i) through (iv) above,
then the Administrative Agent shall apply such funds to the applicable
parties in proportion to the amounts to which such parties would have been
entitled if the entire amount described in any such clause had been
available.
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<PAGE>
SECTION 6.2. Indemnity and Expenses.
(a) Each Grantor jointly and severally agrees to indemnify the
Administrative Agent from and against any and all claims, losses and
liabilities arising out of or resulting from this Security Agreement
(including, without limitation, enforcement of this Security Agreement),
except claims, losses or liabilities resulting from the Administrative
Agent's gross negligence or wilful misconduct.
(b) Each Grantor will upon demand pay to the Administrative Agent the
amount of any and all reasonable expenses, including the reasonable fees
and disbursements of its counsel and of any experts and agents, which the
Administrative Agent may incur in connection with
(i) the administration of this Security Agreement,
(ii) the custody, preservation, use or operation of, or the sale
of, collection from, or other realization upon, any of the Collateral,
(iii) the exercise or enforcement of any of the rights of the
Administrative Agent or the Lender Parties hereunder, or (iv) the
failure by any Grantor to perform or observe any of the provisions
hereof.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.1. Loan Document. This Security Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions thereof.
SECTION 7.2. Amendments; etc. No amendment to or waiver of any provision of
this Security Agreement nor consent to any departure by any Grantor herefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Administrative Agent (on behalf of the Lenders or the Required Lenders,
as the case may be), and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
SECTION 7.3. Addresses for Notices. All notices and other communications
provided to each Guarantor under this Security Agreement shall be in writing or
by facsimile and addressed,
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<PAGE>
delivered or transmitted to such facsimile number as set forth in the Subsidiary
Guaranty or at such other address or facsimile number as may be designated by
such Grantor in a notice to the other parties. Any notice, if mailed and
properly addressed with postage prepaid or if properly addressed and sent by
pre-paid courier service, shall be deemed given when received; any notice, if
transmitted by facsimile, shall be deemed given when transmitted.
SECTION 7.4. Captions. Section captions used in this Security Agreement are
for convenience of reference only, and shall not affect the construction of this
Security Agreement.
SECTION 7.5. Severability. Wherever possible each provision of this
Security Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Security Agreement
shall be prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Security Agreement.
SECTION 7.6. Governing Law, Entire Agreement, etc. THIS SECURITY AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE
SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
NEW YORK. THIS SECURITY AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE
ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER
HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT
THERETO.
SECTION 7.7. Forum Selection and Consent to Jurisdiction. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS SECURITY
AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF THE LENDER PARTIES OR EACH GRANTOR SHALL BE
BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK OR IN
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;
PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR
OTHER PROPERTY MAY BE BROUGHT, AT THE ADMINISTRATIVE Agent'S OPTION, IN THE
COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.
EACH GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET
FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY
IN CONNECTION WITH SUCH LITIGATION. EACH GRANTOR FURTHER IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS BY REGISTERED
-24-
<PAGE>
MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW
YORK. EACH GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE
TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED
TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. TO THE EXTENT THAT ANY GRANTOR HAS OR HEREAFTER MAY ACQUIRE
ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER
THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF
EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, EACH GRANTOR
HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
SECURITY AGREEMENT.
SECTION 7.8. Waiver of Jury Trial. THE LENDER PARTIES AND EACH GRANTOR
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS SECURITY AGREEMENT, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE
LENDER PARTIES OR ANY GRANTOR. EACH GRANTOR ACKNOWLEDGES AND AGREES THAT IT HAS
RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER
PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDERS ENTERING INTO THE CREDIT
AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT.
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<PAGE>
IN WITNESS WHEREOF, each Grantor has caused this Security Agreement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
UB INVESTMENTS US INC.
SHAFFER, CLARKE & CO., INC.
JOHNSTON'S READY-CRUST COMPANY
KEEBLER COMPANY
EMERALD INDUSTRIES, INC.
ATHENS PACKAGING, INC.
BAKE-LINE PRODUCTS INC.
STEAMBOAT CORPORATION
ILLINOIS BAKING CORPORATION
KEEBLER COOKIE AND CRACKER COMPANY
HOLLOW TREE COMPANY
KEEBLER COMPANY/PUERTO RICO, INC.
KEEBLER H.C., INC.
KEEBLER-GEORGIA, INC.
By:______________________________
Title:
THE BANK OF NOVA SCOTIA,
as Administrative Agent
By:______________________________
Title:
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<PAGE>
SCHEDULE I
to
Subsidiary Security Agreement
[NAME OF GRANTOR]
Item A. Location of Equipment
Description Location
----------- --------
1.
2.
3.
4.
5.
Item B. Location of Inventory
Description Location
----------- --------
1.
2.
3.
4.
5.
<PAGE>
Item C. Place of Business, etc. (Section 3.1.1)
Name of Grantor Address
--------------- -------
1.
2.
3.
4.
5.
Item D. Trade Names
Name of Grantor Trade Name
--------------- ----------
1.
2.
3.
4.
5.
<PAGE>
SCHEDULE II
to
Subsidiary Security Agreement
[NAME OF GRANTOR]
Item A. Patents
Issued Patents
Patent No. Issue Date Inventor(s) Title
---------- ---------- ----------- -----
Pending Patent Applications
Serial No. Filing Date Inventor(s) Title
---------- ----------- ----------- -----
Item B. Patent Licenses
Effective Expiration Subject
Licensor Licensee Date Date Matter
-------- -------- ---- ---- ------
<PAGE>
SCHEDULE III
to
Subsidiary Security Agreement
[NAME OF GRANTOR]
Item A. Trademarks
Registered Trademarks
Trademark Registration No. Registration Date
--------- ---------------- -----------------
Pending Trademark Applications
Trademark Serial No. Filing Date
--------- ---------- -----------
Item B. Trademark Licenses
Effective Expiration
Trademark Licensor Licensee Date Date
--------- -------- -------- ---- ----
<PAGE>
SCHEDULE IV
to
Subsidiary Security Agreement
[NAME OF GRANTOR]
Item A. Copyrights/Mask Works
Registered Copyrights/Mask Works
Registration No. Registration Date Author(s) Title
---------------- ----------------- --------- -----
Copyright/Mask Work Pending Registration Applications
Serial No. Filing Date Author(s) Title
---------- ----------- --------- -----
Item B. Copyright/Mask Work Licenses
Effective Expiration Subject
Licensor Licensee Date Date Matter
-------- -------- ---- ---- ------
<PAGE>
SCHEDULE V
to
Subsidiary Security Agreement
[NAME OF GRANTOR]
Trade Secret or Know-How Licenses
Effective Expiration Subject
Licensor Licensee Date Date Matter
-------- -------- ---- ---- ------
<PAGE>
SCHEDULE VI
to
Subsidiary Security Agreement
Account
Bank Address of Bank Type of Account Number
---- --------------- --------------- ------
See Item C of SCHEDULE I to Subsidiary Security Agreement
<PAGE>
EXHIBIT A
to
Subsidiary Security Agreement
PATENT SECURITY AGREEMENT
THIS PATENT SECURITY AGREEMENT (this "Agreement"), dated as of _________
__, 19___, between [NAME OF GRANTOR] (the "Grantor") and THE BANK OF NOVA
SCOTIA, as administrative agent (together with any successor(s) thereto in such
capacity, the "Administrative Agent") for each of the Lender Parties (as defined
below).
W I T N E S S E T H :
WHEREAS, pursuant to a Credit Agreement, dated as of January __, 1996 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Credit Agreement"), between the Keebler Acquisition Corp., a Delaware
corporation (to be merged with and into UB Investments US Inc. and to become
known as Keebler Holding Corp.) (the "Borrower"), the various financial
institutions as are, or may from time to time become, parties thereto
(collectively, the "Lenders"), the Co-Agents named therein and the
Administrative Agent, the Lenders and the Issuer have extended Commitments to
make Credit Extensions to the Borrower;
WHEREAS, in connection with the Credit Agreement, the Grantor has executed
and delivered a Security Agreement, dated as of the date hereof (together with
all amendments and other modifications, if any, from time to time thereafter
made thereto, the "Security Agreement"); and
WHEREAS, as a condition precedent to the making of each Credit Extension
(including the initial Credit Extension) under the Credit Agreement, the Grantor
is required to execute and deliver this Agreement and to grant to the
Administrative Agent a continuing security interest in all of the Patent
Collateral (as defined below) to secure all Secured Obligations; and
WHEREAS, the Grantor has duly authorized the execution, delivery and
performance of this Agreement; and
WHEREAS, it is in the best interests of the Grantor to execute this
Agreement inasmuch as the Grantor will derive substantial direct and indirect
benefits from the Credit
<PAGE>
Extensions made from time to time to the Borrower by the Lenders and the Issuer
pursuant to the Credit Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, and in order to induce the Lenders and the Issuer to
make each Credit Extension (including the initial Credit Extension) to the
Borrower pursuant to the Credit Agreement, the Grantor agrees, for the benefit
of each Lender Party, as follows:
SECTION 1. Definitions. Unless otherwise defined herein or the context
otherwise requires, terms used in this Agreement, including its preamble and
recitals, have the meanings provided in the Security Agreement.
SECTION 2. Grant of Security Interest. For good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, to secure all of
the Secured Obligations, the Grantor does hereby mortgage, pledge and
hypothecate to the Administrative Agent, and grant to the Administrative Agent a
security interest in, for its benefit and the benefit of each Lender Party, all
of the following property (the "Patent Collateral"), whether now owned or
hereafter acquired or existing by it:
(a) all United States letters patent and applications for letters
patent and including each patent and patent application referred to in Item
A of Attachment 1 hereto;
(b) all reissues, divisions, continuations, continuations-in-part,
extensions, renewals and reexaminations of any of the items described in
clause (a);
(c) all patent licenses and other agreements providing the Grantor
with the right to use any of the items of the type referred to in clauses
(a) and (b), including each patent license referred to in Item B of
Attachment 1 hereto;
(d) the right to sue third parties for past, present or future
infringements of any Patent Collateral described in clauses (a) and (b)
and, to the extent applicable, clause (c); and
(e) all proceeds of, and rights associated with, the foregoing
(including license royalties and proceeds of infringement suits), and all
rights corresponding thereto throughout the world.
SECTION 3. Security Agreement. This Agreement has been executed and
delivered by the Grantor for the purpose of registering the security interest of
the Administrative Agent in
A-2
<PAGE>
the Patent Collateral with the United States Patent and Trademark Office. The
security interest granted hereby has been granted as a supplement to, and not in
limitation of, the security interest granted to the Administrative Agent for its
benefit and the benefit of each Lender Party under the Security Agreement. The
Security Agreement (and all rights and remedies of the Administrative Agent and
each Lender Party thereunder) shall remain in full force and effect in
accordance with its terms.
SECTION 4. Release of Security Interest. Upon payment in full of all
Secured Obligations and the termination of all Commitments, the Administrative
Agent shall, at the Grantor's expense, execute and deliver to the Grantor all
instruments and other documents as may be necessary or proper to release the
lien on and security interest in the Patent Collateral which has been granted
hereunder.
SECTION 5. Acknowledgment. The Grantor does hereby further acknowledge and
affirm that the rights and remedies of the Administrative Agent with respect to
the security interest in the Patent Collateral granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which (including
the remedies provided for therein) are incorporated by reference herein as if
fully set forth herein.
SECTION 6. Loan Document, etc. This Agreement is a Loan Document executed
pursuant to the Credit Agreement and shall (unless otherwise expressly indicated
herein) be construed, administered and applied in accordance with the terms and
provisions of the Credit Agreement.
SECTION 7. Counterparts. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
and all of which shall constitute together but one and the same agreement.
A-3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.
[NAME OF GRANTOR]
By:_____________________________
Title:
Address:____________________
____________________
Attention:__________________
Telecopier:_________________
THE BANK OF NOVA SCOTIA,
as Administrative Agent
By:_____________________________
Title:
Address:____________________
____________________
Attention:__________________
Telecopier:_________________
A-4
<PAGE>
ATTACHMENT 1
to
Patent Security Agreement
[NAME OF GRANTOR]
Item A. Patents
Issued Patents
Patent No. Issue Date Inventor(s) Title
---------- ---------- ----------- -----
Pending Patent Applications
Serial No. Filing Date Inventor(s) Title
---------- ----------- ----------- -----
Item B. Patent Licenses
Effective Expiration Subject
Licensor Licensee Patent No. Date Date Matter
-------- -------- ---------- ---- ---- ------
<PAGE>
EXHIBIT B
to
Subsidiary Security Agreement
TRADEMARK SECURITY AGREEMENT
THIS TRADEMARK SECURITY AGREEMENT (this "Agreement"), dated as of January
__, 1996, between [NAME OF GRANTOR] (the "Grantor") and THE BANK OF NOVA SCOTIA,
as administrative agent (together with any successor(s) thereto in such
capacity, the "Administrative Agent") for each of the Lender Parties (as defined
below).
W I T N E S S E T H :
WHEREAS, pursuant to a Credit Agreement, dated as of January __, 1996 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Credit Agreement"), between the Keebler Acquisition Corp., a Delaware
corporation (to be merged with and into UB Investments US Inc. and to become
known as Keebler Holding Corp.) (the "Borrower"), the various financial
institutions as are, or may from time to time become, parties thereto
(collectively, the "Lenders"), the Co-Agents named therein and the
Administrative Agent, the Lenders and the Issuer have extended Commitments to
make Credit Extensions to the Borrower; and
WHEREAS, in connection with the Credit Agreement, the Grantor has executed
and delivered a Security Agreement, dated as of the date hereof (together with
all amendments and other modifications, if any, from time to time thereafter
made thereto, the "Security Agreement"); and
WHEREAS, as a condition precedent to the making of each Credit Extension
(including the initial Credit Extension) under the Credit Agreement, the Grantor
is required to execute and deliver this Agreement and to grant to the
Administrative Agent a continuing security interest in all of the Trademark
Collateral (as defined below) to secure all Secured Obligations; and
WHEREAS, the Grantor has duly authorized the execution, delivery and
performance of this Agreement; and
WHEREAS, it is in the best interests of the Grantor to execute this
Agreement inasmuch as the Grantor will derive substantial direct and indirect
benefits from the Credit
<PAGE>
Extensions made from time to time to the Borrower by the Lenders and the Issuer
pursuant to the Credit Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, and in order to induce the Lenders and the Issuer to
make each Credit Extension (including the initial Credit Extension) to the
Borrower pursuant to the Credit Agreement, the Grantor agrees, for the benefit
of each Lender Party, as follows:
SECTION 1. Definitions. Unless otherwise defined herein or the context
otherwise requires, terms used in this Agreement, including its preamble and
recitals, have the meanings provided in the Security Agreement.
SECTION 2. Grant of Security Interest. For good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, to secure all of
the Secured Obligations, the Grantor does hereby mortgage, pledge and
hypothecate to the Administrative Agent, and grant to the Administrative Agent a
security interest in, for its benefit and the benefit of each Lender Party, all
of the following property (the "Trademark Collateral"), whether now owned or
hereafter acquired or existing:
(a) all trademarks, trade names, trade dress, service marks, logos,
other source of business identifiers, and designs (all of the foregoing
items in this clause (a) being collectively called a "Trademark"), now
existing in the United States or hereafter adopted or acquired in the
United States, and all registrations and recordings thereof and all
applications in connection therewith, including registrations, recordings
and applications in the United States Patent and Trademarks Office,
including those referred to in Item A of Attachment 1 attached hereto, and
all renewals hereof;
(b) all Trademark licenses and other agreements providing the Grantor
with the right to use any items of the type described in clause (a),
including each Trademark license referred to in Item B of Attachment 1
hereto;
(c) all of the goodwill of the business connected with the use of, and
symbolized by the items described in, clause (a);
(d) the right to sue third parties for past, present and future
infringements of any Trademark Collateral described in clause (a) and, to
the extent applicable, clause (b); and
B-2
<PAGE>
(e) all proceeds of, and rights associated with, the foregoing,
including any claim by the Grantor against third parties for past, present
or future infringement or dilution of any Trademark, Trademark registration
or Trademark license, including any Trademark, Trademark registration or
Trademark license referred to in Item A and Item B of Attachment 1 attached
hereto, or for any injury to the goodwill associated with the use of any
such Trademark or for breach or enforcement of any Trademark license and
all rights corresponding thereto throughout the world.
SECTION 3. Security Agreement. This Agreement has been executed and
delivered by the Grantor for the purpose of registering the security interest of
the Administrative Agent in the Trademark Collateral with the United States
Patent and Trademark Office. The security interest granted hereby has been
granted as a supplement to, and not in limitation of, the security interest
granted to the Administrative Agent for its benefit and the benefit of each
Lender Party under the Security Agreement. The Security Agreement (and all
rights and remedies of the Administrative Agent and each Lender Party
thereunder) shall remain in full force and effect in accordance with its terms.
SECTION 4. Release of Security Interest. Upon payment in full of all
Secured Obligations and the termination of all Commitments, the Administrative
Agent shall, at the Grantor's expense, execute and deliver to the Grantor all
instruments and other documents as may be necessary or proper to release the
lien on and security interest in the Trademark Collateral which has been granted
hereunder.
SECTION 5. Acknowledgment. The Grantor does hereby further acknowledge and
affirm that the rights and remedies of the Administrative Agent with respect to
the security interest in the Trademark Collateral granted hereby are more fully
set forth in the Security Agreement, the terms and provisions of which
(including the remedies provided for therein) are incorporated by reference
herein as if fully set forth herein.
SECTION 6. Loan Document, etc. This Agreement is a Loan Document executed
pursuant to the Credit Agreement and shall (unless otherwise expressly indicated
herein) be construed, administered and applied in accordance with the terms and
provisions of the Credit Agreement.
SECTION 7. Counterparts. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
and all of which shall constitute together but one and the same agreement.
B-3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.
[NAME OF GRANTOR]
By:_____________________________
Title:
Address:____________________
____________________
Attention:__________________
Telecopier:_________________
THE BANK OF NOVA SCOTIA,
as Administrative Agent
By:_____________________________
Title:
Address:____________________
____________________
Attention:__________________
Telecopier:_________________
B-4
<PAGE>
ATTACHMENT 1
to
Trademark Security Agreement
[NAME OF GRANTOR]
Item A. Trademarks
Registered Trademarks
Trademark Registration No. Registration Date
--------- ---------------- ------------ ----
Pending Trademark Applications
Trademark Serial No. Filing Date
--------- ---------- -----------
Item B. Trademark Licenses
Effective Expiration
Trademark Licensor Licensee Registration No. Date Date
--------- -------- -------- ---------------- ---- ----
<PAGE>
EXHIBIT C
to
Subsidiary Security Agreement
COPYRIGHT SECURITY AGREEMENT
THIS COPYRIGHT SECURITY AGREEMENT (this "Agreement"), dated as of January
__, 1996, between [NAME OF GRANTOR] (the "Grantor") and THE BANK OF NOVA SCOTIA,
as administrative agent (together with any successor(s) thereto in such
capacity, the "Administrative Agent") for each of the Lender Parties (as defined
below).
W I T N E S S E T H :
WHEREAS, pursuant to a Credit Agreement, dated as of January __, 1996 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Credit Agreement"), between the Keebler Acquisition Corp., a Delaware
corporation (to be merged with and into UB Investments US Inc. and to become
known as Keebler Holding Corp.) (the "Borrower"), the various financial
institutions as are, or may from time to time become, parties thereto
(collectively, the "Lenders"), the Co-Agents named therein and the
Administrative Agent, the Lenders and the Issuer have extended Commitments to
make Credit Extensions to the Borrower; and
WHEREAS, in connection with the Credit Agreement, the Grantor has executed
and delivered a Security Agreement, dated as of the date hereof (together with
all amendments and other modifications, if any, from time to time thereafter
made thereto, the "Security Agreement"); and
WHEREAS, as a condition precedent to the making of each Credit Extension
(including the initial Credit Extension) under the Credit Agreement, the Grantor
is required to execute and deliver this Agreement and to grant to the
Administrative Agent a continuing security interest in all of the Copyright
Collateral (as defined below) to secure all Secured Obligations; and
WHEREAS, the Grantor has duly authorized the execution, delivery and
performance of this Agreement; and
WHEREAS, it is in the best interests of the Grantor to execute this
Agreement inasmuch as the Grantor will derive substantial direct and indirect
benefits from the Credit Extensions made from time to time to the Borrower by
the Lenders and the Issuer pursuant to the Credit Agreement;
<PAGE>
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, and in order to induce the Lenders and the Issuer to
make each Credit Extension (including the initial Credit Extension) to the
Borrower pursuant to the Credit Agreement, the Grantor agrees, for the benefit
of each Lender Party, as follows:
SECTION 1. Definitions. Unless otherwise defined herein or the context
otherwise requires, terms used in this Agreement, including its preamble and
recitals, have the meanings provided in the Security Agreement.
SECTION 2. Grant of Security Interest. For good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, to secure all of
the Secured Obligations, the Grantor does hereby mortgage, pledge and
hypothecate to the Administrative Agent, and grant to the Administrative Agent a
security interest in, for its benefit and the benefit of each Lender Party, all
of the following property (the "Copyright Collateral"), whether now owned or
hereafter acquired or existing:
(a) all United States copyrights and applications for copyrights and
including each copyright and copyright application referred to in Item A of
Attachment 1 attached hereto;
(b) all reissues, divisions, continuations, continuations-in-part,
extensions, renewals and reexaminations of any of the items described in
clause (a);
(c) all copyright licenses and other agreements providing the Grantor
with the right to use any of the items of the type referred to in clauses
(a) and (b), including each copyright license referred to in Item B of
Attachment 1 attached hereto;
(d) the right to sue third parties for past, present or future
infringements of any Copyright Collateral described in clauses (a) and (b)
and, to the extent applicable, clause (c); and
(e) all proceeds of, and rights associated with, the foregoing
(including license royalties and proceeds of infringement suits), and all
rights corresponding thereto throughout the world.
SECTION 3. Security Agreement. This Agreement has been executed and
delivered by the Grantor for the purpose of registering the security interest of
the Administrative Agent in the Copyright Collateral with the United States
Copyright Office.
C-2
<PAGE>
The security interest granted hereby has been granted as a supplement to, and
not in limitation of, the security interest granted to the Administrative Agent
for its benefit and the benefit of each Lender Party under the Security
Agreement. The Security Agreement (and all rights and remedies of the
Administrative Agent and each Lender Party thereunder) shall remain in full
force and effect in accordance with its terms.
SECTION 4. Release of Security Interest. Upon payment in full of all
Secured Obligations and the termination of all Commitments, the Administrative
Agent shall, at the Grantor's expense, execute and deliver to the Grantor all
instruments and other documents as may be necessary or proper to release the
lien on and security interest in the Copyright Collateral which has been granted
hereunder.
SECTION 5. Acknowledgment. The Grantor does hereby further acknowledge and
affirm that the rights and remedies of the Administrative Agent with respect to
the security interest in the Copyright Collateral granted hereby are more fully
set forth in the Security Agreement, the terms and provisions of which
(including the remedies provided for therein) are incorporated by reference
herein as if fully set forth herein.
SECTION 6. Loan Document, etc. This Agreement is a Loan Document executed
pursuant to the Credit Agreement and shall (unless otherwise expressly indicated
herein) be construed, administered and applied in accordance with the terms and
provisions of the Credit Agreement.
SECTION 7. Counterparts. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
and all of which shall constitute together but one and the same agreement.
C-3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.
[NAME OF GRANTOR]
By:_____________________________
Title:
THE BANK OF NOVA SCOTIA,
as Administrative Agent
By:_____________________________
Title:
Address:____________________
____________________
Attention:__________________
Telecopier:_________________
C-4
<PAGE>
ATTACHMENT 1
to
Copyright Security Agreement
[NAME OF GRANTOR]
Item A. Copyrights/Mask Works
Registered Copyrights/Mask Works
Registration No. Registration Date Author(s) Title
---------------- ----------------- --------- -----
Copyright/Mask Work Pending Registration Applications
Serial No. Filing Date Author(s) Title
---------- ----------- --------- -----
Item B. Copyright/Mask Work Licenses
Effective Expiration Subject
Licensor Licensee Date Date Matter
-------- -------- ---- ---- ------
Exhibit 10.7(c)
SUPPLEMENT TO SUBSIDIARY SECURITY AGREEMENT
(SUNSHINE BISCUITS, INC.)
THIS SUPPLEMENT TO SUBSIDIARY SECURITY AGREEMENT (this "Supplement"),
dated as of June 4, 1996, to the Subsidiary Security Agreement, dated as of
January 26, 1996 (as amended or otherwise modified through the date hereof, the
"Subsidiary Security Agreement"), is made by SUNSHINE BISCUITS, INC., a Delaware
corporation (the "Additional Grantor"), in favor of THE BANK OF NOVA SCOTIA, as
administrative agent (together with any successor(s) thereto in such capacity,
the "Administrative Agent") for each of the Lender Parties (as defined in the
Subsidiary Security Agreement). Capitalized terms used herein and not herein
defined shall have the meanings ascribed to them in the Subsidiary Security
Agreement.
W I T N E S S E T H:
WHEREAS, pursuant to the Amended and Restated Credit Agreement, dated
as of June 4, 1996 (the "Credit Agreement"), among Keebler Holding Corp., a
Delaware corporation and the surviving corporation of the Merger (the
"Borrower"), the Administrative Agent, the various financial institutions as
are, or may from time to time become, parties thereto (the "Lenders") and the
Co-Agents named therein, amending and restating in its entirety the Existing
Credit Agreement, the Lenders have extended Commitments to make Credit
Extensions to the Borrower;
WHEREAS, as a condition to the effectiveness of the Credit Agreement
and the continued making of Credit Extensions to the Borrower thereunder, the
Additional Grantor is required to execute and deliver this Supplement;
WHEREAS, it is in the best interests of the Additional Grantor to
execute this Supplement inasmuch as the Additional Grantor will derive
substantial direct and indirect benefits from the Credit Extensions made by the
Lender Parties pursuant to the Credit Agreement; and
WHEREAS, the Additional Grantor desires to become a "Grantor" under the
Subsidiary Security Agreement;
NOW THEREFORE, for good and valuable consideration the receipt of which
is hereby acknowledged, the Additional Grantor agrees, for the benefit of each
Lender Party, as follows:
SECTION 1. Subsidiary Security Agreement. The Additional Grantor to the
extent it has any interest whatsoever, hereby assigns and pledges to the
Administrative Agent for its benefit
<PAGE>
and the ratable benefit of each of the Lender Parties, and hereby grants to the
Administrative Agent for its benefit and the ratable benefit of each of the
Lender Parties a security interest in, all of the following, whether now or
hereafter existing or acquired by the Additional Grantor (the "Additional
Collateral"):
(a) all equipment in all of its forms of the Additional Grantor,
wherever located, including all parts thereof and all accessions,
additions, attachments, improvements, substitutions and replacements
thereto and therefor (any and all of the foregoing being the "Additional
Equipment");
(b) all inventory in all of its forms of the Additional Grantor,
wherever located, including
(i) all raw materials and work in process therefor, finished
goods thereof, and materials used or consumed in the manufacture or
production thereof,
(ii) all goods in which the Additional Grantor has an interest
in mass or a joint or other interest or right of any kind (including
goods in which the Additional Grantor has an interest or right as
consignee), and
(iii) all goods which are returned to or repossessed by the
Additional Grantor,
and all accessions thereto, products thereof and documents therefor (any
and all such inventory, materials, goods, accessions, products and
documents being the "Additional Inventory");
(c) all accounts, contracts, contract rights, chattel paper,
documents and general intangibles of the Additional Grantor, whether or
not arising out of or in connection with the sale or lease of goods or the
rendering of services, and all rights of the Additional Grantor now or
hereafter existing in and to all security agreements, guaranties, leases
and other contracts securing or otherwise relating to any such accounts,
contracts, contract rights, chattel paper, documents, instruments, and
general intangibles (any and all such accounts, contracts, contract
rights, chattel paper, documents, instruments, and general intangibles
being the "Additional Receivables", and any and all such security
agreements, guaranties, leases and other contracts being the "Additional
Related Contracts");
(d) all Intellectual Property Collateral of the Additional Grantor;
-2-
<PAGE>
(e) all books, records, writings, data bases, information and other
property relating to, used or useful in connection with, evidencing,
embodying, incorporating or referring to, any of the foregoing in this
Section 1;
(f) all of the other property and rights of every kind and
description and interests therein of the Additional Grantor (including all
Deposit Accounts); and
(g) all products, offspring, rents, issues, profits, returns, income
and proceeds of and from any and all of the foregoing Additional
Collateral (including proceeds which constitute property of the types
described in clauses (a), (b), (c), (d), (e) and (f), proceeds deposited
from time to time in the Collateral Account and in any lock boxes of the
Additional Grantor, and, to the extent not otherwise included, all
payments under insurance (whether or not the Administrative Agent is the
loss payee thereof), or any indemnity, warranty or guaranty, payable by
reason of loss or damage to or otherwise with respect to any of the
foregoing Additional Collateral).
Notwithstanding the foregoing, "Additional Collateral" shall not include any
general intangibles or other rights arising under contracts as to which the
grant of a security interest would constitute a violation of a valid and
enforceable restriction on such grant, unless and until any required consents
shall have been obtained. The Additional Grantor agrees to use its best efforts
to obtain any such required consent to the extent reasonably requested by the
Administrative Agent.
SECTION 2. Acknowledgment. The Additional Grantor acknowledges and
agrees that by its signature below it hereby is for all purposes a "Grantor"
under the Subsidiary Security Agreement with the same force and effect as if
originally named as a "Grantor" therein, and each reference to (a) a "Grantor"
in the Subsidiary Security Agreement shall for all purposes include the
Additional Grantor, (b) the Additional Collateral consists of, and shall for all
purposes be, "Equipment", "Inventory", "Receivables", "Related Contracts", and
"Collateral" under the Subsidiary Security Agreement, and (c) a Schedule in the
Subsidiary Security Agreement shall for all purposes include the corresponding
Schedule attached hereto. The Additional Grantor hereby agrees to be bound by
all of the terms and provisions of the Subsidiary Security Agreement.
SECTION 3. Warranties, etc. The Additional Grantor hereby represents
and warrants unto each Lender Party, as of the date hereof, as follows:
-3-
<PAGE>
(a) each of the representations and warranties set forth in Article
III of the Subsidiary Security Agreement as applied to the Additional
Grantor are true and correct; and
(b) the execution, delivery and performance by the Additional
Grantor of this Supplement are within its corporate powers, have been duly
authorized by all necessary corporate action and constitute the legal,
valid and binding obligation of the Additional Grantor enforceable against
it in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws from time to time
in effect affecting enforceability of creditors rights generally and to
general principles of equity.
SECTION 4. Subsidiary Security Agreement Remains in Full Force and
Effect. Except as expressly supplemented hereby, the Subsidiary Security
Agreement shall remain in full force and effect in accordance with its terms.
SECTION 5. Governing Law. THIS SUPPLEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, EXCEPT
TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST
HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
SECTION 6. Execution in Counterparts. This Supplement may be executed
by the parties hereto in several counterparts, each of which shall be deemed to
be an original and all of which shall constitute but one and the same agreement.
SECTION 7. Loan Document. The Additional Grantor hereby acknowledges
and agrees that this Supplement constitutes a "Loan Document", as such term is
defined in the Credit Agreement.
-4-
<PAGE>
IN WITNESS WHEREOF, the Additional Grantor has duly executed this
Supplement to the Subsidiary Security Agreement as of the day and year first
above written.
SUNSHINE BISCUITS, INC.
By:
-----------------------
Title:
Acknowledged and Accepted:
THE BANK OF NOVA SCOTIA,
as Administrative Agent
By:
---------------------
Title:
-5-
<PAGE>
SCHEDULE I
to
Supplement
SUNSHINE BISCUITS, INC.
Item A. Location of Equipment
Description Location
----------- --------
Item B. Location of Inventory
Description Location
----------- --------
Item C. Place of Business, etc. (Section 3.1.1)
Name of Grantor Address
--------------- -------
Item D. Trade Names
Name of Grantor Trade Name
--------------- ----------
<PAGE>
SCHEDULE II
to
Supplement
SUNSHINE BISCUITS, INC.
Item A. Patents
Issued Patents
Patent No. Issue Date Inventor(s) Title
---------- ---------- ----------- -----
Pending Patent Applications
Serial No. Filing Date Inventor(s) Title
---------- ----------- ----------- -----
Item B. Patent Licenses
Effective Expiration Subject
Licensor Licensee Date Date Matter
-------- -------- --------- ---------- -------
<PAGE>
SCHEDULE III
to
Supplement
SUNSHINE BISCUITS, INC.
Item A. Trademarks
Registered Trademarks
Trademark Registration No. Registration Date
- --------- ---------------- -----------------
Pending Trademark Applications
Trademark Serial No. Filing Date
--------- ---------- -----------
Item B. Trademark Licenses
Effective Expiration
Trademark Licensor Licensee Date Date
- --------- -------- -------- --------- ----------
<PAGE>
SCHEDULE IV
to
Supplement
SUNSHINE BISCUITS, INC.
Item A. Copyrights/Mask Works
Registered Copyrights/Mask Works
Registration No. Registration Date Author(s) Title
- ---------------- ----------------- --------- -----
Copyright/Mask Work Pending Registration Applications
Serial No. Filing Date Author(s) Title
---------- ----------- --------- -----
Item B. Copyright/Mask Work Licenses
Effective Expiration Subject
Licensor Licensee Date Date Matter
- -------- -------- --------- ---------- -------
<PAGE>
SCHEDULE V
to
Supplement
SUNSHINE BISCUITS, INC.
Trade Secret or Know-How Licenses
Effective Expiration Subject
Licensor Licensee Date Date Matter
- -------- -------- --------- ---------- -------
<PAGE>
SCHEDULE VI
to
Supplement
SUNSHINE BISCUITS, INC.
Deposit Accounts
Account
Bank Address of Bank Type of Account Number
- ---- --------------- --------------- ------
Exhibit 10.7(d)
[EXECUTION COPY]
HOLDINGS PLEDGE AGREEMENT
This HOLDINGS PLEDGE AGREEMENT (this "Pledge Agreement"), dated as of
January 26, 1996, is made by INFLO HOLDINGS CORPORATION, a Delaware corporation
(the "Pledgor"), in favor of THE BANK OF NOVA SCOTIA, as administrative agent
(together with any successor(s) thereto in such capacity, the "Administrative
Agent") for each of the Lender Parties (as defined below).
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement, dated as of January 26, 1996
(as amended, supplemented, amended and restated or otherwise modified from time
to time, the "Credit Agreement"), among the Keebler Acquisition Corp. (to be
merged with and into UB Investments US Inc. and to become known as Keebler
Holding Corp.) (the "Borrower"), the various financial institutions as are, or
may from time to time become, parties thereto (the "Lenders"), the Co-Agents
named therein and the Administrative Agent, the Lenders and the Issuer have
extended Commitments to make Credit Extensions to, and for the benefit of, the
Borrower;
WHEREAS, as a condition precedent to the making of each Credit
Extension (including the initial Credit Extension) under the Credit Agreement,
the Pledgor is required to execute and deliver this Pledge Agreement; and
WHEREAS, the Pledgor has duly authorized the execution, delivery and
performance of this Pledge Agreement; and
WHEREAS, it is in the best interests of the Pledgor to execute this
Pledge Agreement inasmuch as the Pledgor will derive substantial direct and
indirect benefits from the Credit Extensions made from time to time to the
Borrower by the Lenders and the Issuer pursuant to the Credit Agreement;
NOW THEREFORE, for good and valuable consideration the receipt of which
is hereby acknowledged, and in order to induce the Lenders and the Issuer to
make each Credit Extension (including the initial Credit Extension) to the
Borrower pursuant to the Credit Agreement, the Pledgor agrees, for the benefit
of each Lender Party, as follows:
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Terms. The following terms (whether or not
underscored) when used in this Pledge Agreement, including its preamble and
recitals, shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof):
"Administrative Agent" is defined in the preamble.
"Borrower" is defined in the first recital.
"Collateral" is defined in Section 2.1.
"Credit Agreement" is defined in the first recital.
"Distributions" means all stock dividends, liquidating dividends,
shares of stock resulting from (or in connection with the exercise of) stock
splits, reclassifications, warrants, options, non-cash dividends, mergers,
consolidations, and all other distributions (whether similar or dissimilar to
the foregoing) on or with respect to any Pledged Shares or other shares of
capital stock constituting Collateral, but shall not include Dividends.
"Dividends" means cash dividends and cash distributions with respect to
any Pledged Shares or other Pledged Property made in the ordinary course of
business and not a liquidating dividend.
"Lender Party" means, as the context may require, any Lender, the
Issuer, each Co-Agent and the Administrative Agent and each of their respective
successors, transferees and assigns.
"Lenders" is defined in the first recital.
"Pledge Agreement" is defined in the preamble.
"Pledged Property" means all Pledged Shares, and all other pledged
shares of capital stock, all other securities, all assignments of any amounts
due or to become due, all other instruments which are now being delivered by the
Pledgor to the Administrative Agent or may from time to time hereafter be
delivered by the Pledgor to the Administrative Agent for the purpose of pledge
under this Pledge Agreement or any other Loan Document, and all proceeds of any
of the foregoing.
"Pledged Share Issuer" means the Borrower.
-2-
<PAGE>
"Pledged Shares" means all shares of capital stock of the Pledged Share
Issuer which are delivered by the Pledgor to the Administrative Agent as Pledged
Property hereunder.
"Pledgor" is defined in the preamble.
"Secured Obligations" is defined in Section 2.2.
"Securities Act" is defined in Section 6.2.
"U.C.C." means the Uniform Commercial Code as in effect in
the State of New York.
SECTION 1.2. Credit Agreement Definitions. Unless otherwise defined
herein or the context otherwise requires, terms used in this Pledge Agreement,
including its preamble and recitals, have the meanings provided in the Credit
Agreement.
SECTION 1.3. U.C.C. Definitions. Unless otherwise defined herein or the
context otherwise requires, terms for which meanings are provided in the U.C.C.
are used in this Pledge Agreement, including its preamble and recitals, with
such meanings.
ARTICLE II
PLEDGE
SECTION 2.1. Grant of Security Interest. The Pledgor hereby pledges,
hypothecates, assigns, charges, mortgages, delivers, and transfers to the
Administrative Agent, for its benefit and the ratable benefit of each of the
Lender Parties, and hereby grants to the Administrative Agent, for its benefit
and the ratable benefit of the Lender Parties, a continuing security interest
in, all of the following property (the "Collateral"):
(a) all issued and outstanding shares of capital stock of the
Pledged Share Issuer;
(b) all other Pledged Shares issued from time to time;
(c) all other Pledged Property, whether now or hereafter delivered
to the Administrative Agent in connection with this Pledge Agreement;
(d) all Dividends, Distributions, and other payments and rights with
respect to any Pledged Property; and
(e) all proceeds of any of the foregoing.
-3-
<PAGE>
SECTION 2.2. Security for Obligations. This Pledge Agreement secures
the payment in full of all Obligations of the Borrower now or hereafter existing
under the Credit Agreement, the Notes and each other Loan Document to which the
Borrower is or may become a party, whether for principal, interest, costs, fees,
expenses, or otherwise, and all obligations of the Pledgor now or hereafter
existing under this Pledge Agreement and each other Loan Document to which it is
or may become a party (all such obligations of the Borrower and the Pledgor
being the "Secured Obligations").
SECTION 2.3. Delivery of Pledged Property. All certificates or
instruments representing or evidencing any Collateral, including all Pledged
Shares, shall be delivered to and held by or on behalf of the Administrative
Agent pursuant hereto, shall be in suitable form for transfer by delivery, and
shall be accompanied by all necessary instruments of transfer or assignment,
duly executed in blank.
SECTION 2.4. Dividends on Pledged Shares. In the event that any
Dividend is permitted to be paid (in accordance with Section 7.2.6 of the Credit
Agreement) on any Pledged Share, such Dividend may be paid directly to the
Pledgor. If any Dividend is paid in contravention of Section 7.2.6 of the Credit
Agreement, the Pledgor shall hold the same segregated and in trust for the
Administrative Agent until paid to the Administrative Agent in accordance with
Section 4.4 hereto).
SECTION 2.5. Continuing Security Interest; Transfer of Note. This
Pledge Agreement shall create a continuing security interest in the Collateral
and shall
(a) remain in full force and effect until payment in full of all
Secured Obligations, the termination or expiration of all Letters of
Credit and the termination of all Commitments,
(b) be binding upon the Pledgor and its successors, transferees and
assigns, and
(c) inure, together with the rights and remedies of the
Administrative Agent hereunder, to the benefit of the Administrative Agent
and each other Lender Party.
Without limiting the foregoing clause (c), any Lender may assign or otherwise
transfer (in whole or in part) any Note or Loan held by it to any other Person
or entity, and such other Person or entity shall thereupon become vested with
all the rights and benefits in respect thereof granted to such Lender under any
Loan Document (including this Pledge Agreement) or otherwise, subject, however,
to any contrary provisions in such assignment or
-4-
<PAGE>
transfer, and to the provisions of Section 10.11 and Article IX of the Credit
Agreement. Upon (i) the sale, transfer or other disposition of Collateral in
accordance with the Credit Agreement or (ii) the payment in full of all Secured
Obligations, the termination or expiration of all Letters of Credit and the
termination of all Commitments, the security interest granted herein shall
automatically terminate with respect to (x) such Collateral (in the case of
clause (i)) or (y) all Collateral (in the case of clause (ii)). Upon any such
termination, the Administrative Agent will, at the Pledgor's sole expense,
deliver to the Pledgor, without any representations, warranties or recourse of
any kind whatsoever, all certificates and instruments representing or evidencing
all Pledged Shares, together with all other Collateral held by the
Administrative Agent hereunder, and execute and deliver to the Pledgor such
documents as the Pledgor shall reasonably request to evidence such termination.
SECTION 2.6. Security Interest Absolute. All rights of the
Administrative Agent and the security interests granted to the Administrative
Agent hereunder, and all obligations of the Pledgor hereunder, shall be absolute
and unconditional, irrespective of
(a) any lack of validity or enforceability of the Credit Agreement,
any Note or any other Loan Document,
(b) the failure of any Lender Party or any holder of any Note
(i) to assert any claim or demand or to enforce any right or
remedy against the Borrower, any other Obligor or any other Person
under the provisions of the Credit Agreement, any Note, any other
Loan Document or otherwise, or
(ii) to exercise any right or remedy against any other
guarantor of, or collateral securing, any Obligations of the
Borrower or any other Obligor,
(c) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations or any other extension,
compromise or renewal of any Obligation of the Borrower or any other
Obligor,
(d) any reduction, limitation, impairment or termination of any
Obligations of the Borrower or any other Obligor for any reason, including
any claim of waiver, release, surrender, alteration or compromise, and
shall not be subject to (and the Pledgor hereby waives any right to or
claim of) any defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity,
-5-
<PAGE>
illegality, nongenuineness, irregularity, compromise, unenforceability of,
or any other event or occurrence affecting, any Obligations of the
Borrower, any other Obligor or otherwise,
(e) any amendment to, rescission, waiver, or other modification of,
or any consent to departure from, any of the terms of the Credit Agreement
or any other Loan Document,
(f) any addition, exchange, release, surrender or non- perfection of
any collateral (including the Collateral), or any amendment to or waiver
or release of or addition to or consent to departure from any guaranty,
for any of the Obligations, or
(g) any other circumstances which might otherwise constitute a
defense available to, or a legal or equitable discharge of, the Borrower,
any other Obligor, any surety or any guarantor.
SECTION 2.7. Postponement of Subrogation. The Pledgor will not exercise
any rights which it may acquire by way of subrogation under this Pledge
Agreement, by any payment made hereunder or otherwise, until the prior payment,
in full and in cash, of all Obligations of the Borrower and each other Obligor.
Any amount paid to the Pledgor on account of any such subrogation rights prior
to the payment in full of all Obligations of the Borrower and each other Obligor
shall be held in trust for the benefit of the Lender Parties and each holder of
a Note and shall immediately be paid to the Lender Parties and each holder of a
Note and credited and applied against the Obligations of the Borrower and each
other Obligor, whether matured or unmatured, in accordance with the terms of the
Credit Agreement; provided, however, that if
(a) the Pledgor has made payment to the Lender Parties and each
holder of a Note of all or any part of the Obligations of the Borrower or
any other Obligor, and
(b) all Obligations of the Borrower and each other Obligor have been
paid in full and all Commitments have been permanently terminated,
each Lender Party and each holder of a Note agrees that, at the Pledgor's
request, the Lender Parties and the holders of the Notes, will execute and
deliver to the Pledgor appropriate documents (without recourse and without
representation or warranty) necessary to evidence the transfer by subrogation to
the Pledgor of an interest in the Obligations of the Borrower and each other
Obligor resulting from such payment by the Pledgor.
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In furtherance of the foregoing, for so long as any Obligations or Commitments
remain outstanding, the Pledgor shall refrain from taking any action or
commencing any proceeding against the Borrower or any other Obligor (or its
successors or assigns, whether in connection with a bankruptcy proceeding or
otherwise) to recover any amounts in the respect of payments made under this
Pledge Agreement to any Lender Party or any holder of a Note.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties, etc. The Pledgor
represents and warrants unto each Lender Party, as at the date of each pledge
and delivery hereunder (including each pledge and delivery of Pledged Shares) by
the Pledgor to the Administrative Agent of any Collateral, as set forth in this
Article.
SECTION 3.1.1. Ownership, No Liens, etc. The Pledgor is the legal and
beneficial owner of, and has good and marketable title to (and has full right
and authority to pledge and assign) such Collateral, free and clear of all Liens
except any Lien granted pursuant hereto in favor of the Administrative Agent.
SECTION 3.1.2. Valid Security Interest. The execution and delivery of
this Pledge Agreement, together with the delivery of such Collateral to the
Administrative Agent is effective to create a valid, perfected, first priority
security interest in such Collateral and all proceeds thereof, securing the
Secured Obligations. Possession by the Administrative Agent of the Collateral is
the only action necessary to perfect or protect such security interest in the
Collateral, subject to Section 9- 306 of the U.C.C.
SECTION 3.1.3. As to Pledged Shares. In the case of any Pledged Shares
constituting Collateral, all of such Pledged Shares are duly authorized and
validly issued, fully paid, and non-assessable, and constitute all of the issued
and outstanding shares of capital stock of the Pledged Share Issuer. The Pledgor
has no Subsidiary other than the Pledged Share Issuer.
SECTION 3.1.4. Authorization, Approval, etc. No authorization,
approval, or other action by, and no notice to or filing with, any governmental
authority, regulatory body or any other Person is required either
(a) for the pledge by the Pledgor of any Collateral pursuant to this
Pledge Agreement or for the execution,
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delivery, and performance of this Pledge Agreement by the Pledgor, or
(b) for the exercise by the Administrative Agent of the voting or
other rights provided for in this Pledge Agreement, or, except with
respect to any Pledged Shares, as may be required in connection with a
disposition of such Pledged Shares by laws affecting the offering and sale
of securities generally, the remedies in respect of the Collateral
pursuant to this Pledge Agreement.
ARTICLE IV
COVENANTS
SECTION 4.1. Protect Collateral; Further Assurances, etc. The Pledgor
will not sell, assign, transfer, pledge, or encumber in any other manner the
Collateral (except in favor of the Administrative Agent hereunder). The Pledgor
will warrant and defend the right and title herein granted unto the
Administrative Agent in and to the Collateral (and all right, title, and
interest represented by the Collateral) against the claims and demands of all
Persons whomsoever. The Pledgor agrees that at any time, and from time to time,
at the expense of the Pledgor, the Pledgor will promptly execute and deliver all
further instruments, and take all further action, that may be necessary or
desirable, or that the Administrative Agent may reasonably request, in order to
perfect and protect any security interest granted or purported to be granted
hereby or to enable the Administrative Agent to exercise and enforce its rights
and remedies hereunder with respect to any Collateral.
SECTION 4.2. Stock Powers, etc. The Pledgor agrees that all Pledged
Shares (and all other shares of capital stock constituting Collateral) delivered
by the Pledgor pursuant to this Pledge Agreement will be accompanied by duly
executed undated blank stock powers, or other equivalent instruments of transfer
acceptable to the Administrative Agent. The Pledgor will, from time to time upon
the request of the Administrative Agent, promptly deliver to the Administrative
Agent such stock powers, instruments, and similar documents, satisfactory in
form and substance to the Administrative Agent, with respect to the Collateral
as the Administrative Agent may reasonably request and will, from time to time
upon the request of the Administrative Agent after the occurrence of any Event
of Default, promptly transfer any Pledged Shares or other shares of common stock
constituting Collateral into the name of any nominee designated by the
Administrative Agent.
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SECTION 4.3. Continuous Pledge. Subject to Section 2.4, the Pledgor
will, at all times, keep pledged to the Administrative Agent pursuant hereto all
Pledged Shares and all other shares of capital stock constituting Collateral,
all Dividends and Distributions with respect thereto, and all other Collateral
and other securities, instruments, proceeds, and rights from time to time
received by or distributable to the Pledgor in respect of any Collateral and
will not permit the Pledged Share Issuer to issue any capital stock which shall
not have been immediately duly pledged hereunder on a first priority perfected
basis.
SECTION 4.4. Voting Rights; Dividends, etc. The Pledgor agrees:
(a) after any (i) Default of the nature referred to in Section 8.1.9
of the Credit Agreement shall have occurred and be continuing or (ii) any
other Event of Default shall have occurred and be continuing, and the
giving of notice from the Administrative Agent of its intent to exercise
its remedies (in the case of this clause (a)(ii)), the Pledgor will
deliver promptly upon receipt thereof (properly endorsed where required
hereby or requested by the Administrative Agent) to the Administrative
Agent all Dividends, Distributions, all interest, all principal, all other
cash payments, and all proceeds of the Collateral, all of which shall be
held by the Administrative Agent as additional Collateral for use in
accordance with Section 6.4; and
(b) after any Event of Default shall have occurred and be continuing
and the Administrative Agent has notified the Pledgor of the
Administrative Agent's intention to exercise its voting power under this
clause
(i) the Administrative Agent may exercise (to the exclusion of
the Pledgor) the voting power and all other incidental rights of
ownership with respect to any Pledged Shares or other shares of
capital stock constituting Collateral and the Pledgor hereby grants
the Administrative Agent an irrevocable proxy, exercisable under
such circumstances, to vote the Pledged Shares and such other
Collateral; and
(ii) promptly to deliver to the Administrative Agent such
additional proxies and other documents as may be necessary to allow
the Administrative Agent to exercise such voting power.
All Dividends, Distributions, interest, principal, cash payments, and proceeds
which may at any time and from time to time be held
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by the Pledgor but which the Pledgor is then obligated to deliver to the
Administrative Agent, shall, until delivery to the Administrative Agent, be held
by the Pledgor separate and apart from its other property in trust for the
Administrative Agent. The Administrative Agent agrees that unless an Event of
Default shall have occurred and be continuing and the Administrative Agent shall
have given the notice referred to in Section 4.4(b), the Pledgor shall have the
exclusive voting power with respect to any shares of capital stock (including
any of the Pledged Shares) constituting Collateral and the Administrative Agent
shall, upon the written request of the Pledgor, promptly deliver such proxies
and other documents, if any, as shall be reasonably requested by the Pledgor
which are necessary to allow the Pledgor to exercise voting power with respect
to any such share of capital stock (including any of the Pledged Shares)
constituting Collateral; provided, however, that no vote shall be cast, or
consent, waiver, or ratification given, or action taken by the Pledgor that
would impair any Collateral or be inconsistent with or violate any provision of
the Credit Agreement or any other Loan Document (including this Pledge
Agreement).
ARTICLE V
THE ADMINISTRATIVE AGENT
SECTION 5.1. Administrative Agent Appointed Attorney-in- Fact. The
Pledgor hereby irrevocably appoints the Administrative Agent the Pledgor's
attorney-in-fact, with full authority in the place and stead of the Pledgor and
in the name of the Pledgor or otherwise, from time to time in the Administrative
Agent's discretion, upon the occurrence and during the continuance of an Event
of Default and subject to delivery of notice to the Pledgor, to take any action
and to execute any instrument which the Administrative Agent may deem necessary
or advisable to accomplish the purposes of this Pledge Agreement, including
without limitation:
(a) to ask, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral;
(b) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a)
above; and
(c) to file any claims or take any action or institute any
proceedings which the Administrative Agent may deem necessary or desirable
for the collection of any of the
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Collateral or otherwise to enforce the rights of the Administrative Agent
with respect to any of the Collateral.
The Pledgor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
SECTION 5.2. Administrative Agent Has No Duty. The powers conferred on
the Administrative Agent hereunder are solely to protect its interest (on behalf
of the Lender Parties) in the Collateral and shall not impose any duty on it to
exercise any such powers. Except for reasonable care of any Collateral in its
possession and the accounting for moneys actually received by it hereunder, the
Administrative Agent shall have no duty as to any Collateral or responsibility
for (a) ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relative to any Pledged
Property, whether or not the Administrative Agent has or is deemed to have
knowledge of such matters, or (b) taking any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral.
SECTION 5.3. Reasonable Care. The Administrative Agent is required to
exercise reasonable care in the custody and preservation of any of the
Collateral in its possession; provided, however, the Administrative Agent shall
be deemed to have exercised reasonable care in the custody and preservation of
any of the Collateral, if it takes such action for that purpose as the Pledgor
reasonably requests in writing at times other than upon the occurrence and
during the continuance of any Event of Default, but failure of the
Administrative Agent to comply with any such request at any time shall not in
itself be deemed a failure to exercise reasonable care.
ARTICLE VI
REMEDIES
SECTION 6.1. Certain Remedies. If any Event of Default shall have
occurred and be continuing:
(a) The Administrative Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein
or otherwise available to it, all the rights and remedies of a secured
party on default under the U.C.C. (whether or not the U.C.C. applies to
the affected Collateral) and also may, without notice except as specified
below, sell the Collateral or any part thereof in one or more parcels at
public or private sale, at any of the Administrative Agent's offices or
elsewhere, for cash, on
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credit or for future delivery, and upon such other terms as the
Administrative Agent may deem commercially reasonable. The Pledgor agrees
that, to the extent notice of sale shall be required by law, at least ten
days' prior notice to the Pledgor of the time and place of any public sale
or the time after which any private sale is to be made shall constitute
reasonable notification. The Administrative Agent shall not be obligated
to make any sale of Collateral regardless of notice of sale having been
given. The Administrative Agent may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor,
and such sale may, without further notice, be made at the time and place
to which it was so adjourned.
(b) The Administrative Agent may
(i) transfer all or any part of the Collateral into the name
of the Administrative Agent or its nominee, with or without
disclosing that such Collateral is subject to the lien and security
interest hereunder,
(ii) notify the parties obligated on any of the Collateral to
make payment to the Administrative Agent of any amount due or to
become due thereunder,
(iii) enforce collection of any of the Collateral by suit or
otherwise, and surrender, release or exchange all or any part
thereof, or compromise or extend or renew for any period (whether or
not longer than the original period) any obligations of any nature
of any party with respect thereto,
(iv) endorse any checks, drafts, or other writings in the
Pledgor's name to allow collection of the Collateral,
(v) take control of any proceeds of the Collateral, and
(vi) execute (in the name, place and stead of the Pledgor)
endorsements, assignments, stock powers and other instruments of
conveyance or transfer with respect to all or any of the Collateral.
SECTION 6.2. Securities Laws. If the Administrative Agent shall
determine to exercise its right to sell all or any of the Collateral pursuant to
Section 6.1, the Pledgor agrees that, upon request of the Administrative Agent,
the Pledgor will, at its own expense:
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(a) execute and deliver, and cause each issuer of the Collateral
contemplated to be sold and the directors and officers thereof to execute
and deliver, all such instruments and documents, and do or cause to be
done all such other acts and things, as may be necessary or, in the
opinion of the Administrative Agent, advisable to register such Collateral
under the provisions of the Securities Act of 1933, as from time to time
amended (the "Securities Act"), and to use its best efforts to cause the
registration statement relating thereto to become effective and to remain
effective for such period as prospectuses are required by law to be
furnished, and to make all amendments and supplements thereto and to the
related prospectus which, in the opinion of the Administrative Agent, are
necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Securities and
Exchange Commission applicable thereto;
(b) use its best efforts to qualify the Collateral under the state
securities or "Blue Sky" laws and to obtain all necessary governmental
approvals for the sale of the Collateral, as requested by the
Administrative Agent;
(c) cause each such issuer to make available to its security
holders, as soon as practicable, an earnings statement that will satisfy
the provisions of Section 11(a) of the Securities Act; and
(d) do or cause to be done all such other acts and things as may be
necessary to make such sale of the Collateral or any part thereof valid
and binding and in compliance with applicable law.
The Pledgor further acknowledges the impossibility of ascertaining the amount of
damages that would be suffered by the Administrative Agent or the Lender Parties
by reason of the failure by the Pledgor to perform any of the covenants
contained in this Section and, consequently, agrees that, if the Pledgor shall
fail to perform any of such covenants, it shall pay, as liquidated damages and
not as a penalty, an amount equal to the value (as determined by the
Administrative Agent) of the Collateral on the date the Administrative Agent
shall demand compliance with this Section.
SECTION 6.3. Compliance with Restrictions. The Pledgor agrees that in
any sale of any of the Collateral whenever an Event of Default shall have
occurred and be continuing, the Administrative Agent is hereby authorized to
comply with any limitation or restriction in connection with such sale as it may
be advised by counsel is necessary in order to avoid any violation of applicable
law (including compliance with such
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procedures as may restrict the number of prospective bidders and purchasers,
require that such prospective bidders and purchasers have certain
qualifications, and restrict such prospective bidders and purchasers to persons
who will represent and agree that they are purchasing for their own account for
investment and not with a view to the distribution or resale of such
Collateral), or in order to obtain any required approval of the sale or of the
purchaser by any governmental regulatory authority or official, and the Pledgor
further agrees that such compliance shall not result in such sale being
considered or deemed not to have been made in a commercially reasonable manner,
nor shall the Administrative Agent be liable nor accountable to the Pledgor for
any discount allowed by the reason of the fact that such Collateral is sold in
compliance with any such limitation or restriction.
SECTION 6.4. Application of Proceeds. All cash proceeds received by the
Administrative Agent in respect of any sale of, collection from, or other
realization upon, all or any part of the Collateral may, in the discretion of
the Administrative Agent, be held by the Administrative Agent as additional
collateral security for, or then or at any time thereafter be applied (after
payment of any amounts payable to the Administrative Agent pursuant to Section
10.3 of the Credit Agreement and Section 6.5) in whole or in part by the
Administrative Agent against, all or any part of the Secured Obligations as
follows: (i) first, to the reasonable out-of-pocket costs and expenses of the
Administrative Agent in connection with the retaking, holding, preparing for
sale, selling or other disposition of the Collateral, including, without
limitation, all court costs and the reasonable fees and expenses of its agents
and legal counsel; (ii) second, to the payment in full of the Obligations or in
the event that such proceeds are insufficient to pay in full the Obligations,
equally and ratably in accordance with each Lender's Obligations owing to it
under or pursuant to the Credit Agreement or any other Loan Document, or under
or pursuant to any Rate Protection Agreement (as to each Lender, applied first
to fees and expense reimbursements then due to such Lender, then to interest due
to such Lender, then to pay or prepay principal of the Loans owing to, or to
reduce the "credit exposure" of, such Lender under such Rate Protection
Agreement, as the case may be, then to pay (or cash collateralize) the remaining
Obligations; (iii) third, without duplication of any amounts paid pursuant to
clause (ii) above, to the Indemnified Parties to the extent of any amounts owing
pursuant to Section 10.4 of the Credit Agreement; and (iv) fourth, to the
Pledgor, or its successors and assigns, or as a court of competent jurisdiction
may direct, of any surplus then remaining. For purposes of this Agreement, the
"credit exposure" at any time of any Lender under a Rate Protection Agreement to
which such Lender is a party shall be determined at such time in
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accordance with the customary methods of calculating credit exposure under
similar arrangements by the counterparty to such arrangements, taking into
account potential interest rate movements and the respective termination
provisions and notional principal amount and term of such Rate Protection
Agreement. The Pledgor shall remain liable to the Lenders for any deficiency. If
the Administrative Agent has funds available to apply to a portion of, but not
all of, one of the amounts described in clauses (i) through (iv) above, then the
Administrative Agent shall apply such funds to the applicable parties in
proportion to the amounts to which such parties would have been entitled if the
entire amount described in any such clause had been available.
SECTION 6.5. Indemnity and Expenses. The Pledgor hereby indemnifies and
holds harmless the Administrative Agent from and against any and all claims,
losses, and liabilities arising out of or resulting from this Pledge Agreement
(including enforcement of this Pledge Agreement), except claims, losses, or
liabilities resulting from the Administrative Agent's gross negligence or wilful
misconduct. Upon demand, the Pledgor will pay to the Administrative Agent the
amount of any and all reasonable expenses, including the reasonable fees and
disbursements of its counsel and of any experts and agents, which the
Administrative Agent may incur in connection with:
(a) the administration of this Pledge Agreement, the Credit
Agreement and each other Loan Document;
(b) the custody, preservation, use, or operation of, or the sale of,
collection from, or other realization upon, any of the Collateral;
(c) the exercise or enforcement of any of the rights of the
Administrative Agent hereunder; or
(d) the failure by the Pledgor to perform or observe any of the
provisions hereof.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.1. Loan Document. This Pledge Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions thereof.
SECTION 7.2. Amendments, etc. No amendment to or waiver of any
provision of this Pledge Agreement nor consent to any
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departure by the Pledgor herefrom shall in any event be effective unless the
same shall be in writing and signed by the Administrative Agent (on behalf of
the Lenders or the Required Lenders, as the case may be), and then such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which it is given.
SECTION 7.3. Protection of Collateral. The Administrative Agent may
from time to time, at its option, perform any act which the Pledgor agrees
hereunder to perform and which the Pledgor shall fail to perform within 30 days
after being requested in writing so to perform and the Administrative Agent may
from time to time take any other action which the Administrative Agent
reasonably deems necessary for the maintenance, preservation or protection of
any of the Collateral or of its security interest therein.
SECTION 7.4. Addresses for Notices. All notices and other
communications provided to the Pledgor under this Pledge Agreement shall be in
writing or by facsimile and addressed, delivered or transmitted to the Pledgor
at its address or facsimile number as set forth in the Holdings Guaranty or at
such other address or facsimile number as may be designated by the Pledgor in a
notice to the other parties. Any notice, if mailed and properly addressed with
postage prepaid or if properly addressed and sent by pre-paid courier service,
shall be deemed given when received; any notice, if transmitted by facsimile,
shall be deemed given when transmitted.
SECTION 7.5. Section Captions. Section captions used in this Pledge
Agreement are for convenience of reference only, and shall not affect the
construction of this Pledge Agreement.
SECTION 7.6. Severability. Wherever possible each provision of this
Pledge Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Pledge Agreement shall
be prohibited by or invalid under such law, such provision shall be ineffective
to the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Pledge
Agreement.
SECTION 7.7. Governing Law, Entire Agreement, etc. THIS PLEDGE
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR
PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT
OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER
THAN THE STATE OF NEW YORK. THIS PLEDGE AGREEMENT AND THE OTHER LOAN DOCUMENTS
CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES
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HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR
AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.
SECTION 7.8. Forum Selection and Consent to Jurisdiction. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
PLEDGE AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE LENDER PARTIES OR THE PLEDGOR
SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW
YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE ADMINISTRATIVE AGENT'S
OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER
PROPERTY MAY BE FOUND. THE PLEDGOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH
LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. THE PLEDGOR FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE
PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. THE
PLEDGOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF
VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY
CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE
EXTENT THAT THE PLEDGOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM
JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR
NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR
OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE PLEDGOR HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS PLEDGE
AGREEMENT.
SECTION 7.9. Waiver of Jury Trial. THE LENDER PARTIES AND THE PLEDGOR
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS PLEDGE AGREEMENT, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE
LENDER PARTIES OR THE PLEDGOR. THE PLEDGOR ACKNOWLEDGES AND AGREES THAT IT HAS
RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER
PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER PARTIES ENTERING INTO THE
CREDIT AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT.
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IN WITNESS WHEREOF, the parties hereto have caused this Pledge
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the day and year first above written.
INFLO HOLDINGS CORPORATION
By
--------------------------
Title:
THE BANK OF NOVA SCOTIA,
as Administrative Agent
By
--------------------------
Title:
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ATTACHMENT 1
to
Holdings Pledge Agreement
Item A. Pledged Shares
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Pledged Share Issuer Description of Shares
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% of
Outstanding
Authorized Outstanding Shares
Shares Shares Pledged
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Keebler Acquisition Corp. 1,000 1,000 100
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================================================================================
Exhibit 10.7(e)
[EXECUTION COPY]
BORROWER PLEDGE AGREEMENT
This BORROWER PLEDGE AGREEMENT (this "Pledge Agreement"), dated as of
January 26, 1996, is made by KEEBLER ACQUISITION CORP., a Delaware corporation
(to be merged with and into UB Investments US Inc. and to become known as
Keebler Holding Corp.) (the "Pledgor"), in favor of THE BANK OF NOVA SCOTIA, as
administrative agent (together with any successor(s) thereto in such capacity,
the "Administrative Agent") for each of the Lender Parties (as defined below).
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement, dated as of January 26, 1996
(as amended, supplemented, amended and restated and otherwise modified from time
to time, the "Credit Agreement"), among the Pledgor, the various financial
institutions as are, or may from time to time become, parties thereto (the
"Lenders"), the Co-Agents named therein and the Administrative Agent, the
Lenders and the Issuer have extended Commitments to make Credit Extensions to,
and for the benefit of, the Pledgor;
WHEREAS, as a condition precedent to the making of each Credit
Extension (including the initial Credit Extension) under the Credit Agreement,
the Pledgor is required to execute and deliver this Pledge Agreement; and
WHEREAS, the Pledgor has duly authorized the execution, delivery and
performance of this Pledge Agreement;
NOW, THEREFORE, for good and valuable consideration the receipt of
which is hereby acknowledged, and in order to induce the Lenders and the Issuer
to make each Credit Extension (including the initial Credit Extension) to the
Pledgor pursuant to the Credit Agreement, the Pledgor agrees, for the benefit of
each Lender Party, as follows:
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ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Terms. The following terms (whether or not
underscored) when used in this Pledge Agreement, including its preamble and
recitals, shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof):
"Administrative Agent" is defined in the preamble.
"Collateral" is defined in Section 2.1.
"Credit Agreement" is defined in the first recital.
"Distributions" means all stock dividends, liquidating dividends,
shares of stock resulting from (or in connection with the exercise of) stock
splits, reclassifications, warrants, options, non-cash dividends, mergers,
consolidations, and all other distributions (whether similar or dissimilar to
the foregoing) on or with respect to any Pledged Shares or other shares of
capital stock constituting Collateral, but shall not include Dividends.
"Dividends" means cash dividends and cash distributions with respect to
any Pledged Shares or other Pledged Property made in the ordinary course of
business and not a liquidating dividend.
"Lender Party" means, as the context may require, any Lender, the
Issuer, each Co-Agent and the Administrative Agent and each of their respective
successors, transferees and assigns.
"Lenders" is defined in the first recital.
"Pledge Agreement" is defined in the preamble.
"Pledged Note Issuer" means each Person identified in Item A of
Attachment 1 hereto as the issuer of the Pledged Note identified opposite the
name of such Person.
"Pledged Notes" means all promissory notes of any Pledged Note Issuer
in the form satisfactory to the Administrative Agent or substantially the form
of Exhibit A hereto which are delivered by the Pledgor to the Administrative
Agent as Pledged Property hereunder, as such promissory notes, in accordance
with Section 4.5, are amended, modified or supplemented from time to time and
together with any promissory note of any Pledged Note Issuer taken in extension
or renewal thereof or substitution therefor.
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"Pledged Property" means all Pledged Shares, all Pledged Notes, and all
other pledged shares of capital stock or promissory notes, all other securities,
all assignments of any amounts due or to become due, all other instruments which
are now being delivered by the Pledgor to the Administrative Agent or may from
time to time hereafter be delivered by the Pledgor to the Administrative Agent
for the purpose of pledge under this Pledge Agreement or any other Loan
Document, and all proceeds of any of the foregoing.
"Pledged Share Issuer" means each Person identified in Item B of
Attachment 1 hereto as the issuer of the Pledged Shares identified opposite the
name of such Person.
"Pledged Shares" means all shares of capital stock of any Pledged Share
Issuer which are delivered by the Pledgor to the Administrative Agent as Pledged
Property hereunder.
"Pledgor" is defined in the preamble.
"Securities Act" is defined in Section 6.2.
"U.C.C." means the Uniform Commercial Code as in effect in the State of
New York.
SECTION 1.2. Credit Agreement Definitions. Unless otherwise defined
herein or the context otherwise requires, terms used in this Pledge Agreement,
including its preamble and recitals, have the meanings provided in the Credit
Agreement.
SECTION 1.3. U.C.C. Definitions. Unless otherwise defined herein or the
context otherwise requires, terms for which meanings are provided in the U.C.C.
are used in this Pledge Agreement, including its preamble and recitals, with
such meanings.
ARTICLE II
PLEDGE
SECTION 2.1. Grant of Security Interest. The Pledgor hereby pledges,
hypothecates, assigns, charges, mortgages, delivers, and transfers to the
Administrative Agent, for its benefit and the ratable benefit of each of the
Lender Parties, and hereby grants to the Administrative Agent, for its benefit
and the ratable benefit of the Lender Parties, a continuing security interest
in, all of the following property (the "Collateral"):
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(a) all promissory notes of each Pledged Note Issuer identified in
Item A of Attachment 1 hereto;
(b) all other Pledged Notes issued from time to time;
(c) all issued and outstanding shares of capital stock of each
Pledged Share Issuer identified in Item B of Attachment 1 hereto;
(d) all other Pledged Shares issued from time to time;
(e) all other Pledged Property, whether now or hereafter delivered
to the Administrative Agent in connection with this Pledge Agreement;
(f) all Dividends, Distributions, interest and other payments and
rights with respect to any Pledged Property; and
(g) all proceeds of any of the foregoing.
SECTION 2.2. Security for Obligations. This Pledge Agreement secures
the payment in full of all Obligations now or hereafter existing under the
Credit Agreement, the Notes and each other Loan Document to which the Pledgor is
or may become a party, whether for principal, interest, costs, fees, expenses,
or otherwise.
SECTION 2.3. Delivery of Pledged Property. All certificates or
instruments representing or evidencing any Collateral, including all Pledged
Shares and all Pledged Notes, shall be delivered to and held by or on behalf of
(and in the case of the Pledged Notes, endorsed to the order of) the
Administrative Agent pursuant hereto, shall be in suitable form for transfer by
delivery, and shall be accompanied by all necessary instruments of transfer or
assignment, duly executed in blank.
SECTION 2.4. Continuing Security Interest; Transfer of Note. This
Pledge Agreement shall create a continuing security interest in the Collateral
and shall
(a) remain in full force and effect until payment in full of all
Obligations, the termination or expiration of all Letters of Credit and
the termination of all Commitments,
(b) be binding upon the Pledgor and its successors, transferees and
assigns, and
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(c) inure, together with the rights and remedies of the
Administrative Agent hereunder, to the benefit of the Administrative Agent
and each other Lender Party.
Without limiting the foregoing clause (c), any Lender may assign or otherwise
transfer (in whole or in part) any Note or Credit Extension held by it to any
other Person or entity, and such other Person or entity shall thereupon become
vested with all the rights and benefits in respect thereof granted to such
Lender under any Loan Document (including this Pledge Agreement) or otherwise,
subject, however, to any contrary provisions in such assignment or transfer, and
to the provisions of Section 10.11 and Article IX of the Credit Agreement. Upon
(i) the sale, transfer or other disposition of Collateral in accordance with the
Credit Agreement or (ii) the payment in full of all Obligations, the termination
or expiration of all Letters of Credit and the termination of all Commitments,
the security interest granted herein shall automatically terminate with respect
to (x) such Collateral (in the case of clause (i)) or (y) all Collateral (in the
case of clause (ii)). Upon any such termination, the Administrative Agent will,
at the Pledgor's sole expense, deliver to the Pledgor, without any
representations, warranties or recourse of any kind whatsoever, all certificates
and instruments representing or evidencing all Pledged Shares and all Pledged
Notes, together with all other Collateral held by the Administrative Agent
hereunder, and execute and deliver to the Pledgor such documents as the Pledgor
shall reasonably request to evidence such termination.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties, etc. The Pledgor
represents and warrants unto each Lender Party, as at the date of each pledge
and delivery hereunder (including each pledge and delivery of Pledged Shares) by
the Pledgor to the Administrative Agent of any Collateral, as set forth in this
Article.
SECTION 3.1.1. Ownership, No Liens, etc. The Pledgor is the legal and
beneficial owner of, and has good and marketable title to (and has full right
and authority to pledge and assign) such Collateral, free and clear of all Liens
except any Lien granted pursuant hereto in favor of the Administrative Agent.
SECTION 3.1.2. Valid Security Interest. The execution and delivery of
this Pledge Agreement, together with the delivery of such Collateral to the
Administrative Agent is effective to create a valid, perfected, first priority
security interest in
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such Collateral and all proceeds thereof, securing the Obligations. Possession
by the Administrative Agent of the Collateral is the only action necessary to
perfect or protect such security interest in the Collateral subject to Section
9-306 of the U.C.C.
SECTION 3.1.3. As to Pledged Shares. In the case of any Pledged Shares
constituting Collateral, all of such Pledged Shares are duly authorized and
validly issued, fully paid, and non-assessable, and constitute all of the issued
and outstanding shares of capital stock of each Pledged Share Issuer owned by
the Pledgor and required to be delivered in pledge under the terms of the Credit
Agreement. The Pledgor has no Subsidiary other than the Pledged Share Issuers.
SECTION 3.1.4. As to Pledged Notes. In the case of each Pledged Note,
all of such Pledged Notes have been duly authorized, executed, endorsed, issued
and delivered, and are the legal, valid and binding obligation of the issuers
thereof, and are not in default.
SECTION 3.1.5. Authorization, Approval, etc. No authorization,
approval, or other action by, and no notice to or filing with, any governmental
authority, regulatory body or any other Person is required either
(a) for the pledge by the Pledgor of any Collateral pursuant to this
Pledge Agreement or for the execution, delivery, and performance of this
Pledge Agreement by the Pledgor, or
(b) for the exercise by the Administrative Agent of the voting or
other rights provided for in this Pledge Agreement, or, except with
respect to any Pledged Shares, as may be required in connection with a
disposition of such Pledged Shares by laws affecting the offering and sale
of securities generally, the remedies in respect of the Collateral
pursuant to this Pledge Agreement.
ARTICLE IV
COVENANTS
SECTION 4.1. Protect Collateral; Further Assurances, etc. The Pledgor
will not sell, assign, transfer, pledge, or encumber in any other manner the
Collateral (except in favor of the Administrative Agent hereunder). The Pledgor
will warrant and defend the right and title herein granted unto the
Administrative Agent in and to the Collateral (and all right, title, and
interest represented by the Collateral) against the claims and
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demands of all Persons whomsoever. The Pledgor agrees that at any time, and from
time to time, at the expense of the Pledgor, the Pledgor will promptly execute
and deliver all further instruments, and take all further action, that may be
necessary or desirable, or that the Administrative Agent may reasonably request,
in order to perfect and protect any security interest granted or purported to be
granted hereby or to enable the Administrative Agent to exercise and enforce its
rights and remedies hereunder with respect to any Collateral.
SECTION 4.2. Stock Powers, etc. The Pledgor agrees that all Pledged
Shares (and all other shares of capital stock constituting Collateral) delivered
by the Pledgor pursuant to this Pledge Agreement will be accompanied by duly
executed undated blank stock powers, or other equivalent instruments of transfer
acceptable to the Administrative Agent. The Pledgor will, from time to time upon
the request of the Administrative Agent, promptly deliver to the Administrative
Agent such stock powers, instruments, and similar documents, satisfactory in
form and substance to the Administrative Agent, with respect to the Collateral
as the Administrative Agent may reasonably request and will, from time to time
upon the request of the Administrative Agent after the occurrence of any Event
of Default, promptly transfer any Pledged Shares or other shares of common stock
constituting Collateral into the name of any nominee designated by the
Administrative Agent.
SECTION 4.3. Continuous Pledge. The Pledgor will, at all times, keep
pledged to the Administrative Agent pursuant hereto all Pledged Shares and all
other shares of capital stock constituting Collateral, all Dividends and
Distributions with respect thereto, all Pledged Notes, all interest, principal
and other proceeds received by the Administrative Agent with respect to the
Pledged Notes, and all other Collateral and other securities, instruments,
proceeds, and rights from time to time received by or distributable to the
Pledgor in respect of any Collateral and will not permit any Pledged Share
Issuer to issue any capital stock which shall not have been immediately duly
pledged hereunder on a first priority perfected basis.
SECTION 4.4. Voting Rights; Dividends, etc. The Pledgor agrees:
(a) after any (i) Default of the nature referred to in Section 8.1.9
of the Credit Agreement shall have occurred and be continuing or (ii) any
other Event of Default shall have occurred and be continuing, and the
giving of notice from the Administrative Agent of its intent to exercise
its remedies (in the case of this clause (a)(ii)), the Pledgor will
deliver promptly upon receipt thereof (properly endorsed where required
hereby or requested by the
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Administrative Agent) to the Administrative Agent all Dividends,
Distributions, all interest, all principal, all other cash payments, and
all proceeds of the Collateral, all of which shall be held by the
Administrative Agent as additional Collateral for use in accordance with
Section 6.4; and
(b) after any Event of Default shall have occurred and be continuing
and the Administrative Agent has notified the Pledgor of the
Administrative Agent's intention to exercise its voting power under this
Section 4.4(b)
(i) the Administrative Agent may exercise (to the exclusion of
the Pledgor) the voting power and all other incidental rights of
ownership with respect to any Pledged Shares or other shares of
capital stock constituting Collateral and the Pledgor hereby grants
the Administrative Agent an irrevocable proxy, exercisable under
such circumstances, to vote the Pledged Shares and such other
Collateral; and
(ii) promptly to deliver to the Administrative Agent such
additional proxies and other documents as may be necessary to allow
the Administrative Agent to exercise such voting power.
All Dividends, Distributions, interest, principal, cash payments, and proceeds
which may at any time and from time to time be held by the Pledgor but which the
Pledgor is then obligated to deliver to the Administrative Agent, shall, until
delivery to the Administrative Agent, be held by the Pledgor separate and apart
from its other property in trust for the Administrative Agent. The
Administrative Agent agrees that unless an Event of Default shall have occurred
and be continuing and the Administrative Agent shall have given the notice
referred to in Section 4.4(b), the Pledgor shall have the exclusive voting power
with respect to any shares of capital stock (including any of the Pledged
Shares) constituting Collateral and the Administrative Agent shall, upon the
written request of the Pledgor, promptly deliver such proxies and other
documents, if any, as shall be reasonably requested by the Pledgor which are
necessary to allow the Pledgor to exercise voting power with respect to any such
share of capital stock (including any of the Pledged Shares) constituting
Collateral; provided, however, that no vote shall be cast, or consent, waiver,
or ratification given, or action taken by the Pledgor that would impair any
Collateral or be inconsistent with or violate any provision of the Credit
Agreement or any other Loan Document (including this Pledge Agreement).
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ARTICLE V
THE ADMINISTRATIVE AGENT
SECTION 5.1. Administrative Agent Appointed Attorney-in- Fact. The
Pledgor hereby irrevocably appoints the Administrative Agent the Pledgor's
attorney-in-fact, with full authority in the place and stead of the Pledgor and
in the name of the Pledgor or otherwise, from time to time in the Administrative
Agent's discretion, upon the occurrence and during the continuance of an Event
of Default and subject to delivery of notice to the Pledgor to take any action
and to execute any instrument which the Administrative Agent may deem necessary
or advisable to accomplish the purposes of this Pledge Agreement, including
without limitation:
(a) to ask, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral;
(b) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a)
above; and
(c) to file any claims or take any action or institute any
proceedings which the Administrative Agent may deem necessary or desirable
for the collection of any of the Collateral or otherwise to enforce the
rights of the Administrative Agent with respect to any of the Collateral.
The Pledgor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
SECTION 5.2. Administrative Agent Has No Duty. The powers conferred on
the Administrative Agent hereunder are solely to protect its interest (on behalf
of the Lender Parties) in the Collateral and shall not impose any duty on it to
exercise any such powers. Except for reasonable care of any Collateral in its
possession and the accounting for moneys actually received by it hereunder, the
Administrative Agent shall have no duty as to any Collateral or responsibility
for (a) ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relative to any Pledged
Property, whether or not the Administrative Agent has or is deemed to have
knowledge of such matters, or (b) taking any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral.
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SECTION 5.3. Reasonable Care. The Administrative Agent is required to
exercise reasonable care in the custody and preservation of any of the
Collateral in its possession; provided, however, the Administrative Agent shall
be deemed to have exercised reasonable care in the custody and preservation of
any of the Collateral, if it takes such action for that purpose as the Pledgor
reasonably requests in writing at times other than upon the occurrence and
during the continuance of any Event of Default, but failure of the
Administrative Agent to comply with any such request at any time shall not in
itself be deemed a failure to exercise reasonable care.
ARTICLE VI
REMEDIES
SECTION 6.1. Certain Remedies. If any Event of Default shall have
occurred and be continuing:
(a) The Administrative Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein
or otherwise available to it, all the rights and remedies of a secured
party on default under the U.C.C. (whether or not the U.C.C. applies to
the affected Collateral) and also may, without notice except as specified
below, sell the Collateral or any part thereof in one or more parcels at
public or private sale, at any of the Administrative Agent's offices or
elsewhere, for cash, on credit or for future delivery, and upon such other
terms as the Administrative Agent may deem commercially reasonable. The
Pledgor agrees that, to the extent notice of sale shall be required by
law, at least ten days' prior notice to the Pledgor of the time and place
of any public sale or the time after which any private sale is to be made
shall constitute reasonable notification. The Administrative Agent shall
not be obligated to make any sale of Collateral regardless of notice of
sale having been given. The Administrative Agent may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned.
(b) The Administrative Agent may
(i) transfer all or any part of the Collateral into the name
of the Administrative Agent or its nominee, with or without
disclosing that such Collateral is subject to the lien and security
interest hereunder,
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(ii) notify the parties obligated on any of the Collateral to
make payment to the Administrative Agent of any amount due or to
become due thereunder,
(iii) enforce collection of any of the Collateral by suit or
otherwise, and surrender, release or exchange all or any part
thereof, or compromise or extend or renew for any period (whether or
not longer than the original period) any obligations of any nature
of any party with respect thereto,
(iv) endorse any checks, drafts, or other writings in the
Pledgor's name to allow collection of the Collateral,
(v) take control of any proceeds of the Collateral, and
(vi) execute (in the name, place and stead of the Pledgor)
endorsements, assignments, stock powers and other instruments of
conveyance or transfer with respect to all or any of the Collateral.
SECTION 6.2. Securities Laws. If the Administrative Agent shall
determine to exercise its right to sell all or any of the Collateral pursuant to
Section 6.1, the Pledgor agrees that, upon request of the Administrative Agent,
the Pledgor will, at its own expense:
(a) execute and deliver, and cause each issuer of the Collateral
contemplated to be sold and the directors and officers thereof to execute
and deliver, all such instruments and documents, and do or cause to be
done all such other acts and things, as may be necessary or, in the
opinion of the Administrative Agent, advisable to register such Collateral
under the provisions of the Securities Act of 1933, as from time to time
amended (the "Securities Act"), and to use its best efforts to cause the
registration statement relating thereto to become effective and to remain
effective for such period as prospectuses are required by law to be
furnished, and to make all amendments and supplements thereto and to the
related prospectus which, in the opinion of the Administrative Agent, are
necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Securities and
Exchange Commission applicable thereto;
(b) use its best efforts to qualify the Collateral under the state
securities or "Blue Sky" laws and to obtain all necessary governmental
approvals for the sale of the Collateral, as requested by the
Administrative Agent;
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(c) cause each such issuer to make available to its security
holders, as soon as practicable, an earnings statement that will satisfy
the provisions of Section 11(a) of the Securities Act; and
(d) do or cause to be done all such other acts and things as may be
necessary to make such sale of the Collateral or any part thereof valid
and binding and in compliance with applicable law.
The Pledgor further acknowledges the impossibility of ascertaining the amount of
damages that would be suffered by the Administrative Agent or the Lender Parties
by reason of the failure by the Pledgor to perform any of the covenants
contained in this Section and, consequently, agrees that, if the Pledgor shall
fail to perform any of such covenants, it shall pay, as liquidated damages and
not as a penalty, an amount equal to the value (as determined by the
Administrative Agent) of the Collateral on the date the Administrative Agent
shall demand compliance with this Section.
SECTION 6.3. Compliance with Restrictions. The Pledgor agrees that in
any sale of any of the Collateral whenever an Event of Default shall have
occurred and be continuing, the Administrative Agent is hereby authorized to
comply with any limitation or restriction in connection with such sale as it may
be advised by counsel is necessary in order to avoid any violation of applicable
law (including compliance with such procedures as may restrict the number of
prospective bidders and purchasers, require that such prospective bidders and
purchasers have certain qualifications, and restrict such prospective bidders
and purchasers to persons who will represent and agree that they are purchasing
for their own account for investment and not with a view to the distribution or
resale of such Collateral), or in order to obtain any required approval of the
sale or of the purchaser by any governmental regulatory authority or official,
and the Pledgor further agrees that such compliance shall not result in such
sale being considered or deemed not to have been made in a commercially
reasonable manner, nor shall the Administrative Agent be liable nor accountable
to the Pledgor for any discount allowed by the reason of the fact that such
Collateral is sold in compliance with any such limitation or restriction.
SECTION 6.4. Application of Proceeds. All cash proceeds received by the
Administrative Agent in respect of any sale of, collection from, or other
realization upon, all or any part of the Collateral may, in the discretion of
the Administrative Agent, be held by the Administrative Agent as additional
collateral security for, or then or at any time thereafter be applied (after
payment of any amounts payable to the
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Administrative Agent pursuant to Section 10.3 of the Credit Agreement and
Section 6.5) in whole or in part by the Administrative Agent against, all or any
part of the Obligations as follows: (i) first, to the reasonable out-of-pocket
costs and expenses of the Administrative Agent in connection with the retaking,
holding, preparing for sale, selling or other disposition of the Collateral,
including, without limitation, all court costs and the reasonable fees and
expenses of its agents and legal counsel; (ii) second, to the payment in full of
the Obligations or in the event that such proceeds are insufficient to pay in
full the Obligations, equally and ratably in accordance with each Lender's
respective amounts owing to it under or pursuant to the Credit Agreement or any
other Loan Document, or under or pursuant to any Rate Protection Agreement (as
to each Lender, applied first to fees and expense reimbursements then due to
such Lender, then to interest due to such Lender, then to pay or prepay
principal of the Loans owing to, or to reduce the "credit exposure" of, such
Lender under such Rate Protection Agreement, as the case may be, then to pay (or
cash collateralize) the remaining Obligations; (iii) third, without duplication
of any amounts paid pursuant to clause (ii) above, to the Indemnified Parties to
the extent of any amounts owing pursuant to Section 10.4 of the Credit
Agreement; and (iv) fourth, to the Pledgor, or its successors and assigns, or as
a court of competent jurisdiction may direct, of any surplus then remaining. For
purposes of this Agreement, the "credit exposure" at any time of any Lender
under a Rate Protection Agreement to which such Lender is a party shall be
determined at such time in accordance with the customary methods of calculating
credit exposure under similar arrangements by the counterparty to such
arrangements, taking into account potential interest rate movements and the
respective termination provisions and notional principal amount and term of such
Rate Protection Agreement. The Pledgor shall remain liable to the Lenders for
any deficiency. If the Administrative Agent has funds available to apply to a
portion of, but not all of, one of the amounts described in clauses (i) through
(iv) above, then the Administrative Agent shall apply such funds to the
applicable parties in proportion to the amounts to which such parties would have
been entitled if the entire amount described in any such clause had been
available.
SECTION 6.5. Indemnity and Expenses. The Pledgor hereby indemnifies and
holds harmless the Administrative Agent from and against any and all claims,
losses, and liabilities arising out of or resulting from this Pledge Agreement
(including enforcement of this Pledge Agreement), except claims, losses, or
liabilities resulting from the Administrative Agent's gross negligence or wilful
misconduct. Upon demand, the Pledgor will pay to the Administrative Agent the
amount of any and all reasonable expenses, including the reasonable fees and
disbursements of its
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counsel and of any experts and agents, which the Administrative Agent may incur
in connection with:
(a) the administration of this Pledge Agreement, the Credit
Agreement and each other Loan Document;
(b) the custody, preservation, use, or operation of, or the sale of,
collection from, or other realization upon, any of the Collateral;
(c) the exercise or enforcement of any of the rights of the
Administrative Agent hereunder; or
(d) the failure by the Pledgor to perform or observe any of the
provisions hereof.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.1. Loan Document. This Pledge Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions thereof.
SECTION 7.2. Amendments, etc. No amendment to or waiver of any
provision of this Pledge Agreement nor consent to any departure by the Pledgor
herefrom shall in any event be effective unless the same shall be in writing and
signed by the Administrative Agent (on behalf of the Lenders or the Required
Lenders, as the case may be), and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which it is
given.
SECTION 7.3. Protection of Collateral. The Administrative Agent may
from time to time, at its option, perform any act which the Pledgor agrees
hereunder to perform and which the Pledgor shall fail to perform within 30 days
after being requested in writing so to perform and the Administrative Agent may
from time to time take any other action which the Administrative Agent
reasonably deems necessary for the maintenance, preservation or protection of
any of the Collateral or of its security interest therein.
SECTION 7.4. Addresses for Notices. All notices and other
communications provided to the Pledgor under this Pledge Agreement shall be in
writing or by facsimile and addressed, delivered or transmitted to the Pledgor
at its address or facsimile number as set forth in the Credit Agreement or at
such
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other address or facsimile number as may be designated by the Pledgor in a
notice to the other parties. Any notice, if mailed and properly addressed with
postage prepaid or if properly addressed and sent by pre-paid courier service,
shall be deemed given when received; any notice, if transmitted by facsimile,
shall be deemed given when transmitted.
SECTION 7.5. Section Captions. Section captions used in this Pledge
Agreement are for convenience of reference only, and shall not affect the
construction of this Pledge Agreement.
SECTION 7.6. Severability. Wherever possible each provision of this
Pledge Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Pledge Agreement shall
be prohibited by or invalid under such law, such provision shall be ineffective
to the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Pledge
Agreement.
SECTION 7.7. Governing Law, Entire Agreement, etc. THIS PLEDGE
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR
PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT
OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER
THAN THE STATE OF NEW YORK. THIS PLEDGE AGREEMENT AND THE OTHER LOAN DOCUMENTS
CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE
SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH
RESPECT THERETO.
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IN WITNESS WHEREOF, the parties hereto have caused this Pledge
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the day and year first above written.
KEEBLER ACQUISITION CORP.
By
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Title:
THE BANK OF NOVA SCOTIA,
as Administrative Agent
By
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Title:
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EXHIBIT A
to
Borrower Pledge Agreement
PROMISSORY NOTE
$_____________ __________________, 19__
FOR VALUE RECEIVED, the undersigned, ______________, a _______________
corporation (the "Maker"), promises to pay to the order of KEEBLER HOLDING
CORP., a Delaware corporation (the "Payee"), on demand, the aggregate unpaid
principal amount of an intercompany loan made by the Payee to the Maker.
The unpaid principal amount of this promissory note (this "Note") from
time to time outstanding shall bear interest at a rate of interest equal to such
rate per annum as shall be agreed upon from time to time by the Payee and the
Maker payable at such times as shall be agreed upon by the Payee and the Maker,
and all payments of principal of and interest on this Note shall be payable in
lawful currency of the United States of America. All such payments shall be made
by the Maker to an account established by the Payee at and notified to the Maker
and shall be recorded on the books and records of the Maker and the Payee. Upon
notice from the Administrative Agent (hereinafter defined) that an Event of
Default (as defined in the Credit Agreement, hereinafter defined) has occurred
and is continuing under the Credit Agreement, the Maker shall make such
payments, in same day funds, to such other account as the Administrative Agent
shall direct in such notice.
This Note is one of the Pledged Notes referred to in, and evidences
Indebtedness incurred pursuant to, clause (f) or clause (g) of Section 7.2.2 of
the Credit Agreement, dated as of January 26, 1996 (as amended, supplemented,
amended and restated and otherwise modified, from time to time, the "Credit
Agreement"), among the Payee, The Bank of Nova Scotia, as the administrative
agent (the "Administrative Agent"), and various financial institutions as are,
or may from time to time become, parties thereto and the Co-Agents named
therein. Upon the occurrence and continuance of an Event of Default under the
Credit Agreement, and notice thereof by the Administrative Agent to the Maker,
the Administrative Agent shall have all rights of the Payee to collect and
accelerate, and enforce all rights with respect to, the Indebtedness evidenced
by this Note. Unless otherwise defined herein or the context otherwise requires,
terms used herein have the meanings provided in the Credit Agreement.
<PAGE>
Reference is made to the Credit Agreement for a description of the
Pledge Agreement pursuant to which this Note has been pledged to the
Administrative Agent as security for the Obligations outstanding from time to
time under the Credit Agreement and each other Loan Document.
In addition to, but not in limitation of, the foregoing, the Maker
further agrees to pay all expenses, including reasonable attorneys' fees and
legal expenses, incurred by the holder (including the Administrative Agent as
pledgee) of this Note endeavoring to collect any amounts payable hereunder which
are not paid when due, whether by acceleration or otherwise.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK.
THE MAKER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY
RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON THIS
NOTE. THE MAKER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PAYEE TO ACCEPT THIS NOTE.
[Name of Maker]
By _____________________________
Title: _____________________
Pay to the order of THE BANK OF
NOVA SCOTIA
KEEBLER HOLDING CORP.
By _____________________________
Title: ______________________
<PAGE>
GRID
Intercompany Loans made by _______________ to KEEBLER HOLDING CORP. and
payments of principal of such Loans.
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Amount of Amount of Outstanding
Intercompany Principal Principal Notation
Date Loan Payment Balance Made By
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<PAGE>
ATTACHMENT 1
to
Borrower Pledge Agreement
Item A. Pledged Notes
Pledged Note Issuer Description
- ------------------- -----------
Keebler Leasing Corporation Promissory Note in a principal amount
of $10,000,000.
Item B. Pledged Shares
Pledged Share Issuer Description of Shares
- -------------------------------- ----------------------------------------------
% of
Outstanding
Authorized Outstanding Shares
Shares Shares Pledged
- ------------------------------- --------------- ----------- -----------
Keebler Leasing Corporation 1,000 1,000 100
Common
- ------------------------------- --------------- ----------- -----------
Keebler Company 1,000 1,000 100
Common
- ------------------------------- --------------- ----------- -----------
Shaffer, Clarke & Co., Inc. 1,000 10 100
Common
- ------------------------------- --------------- ----------- -----------
Johnston's Ready-Crust Company 1,000 1,000 100
Common
- ------------------------------- --------------- ----------- -----------
Emerald Industries, Inc. 1,000 1,000 100
Common
- ------------------------------- --------------- ----------- -----------
Athens Packaging, Inc. 1,000 1,000 100
Common
- ------------------------------- --------------- ----------- -----------
Bake-Line Products, Inc. 4,000 312.5 100
Common
- ------------------------------- --------------- ----------- -----------
- ------------------------------- --------------- ----------- -----------
- ------------------------------- --------------- ----------- -----------
- ------------------------------- --------------- ----------- -----------
Exhibit 10.7(f)
ACKNOWLEDGMENT AND SUPPLEMENT TO
BORROWER PLEDGE AGREEMENT
(KEEBLER HOLDING CORP.)
This ACKNOWLEDGMENT AND SUPPLEMENT TO BORROWER PLEDGE AGREEMENT (this
"Acknowledgment and Supplement"), dated as of June 4, 1996, supplements the
Borrower Pledge Agreement, dated as of January 26, 1996 (as amended,
supplemented or otherwise modified from time to time, the "Pledge Agreement"),
made by Keebler Holding Corp., a Delaware corporation (the "Pledgor") as the
surviving corporation of the Merger, in favor of The Bank of Nova Scotia, as
administrative agent (together with any successor(s) thereto in such capacity,
the "Administrative Agent") for the Lenders party to the Amended and Restated
Credit Agreement, dated as of June 4, 1996 (as so amended and restated, and
together with any further amendments, supplements, amendment and restatements
and other modifications from time to time thereafter made thereto, the "Credit
Agreement"), among the Pledgor, the Administrative Agent, the Lenders and the
Co-Agents named therein, amending and restating in its entirety the Existing
Credit Agreement.
W I T N E S S E T H :
WHEREAS, the Pledgor has entered into the Pledge Agreement to secure the
Obligations (such capitalized term, and other terms used in this Acknowledgment
and Supplement, unless otherwise defined herein, to have the meanings set forth
in the Pledge Agreement);
WHEREAS, pursuant to the Pledge Agreement, the Pledgor pledged to the
Administrative Agent for the benefit of the Lender Parties the Pledged Shares;
and
WHEREAS, pursuant to the Credit Agreement the Pledgor is required to
supplement the Pledge Agreement as set forth below;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Pledgor and the Administrative Agent agree as follows:
<PAGE>
PART I
SUPPLEMENTAL PLEDGE, ETC.
SUBPART 1.1. Supplemental Pledge. As collateral security for the payment in
full or performance of the Obligations, the Pledgor hereby pledges,
hypothecates, assigns, transfers, sets over and delivers unto the Administrative
Agent, and grants to the Administrative Agent for the benefit of the Lender
Parties, a continuing security interest in
(i) all of the outstanding shares of capital stock owned by the
Pledgor in Sunshine, as further set forth in Schedule I hereto (the
"Additional Pledged Stock"); and
(ii) any additional shares or securities at any time or from time to
time receivable or otherwise distributable in respect of, in exchange for
or in substitution of, any and all of the Additional Pledged Stock
together with any and all proceeds of the Additional Pledged Stock or of
any of the foregoing (all such shares, capital stock, securities, and
proceeds thereof being hereinafter collectively called the "Additional
Pledged Collateral").
Upon delivery to the Administrative Agent, the Additional Pledged Collateral
shall be accompanied by undated stock powers duly executed in blank and by such
other instruments or documents as the Administrative Agent may reasonably
request; provided, however, that if any Additional Pledged Stock consists of
uncertificated securities, the Administrative Agent shall have received
confirmation and evidence, satisfactory to it that appropriate entries shall
have been made in the relevant books or records of a financial intermediary of
the Pledged Share Issuer thereof, as the case may be, under applicable law, to
effect the transfer of such Additional Pledged Stock to the Administrative Agent
for purposes of the Pledge Agreement and this Acknowledgment and Supplement.
SUBPART 1.2. Acknowledgment. The Pledgor hereby acknowledges and agrees
that (i) the Additional Pledged Collateral consists of, and shall for all
purposes be, "Pledged Shares", "Pledged Property" and "Collateral" under the
Pledge Agreement, and (ii) Sunshine shall for all purposes be a "Pledged Share
Issuer" under the Pledge Agreement.
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<PAGE>
PART II
REPRESENTATIONS, ETC.
SUBPART 2.1. Additional Pledged Collateral. The pledge and grant contained
in Part I above and the other agreements of the Pledgor provided for herein have
been made as a supplement to the existing Pledge Agreement, and in furtherance
thereof, the Pledgor hereby agrees that all references contained in the Pledge
Agreement to the terms "Pledged Property", "Pledged Shares" and "Collateral"
hereafter shall be deemed expressly to include the Additional Pledged
Collateral, and all rights, remedies, benefits and privileges extended to the
Administrative Agent under the Pledge Agreement with respect to the Pledged
Property, the Pledged Shares and the Collateral are hereby extended to the
Administrative Agent with respect to the Additional Pledged Collateral;
provided, that all rights reserved by the Pledgor in the Pledge Agreement with
respect to the Pledged Property, Pledged Shares and Collateral shall be deemed
to be equally reserved with respect to the Additional Pledged Collateral.
SUBPART 2.2. Representations and Warranties. The Pledgor hereby confirms,
reaffirms and restates each of the representations and warranties set forth in
Article III of the Pledge Agreement, provided that such representations and
warranties shall be and hereby are amended as follows: (i) each reference to
"Collateral", "Pledged Shares" and "Pledged Property" contained therein shall be
deemed a reference to the original Collateral, Pledged Shares and Pledged
Property, as well as to the Additional Pledged Collateral, and (ii) each
reference to "Pledged Share Issuers" contained therein shall be deemed a
reference to the original Pledged Share Issuers, as well as to Sunshine.
PART III
MISCELLANEOUS
SUBPART 3.1. Governing Law. THIS ACKNOWLEDGMENT AND SUPPLEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY
INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE REQUIRED TO BE GOVERNED BY THE LAWS OF JURISDICTION OTHER THAN
THE STATE OF NEW YORK.
SUBPART 3.2. Obligations Absolute. Except as expressly supplemented by this
Acknowledgment and Supplement, the Pledge Agreement shall remain in full force
and effect in accordance with its terms. This Acknowledgment and Supplement may
be signed
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<PAGE>
in counterparts, each of which shall be an original and all of which shall
constitute one and the same agreement.
SUBPART 3.3. Loan Document. This Acknowledgment and Supplement constitutes
a Loan Document executed and delivered pursuant to the Credit Agreement.
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<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Acknowledgment and
Supplement to be duly executed and delivered by its officer thereunto duly
authorized on the date first written above.
KEEBLER HOLDING CORP.
By
---------------------
Title:
ACKNOWLEDGED:
THE BANK OF NOVA SCOTIA,
as Administrative Agent
By
---------------------
Title:
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<PAGE>
SCHEDULE I
Pledged Shares
COMMON STOCK
Pledged Authorized Outstanding % of Outstanding
Share Issuer Shares Shares Shares Pledged
------------ ---------- ----------- ----------------
Sunshine 1000 100 100%
Biscuits, Inc.
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Exhibit 10.7(g)
[EXECUTION COPY]
SUBSIDIARY PLEDGE AGREEMENT
This SUBSIDIARY PLEDGE AGREEMENT (this "Pledge Agreement"), dated as of
January 26, 1996, is made by each Subsidiary (as defined in the Credit Agreement
referred to below) a signatory hereto on the date hereof and each other
Subsidiary that may, from time to time become, pursuant to the terms of the
Credit Agreement, a party hereto (individually, a "Pledgor" and collectively,
the "Pledgors"), in favor of THE BANK OF NOVA SCOTIA, as administrative agent
(together with any successor(s) thereto in such capacity, the "Administrative
Agent") for each of the Lender Parties (as defined below).
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement, dated as of January 26, 1996 (as
amended, supplemented, amended and restated and otherwise modified from time to
time, the "Credit Agreement"), among Keebler Acquisition Corp., a Delaware
corporation (to be merged with and into UB Investments US Inc. and to become
known as Keebler Holding Corp.) (the "Borrower"), the various financial
institutions as are, or may from time to time become, parties thereto (the
"Lenders"), the Co-Agents named therein and the Administrative Agent, the
Lenders and the Issuer have extended Commitments to make Credit Extensions to
the Borrower;
WHEREAS, as a condition precedent to the making of each Credit Extension
(including the initial Credit Extension) under the Credit Agreement, each
Pledgor is required to execute and deliver this Pledge Agreement;
WHEREAS, each Pledgor has duly authorized the execution, delivery and
performance of this Pledge Agreement; and
WHEREAS, it is in the best interest of each Pledgor to execute this Pledge
Agreement inasmuch as each Pledgor will derive substantial direct and indirect
benefits from the Credit Extensions made from time to time to the Borrower by
the Lenders and the Issuer pursuant to the Credit Agreement;
<PAGE>
NOW, THEREFORE, for good and valuable consideration the receipt of which is
hereby acknowledged, and in order to induce the Lenders and the Issuer to make
each Credit Extension (including the initial Credit Extension) to the Borrower
pursuant to the Credit Agreement, each Pledgor jointly and severally agrees, for
the benefit of each Lender Party, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Terms. The following terms (whether or not
underscored) when used in this Pledge Agreement, including its preamble and
recitals, shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof):
"Administrative Agent" is defined in the preamble.
"Borrower" is defined in the first recital.
"Collateral" is defined in Section 2.1.
"Credit Agreement" is defined in the first recital.
"Distributions" means all stock dividends, liquidating dividends, shares of
stock resulting from (or in connection with the exercise of) stock splits,
reclassifications, warrants, options, non-cash dividends, mergers,
consolidations, and all other distributions (whether similar or dissimilar to
the foregoing) on or with respect to any Pledged Shares or other shares of
capital stock constituting Collateral, but shall not include Dividends.
"Dividends" means cash dividends and cash distributions with respect to any
Pledged Shares or other Pledged Property made in the ordinary course of business
and not a liquidating dividend.
"Lender Party" means, as the context may require, each Lender, the Issuer,
each Co-Agent and the Administrative Agent and each of their respective
successors, transferees and assigns.
"Lenders" is defined in the first recital.
"Pledge Agreement" is defined in the preamble.
"Pledged Note Issuer" means each Person identified in Item A of Attachment
1 hereto as the issuer of the Pledged Note identified opposite the name of such
Person.
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<PAGE>
"Pledged Notes" means all promissory notes of each Pledged Note Issuer in
the form satisfactory to the Administrative Agent or substantially the form of
Exhibit A hereto which are delivered by such Pledgor to the Administrative Agent
as Pledged Property hereunder, as such promissory notes, in accordance with
Section 4.5, are amended, modified or supplemented from time to time and
together with any promissory note of such Pledged Note Issuer taken in extension
or renewal thereof or substitution therefor.
"Pledged Property" means all Pledged Shares, all Pledged Notes, and all
other pledged shares of capital stock or promissory notes, all other securities,
all assignments of any amounts due or to become due, all other instruments which
are now being delivered by each Pledgor to the Administrative Agent or may from
time to time hereafter be delivered by each Pledgor to the Administrative Agent
for the purpose of pledge under this Pledge Agreement or any other Loan
Document, and all proceeds of any of the foregoing.
"Pledged Share Issuer" means each Person identified in Item B of Attachment
1 hereto as issuer of the Pledged Shares identified opposite the name of such
Person.
"Pledged Shares" means all shares of capital stock of any Pledged Share
Issuer which are delivered by such Pledgor to the Administrative Agent as
Pledged Property hereunder.
"Pledgor" is defined in the preamble.
"Secured Obligations" is defined in Section 2.2.
"Securities Act" is defined in Section 6.2.
"U.C.C." means the Uniform Commercial Code as in effect in the State of New
York.
SECTION 1.2. Credit Agreement Definitions. Unless otherwise defined herein
or the context otherwise requires, terms used in this Pledge Agreement,
including its preamble and recitals, have the meanings provided in the Credit
Agreement.
SECTION 1.3. U.C.C. Definitions. Unless otherwise defined herein or the
context otherwise requires, terms for which meanings are provided in the U.C.C.
are used in this Pledge Agreement, including its preamble and recitals, with
such meanings.
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<PAGE>
ARTICLE II
PLEDGE
SECTION 2.1. Grant of Security Interest. Each Pledgor hereby pledges,
hypothecates, assigns, charges, mortgages, delivers, and transfers to the
Administrative Agent, for its benefit and the ratable benefit of each of the
Lender Parties, and hereby grants to the Administrative Agent, for its benefit
and the ratable benefit of the Lender Parties, a continuing security interest
in, all of the following property (the "Collateral"):
(a) all promissory notes of each Pledged Note Issuer identified in
Item A of Attachment 1 hereto;
(b) all other Pledged Notes issued from time to time;
(c) all issued and outstanding shares of capital stock of each
Pledged Share Issuer identified in Item B of Attachment 1 hereto;
(d) all other Pledged Shares issued from time to time;
(e) all other Pledged Property, whether now or hereafter delivered
to the Administrative Agent in connection with this Pledge Agreement;
(f) all Dividends, Distributions, interest, and other payments and
rights with respect to any Pledged Property; and
(g) all proceeds of any of the foregoing.
SECTION 2.2. Security for Obligations. This Pledge Agreement secures the
payment in full of all Obligations of the Borrower now or hereafter existing
under the Credit Agreement, the Notes and each other Loan Document to which the
Borrower is or may become a party, whether for principal, interest, costs, fees,
expenses, or otherwise and all obligations of each Pledgor now or hereafter
existing under this Pledge Agreement and each other Loan Document to which it is
or may become a party (all such obligations of the Borrower and each Pledgor
being the "Secured Obligations").
SECTION 2.3. Delivery of Pledged Property. All certificates or instruments
representing or evidencing any Collateral, including all Pledged Shares and all
Pledged Notes, shall be delivered to and held by or on behalf of (and, in the
case of the Pledged Notes, endorsed to the order of) the Administrative Agent
pursuant hereto, shall be in suitable form
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<PAGE>
for transfer by delivery, and shall be accompanied by all necessary instruments
of transfer or assignment, duly executed in blank.
SECTION 2.4. Payment on Pledged Notes. If any payment of a Pledged Note
issued by the Borrower to a Pledgor is paid by the Borrower to a Pledgor in
contravention of the Intercompany Subordination Agreement, such Pledgor shall
hold the same segregated and in trust for the Administrative Agent until paid to
the Administrative Agent in accordance with Section 4.4 hereto).
SECTION 2.5. Continuing Security Interest; Transfer of Note. This Pledge
Agreement shall create a continuing security interest in the Collateral and
shall
(a) remain in full force and effect until payment in full of all
Secured Obligations and the termination of all Commitments,
(b) be binding upon each Pledgor and its successors, transferees and
assigns, and
(c) inure, together with the rights and remedies of the
Administrative Agent hereunder, to the benefit of the Administrative Agent
and each other Lender Party.
Without limiting the foregoing clause (c), any Lender may assign or otherwise
transfer (in whole or in part) any Note or Credit Extension held by it to any
other Person or entity, and such other Person or entity shall thereupon become
vested with all the rights and benefits in respect thereof granted to such
Lender under any Loan Document (including this Pledge Agreement) or otherwise,
subject, however, to any contrary provisions in such assignment or transfer, and
to the provisions of Section 10.11 and Article IX of the Credit Agreement. Upon
(i) the sale, transfer or other disposition of Collateral in accordance with the
Credit Agreement or (ii) the payment in full of all Secured Obligations and the
termination of all Commitments, the security interests granted herein shall
automatically terminate with respect to (x) such Collateral (in respect of
clause (i)) or all Collateral (with respect to clause (ii)). Upon any such sale,
transfer disposition, or termination, the Administrative Agent will, at such
Pledgor's sole expense, deliver to such Pledgor, without any representations,
warranties or recourse of any kind whatsoever, all certificates and instruments
representing or evidencing all Pledged Shares and all Pledged Notes, together
with all other Collateral held by the Administrative Agent hereunder, and
execute and deliver to such Pledgor such documents as such Pledgor shall
reasonably request to evidence such termination.
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<PAGE>
SECTION 2.6. Security Interest Absolute. All rights of the Administrative
Agent and the security interests granted to the Administrative Agent hereunder,
and all obligations of each Pledgor hereunder, shall be absolute and
unconditional, irrespective of
(a) any lack of validity or enforceability of the Credit Agreement,
any Note or any other Loan Document,
(b) the failure of any Lender Party or any holder of any Note
(i) to assert any claim or demand or to enforce any right or
remedy against the Borrower, any other Obligor or any other Person
under the provisions of the Credit Agreement, any Note, any other
Loan Document or otherwise, or
(ii) to exercise any right or remedy against any other
guarantor of, or collateral securing, any Obligations of the
Borrower or any other Obligor,
(c) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations or any other extension,
compromise or renewal of any Obligation of the Borrower or any other
Obligor,
(d) any reduction, limitation, impairment or termination of any
Obligations of the Borrower or any other Obligor for any reason, including
any claim of waiver, release, surrender, alteration or compromise, and
shall not be subject to (and each Pledgor hereby waives any right to or
claim of) any defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality, nongenuineness,
irregularity, compromise, unenforceability of, or any other event or
occurrence affecting, any Obligations of the Borrower, any other Obligor
or otherwise,
(e) any amendment to, recision, waiver, or other modification of, or
any consent to departure from, any of the terms of the Credit Agreement,
any Note or any other Loan Document,
(f) any addition, exchange, release, surrender or non- perfection of
any collateral (including the Collateral), or any amendment to or waiver
or release of or addition to or consent to departure from any guaranty,
for any of the Secured Obligations, or
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<PAGE>
(g) any other circumstances which might otherwise constitute a
defense available to, or a legal or equitable discharge of, the Borrower,
any other Obligor, any surety or any guarantor.
SECTION 2.7. Postponement of Subrogation. Each Pledgor covenants and agrees
that it will not exercise any rights which it may acquire by way of subrogation
under this Pledge Agreement, by any payment made hereunder or otherwise, until
the prior payment, in full and in cash, of all Obligations of the Borrower and
each other Obligor. Any amount paid to such Pledgor on account of any such
subrogation rights prior to the payment in full of all Obligations of the
Borrower and each other Obligor shall be held in trust for the benefit of the
Lender Parties and each holder of a Note and shall immediately be paid to the
Lender Parties and each holder of a Note and credited and applied against the
Obligations of the Borrower and each other Obligor, whether matured or
unmatured, in accordance with the terms of the Credit Agreement; provided
however, that if
(a) such Pledgor has made payment to the Lender Parties and each
holder of a Note of all or any part of the Obligations of the Borrower or
any other Obligor, and
(b) all Obligations of the Borrower and each other Obligor have been
paid in full and all Commitments have been permanently terminated.
each Lender Party and each holder of Note agrees that, at such Pledgor's
request, the Lender Parties and the holders of the Notes, will execute and
deliver to such Pledgor appropriate documents (without recourse and without
representation or warranty) necessary to evidence the transfer by subrogation to
such Pledgor of an interest in the Obligations of the Borrower and each other
Obligor resulting from such payment by such Pledgor. In furtherance of the
foregoing, for so long as any Obligations or Commitments remain outstanding,
such Pledgor shall refrain from taking any action or commencing any proceeding
against the Borrower or any other Obligor (or its successors or assigns, whether
in connection with a bankruptcy proceeding or otherwise) to recover any amounts
in the respect of payments made under this Pledge Agreement to any Lender Party
or any holder of a Note.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties, etc. Each Pledgor represents
insofar as the representations and warranties
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<PAGE>
contained herein are applicable to such Pledgor and its properties, to each
Lender Party, as of the date of each pledge and delivery hereunder (including
each pledge and delivery of Pledged Shares) by each Pledgor to the
Administrative Agent of any Collateral, as set forth in this Article.
SECTION 3.1.1. Ownership, No Liens, etc. Each Pledgor is the legal and
beneficial owner of, and has good and marketable title to (and has full right
and authority to pledge and assign) its Collateral, free and clear of all Liens
except any Lien granted pursuant hereto in favor of the Administrative Agent.
SECTION 3.1.2. Valid Security Interest. The execution and delivery of this
Pledge Agreement, together with the delivery of such Collateral to the
Administrative Agent is effective to create a valid, perfected, first priority
security interest in such Collateral and all proceeds thereof, securing the
Secured Obligations. Possession by the Administrative Agent of the Collateral is
the only action necessary to perfect or protect such security interest in the
Collateral, subject to Section 9- 306 of the U.C.C.
SECTION 3.1.3. As to Pledged Shares. In the case of any Pledged Shares
constituting Collateral, all of such Pledged Shares are duly authorized and
validly issued, fully paid, and non-assessable, and constitute all of the issued
and outstanding shares of capital stock of each Pledged Share Issuer owned by
such Pledgor that are required to be delivered in pledge under the terms of the
Credit Agreement. Such Pledgor has no Subsidiary other than the Pledged Share
Issuers (other than, in the case of Keebler Company, the Designated Subsidiaries
that are not-for-profit corporations).
SECTION 3.1.4. As to Pledged Notes. In the case of each Pledged Note, all
of such Pledged Notes have been duly authorized, executed, endorsed, issued and
delivered, and are the legal, valid and binding obligation of the issuers
thereof, and are not in default.
SECTION 3.1.5. Authorization, Approval, etc. No authorization, approval, or
other action by, and no notice to or filing with, any governmental authority,
regulatory body or any other Person is required either
(a) for the pledge by such Pledgor of any Collateral pursuant to
this Pledge Agreement or for the execution, delivery, and performance of
this Pledge Agreement by such Pledgor, or
(b) for the exercise by the Administrative Agent of the voting or
other rights provided for in this Pledge
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<PAGE>
Agreement, or, except with respect to any Pledged Shares, as may be
required in connection with a disposition of such Pledged Shares by laws
affecting the offering and sale of securities generally, the remedies in
respect of the Collateral pursuant to this Pledge Agreement.
ARTICLE IV
COVENANTS
SECTION 4.1. Protect Collateral; Further Assurances, etc. Each Pledgor
agrees and covenants that it will not sell, assign, transfer, pledge, or
encumber in any other manner the Collateral (except in favor of the
Administrative Agent hereunder). Each Pledgor will warrant and defend the right
and title herein granted unto the Administrative Agent in and to the Collateral
(and all right, title, and interest represented by the Collateral) against the
claims and demands of all Persons whomsoever. Each Pledgor agrees that at any
time, and from time to time, at the expense of such Pledgor, such Pledgor will
promptly execute and deliver all further instruments, and take all further
action, that may be necessary or desirable, or that the Administrative Agent may
reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Administrative Agent
to exercise and enforce its rights and remedies hereunder with respect to any
Collateral.
SECTION 4.2. Stock Powers, etc. Each Pledgor agrees that all Pledged Shares
(and all other shares of capital stock constituting Collateral) delivered by it
pursuant to this Pledge Agreement will be accompanied by duly executed undated
blank stock powers, or other equivalent instruments of transfer acceptable to
the Administrative Agent. Each Pledgor will, from time to time upon the request
of the Administrative Agent, promptly deliver to the Administrative Agent such
stock powers, instruments, and similar documents, satisfactory in form and
substance to the Administrative Agent, with respect to the Collateral as the
Administrative Agent may reasonably request and will, from time to time upon the
request of the Administrative Agent after the occurrence of any Event of
Default, promptly transfer any Pledged Shares or other shares of common stock
constituting Collateral into the name of any nominee designated by the
Administrative Agent.
SECTION 4.3. Continuous Pledge. Subject to Section 2.4, each Pledgor will,
at all times, keep pledged to the Administrative Agent pursuant hereto all
Pledged Shares and all other shares of capital stock constituting Collateral,
all Dividends and Distributions with respect thereto, all Pledged
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Notes, all interest, principal and other proceeds received by the Administrative
Agent with respect to the Pledged Notes, and all other Collateral and other
securities, instruments, proceeds, and rights from time to time received by it
or distributable to it in respect of any Collateral and will not permit any
Pledged Share Issuer to issue any capital stock which shall not have been
immediately duly pledged hereunder on a first priority perfected basis.
SECTION 4.4. Voting Rights; Dividends, etc. Each Pledgor agrees:
(a) after any (i) Default of the nature referred to in Section 8.1.9
of the Credit Agreement shall have occurred and be continuing or (ii) any
other Event of Default shall have occurred and be continuing, and the
giving of notice from the Administrative Agent of its intent to exercise
its remedies (in the case of this clause (a)(ii)), such Pledgor will
deliver promptly upon receipt thereof (properly endorsed where required
hereby or requested by the Administrative Agent) to the Administrative
Agent all Dividends, Distributions, all interest, all principal, all other
cash payments, and all proceeds of the Collateral, all of which shall be
held by the Administrative Agent as additional Collateral for use in
accordance with Section 6.4; and
(b) after any Event of Default shall have occurred and be continuing
and the Administrative Agent has notified each Pledgor of the
Administrative Agent's intention to exercise its voting power under this
Section 4.4(b)
(i) the Administrative Agent may exercise (to the exclusion of
each Pledgor) the voting power and all other incidental rights of
ownership with respect to any Pledged Shares or other shares of
capital stock constituting Collateral and each Pledgor hereby grants
the Administrative Agent an irrevocable proxy, exercisable under
such circumstances, to vote the Pledged Shares and such other
Collateral; and
(ii) promptly to deliver to the Administrative Agent such
additional proxies and other documents as may be necessary to allow
the Administrative Agent to exercise such voting power.
All Dividends, Distributions, interest, principal, cash payments, and proceeds
which may at any time and from time to time be held by such Pledgor but which
such Pledgor is then obligated to deliver to the Administrative Agent, shall,
until delivery to the Administrative Agent, be held by such Pledgor separate and
apart
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<PAGE>
from its other property in trust for the Administrative Agent. The
Administrative Agent agrees that unless an Event of Default shall have occurred
and be continuing and the Administrative Agent shall have given the notice
referred to in Section 4.4(b), such Pledgor shall have the exclusive voting
power with respect to any shares of capital stock (including any of the Pledged
Shares) constituting Collateral and the Administrative Agent shall, upon the
written request of such Pledgor, promptly deliver such proxies and other
documents, if any, as shall be reasonably requested by such Pledgor which are
necessary to allow such Pledgor to exercise voting power with respect to any
such share of capital stock (including any of the Pledged Shares) constituting
Collateral; provided, however, that no vote shall be cast, or consent, waiver,
or ratification given, or action taken by such Pledgor that would impair any
Collateral or be inconsistent with or violate any provision of the Credit
Agreement or any other Loan Document (including this Pledge Agreement).
ARTICLE V
THE ADMINISTRATIVE AGENT
SECTION 5.1. Administrative Agent Appointed Attorney-in- Fact. Each Pledgor
hereby irrevocably appoints the Administrative Agent such Pledgor's
attorney-in-fact, with full authority in the place and stead of such Pledgor and
in the name of such Pledgor or otherwise, from time to time in the
Administrative Agent's discretion, upon the occurrence and continuation of an
Event of Default and subject to delivery of notice to such Pledgor to take any
action and to execute any instrument which the Administrative Agent may deem
necessary or advisable to accomplish the purposes of this Pledge Agreement,
including without limitation:
(a) to ask, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral;
(b) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a)
above; and
(c) to file any claims or take any action or institute any
proceedings which the Administrative Agent may deem necessary or desirable
for the collection of any of the Collateral or otherwise to enforce the
rights of the Administrative Agent with respect to any of the Collateral.
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<PAGE>
Each Pledgor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
SECTION 5.2. Administrative Agent Has No Duty. The powers conferred on the
Administrative Agent hereunder are solely to protect its interest (on behalf of
the Lender Parties) in the Collateral and shall not impose any duty on it to
exercise any such powers. Except for reasonable care of any Collateral in its
possession and the accounting for monies actually received by it hereunder, the
Administrative Agent shall have no duty as to any Collateral or responsibility
for (a) ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relative to any Pledged
Property, whether or not the Administrative Agent has or is deemed to have
knowledge of such matters, or (b) taking any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral.
SECTION 5.3. Reasonable Care. The Administrative Agent is required to
exercise reasonable care in the custody and preservation of any of the
Collateral in its possession; provided, however, the Administrative Agent shall
be deemed to have exercised reasonable care in the custody and preservation of
any of the Collateral, if it takes such action for that purpose as such Pledgor
reasonably requests in writing at times other than upon the occurrence and
during the continuance of any Event of Default, but failure of the
Administrative Agent to comply with any such request at any time shall not in
itself be deemed a failure to exercise reasonable care.
ARTICLE VI
REMEDIES
SECTION 6.1. Certain Remedies. If any Event of Default shall have occurred
and be continuing:
(a) The Administrative Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein
or otherwise available to it, all the rights and remedies of a secured
party on default under the U.C.C. (whether or not the U.C.C. applies to
the affected Collateral) and also may, without notice except as specified
below, sell the Collateral or any part thereof in one or more parcels at
public or private sale, at any of the Administrative Agent's offices or
elsewhere, for cash, on credit or for future delivery, and upon such other
terms as the Administrative Agent may deem commercially reasonable. Each
Pledgor agrees that, to the extent notice of sale shall
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<PAGE>
be required by law, at least ten days' prior notice to such Pledgor of the
time and place of any public sale or the time after which any private sale
is to be made shall constitute reasonable notification. The Administrative
Agent shall not be obligated to make any sale of Collateral regardless of
notice of sale having been given. The Administrative Agent may adjourn any
public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made
at the time and place to which it was so adjourned.
(b) The Administrative Agent may
(i) transfer all or any part of the Collateral into the name
of the Administrative Agent or its nominee, with or without
disclosing that such Collateral is subject to the lien and security
interest hereunder,
(ii) notify the parties obligated on any of the Collateral to
make payment to the Administrative Agent of any amount due or to
become due thereunder,
(iii) enforce collection of any of the Collateral by suit or
otherwise, and surrender, release or exchange all or any part
thereof, or compromise or extend or renew for any period (whether or
not longer than the original period) any obligations of any nature
of any party with respect thereto,
(iv) endorse any checks, drafts, or other writings in each
Pledgor's name to allow collection of the Collateral,
(v) take control of any proceeds of the Collateral, and
(vi) execute (in the name, place and stead of each Pledgor)
endorsements, assignments, stock powers and other instruments of
conveyance or transfer with respect to all or any of the Collateral.
SECTION 6.2. Securities Laws. If the Administrative Agent shall determine
to exercise its right to sell all or any of the Collateral pursuant to Section
6.1, each Pledgor agrees that, upon request of the Administrative Agent, it
will, at its own expense:
(a) execute and deliver, and cause each issuer of the Collateral
contemplated to be sold and the directors and officers thereof to execute
and deliver, all such
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<PAGE>
instruments and documents, and do or cause to be done all such other acts
and things, as may be necessary or, in the opinion of the Administrative
Agent, advisable to register such Collateral under the provisions of the
Securities Act of 1933, as from time to time amended (the "Securities
Act"), and to use its best efforts to cause the registration statement
relating thereto to become effective and to remain effective for such
period as prospectuses are required by law to be furnished, and to make
all amendments and supplements thereto and to the related prospectus
which, in the opinion of the Administrative Agent, are necessary or
advisable, all in conformity with the requirements of the Securities Act
and the rules and regulations of the Securities and Exchange Commission
applicable thereto;
(b) use its best efforts to qualify the Collateral under the state
securities or "Blue Sky" laws and to obtain all necessary governmental
approvals for the sale of the Collateral, as requested by the
Administrative Agent;
(c) cause each such issuer to make available to its security
holders, as soon as practicable, an earnings statement that will satisfy
the provisions of Section 11(a) of the Securities Act; and
(d) do or cause to be done all such other acts and things as may be
necessary to make such sale of the Collateral or any part thereof valid
and binding and in compliance with applicable law.
Each Pledgor further acknowledges the impossibility of ascertaining the amount
of damages that would be suffered by the Administrative Agent or the Lender
Parties by reason of the failure by any Pledgor to perform any of the covenants
contained in this Section and, consequently, agrees that, if any Pledgor shall
fail to perform any of such covenants, it shall pay, as liquidated damages and
not as a penalty, an amount equal to the value (as determined by the
Administrative Agent) of the Collateral on the date the Administrative Agent
shall demand compliance with this Section.
SECTION 6.3. Compliance with Restrictions. Each Pledgor agrees that in any
sale of any of the Collateral whenever an Event of Default shall have occurred
and be continuing, the Administrative Agent is hereby authorized to comply with
any limitation or restriction in connection with such sale as it may be advised
by counsel is necessary in order to avoid any violation of applicable law
(including compliance with such procedures as may restrict the number of
prospective bidders and purchasers, require that such prospective bidders and
purchasers have certain qualifications, and restrict such prospective
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<PAGE>
bidders and purchasers to persons who will represent and agree that they are
purchasing for their own account for investment and not with a view to the
distribution or resale of such Collateral), or in order to obtain any required
approval of the sale or of the purchaser by any governmental regulatory
authority or official, and each Pledgor further agrees that such compliance
shall not result in such sale being considered or deemed not to have been made
in a commercially reasonable manner, nor shall the Administrative Agent be
liable nor accountable to any Pledgor for any discount allowed by the reason of
the fact that such Collateral is sold in compliance with any such limitation or
restriction.
SECTION 6.4. Application of Proceeds. All cash proceeds received by the
Administrative Agent in respect of any sale of, collection from, or other
realization upon, all or any part of the Collateral may, in the discretion of
the Administrative Agent, be held by the Administrative Agent as additional
collateral security for, or then or at any time thereafter be applied (after
payment of any amounts payable to the Administrative Agent pursuant to Section
10.3 of the Credit Agreement and Section 6.5) in whole or in part by the
Administrative Agent against, all or any part of the Secured Obligations as
follows: (i) first, to the reasonable out-of-pocket costs and expenses of the
Administrative Agent in connection with the retaking, holding, preparing for
sale, selling or other disposition of the Collateral, including, without
limitation, all court costs and the reasonable fees and expenses of its agents
and legal counsel; (ii) second, to the payment in full of the Obligations or in
the event that such proceeds are insufficient to pay in full the Obligations,
equally and ratably in accordance with each Lender's Obligations owing to it
under or pursuant to the Credit Agreement or any other Loan Document, or under
or pursuant to any Rate Protection Agreement (as to each Lender, applied first
to fees and expense reimbursements then due to such Lender, then to interest due
to such Lender, then to pay or prepay principal of the Loans owing to, or to
reduce the "credit exposure" of, such Lender under such Rate Protection
Agreement, as the case may be, then to pay (or cash collateralize) the remaining
Obligations; (iii) third, without duplication of any amounts paid pursuant to
clause (ii) above, to the Indemnified Parties to the extent of any amounts owing
pursuant to Section 10.4 of the Credit Agreement; and (iv) fourth, to each
Pledgor, or its successors and assigns, or as a court of competent jurisdiction
may direct, of any surplus then remaining. For purposes of this Agreement, the
"credit exposure" at any time of any Lender under a Rate Protection Agreement to
which such Lender is a party shall be determined at such time in accordance with
the customary methods of calculating credit exposure under similar arrangements
by the counterparty to such arrangements, taking into account potential interest
rate
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<PAGE>
movements and the respective termination provisions and notional principal
amount and term of such Rate Protection Agreement. Each Pledgor shall remain
liable to the Lenders for any deficiency. If the Administrative Agent has funds
available to apply to a portion of, but not all of, one of the amounts described
in clauses (i) through (iv) above, then the Administrative Agent shall apply
such funds to the applicable parties in proportion to the amounts to which such
parties would have been entitled if the entire amount described in any such
clause had been available.
SECTION 6.5. Indemnity and Expenses. Each Pledgor hereby jointly and
severally indemnifies and holds harmless the Administrative Agent from and
against any and all claims, losses, and liabilities arising out of or resulting
from this Pledge Agreement (including enforcement of this Pledge Agreement),
except claims, losses, or liabilities resulting from the Administrative Agent's
gross negligence or wilful misconduct. Upon demand, each Pledgor will pay to the
Administrative Agent the amount of any and all reasonable expenses, including
the reasonable fees and disbursements of its counsel and of any experts and
agents, which the Administrative Agent may incur in connection with:
(a) the administration of this Pledge Agreement, the Credit
Agreement and each other Loan Document;
(b) the custody, preservation, use, or operation of, or the sale of,
collection from, or other realization upon, any of the Collateral;
(c) the exercise or enforcement of any of the rights of the
Administrative Agent hereunder; or
(d) the failure by any Pledgor to perform or observe any of the
provisions hereof.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.1. Loan Document. This Pledge Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions thereof.
SECTION 7.2. Amendments, etc. No amendment to or waiver of any provision of
this Pledge Agreement nor consent to any departure by any Pledgor herefrom shall
in any event be effective
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<PAGE>
unless the same shall be in writing and signed by the Administrative Agent (on
behalf of the Lenders or the Required Lenders, as the case may be), and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which it is given.
SECTION 7.3. Protection of Collateral. The Administrative Agent may from
time to time, at its option, perform any act which each Pledgor agrees hereunder
to perform and which such Pledgor shall fail to perform within 30 days after
being requested in writing so to perform and the Administrative Agent may from
time to time take any other action which the Administrative Agent reasonably
deems necessary for the maintenance, preservation or protection of any of the
Collateral or of its security interest therein.
SECTION 7.4. Addresses for Notices. All notices and other communications
provided to such Pledgor under this Pledge Agreement shall be in writing or by
facsimile and addressed, delivered or transmitted to such Pledgor at its address
or facsimile number set forth in the Subsidiary Guaranty or at such other
address or facsimile number as may be designated by such Pledgor in a notice to
the other parties. Any notice, if mailed and properly addressed with postage
prepaid or if properly addressed and sent by pre-paid courier service, shall be
deemed given when received; any notice, if transmitted by facsimile, shall be
deemed given when transmitted.
SECTION 7.5. Section Captions. Section captions used in this Pledge
Agreement are for convenience of reference only, and shall not affect the
construction of this Pledge Agreement.
SECTION 7.6. Severability. Wherever possible each provision of this Pledge
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Pledge Agreement shall be
prohibited by or invalid under such law, such provision shall be ineffective to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Pledge Agreement.
SECTION 7.7. Governing Law, Entire Agreement, etc. THIS PLEDGE AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE
SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
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COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
NEW YORK. THIS PLEDGE AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE
ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER
HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT
THERETO.
SECTION 7.8. Forum Selection and Consent to Jurisdiction. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS PLEDGE
AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL
OR WRITTEN) OR ACTIONS OF THE LENDER PARTIES OR Each Pledgor SHALL BE BROUGHT
AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK, NEW YORK
COUNTY, OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE ADMINISTRATIVE AGENT'S
OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER
PROPERTY MAY BE FOUND. EACH PLEDGOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, NEW YORK COUNTY, AND OF
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE
PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE
BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. EACH
PLEDGOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED
MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW
YORK. EACH PLEDGOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE
TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED
TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. TO THE EXTENT THAT EACH PLEDGOR HAS OR HEREAFTER MAY ACQUIRE
ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER
THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF
EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, EACH PLEDGOR
HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
PLEDGE AGREEMENT.
SECTION 7.9. Waiver of Jury Trial. EACH PLEDGOR AND EACH LENDER PARTY
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS PLEDGE AGREEMENT, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF EACH
PLEDGOR OR ANY LENDER PARTY. EACH PLEDGOR ACKNOWLEDGES AND AGREES THAT IT HAS
RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE ADMINISTRATIVE AGENT ENTERING INTO
THIS AGREEMENT AND THE LENDER PARTIES ENTERING INTO THE CREDIT AGREEMENT.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Pledge Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.
UB INVESTMENTS US INC.
SHAFFER, CLARKE & CO., INC.
JOHNSTON'S READY-CRUST COMPANY
KEEBLER COMPANY
EMERALD INDUSTRIES, INC.
ATHENS PACKAGING, INC.
BAKE-LINE PRODUCTS INC.
STEAMBOAT CORPORATION
ILLINOIS BAKING CORPORATION
KEEBLER COOKIE AND CRACKER COMPANY
HOLLOW TREE COMPANY
KEEBLER COMPANY/PUERTO RICO, INC.
KEEBLER H.C., INC.
KEEBLER-GEORGIA, INC.
By
--------------------------------
Title:
THE BANK OF NOVA SCOTIA,
as Administrative Agent
By
--------------------------------
Title:
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EXHIBIT A
to
Subsidiary Pledge Agreement
PROMISSORY NOTE
$_________________ ________________, 19__
FOR VALUE RECEIVED, the undersigned, ______________, a _______________
corporation (the "Maker"), promises to pay to the order of
______________________, a __________ corporation (the "Payee"), on demand the
aggregate unpaid principal amount of an intercompany loan made by the Payee to
the Maker.
The unpaid principal amount of this promissory note (this "Note") from time
to time outstanding shall bear interest at a rate of interest equal to such rate
per annum as shall be agreed upon from time to time by the Payee and the Maker
payable at such times as shall be agreed upon by the Payee and the Maker, and
all payments of principal of and interest on this Note shall be payable in
lawful currency of the United States of America. All such payments shall be made
by the Maker to an account established by the Payee and notified to the Maker
and shall be recorded on the books and records of the Maker and the Payee. Upon
notice from the Administrative Agent (hereinafter defined) that an Event of
Default (as defined in the Credit Agreement, hereinafter defined) has occurred
and is continuing under the Credit Agreement, the Maker shall make such
payments, in same day funds, to such other account as the Administrative Agent
shall direct in such notice.
This Note is one of the Pledged Notes referred to in, and evidences
Indebtedness incurred pursuant to, clause (f) or clause (g) of Section 7.2.2 of
the Credit Agreement, dated as of January 26, 1996 (as amended, supplemented,
amended and restated and otherwise modified from time to time, the "Credit
Agreement"), among the Payee, The Bank of Nova Scotia, as the administrative
agent (the "Administrative Agent"), the various financial institutions as are,
or may from time to time become, parties thereto and the Co-Agents named
therein. Upon the occurrence and continuance of an Event of Default under the
Credit Agreement, and notice thereof by the Administrative Agent to the Maker,
the Administrative Agent shall have all rights of the Payee to collect and
accelerate, and enforce all rights with respect to, the Indebtedness evidenced
by this Note. Unless otherwise defined herein or the context otherwise requires,
terms used herein have the meanings provided in the Credit Agreement.
<PAGE>
Reference is made to the Credit Agreement for a description of the Pledge
Agreement pursuant to which this Note has been pledged to the Administrative
Agent as security for the Obligations outstanding from time to time under the
Credit Agreement and each other Loan Document.
In addition to, but not in limitation of, the foregoing, the Maker further
agrees to pay all expenses, including reasonable attorneys' fees and legal
expenses, incurred by the holder (including the Administrative Agent as pledgee)
of this Note endeavoring to collect any amounts payable hereunder which are not
paid when due, whether by acceleration or otherwise.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK.
THE MAKER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS
IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON THIS NOTE.
THE MAKER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PAYEE TO ACCEPT THIS NOTE.
[Name of Maker]
By _____________________________
Title: ______________________
Pay to the order of THE BANK
OF NOVA SCOTIA
[NAME OF PAYEE]
By _____________________________
Title: _____________________
<PAGE>
GRID
Intercompany Loans made by _______________ to _____________________ and
payments of principal of such Loans.
================================================================================
Amount of Amount of Outstanding
Intercompany Principal Principal Notation
Date Loan Payment Balance Made By
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------
================================================================================
<PAGE>
ATTACHMENT 1
to
Subsidiary Pledge Agreement
PLEDGOR:
KEEBLER COMPANY
Item A. Pledged Notes
Pledged Note Issuer Description
- ------------------- -----------
Item B. Pledged Shares
Pledged Share Issuer Description of Shares
- -------------------------------- ---------------------------------------------
% of
Outstanding
Authorized Outstanding Shares
Shares Shares Pledged
- ---------------------------------- --------------- ----------- -----------
Steamboat Corporation 10,000 500 100
- ---------------------------------- --------------- ----------- -----------
Illinois Baking Corporation 10 10 100
- ---------------------------------- --------------- ----------- -----------
Keebler Cookie and Cracker Company 10 10 100
- ---------------------------------- --------------- ----------- -----------
Hollow Tree Company 100 100 100
- ---------------------------------- --------------- ----------- -----------
Keebler Company/Puerto Rico, Inc. 1,000 100 100
- ---------------------------------- --------------- ----------- -----------
Keebler H.C., Inc. 1,000 1,000 100
- ---------------------------------- --------------- ----------- -----------
Keebler-Georgia, Inc. 100,000 500 100
- ---------------------------------- --------------- ----------- -----------
Keebler Foreign Sales Corporation 2,500 1,000 65
- ---------------------------------- --------------- ----------- -----------
- ---------------------------------- --------------- ----------- -----------
- ---------------------------------- --------------- ----------- -----------
- ---------------------------------- --------------- ----------- -----------
- ---------------------------------- --------------- ----------- -----------
Exhibit 10.7(h)
[EXECUTION COPY]
SUBSIDIARY GUARANTY
This GUARANTY (this "Guaranty"), dated as of January 26, 1996, is made by
each Subsidiary (as defined in the Credit Agreement referred to below) a
signatory hereto on the date hereof and each other Subsidiary that may, from
time to time become, pursuant to the terms of the Credit Agreement, a party
hereto (individually, a "Guarantor" and collectively, the "Guarantors"), in
favor of THE BANK OF NOVA SCOTIA, as administrative agent (together with any
successor(s) thereto in such capacity, the "Administrative Agent") for each of
the Lender Parties (as defined below).
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement, dated as of January 26, 1996 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Credit Agreement"), among Keebler Acquisition Corp., a Delaware
corporation (to be merged with and into UB Investments US Inc. and to become
known as Keebler Holding Corp.) (the "Borrower"), the various financial
institutions as are, or may from time to time become, parties thereto (the
"Lenders"), the Co-Agents named therein and The Bank of Nova Scotia, as
Administrative Agent for the Lenders, the Lenders and the Issuer have extended
Commitments to make Credit Extensions to the Borrower;
WHEREAS, as a condition precedent to the making of each Credit Extension
(including the initial Credit Extension) under the Credit Agreement, each
Guarantor is required to execute and deliver this Guaranty;
WHEREAS, each Guarantor has duly authorized the execution, delivery and
performance of this Guaranty; and
WHEREAS, it is in the best interests of each Guarantor to execute this
Guaranty inasmuch as such Guarantor will derive substantial direct and indirect
benefits from the Credit Extensions made from time to time to the Borrower by
the Lenders and the Issuer pursuant to the Credit Agreement;
NOW THEREFORE, for good and valuable consideration the receipt of which is
hereby acknowledged, and in order to induce the Lenders to make each Credit
Extension (including the initial
<PAGE>
Credit Extension) to the Borrower pursuant to the Credit Agreement, each
Guarantor jointly and severally agrees, for the benefit of each Lender Party, as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Terms. The following terms (whether or not
underscored) when used in this Guaranty, including its preamble and recitals,
shall have the following meanings (such definitions to be equally applicable to
the singular and plural forms thereof):
"Administrative Agent" is defined in the preamble.
"Borrower" is defined in the first recital.
"Credit Agreement" is defined in the first recital.
"Guarantors" is defined in the preamble.
"Guaranty" is defined in the preamble.
"Lender Party" means, as the context may require, each Lender, the Issuer,
each Co-Agent and the Administrative Agent and each of their respective
successors, transferees and assigns.
"Lenders" is defined in the first recital.
SECTION 1.2. Credit Agreement Definitions. Unless otherwise defined herein
or the context otherwise requires, terms used in this Guaranty, including its
preamble and recitals, have the meanings provided in the Credit Agreement.
ARTICLE II
GUARANTY PROVISIONS
SECTION 2.1. Guaranty. Each Guarantor hereby jointly and severally,
absolutely, unconditionally and irrevocably
(a) guarantees the full and punctual payment when due, whether at
stated maturity, by required prepayment, declaration, acceleration, demand
or otherwise, of all Obligations of the Borrower and each other Obligor
now or hereafter existing under the Credit Agreement, the Notes, any
Letter of Credit and each other Loan Document to which the Borrower or
such other Obligor is or may become a party (or, in the case of Letters of
Credit, is or may become the
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<PAGE>
account party), whether for principal, interest, Reimbursement
Obligations, fees, expenses or otherwise (including all such amounts which
would become due but for the operation of the automatic stay under Section
362(a) of the United States Bankruptcy Code, 11 U.S.C. ss.362(a), and the
operation of Sections 502(b) and 506(b) of the United States Bankruptcy
Code, 11 U.S.C. ss.502(b) and ss.506(b)), and
(b) indemnifies and holds harmless each Lender Party and each holder
of a Note for any and all costs and expenses (including reasonable
attorney's fees and expenses) incurred by such Lender Party or such
holder, as the case may be, in enforcing any rights under this Guaranty;
provided, however, that each Guarantor shall be liable under this Guaranty only
for the maximum amount of such liability that can be hereby incurred without
rendering this Guaranty, as it relates to such Guarantor, voidable under
applicable law relating to fraudulent conveyance or fraudulent transfer, and not
for any greater amount. This Guaranty constitutes a guaranty of payment when due
and not of collection, and each Guarantor specifically agrees that it shall not
be necessary or required that any Lender Party or any holder of any Note
exercise any right, assert any claim or demand or enforce any remedy whatsoever
against the Borrower or any other Obligor (or any other Person) before or as a
condition to the obligations of such Guarantor hereunder. Each Guarantor
acknowledges and agrees that each obligation hereunder shall be a joint and
several obligation of such Guarantor.
SECTION 2.2. Acceleration of Guaranty. Each Guarantor agrees that, in the
event of the dissolution or insolvency of the Borrower, any other Obligor or any
Guarantor, or the inability or failure of the Borrower, any other Obligor or any
Guarantor to pay debts as they become due, or an assignment by the Borrower, any
other Obligor or any Guarantor for the benefit of creditors, or the commencement
of any case or proceeding in respect of the Borrower, any other Obligor or any
Guarantor under any bankruptcy, insolvency or similar laws, and if such event
shall occur at a time when any of the Obligations of the Borrower and each other
Obligor may not then be due and payable, each Guarantor jointly and severally
agrees that it will pay to the Lenders forthwith the full amount which would be
payable hereunder by such Guarantor if all such Obligations were then due and
payable. The foregoing provisions of this Section 2.2 shall not be applicable if
the dissolution, insolvency or other events described above relate to an
Immaterial Subsidiary.
SECTION 2.3. Guaranty Absolute, etc. This Guaranty shall in all respects be
a continuing, absolute, unconditional and irrevocable guaranty of payment, and
shall remain in full force and effect until all Obligations of the Borrower and
each other Obligor have been paid in full, all Letters of Credit have been
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<PAGE>
terminated or expired, all obligations of each Guarantor hereunder shall have
been paid in full and all Commitments shall have terminated. Each Guarantor
guarantees that the Obligations of the Borrower and each other Obligor will be
paid strictly in accordance with the terms of the Credit Agreement and each
other Loan Document under which they arise, regardless of any law, regulation or
order now or hereafter in effect in any jurisdiction affecting any of such terms
or the rights of any Lender Party or any holder of any Note with respect
thereto. The liability of each Guarantor under this Guaranty shall be joint and
several, and shall be absolute, unconditional and irrevocable irrespective of:
(a) any lack of validity, legality or enforceability of the Credit
Agreement, any Note or any other Loan Document;
(b) the failure of any Lender Party or any holder of any Note
(i) to assert any claim or demand or to enforce any right or
remedy against the Borrower, any other Obligor or any other Person
(including any other guarantor (including any Guarantor)) under the
provisions of the Credit Agreement, any Note, any other Loan
Document or otherwise, or
(ii) to exercise any right or remedy against any other
guarantor (including any Guarantor) of, or collateral securing, any
Obligations of the Borrower or any other Obligor;
(c) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations of the Borrower or any other
Obligor, or any other extension, compromise or renewal of any Obligation
of the Borrower or any other Obligor;
(d) any reduction, limitation, impairment or termination of any
Obligations of the Borrower or any other Obligor for any reason, including
any claim of waiver, release, surrender, alteration or compromise, and
shall not be subject to (and each Guarantor hereby waives any right to or
claim of) any defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality, nongenuineness,
irregularity, compromise, unenforceability of, or any other event or
occurrence affecting, any Obligations of the Borrower, any other Obligor
or otherwise;
(e) any amendment to, rescission, waiver, or other modification of,
or any consent to departure from, any of
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<PAGE>
the terms of the Credit Agreement, any Note or any other Loan Document;
(f) any addition, exchange, release, surrender or non- perfection of
any collateral, or any amendment to or waiver or release or addition of,
or consent to departure from, any other guaranty, held by any Lender Party
or any holder of any Note securing any of the Obligations of the Borrower
or any other Obligor; or
(g) any other circumstance which might otherwise constitute a
defense available to, or a legal or equitable discharge of, the Borrower,
any other Obligor, any surety or any guarantor.
SECTION 2.4. Reinstatement, etc. Each Guarantor agrees that this Guaranty
shall continue to be effective or be reinstated, as the case may be, if at any
time any payment (in whole or in part) of any of the Obligations is rescinded or
must otherwise be restored by any Lender Party or any holder of any Note, upon
the insolvency, bankruptcy or reorganization of the Borrower, any other Obligor
or otherwise, all as though such payment had not been made.
SECTION 2.5. Waiver, etc. Each Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Obligations of the Borrower or any other Obligor and this Guaranty and any
requirement that the Administrative Agent, any other Lender Party or any holder
of any Note protect, secure, perfect or insure any security interest or Lien, or
any property subject thereto, or exhaust any right or take any action against
the Borrower, any other Obligor or any other Person (including any other
guarantor) or entity or any collateral securing the Obligations of the Borrower
or any other Obligor, as the case may be.
SECTION 2.6. Postponement of Subrogation. Each Guarantor agrees that it
will not exercise any rights which it may acquire by way of subrogation under
this Guaranty, by any payment made hereunder or otherwise, until the prior
payment, in full and in cash, of all Obligations of the Borrower and each other
Obligor. Any amount paid to such Guarantor on account of any such subrogation
rights prior to the payment in full of all Obligations of the Borrower and each
other Obligor shall be held in trust for the benefit of the Lender Parties and
each holder of a Note and shall immediately be paid to the Lender Parties and
each holder of a Note and credited and applied against the Obligations of the
Borrower and each other Obligor, whether matured or unmatured, in accordance
with the terms of the Credit Agreement; provided, however, that if
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(a) such Guarantor has made payment to the Lender Parties and each
holder of a Note of all or any part of the Obligations of the Borrower or
any other Obligor, and
(b) all Obligations of the Borrower and each other Obligor have been
paid in full and all Commitments have been permanently terminated,
each Lender Party and each holder of a Note agrees that, at such Guarantor's
request, the Lender Parties and the holders of the Notes, will execute and
deliver to such Guarantor appropriate documents (without recourse and without
representation or warranty) necessary to evidence the transfer by subrogation to
such Guarantor of an interest in the Obligations of the Borrower and each other
Obligor resulting from such payment by such Guarantor. In furtherance of the
foregoing, for so long as any Obligations or Commitments remain outstanding,
each Guarantor shall refrain from taking any action or commencing any proceeding
against the Borrower or any other Obligor (or its successors or assigns, whether
in connection with a bankruptcy proceeding or otherwise) to recover any amounts
in the respect of payments made under this Guaranty to any Lender Party or any
holder of a Note.
SECTION 2.7. Successors, Transferees and Assigns; Transfers of Notes, etc.
This Guaranty shall:
(a) be binding upon each Guarantor, and each Guarantor's successors,
transferees and assigns; and
(b) inure to the benefit of and be enforceable by the Administrative
Agent and each other Lender Party.
Without limiting the generality of the foregoing clause (b), any Lender may
assign or otherwise transfer (in whole or in part) any Note or Credit Extension
held by it to any other Person or entity, and such other Person or entity shall
thereupon become vested with all rights and benefits in respect thereof granted
to such Lender under any Loan Document (including this Guaranty) or otherwise,
subject, however, to any contrary provisions in such assignment or transfer, and
to the provisions of Section 10.11 and Article IX of the Credit Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties. Each Guarantor hereby
represents and warrants to each Lender Party that the representations and
warranties contained in Article VI of the Credit Agreement, insofar as the
representations and warranties contained therein are applicable to such
Guarantor and
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<PAGE>
its properties, are true and correct in all material respects, each such
representation and warranty set forth in such Article (insofar as applicable as
aforesaid) and all other terms of the Credit Agreement to which reference is
made therein, together with all related definitions and ancillary provisions,
being hereby incorporated into this Guaranty by reference as though specifically
set forth in this Section.
ARTICLE IV
COVENANTS, ETC.
SECTION 4.1. Covenants. Each Guarantor covenants and agrees that, so long
as any portion of the Obligations shall remain unpaid, any Letters of Credit
shall be outstanding or any Lender shall have any outstanding Commitment, such
Guarantor will, unless the Required Lenders shall otherwise consent in writing,
perform, comply with and be bound by all of the agreements, covenants and
obligations contained in Article VII of the Credit Agreement which are
applicable to such Guarantor or its properties, each such agreement, covenant
and obligation contained in such Article and all other terms of the Credit
Agreement to which reference is made herein, together with all related
definitions and ancillary provisions, being hereby incorporated into this
Guaranty by reference as though specifically set forth in this Section.
ARTICLE V
MISCELLANEOUS PROVISIONS
SECTION 5.1. Loan Document. This Guaranty is a Loan Document executed
pursuant to the Credit Agreement and shall (unless otherwise expressly indicated
herein) be construed, administered and applied in accordance with the terms and
provisions thereof.
SECTION 5.2. Binding on Successors, Transferees and Assigns; Assignment. In
addition to, and not in limitation of, Section 2.7, this Guaranty shall be
binding upon each Guarantor and its successors, transferees and assigns and
shall inure to the benefit of and be enforceable by each Lender Party and each
holder of a Note and their respective successors, transferees and assigns (to
the full extent provided pursuant to Section 2.7); provided, however, that no
Guarantor may assign any of its obligations hereunder without the prior written
consent of all Lenders; provided further that upon the transfer, sale or other
disposition of all of the Capital Stock of any Guarantor in accordance with the
terms of the Credit Agreement (other than to the Borrower or another Guarantor),
such Guarantor will
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<PAGE>
automatically be released from its obligations hereunder. At the sole expense of
the Borrower, the Administrative Agent will deliver any documents reasonably
requested by the Borrower to evidence such release.
SECTION 5.3. Amendments, etc. No amendment to or waiver of any provision of
this Guaranty, nor consent to any departure by any Guarantor herefrom, shall in
any event be effective unless the same shall be in writing and signed by the
Administrative Agent (on behalf of the Lenders or the Required Lenders, as the
case may be) and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
SECTION 5.4. Addresses for Notices to Each Guarantor. All notices and other
communications provided to each Guarantor under this Guaranty shall be in
writing or by facsimile and addressed, delivered or transmitted to such
Guarantor at its address or facsimile number set forth opposite its name on
Schedule I hereto or at such other address or facsimile number as may be
designated by such Guarantor in a notice to the other parties. Any notice, if
mailed and properly addressed with postage prepaid or if properly addressed and
sent by pre-paid courier service, shall be deemed given when received; any
notice, if transmitted by facsimile, shall be deemed given when transmitted.
SECTION 5.5. No Waiver; Remedies. In addition to, and not in limitation of,
Section 2.3 and Section 2.5, no failure on the part of any Lender Party or any
holder of a Note to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 5.6. Section Captions. Section captions used in this Guaranty are
for convenience of reference only, and shall not affect the construction of this
Guaranty.
SECTION 5.7. Setoff. In addition to, and not in limitation of, any rights
of any Lender Party or any holder of a Note under applicable law, each Lender
Party and each such holder shall, upon the occurrence of any Event of Default
described in any of clauses (a) through (d) of Section 8.1.9 of the Credit
Agreement or, with the consent of the Required Lenders, any Event of Default,
have the right to appropriate and apply to the payment of the obligations of
each Guarantor owing to it hereunder, whether or not then due, and each
Guarantor hereby grants to each Lender Party and each such holder a continuing
security interest in, any and all balances, credits, deposits, accounts or
moneys of such Guarantor then or thereafter maintained with such Lender Party or
such holder and any and all property of every kind or
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<PAGE>
description of or in the name of such Guarantor now or hereafter, for any reason
or purpose whatsoever, in the possession or control of, or in transit to, such
Lender Party, such holder or any agent or bailee for such Lender Party or such
holder; provided, however, that any such appropriation and application shall be
subject to the provisions of Section 4.8 of the Credit Agreement.
SECTION 5.8. Severability. Wherever possible each provision of this
Guaranty shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Guaranty.
SECTION 5.9. Governing Law, Entire Agreement, etc. THIS GUARANTY SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK. THIS GUARANTY AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE
UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF
AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.
SECTION 5.10. Forum Selection and Consent to Jurisdiction. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS GUARANTY, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN)
OR ACTIONS OF THE LENDER PARTIES OR ANY GUARANTOR SHALL BE BROUGHT AND
MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK, NEW YORK COUNTY
OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;
PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY PROPERTY MAY BE
BROUGHT, AT THE ADMINISTRATIVE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION
WHERE SUCH PROPERTY MAY BE FOUND. EACH GUARANTOR HEREBY EXPRESSLY AND
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK,
NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE
AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN
CONNECTION WITH SUCH LITIGATION. EACH GUARANTOR FURTHER IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. EACH GUARANTOR HEREBY EXPRESSLY
AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH
LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY
SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT
SUCH GUARANTOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF
ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER
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<PAGE>
THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF
EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, EACH GUARANTOR
HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
GUARANTY AND THE OTHER LOAN DOCUMENTS.
SECTION 5.11. Waiver of Jury Trial. EACH GUARANTOR HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS GUARANTY, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE LENDER PARTIES OR ANY
GUARANTOR. EACH GUARANTOR ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND
SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE LENDERS ENTERING INTO THE CREDIT AGREEMENT.
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<PAGE>
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
UB INVESTMENTS US INC.
SHAFFER, CLARKE & CO., INC.
JOHNSTON'S READY-CRUST COMPANY
KEEBLER COMPANY
EMERALD INDUSTRIES, INC.
ATHENS PACKAGING, INC.
BAKE-LINE PRODUCTS INC.
STEAMBOAT CORPORATION
ILLINOIS BAKING CORPORATION
KEEBLER COOKIE AND CRACKER COMPANY
HOLLOW TREE COMPANY
KEEBLER COMPANY/PUERTO RICO, INC.
KEEBLER H.C. INC.
KEEBLER-GEORGIA, INC.
By
---------------------------------
Title:
THE BANK OF NOVA SCOTIA,
as Administrative Agent
By
---------------------------------
Title:
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<PAGE>
SCHEDULE I
TO
SUBSIDIARY GUARANTY
Name of Subsidiary Address Facsimile No.
- ------------------ ------- -------------
1. UB Investments US Inc.
2. Shaffer, Clarke & Co., Inc.
3. Johnston's Ready-Crust Company
4. Keebler Company
5. Emerald Industries, Inc.
6. Athens Packaging, Inc.
7. Bake-Line Products Inc.
8. Steamboat Corporation
9. Illinois Baking Corporation
10. Keebler Cookie and Cracker Company
11. Hollow Tree Company
12. Keebler Company/Puerto Rico, Inc.
13. Keebler H. C. Inc.
14. Keebler-Georgia, Inc.
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Exhibit 10.7(i)
SUPPLEMENT TO SUBSIDIARY GUARANTY
(SUNSHINE BISCUITS, INC.)
THIS SUPPLEMENT TO SUBSIDIARY GUARANTY (this "Supplement"), dated as of
June 4, 1996, to the Subsidiary Guaranty, dated as of January 26, 1996 (as
amended or otherwise modified through the date hereof, the "Subsidiary
Guaranty"), is made by SUNSHINE BISCUITS, INC., a Delaware corporation (the
"Additional Guarantor"), in favor of THE BANK OF NOVA SCOTIA, as administrative
agent (together with any successor(s) thereto in such capacity, the
"Administrative Agent") for each of the Lender Parties (as defined in the
Subsidiary Guaranty). Capitalized terms used herein and not herein defined shall
have the meanings ascribed to them in the Subsidiary Guaranty.
W I T N E S S E T H:
WHEREAS, pursuant to the Amended and Restated Credit Agreement, dated as of
June 4, 1996 (the "Credit Agreement"), among Keebler Holding Corp., a Delaware
corporation and the surviving corporation of the Merger (the "Borrower"), the
Administrative Agent, the various financial institutions as are, or may from
time to time become, parties thereto (the "Lenders") and the Co-Agents named
therein, amending and restating in its entirety the Existing Credit Agreement,
the Lenders have extended Commitments to make Credit Extensions to the Borrower;
WHEREAS, as a condition to the effectiveness of the Credit Agreement and
the continued making of Credit Extensions to the Borrower thereunder, the
Additional Guarantor is required to execute and deliver this Supplement;
WHEREAS, it is in the best interests of the Additional Guarantor to execute
this Supplement inasmuch as the Additional Guarantor will derive substantial
direct and indirect benefits from the Credit Extensions made by the Lender
Parties pursuant to the Credit Agreement; and
WHEREAS, the Additional Guarantor desires to become a "Guarantor" under the
Subsidiary Guaranty;
NOW THEREFORE, for good and valuable consideration the receipt of which is
hereby acknowledged, the Additional Guarantor agrees, for the benefit of each
Lender Party, as follows:
SECTION 1. Guaranty. The Additional Guarantor hereby jointly and severally,
absolutely, unconditionally and irrevocably
<PAGE>
(a) guarantees the full and punctual payment when due, whether at
stated maturity, by required prepayment, declaration, acceleration, demand
or otherwise, of all Obligations of the Borrower and each other Obligor
now or hereafter existing under the Credit Agreement, the Notes, any
Letter of Credit and each other Loan Document to which the Borrower or
such other Obligor is or may become a party (or, in the case of Letters of
Credit, is or may become the account party), whether for principal,
interest, Reimbursement Obligations, fees, expenses or otherwise
(including all such amounts which would become due but for the operation
of the automatic stay under Section 362(a) of the United States Bankruptcy
Code, 11 U.S.C. ss.362(a), and the operation of Sections 502(b) and 506(b)
of the United States Bankruptcy Code, 11 U.S.C. ss.502(b) and ss.506(b)),
and
(b) indemnifies and holds harmless each Lender Party and each holder
of a Note for any and all costs and expenses (including reasonable
attorney's fees and expenses) incurred by such Lender Party or such
holder, as the case may be, in enforcing any rights under the Subsidiary
Guaranty (as supplemented by this Supplement);
provided, however, that the Additional Guarantor shall be liable under the
Subsidiary Guaranty (as supplemented by this Supplement) only for the maximum
amount of such liability that can be thereby incurred without rendering the
Subsidiary Guaranty (as supplemented by this Supplement), as it relates to the
Additional Guarantor, voidable under applicable law relating to fraudulent
conveyance or fraudulent transfer, and not for any greater amount. The
Subsidiary Guaranty (as supplemented by this Supplement) constitutes a guaranty
of payment when due and not of collection, and the Additional Guarantor
specifically agrees that it shall not be necessary or required that any Lender
Party or any holder of any Note exercise any right, assert any claim or demand
or enforce any remedy whatsoever against the Borrower or any other Obligor (or
any other Person) before or as a condition to the obligations of the Additional
Guarantor hereunder. The Additional Guarantor acknowledges and agrees that each
obligation hereunder shall be a joint and several obligation of the Additional
Guarantor.
SECTION 2. Acknowledgment. The Additional Guarantor acknowledges and agrees
that by its signature below it hereby is for all purposes a "Guarantor" under
the Subsidiary Guaranty with the same force and effect as if originally named as
a "Guarantor" therein, and each reference to a "Guarantor" in the Subsidiary
Guaranty shall be deemed to include the Additional Guarantor. The Additional
Guarantor hereby agrees to be bound by all of the terms and provisions of the
Subsidiary Guaranty.
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SECTION 3. Warranties, etc. The Additional Guarantor hereby represents and
warrants unto each Lender Party, as of the date hereof, each of the
representations and warranties set forth in Article III of the Subsidiary
Guaranty (included as incorporated by reference to the Credit Agreement) as
applied to the Additional Guarantor are true and correct.
SECTION 4. Subsidiary Guaranty Remains in Full Force and Effect. Except as
expressly supplemented hereby, the Subsidiary Guaranty shall remain in full
force and effect in accordance with its terms.
SECTION 5. Governing Law. THIS SUPPLEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. THIS
SUPPLEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING
AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE
ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.
SECTION 6. Execution in Counterparts. This Supplement may be executed by
the parties hereto in several counterparts, each of which shall be deemed to be
an original and all of which shall constitute but one and the same agreement.
SECTION 7. Loan Document. The Additional Guarantor hereby acknowledges and
agrees that this Supplement constitutes a "Loan Document", as such term is
defined in the Credit Agreement.
IN WITNESS WHEREOF, the Additional Guarantor has duly executed this
Supplement to the Subsidiary Guaranty as of the day and year first above
written.
SUNSHINE BISCUITS, INC.
By:
-----------------------
Title:
Acknowledged and Accepted:
THE BANK OF NOVA SCOTIA,
as Administrative Agent
By:
-----------------------
Title:
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Exhibit 10.7(j)
[EXECUTION COPY]
HOLDINGS GUARANTY
This GUARANTY (this "Guaranty"), dated as of January 26, 1996, is made by
INFLO HOLDING CORPORATION, a Delaware corporation (the "Guarantor"), in favor of
THE BANK OF NOVA SCOTIA, as administrative agent (together with any successor(s)
thereto in such capacity, the "Administrative Agent)" for each of the Lender
Parties (as defined below).
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement, dated as of January 26, 1996 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Credit Agreement"), among Keebler Acquisition Corp., a Delaware
corporation (to be merged with and into UB Investments US Inc. and to become
known as Keebler Holding Corp.) (the "Borrower"), the various financial lending
institutions as are, or may from time to time become, parties thereto (the
"Lenders"), the Co-Agents named therein and The Bank of Nova Scotia, as the
Administrative Agent for the Lenders, the Lenders and the Issuer have extended
Commitments to make Credit Extensions to the Borrower;
WHEREAS, as a condition precedent to the making of each Credit Extension
(including the initial Credit Extension) under the Credit Agreement, the
Guarantor is required to execute and deliver this Guaranty;
WHEREAS, the Guarantor has duly authorized the execution, delivery and
performance of this Guaranty; and
WHEREAS, it is in the best interests of the Guarantor to execute this
Guaranty inasmuch as the Guarantor will derive substantial direct and indirect
benefits from the Credit Extensions made from time to time to the Borrower by
the Lenders and the Issuer pursuant to the Credit Agreement;
NOW THEREFORE, for good and valuable consideration the receipt of which is
hereby acknowledged, and in order to induce the Lenders to make each Credit
Extension (including the initial Credit Extension) to the Borrower pursuant to
the Credit Agreement, the Guarantor agrees, for the benefit of each Lender
Party, as follows:
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ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Terms. The following terms (whether or not
underscored) when used in this Guaranty, including its preamble and recitals,
shall have the following meanings (such definitions to be equally applicable to
the singular and plural forms thereof):
"Administrative Agent" is defined in the preamble.
"Borrower" is defined in the first recital.
"Credit Agreement" is defined in the first recital.
"Guarantor" is defined in the preamble.
"Guaranty" is defined in the preamble.
"Lender Party" means, as the context may require, any Lender, the Issuer,
each Co-Agent and the Administrative Agent and each of their respective
successors, transferees and assigns.
"Lenders" is defined in the first recital.
SECTION 1.2. Credit Agreement Definitions. Unless otherwise defined herein
or the context otherwise requires, terms used in this Guaranty, including its
preamble and recitals, have the meanings provided in the Credit Agreement.
ARTICLE II
GUARANTY PROVISIONS
SECTION 2.1. Guaranty. The Guarantor hereby absolutely, unconditionally and
irrevocably
(a) guarantees the full and punctual payment when due, whether at
stated maturity, by required prepayment, declaration, acceleration, demand
or otherwise, of all Obligations of the Borrower and each other Obligor
now or hereafter existing under the Credit Agreement, the Notes, any
Letter of Credit and each other Loan Document to which the Borrower or
such other Obligor is or may become a party (or, in the case of Letters of
Credit, is or may become the account party), whether for principal,
interest, Reimbursement Obligations, fees, expenses or otherwise
(including all such amounts which would become due but for
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the operation of the automatic stay under Section 362(a) of the United
States Bankruptcy Code, 11 U.S.C. ss.362(a), and the operation of Sections
502(b) and 506(b) of the United States Bankruptcy Code, 11 U.S.C.
ss.502(b) and ss.506(b)), and
(b) indemnifies and holds harmless each Lender Party and each holder
of a Note for any and all costs and expenses (including reasonable
attorney's fees and expenses) incurred by such Lender Party or such
holder, as the case may be, in enforcing any rights under this Guaranty;
provided, however, that the Guarantor shall be liable under this Guaranty only
for the maximum amount of such liability that can be hereby incurred without
rendering this Guaranty, voidable under applicable law relating to fraudulent
conveyance or fraudulent transfer, and not for any greater amount. This Guaranty
constitutes a guaranty of payment when due and not of collection, and the
Guarantor specifically agrees that it shall not be necessary or required that
any Lender Party or any holder of any Note exercise any right, assert any claim
or demand or enforce any remedy whatsoever against the Borrower or any other
Obligor (or any other Person) before or as a condition to the obligations of the
Guarantor hereunder.
SECTION 2.2. Acceleration of Guaranty. The Guarantor agrees that, in the
event of the dissolution or insolvency of the Borrower, any other Obligor or the
Guarantor (other than, for purposes of this Section, an Immaterial Subsidiary),
or the inability or failure of the Borrower, any other Obligor or the Guarantor
to pay debts as they become due, or an assignment by the Borrower, any other
Obligor or the Guarantor for the benefit of creditors, or the commencement of
any case or proceeding in respect of the Borrower, any other Obligor or the
Guarantor under any bankruptcy, insolvency or similar laws, and if such event
shall occur at a time when any of the Obligations of the Borrower and each other
Obligor may not then be due and payable, the Guarantor agrees that it will pay
to the Lenders forthwith the full amount which would be payable hereunder by the
Guarantor if all such Obligations were then due and payable.
SECTION 2.3. Guaranty Absolute, etc. This Guaranty shall in all respects be
a continuing, absolute, unconditional and irrevocable guaranty of payment, and
shall remain in full force and effect until all Obligations of the Borrower and
each other Obligor have been paid in full, all Letters of Credit have been
terminated or expired, all obligations of the Guarantor hereunder shall have
been paid in full and all Commitments shall have terminated. The Guarantor
guarantees that the Obligations of the Borrower and each other Obligor will be
paid strictly in accordance with the terms of the Credit Agreement and each
other Loan Document under which they arise, regardless of any law,
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regulation or order now or hereafter in effect in any jurisdiction affecting any
of such terms or the rights of any Lender Party or any holder of any Note with
respect thereto. The liability of the Guarantor under this Guaranty shall be
joint and several, and shall be absolute, unconditional and irrevocable
irrespective of:
(a) any lack of validity, legality or enforceability of the Credit
Agreement, any Note or any other Loan Document;
(b) the failure of any Lender Party or any holder of any Note
(i) to assert any claim or demand or to enforce any right or
remedy against the Borrower, any other Obligor or any other Person
(including any other guarantor (including the Guarantor)) under the
provisions of the Credit Agreement, any Note, any other Loan
Document or otherwise, or
(ii) to exercise any right or remedy against any other
guarantor (including the Guarantor) of, or collateral securing, any
Obligations of the Borrower or any other Obligor;
(c) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations of the Borrower or any other
Obligor, or any other extension, compromise or renewal of any Obligation
of the Borrower or any other Obligor;
(d) any reduction, limitation, impairment or termination of any
Obligations of the Borrower or any other Obligor for any reason, including
any claim of waiver, release, surrender, alteration or compromise, and
shall not be subject to (and the Guarantor hereby waives any right to or
claim of) any defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality, nongenuineness,
irregularity, compromise, unenforceability of, or any other event or
occurrence affecting, any Obligations of the Borrower, any other Obligor
or otherwise;
(e) any amendment to, rescission, waiver, or other modification of,
or any consent to departure from, any of the terms of the Credit
Agreement, any Note or any other Loan Document;
(f) any addition, exchange, release, surrender or non- perfection of
any collateral, or any amendment to or waiver
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or release or addition of, or consent to departure from, any other
guaranty, held by any Lender Party or any holder of any Note securing any
of the Obligations of the Borrower or any other Obligor; or
(g) any other circumstance which might otherwise constitute a
defense available to, or a legal or equitable discharge of, the Borrower,
any other Obligor, any surety or any guarantor.
SECTION 2.4. Reinstatement, etc. The Guarantor agrees that this Guaranty
shall continue to be effective or be reinstated, as the case may be, if at any
time any payment (in whole or in part) of any of the Obligations is rescinded or
must otherwise be restored by any Lender Party or any holder of any Note, upon
the insolvency, bankruptcy or reorganization of the Borrower, any other Obligor
or otherwise, all as though such payment had not been made.
SECTION 2.5. Waiver, etc. The Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Obligations of the Borrower or any other Obligor and this Guaranty and any
requirement that the Administrative Agent, any other Lender Party or any holder
of any Note protect, secure, perfect or insure any security interest or Lien, or
any property subject thereto, or exhaust any right or take any action against
the Borrower, any other Obligor or any other Person (including any other
guarantor) or entity or any collateral securing the Obligations of the Borrower
or any other Obligor, as the case may be.
SECTION 2.6. Postponement of Subrogation. The Guarantor will not exercise
any rights which it may acquire by way of subrogation under this Guaranty, by
any payment made hereunder or otherwise, until the prior payment, in full and in
cash, of all Obligations of the Borrower and each other Obligor. Any amount paid
to the Guarantor on account of any such subrogation rights prior to the payment
in full of all Obligations of the Borrower and each other Obligor shall be held
in trust for the benefit of the Lender Parties and each holder of a Note and
shall immediately be paid to the Lender Parties and each holder of a Note and
credited and applied against the Obligations of the Borrower and each other
Obligor, whether matured or unmatured, in accordance with the terms of the
Credit Agreement; provided, however, that if
(a) the Guarantor has made payment to the Lender Parties and any
holder of a Note of all or any part of the Obligations of the Borrower or
any other Obligor, and
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(b) all Obligations of the Borrower and each other Obligor have been
paid in full and all Commitments have been permanently terminated,
each Lender Party and each holder of a Note agrees that, at the Guarantor's
request, the Lender Parties and the holders of the Notes, will execute and
deliver to the Guarantor appropriate documents (without recourse and without
representation or warranty) necessary to evidence the transfer by subrogation to
the Guarantor of an interest in the Obligations of the Borrower and each other
Obligor resulting from such payment by the Guarantor. In furtherance of the
foregoing, for so long as any Obligations or Commitments remain outstanding, the
Guarantor shall refrain from taking any action or commencing any proceeding
against the Borrower or any other Obligor (or its successors or assigns, whether
in connection with a bankruptcy proceeding or otherwise) to recover any amounts
in the respect of payments made under this Guaranty to any Lender Party or any
holder of a Note.
SECTION 2.7. Successors, Transferees and Assigns; Transfers of Notes, etc.
This Guaranty shall:
(a) be binding upon the Guarantor, and the Guarantor's successors,
transferees and assigns; and
(b) inure to the benefit of and be enforceable by the Administrative
Agent and each other Lender Party.
Without limiting the generality of the foregoing clause (b), any Lender may
assign or otherwise transfer (in whole or in part) any Note or Credit Extension
held by it to any other Person or entity, and such other Person or entity shall
thereupon become vested with all rights and benefits in respect thereof granted
to such Lender under any Loan Document (including this Guaranty) or otherwise,
subject, however, to any contrary provisions in such assignment or transfer, and
to the provisions of Section 10.11 and Article IX of the Credit Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties. The Guarantor hereby
represents and warrants to each Lender Party that:
(a) the representations and warranties contained in Article VI of
the Credit Agreement, insofar as the representations and warranties
contained therein are applicable to the Guarantor and its properties, are
true and
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correct in all material respects, each such representation and warranty
set forth in such Article (insofar as applicable as aforesaid) and all
other terms of the Credit Agreement to which reference is made therein,
together with all related definitions and ancillary provisions, being
hereby incorporated into this Guaranty by reference as though specifically
set forth in this Section; and
(b) it has the power and authority to execute and deliver the
Subordinated Guaranty and to execute and deliver, and incur the
Indebtedness evidenced by, the Seller Note and has duly authorized,
executed and delivered the Subordinated Guaranty and the Seller Note. Once
executed and delivered by the Guarantor, each of the Subordinated Guaranty
and the Seller Note will constitute the legal, valid and binding
obligation of the Guarantor enforceable against the Guarantor in
accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at
law) and an implied covenant of good faith and fair dealing. The
subordination provisions of each of the Subordinated Guaranty and the
Seller Note will be enforceable against the Subordinated Noteholder and
the holder of the Seller Note, as the case may be, by each Lender Party
which has not effectively waived the benefits thereof. All monetary
Obligations, including those to pay principal of and interest (including
post-petition interest, whether or not permitted as a claim) on the Loans
and Reimbursement Obligations, and fees and expenses in connection
therewith, constitute "Senior Indebtedness" (as defined in the Seller Note
by reference to Bridge Note Agreement) and all such Obligations are
entitled to the benefits of the subordination created under ___________ of
the Subordinated Guaranty and paragraph number 4 of the Seller Note. The
Guarantor acknowledges that each Lender Party is entering into the Credit
Agreement, and is extending its Commitments, in reliance upon the
subordination provisions of ___________ of the Subordinated Guaranty and
paragraph number 4 of the Seller Note.
ARTICLE IV
COVENANTS, ETC.
SECTION 4.1. Covenants. The Guarantor covenants and agrees that, so long as
any portion of the Obligations shall remain unpaid, any Letters of Credit shall
be outstanding or any Lender shall have any outstanding Commitment, the
Guarantor will, unless
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the Required Lenders shall otherwise consent in writing, perform the obligations
set forth in this Section.
SECTION 4.1.1. Maintenance of Corporate Existence; Payment of Net Equity
Proceeds. The Guarantor will cause to be taken all actions necessary to maintain
and preserve at all times its corporate existence. Upon receipt of any Net
Equity Proceeds, the Guarantor will repay, or cause the Borrower to repay, the
Loans in the amounts and on the dates required pursuant to clause (e) of Section
3.1.1 of the Credit Agreement.
SECTION 4.1.2. Financial Information, Reports, Notices, etc. The Guarantor
will furnish, or will cause to be furnished, to each Lender,each Issuer and the
Administrative Agent copies of the following reports, notices and information:
(a) promptly after the sending or filing thereof, copies of all
reports and registration statements which the Guarantor or any of its
Subsidiaries files with the Securities and Exchange Commission or any
national securities exchange;
(b) promptly following the delivery or receipt, as the case may be,
of any material written notice or communication pursuant to or in
connection with either Seller Note Indenture or any of the Seller Notes, a
copy of such notice or communication;
SECTION 4.1.3. Compliance with Laws, etc. The Guarantor will, and will
cause each of its Subsidiaries to, comply in all material respects with all
applicable laws, rules, regulations and orders, such compliance to include
(without limitation):
(a) the maintenance and preservation of its corporate existence and
qualification as a foreign corporation, except where the failure to so
qualify could not reasonably be expected to have a Material Adverse
Effect; and
(b) the payment, before the same become delinquent, of all material
taxes, assessments and governmental charges imposed upon it or upon its
property except to the extent being contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall
have been set aside on its books.
SECTION 4.1.4. Business Activities. The Guarantor will not engage in any
business activity other than in connection with the Guarantor's continuing
ownership of the issued and outstanding shares of capital stock of the Borrower.
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SECTION 4.1.5. Indebtedness. The Guarantor will not create, incur, assume
or suffer to exist or otherwise become or be liable in respect of any
Indebtedness, other than, without duplication, the following:
(a) Indebtedness incurred in the ordinary course of its business
activities permitted pursuant to Section 4.1.4;
(b) in respect of the Obligations;
(c) Indebtedness in respect of the Seller Note; and
(d) Indebtedness incurred under the Subordinated Guaranty.
SECTION 4.1.6. Liens, etc. The Guarantor will not create, incur, assume, or
enter into any agreement which by its terms creates, incurs or assumes any Lien
upon any of its assets (including any shares of capital stock of the Borrower),
whether now owned or hereafter acquired by the Guarantor except as permitted
pursuant to Section 7.2.3 of the Credit Agreement; nor will the Guarantor sell,
transfer, contribute or otherwise dispose of or convey (or grant any options,
warrants or other rights with respect thereto) any shares of capital stock of
the Borrower (except pursuant to a transaction in which all Obligations will be
simultaneously discharged in full and all Commitments will be simultaneously
terminated in full).
SECTION 4.1.7. Investments. The Guarantor will not make, incur, assume or
suffer to exist any Investment in any other Person, except Investments in the
Borrower.
SECTION 4.1.8. Fixed Assets. The Guarantor will not make or commit to make
any Capital Expenditure or enter into any arrangement which would give rise to
any Capitalized Lease Liability.
SECTION 4.1.9. Rental Obligations. The Guarantor will not enter into any
arrangement which involves the leasing by the Guarantor from any lessor of any
real or personal property (or any interest therein) other than the lease of
office space.
SECTION 4.1.10. Consolidation, Merger. The Guarantor will not wind-up,
liquidate or dissolve, consolidate or amalgamate with, or merge into or with any
other corporation or purchase or otherwise acquire all or any part of the assets
of any Person (or division thereof).
SECTION 4.1.11. Asset Dispositions, etc. The Guarantor will not sell,
transfer, lease or otherwise dispose of, or grant to any Person options,
warrants or other rights with respect to
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any of its assets, unless otherwise permitted by the Credit Agreement.
SECTION 4.1.12. Modification of Certain Agreements. Without the prior
written consent of the Required Lenders, the Guarantor will not (a) make any
payment on account of the Seller Note, other than as required pursuant to the
terms thereof, or (b) consent to any amendment, supplement or other modification
of any of the terms or provisions contained in, or applicable to the Seller
Note, other than any waiver of a default by the Guarantor, if the effect of such
amendment, supplement or modification is to (i) increase the principal amount
of, or increase the interest rate on, the Seller Note, advance any dates upon
which payments of principal or interest are due thereon or change any of the
covenants with respect thereto in a manner which is more restrictive to Holdings
or its Subsidiaries or (ii) change any event of default or condition to an event
of default with respect thereto, or change the redemption, prepayment or
defeasance provisions thereof, if (in the case of this clause (b)(ii)), the
effect of such amendment or change, individually or together with all other
amendments or changes made, is to increase the obligations of Holdings
thereunder or to confer any additional rights on the holders of the Seller Note.
ARTICLE V
MISCELLANEOUS PROVISIONS
SECTION 5.1. Loan Document. This Guaranty is a Loan Document executed
pursuant to the Credit Agreement and shall (unless otherwise expressly indicated
herein) be construed, administered and applied in accordance with the terms and
provisions thereof.
SECTION 5.2. Binding on Successors, Transferees and Assigns; Assignment. In
addition to, and not in limitation of, Section 2.7, this Guaranty shall be
binding upon the Guarantor and its successors, transferees and assigns and shall
inure to the benefit of and be enforceable by each Lender Party and each holder
of a Note and their respective successors, transferees and assigns (to the full
extent provided pursuant to Section 2.7); provided, however, that the Guarantor
may assign any of its obligations hereunder without the prior written consent of
all Lenders.
SECTION 5.3. Amendments, etc. No amendment to or waiver of any provision of
this Guaranty, nor consent to any departure by the Guarantor herefrom, shall in
any event be effective unless the same shall be in writing and signed by the
Administrative Agent (on behalf of the Lenders or the Required Lenders, as the
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case may be), and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
SECTION 5.4. Addresses for Notices to the Guarantor. All notices and other
communications provided to the Guarantor under this Guaranty shall be in writing
or by facsimile and addressed, delivered or transmitted to the Guarantor at its
address or facsimile number set forth on Schedule 1 hereto or at such other
address or facsimile number as may be designated by the Guarantor in a notice to
the other parties. Any notice, if mailed and properly addressed with postage
prepaid or if properly addressed and sent by pre-paid courier service, shall be
deemed given when received; any notice, if transmitted by facsimile, shall be
deemed given when transmitted.
SECTION 5.5. No Waiver; Remedies. In addition to, and not in limitation of,
Section 2.3 and Section 2.5, no failure on the part of any Lender Party or any
holder of a Note to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 5.6. Section Captions. Section captions used in this Guaranty are
for convenience of reference only, and shall not affect the construction of this
Guaranty.
SECTION 5.7. Setoff. In addition to, and not in limitation of, any rights
of any Lender Party or any holder of a Note under applicable law, each Lender
Party and each such holder shall, upon the occurrence of any Event of Default
described in any of clauses (a) through (d) of Section 8.1.9 of the Credit
Agreement or, with the consent of the Required Lenders, any Event of Default,
have the right to appropriate and apply to the payment of the obligations of the
Guarantor owing to it hereunder, whether or not then due, and the Guarantor
hereby grants to each Lender Party and each such holder a continuing security
interest in, any and all balances, credits, deposits, accounts or moneys of the
Guarantor then or thereafter maintained with such Lender Party or such holder
and any and all property of every kind or description of or in the name of the
Guarantor now or hereafter, for any reason or purpose whatsoever, in the
possession or control of, or in transit to, such Lender Party, such holder or
any agent or bailee for such Lender Party or such holder; provided, however,
that any such appropriation and application shall be subject to the provisions
of Section 4.8 of the Credit Agreement.
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SECTION 5.8. Severability. Wherever possible each provision of this
Guaranty shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Guaranty.
SECTION 5.9. Governing Law, Entire Agreement, etc. THIS GUARANTY SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK. THIS GUARANTY AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE
UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF
AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.
SECTION 5.10. Forum Selection and Consent to Jurisdiction. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS GUARANTY, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN)
OR ACTIONS OF THE LENDER PARTIES OR THE GUARANTOR SHALL BE BROUGHT AND
MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK, NEW YORK COUNTY
OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;
PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY PROPERTY MAY BE
BROUGHT, AT THE ADMINISTRATIVE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION
WHERE SUCH PROPERTY MAY BE FOUND. THE GUARANTOR HEREBY EXPRESSLY AND IRREVOCABLY
SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, NEW YORK
COUNTY AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY
AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH
LITIGATION. THE GUARANTOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT
THE STATE OF NEW YORK. THE GUARANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR
HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY
SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT THE GUARANTOR HAS OR
HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY
LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS
PROPERTY, THE GUARANTOR HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF
ITS OBLIGATIONS UNDER THIS GUARANTY AND THE OTHER LOAN DOCUMENTS.
SECTION 5.11. Waiver of Jury Trial. THE GUARANTOR HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY
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HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING
OUT OF, UNDER, OR IN CONNECTION WITH, THIS GUARANTY, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE LENDER
PARTIES OR THE GUARANTOR. THE GUARANTOR ACKNOWLEDGES AND AGREES THAT IT HAS
RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDERS ENTERING INTO THE CREDIT
AGREEMENT.
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IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
INFLO HOLDINGS CORPORATION
By
--------------------------
Title:
THE BANK OF NOVA SCOTIA
as Administrative Agent
By
--------------------------
Title:
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Schedule 1
Addresses for Notice
Inflo Holdings Corporation
c/o Mr. David van Zandt
Northwestern University Law School
357 East Chicago Avenue
Chicago, IL 60611
Telephone No.: (312) 503-0470
Facsimile No.: (312) 503-7694
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Exhibit 10.7(k)
[EXECUTION COPY]
FIRST AMENDMENT TO HOLDINGS GUARANTY
THIS FIRST AMENDMENT TO HOLDINGS GUARANTY, dated as of June 4, 1996 (this
"Amendatory Agreement"), is to the Holdings Guaranty, dated as of January 26,
1996 (as amended or otherwise modified to the date hereof, the "Holdings
Guaranty"), is made by INFLO HOLDINGS, INC., a Delaware corporation (the
"Guarantor"), in favor of THE BANK OF NOVA SCOTIA, as administrative agent
(together with any successor(s) thereto in such capacity, the "Administrative
Agent") for each of the Lender Parties (as defined in the Holdings Guaranty).
Capitalized terms used herein and not herein defined shall have the meanings
ascribed to them in the Credit Agreement.
W I T N E S S E T H:
WHEREAS, pursuant to the Amended and Restated Credit Agreement, dated as of
June 4, 1996 (the "Credit Agreement"), among Keebler Holding Corp., a Delaware
corporation and the surviving corporation of the Merger (the "Borrower"), the
Administrative Agent, the various financial institutions as are, or may from
time to time become, parties thereto (the "Lenders") and the Co-Agents named
therein, amending and restating in its entirety the Existing Credit Agreement,
the Lenders have extended Commitments to make Credit Extensions to the Borrower;
WHEREAS, as a condition to the effectiveness of the Credit Agreement and
the continued making of Credit Extensions to the Borrower thereunder, the
Guarantor is required to execute and deliver this Amendatory Agreement; and
WHEREAS, the Guarantor has requested that the Lenders, subject to the terms
and conditions hereof, amend certain terms of the Holdings Guaranty as
hereinafter provided;
NOW THEREFORE, in consideration of the agreements herein contained, the
parties hereto agree as follows:
SECTION 1. Amendment to Holdings Guaranty. Effective on (and subject to the
occurrence of) the Amendment Effective Date:
(a) Section 4.1.5 of the Holdings Guaranty is hereby deleted and replaced
in its entirety with the following:
<PAGE>
"SECTION 4.1.5. Indebtedness. The Guarantor will not create, incur,
assume or suffer to exist or otherwise become or be liable in respect of
any Indebtedness, other than, without duplication, the following:
(a) Indebtedness incurred in the ordinary course of its
business activities permitted pursuant to Section 4.1.4;
(b) in respect of the Obligations;
(c) Indebtedness in respect of the Seller Note;
(d) Indebtedness incurred under the Subordinated Guaranty; and
(e) Indebtedness incurred pursuant to clause (j) of Section
7.2.5 of the Credit Agreement." and
(b) the last three sentences of Section 3.1(b) of the Holdings Guaranty are
deleted and replaced in their entirety with the following:
"The subordination provisions applicable to each of the Subordinated
Guaranty and the Seller Note will be enforceable against the holders of
the Subordinated Notes and the Seller Note, as the case may be, by each
Lender Party which has not effectively waived the benefits thereof. All
monetary Obligations, including those to pay principal of and interest
(including post-petition interest, whether or not permitted as a claim) on
the Loans and Reimbursement Obligations, and fees and expenses in
connection therewith, constitute "Senior Indebtedness", "Senior Debt" or
similar term referring to such Obligations, as used in the subordination
provisions applicable to the Subordinated Guaranty and the Seller Note and
all such Obligations are entitled to the benefits of the subordination
created under the applicable Subordinated Note Indenture and paragraph
number 4 of the Seller Note. The Guarantor acknowledges that each Lender
Party is entering into the Credit Agreement, and is extending its
Commitments, in reliance upon the subordination provisions of (or to be
contained in) each Subordinated Note Indenture (as referred to in the
applicable Subordinated Guaranty) paragraph number 4 of the Seller Note
and this Section."
SECTION 2. Warranties, etc. The Guarantor hereby represents and warrants
unto each Lender Party, as of the date hereof, each of the representations and
warranties set forth in Article III of the Holdings Guaranty (included as
incorporated by
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<PAGE>
reference to the Credit Agreement) as applied to the Guarantor are true and
correct.
SECTION 3. Execution in Counterparts. This Amendatory Agreement may be
executed by the parties hereto in several counterparts, each of which shall be
deemed to be an original and all of which shall constitute but one and the same
agreement.
SECTION 4. Loan Document. The Guarantor hereby acknowledges and agrees that
this Amendatory Agreement constitutes a "Loan Document", as such term is defined
in the Credit Agreement.
SECTION 5. Limitation. Except as expressly amended and waived by this
Amendatory Agreement, all of the terms, covenants and conditions contained in
the Holdings Guaranty shall remain unmodified and shall continue to be, and
shall remain, in full force and effect in accordance with their respective
terms.
SECTION 6. Governing Law. THIS AMENDATORY AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
THIS AMENDATORY AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE
UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF
AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendatory
Agreement to be executed by their respective officers thereunto duly authorized
as of the day and year first above written.
INFLO HOLDINGS CORPORATION
By
-----------------------
Title:
THE BANK OF NOVA SCOTIA,
as Administrative Agent
By
-----------------------
Title:
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Exhibit 10.7(l)
================================================================================
KEEBLER ACQUISITION CORP.
Mortgagor
to
THE BANK OF NOVA SCOTIA,
a Canadian chartered bank, as Agent,
Mortgagee
================================================================================
MORTGAGE
(AND SECURITY AGREEMENT)
================================================================================
Dated as of January __, 1996
This instrument affects
certain real and personal property
located in ____________ County,
State of ___________.
================================================================================
Record and return to:
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019
Attention: Richard P. Spinelli, Esq.
This instrument was prepared by the above-named attorney.
<PAGE>
TABLE OF CONTENTS
ARTICLE I
COVENANTS AND AGREEMENTS OF THE MORTGAGOR
Section Page
- ------- ----
1.1. Payment, Performance of, and Compliance with
Obligations............................................... 5
1.2. Title to Collateral, etc.................................... 6
1.3. Title Insurance............................................. 7
1.3.1. Title Insurance Policy...................................... 7
1.3.2. Title Insurance Proceeds.................................... 7
1.4. Recordation................................................. 7
1.5. Payment of Impositions, etc................................. 7
1.6. Insurance Requirements...................................... 8
1.7. Security Interests, etc..................................... 8
1.8. Permitted Contests.......................................... 9
1.9. Leases...................................................... 10
1.10. Compliance with Instruments................................. 10
1.11. Maintenance and Repair, etc................................. 10
1.12. Alterations, Additions, etc................................. 10
1.13. Acquired Property Subject to Lien........................... 11
1.14. Assignment of Rents, Proceeds, etc.......................... 11
1.15. No Claims Against the Mortgagee............................. 12
1.16. Indemnification............................................. 12
1.17. No Credit for Payment of Taxes.............................. 14
1.18. Offering of the Notes; Application of Proceeds of
Loans..................................................... 14
1.19. Hazardous Substances and Wastes............................. 14
1.20. No Transfer of the Property............................. 14
ARTICLE II
INSURANCE; DAMAGE, DESTRUCTION OR TAKING, ETC.
2.1. Insurance................................................... 15
2.1.1. Risks to be Insured......................................... 15
2.1.2. Policy Provisions........................................... 16
2.1.3. Delivery of Policies, etc................................... 16
2.1.4. Separate Insurance.......................................... 17
2.2. Intentionally Omitted....................................... 17
2.3. Application of Proceeds and Awards.......................... 18
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<PAGE>
ARTICLE III
EVENTS OF DEFAULT; REMEDIES, ETC.
Section Page
- ------- ----
3.1. Events of Default; Acceleration............................. 19
3.2. Legal Proceedings; Foreclosure.............................. 20
3.3. Power of Sale............................................... 21
3.4. Uniform Commercial Code Remedies............................ 21
3.5. Mortgagee Authorized to Execute Deeds, etc.................. 22
3.6. Purchase of Collateral by Mortgagee......................... 22
3.7. Receipt a Sufficient Discharge to Purchaser................. 22
3.8. Waiver of Appraisement, Valuation, etc...................... 22
3.9. Sale a Bar Against Mortgagor................................ 23
3.10. Performance of the Obligations Due on Sale.................. 23
3.11. Application of Proceeds of Sale and Other Moneys............ 23
3.12. Appointment of Receiver..................................... 24
3.13. Possession, Management and Income........................... 24
3.14. Right of Mortgagee to Perform Mortgagor's Covenants,
etc....................................................... 24
3.15. Subrogation................................................. 25
3.16. Remedies, etc., Cumulative.................................. 25
3.17. Provisions Subject to Applicable Law........................ 25
3.18. No Waiver, etc.............................................. 26
3.19. Compromise of Actions, etc.................................. 26
ARTICLE IV
DEFINITIONS
4.1. Terms Defined in this Mortgage.............................. 26
4.2. Use of Defined Terms........................................ 29
4.3. Credit Agreement Definitions................................ 29
ARTICLE V
MISCELLANEOUS
5.1. Further Assurances; Financing Statements.................... 29
5.1.1. Further Assurances.......................................... 29
5.1.2. Financing Statements........................................ 30
5.2. Additional Security......................................... 30
5.3. Defeasance; Partial Release, etc............................ 30
5.3.1. Defeasance.................................................. 30
5.3.2. Partial Release, etc........................................ 30
5.4. Notices, etc................................................ 31
5.5. Waivers, Amendments, etc.................................... 32
5.6. Cross-References............................................ 32
5.7. Headings.................................................... 32
5.8. Currency.................................................... 32
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<PAGE>
5.9. Governing Law............................................... 32
5.10. Successors and Assigns, etc................................. 32
5.11. Waiver of Jury Trial; Submission to Jurisdiction............ 32
5.12. Severability................................................ 33
5.13. Loan Document............................................... 33
5.14. Usury Savings Clause........................................ 33
5.15. Conflict with Credit Agreement.............................. 34
Schedule 1 - Legal Description of the Land
Schedule 2 - Permitted Encumbrances
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<PAGE>
MORTGAGE
(and Security Agreement)
This MORTGAGE (AND SECURITY AGREEMENT), dated as of January __, 1996 (this
"Mortgage"), made by Keebler Acquisition Corp., a Delaware corporation, as
mortgagor (to be merged with and into UB Investments US Inc. and to become known
as Keebler Holding Corp.) (the "Mortgagor"), having an address at
__________________ to The Bank of Nova Scotia, having an address at One Liberty
Plaza, New York, New York 10006, as administrative agent for the Lenders and the
Issuer (as such terms are hereinafter defined) under the Credit Agreement
referred to below (together with its successors and assigns from time to time
acting as agent under such Credit Agreement, the "Mortgagee").
W I T N E S S E T H T H A T:
WHEREAS, the Mortgagor is on the date of delivery hereof the owner of fee
title to the parcel or parcels of land described in Schedule 1 hereto (the
"Land") and of the Improvements (such term and other capitalized terms used in
this Mortgage having the respective meanings specified or referred to in Article
IV);
WHEREAS, pursuant to a Credit Agreement, dated as of January __, 1996 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Credit Agreement"), among the Mortgagor, the various financial
institutions as are, or may from time to time become, parties thereto
(collectively, the "Lenders"), the Co-Agents referred to therein and the
Mortgagee, in its capacity as Administrative Agent, the Lenders and the Issuer
have extended Commitments (such capitalized term and the other terms used herein
to have the meanings provided in Article I below) to make Credit Extensions to
the Mortgagor on or after the Merger Date, which such Commitments may have a
maximum aggregate principal amount at any one time outstanding of Three Hundred
Five Million Dollars ($305,000,000);
WHEREAS, the Term Loans shall consist of (i) Term-A Loans in a maximum
aggregate principal amount not to exceed One Hundred Million Dollars
($100,000,000) having a Stated Maturity Date of January 31, 2002, (ii) Term-B
Loans in a maximum aggregate principal amount not to exceed Sixty Million
Dollars ($60,000,000) having a Stated Maturity Date of July 31, 2003, and (iii)
Term-C Loans in a maximum aggregate principal amount not to exceed Forty Million
Dollars ($40,000,000) having a Stated Maturity Date of July 31, 2004;
<PAGE>
WHEREAS, the Revolving Loans shall consist of Revolving Loans in a maximum
aggregate principal amount (together with all Swing Line Loans and Letter of
Credit Outstandings) not to exceed One Hundred Five Million Dollars
($105,000,000) having a Stated Maturity Date of January 31, 2002;
WHEREAS, the Swing Line Loans shall consist of Swing Line Loans in a
maximum aggregate Stated Amount at any one time outstanding not to exceed
Fifteen Million Dollars ($15,000,000); provided, that the aggregate outstanding
principal amount of Revolving Loans, Swing Line Loans and Letter of Credit
Outstandings at any time shall not exceed One Hundred Five Million Dollars
($105,000,000);
WHEREAS, the Letters of Credit shall consist of Letters of Credit which
will be issued by the Issuer in a maximum aggregate Stated Amount at any one
time outstanding not to exceed Thirty- Five Million Dollars ($35,000,000);
provided, that the aggregate outstanding principal amount of Revolving Loans,
Swing Line Loans and Letter of Credit Outstandings at any time shall not exceed
One Hundred Five Million Dollars ($105,000,000);
WHEREAS, the Mortgagor has duly authorized the execution, delivery and
performance of this Mortgage.
G R A N T:
NOW, THEREFORE, for and in consideration of the premises, and of the mutual
covenants herein contained, and in order to secure the full, timely and proper
performance of and compliance with each and every one of the Obligations, the
Mortgagor hereby irrevocably grants, bargains, sells, mortgages, warrants,
aliens, demises, releases, hypothecates, pledges, assigns, transfers and conveys
to the Mortgagee and its successors and assigns, forever, all of its right,
title and interest in the following (the "Collateral"):
(a) Real Estate. All of the Land and all additional lands and estates
therein now owned or hereafter acquired by the Mortgagor for use or
development with the Land or any portion thereof, together with all and
singular the tenements, rights, easements, hereditaments, rights of way,
privileges, liberties, appendages and appurtenances now or hereafter
belonging or in anywise pertaining to the Land and such additional lands
and estates therein (including, without limitation, all rights relating to
storm and sanitary sewer, water, gas, electric, railway and telephone
services); all development rights, air rights, riparian rights, water,
water rights, water stock, all rights in, to
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<PAGE>
and with respect to any and all oil, gas, coal, minerals and other
substances of any kind or character underlying or relating to the Land and
such additional lands and estates therein and any interest therein; all
estate, claim, demand, right, title or interest of the Mortgagor in and to
any street, road, highway or alley, vacated or other, adjoining the Land or
any part thereof and such additional lands and estates therein; all strips
and gores belonging, adjacent or pertaining to the Land or such additional
lands and estates; and any after-acquired title to any of the foregoing
(herein collectively called the "Real Estate");
(b) Improvements. All buildings, structures and other improvements and
any additions and alterations thereto or replacements thereof, now or
hereafter built, constructed or located upon the Real Estate; and all
furnishings, fixtures, fittings, appliances, apparatus, equipment,
manufacturing equipment, machinery, building and construction materials and
other articles of every kind and nature whatsoever and all replacements
thereof, now or hereafter affixed or attached to, placed upon or used in
any way in connection with the complete and comfortable use, enjoyment,
occupation, operation, development and/or maintenance of the Real Estate or
such buildings, structures and other improvements, including, but not
limited to, partitions, furnaces, boilers, oil burners, radiators and
piping, plumbing and bathroom fixtures, refrigeration, heating,
ventilating, air conditioning and sprinkler systems, other fire prevention
and extinguishing apparatus and materials, vacuum cleaning systems, gas and
electric fixtures, incinerators, compactors, elevators, engines, motors,
generators and all other articles of property which are considered fixtures
under applicable law (such buildings, structures and other improvements and
such other property are herein collectively referred to as the
"Improvements"; the Real Estate and the Improvements are herein
collectively referred to as the "Property");
(c) Goods. All building materials, goods, construction materials,
appliances (including, without limitation, stoves, ranges, ovens,
disposals, refrigerators, water fountains and coolers, fans, heaters,
dishwashers, clothes washers and dryers, water heaters, hood and fan
combinations, kitchen equipment, laundry equipment, kitchen cabinets and
other similar equipment), stocks, beds, mattresses, bedding and linens,
supplies, blinds, window shades, drapes, carpets, floor coverings,
manufacturing equipment and machinery, office equipment, growing plants and
shrubberies, control devices, equipment (including window cleaning,
building cleaning, swimming pool, recreational, monitoring, garbage, pest
control and other
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<PAGE>
equipment), motor vehicles, tools, furnishings, furniture, lighting,
non-structural additions to the Real Estate and Improvements and all other
tangible property of any kind or character, together with all replacements
thereof, now or hereafter located on or in or used or useful in connection
with the complete and comfortable use, enjoyment, occupation, operation,
development and/or maintenance of the Property, whether or not located on
or in the Property or located elsewhere for purposes of storage,
fabrication or otherwise (herein collectively referred to as the "Goods");
(d) Intangibles. All goodwill, trademarks, trade names, option rights,
purchase contracts, books and records and general intangibles of the
Mortgagor relating to the Property and all accounts, contract rights,
instruments, chattel paper and other rights of the Mortgagor for the
payment of money for property sold or lent, for services rendered, for
money lent, or for advances or deposits made, and any other intangible
property of the Mortgagor relating to the Property (herein collectively
referred to as the "Intangibles");
(e) Leases. All rights of the Mortgagor in, to and under all leases,
licenses, occupancy agreements, concessions and other arrangements, oral or
written, now existing or hereafter entered into, whereby any Person agrees
to pay money or any other consideration for the use, possession or
occupancy of, or any estate in, the Property or any portion thereof or
interest therein (herein collectively referred to as the "Leases"), and the
right, upon the occurrence and during the continuance of any Event of
Default hereunder, after notice to the Mortgagor, to receive and collect
the Rents (as hereinafter defined) paid or payable thereunder;
(f) Plans. All rights of the Mortgagor in and to all plans and
specifications, designs, drawings and other information, materials and
matters heretofore or hereafter prepared relating to the Improvements or
any construction on the Real Estate (herein collectively referred to as the
"Plans");
(g) Permits. All rights of the Mortgagor in, to and under all permits,
franchises, licenses, approvals and other authorizations respecting the
use, occupation and operation of the Property and every part thereof and
respecting any business or other activity conducted on or from the
Property, and any product or proceed thereof or therefrom, including,
without limitation, all building permits, certificates of occupancy and
other licenses, permits and
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<PAGE>
approvals issued by governmental authorities having jurisdiction (herein
collectively called the "Permits");
(h) Leases of Furniture, Furnishings and Equipment. All right, title
and interest of the Mortgagor as lessee in, to and under any leases of
furniture, furnishings and equipment now or hereafter installed in or at
any time used in connection with the Property;
(i) Rents. All rents, issues, profits, royalties, avails, income and
other benefits derived or owned, directly or indirectly, by the Mortgagor
from the Property, including, without limitation, all rents and other
consideration payable by tenants, claims against guarantors, and any cash
or other securities deposited to secure performance by tenants, under the
Leases (herein collectively referred to as "Rents");
(j) Proceeds. All proceeds of the conversion, voluntary or involuntary
of any of the foregoing into cash or liquidated claims, including, without
limitation, Casualty Proceeds (herein collectively referred to as
"Proceeds"), subject to the provisions relating to insurance generally set
forth below; and
(k) Other Property. All other property and rights of the Mortgagor of
every kind and character relating to the Property, and all proceeds and
products of any of the foregoing;
AND, without limiting any of the other provisions of this Mortgage, the
Mortgagor expressly grants to the Mortgagee, as secured party, a security
interest in all of those portions of the Collateral which are or may be subject
to the State Uniform Commercial Code provisions applicable to secured
transactions;
TO HAVE AND TO HOLD the Collateral unto the Mortgagee, its successors and
assigns, forever.
FURTHER to secure the full, timely and proper payment, performance of and
compliance with the Obligations, the Mortgagor hereby covenants and agrees with
and warrants to the Mortgagee as follows:
ARTICLE I
COVENANTS AND AGREEMENTS OF THE MORTGAGOR
SECTION 1.1. Payment, Performance of, and Compliance with Obligations. The
Mortgagor agrees that:
-5-
<PAGE>
(a) it will duly and punctually pay, perform and comply with each of
the Obligations; and
(b) when and as due and payable from time to time in accordance with
the terms hereof, it will pay, comply with and perform, or cause payment
of, compliance with and to be performed, all other duties and obligations
hereunder.
SECTION 1.2. Title to Collateral, etc. The Mortgagor represents and
warrants to and covenants with the Mortgagee that:
(a) as of the date hereof and at all times hereafter while this
Mortgage is outstanding, the Mortgagor (1) is and shall be the owner of the
legal and beneficial title to the Property and to all other property
included in the Collateral, and (2) has and shall have good and marketable
title in fee simple absolute to the Property, subject in each case only to
this Mortgage, any encumbrances expressly permitted under the Credit
Agreement, and the encumbrances set forth in Schedule 2 hereto
(collectively, the "Permitted Encumbrances");
(b) the Mortgagor has good and lawful right, power and authority to
execute this Mortgage and to convey, transfer, assign, mortgage and grant a
security interest in the Collateral, all as provided herein;
(c) this Mortgage has been duly executed, acknowledged and delivered
on behalf of the Mortgagor, all consents and other actions required to be
taken by the officers, directors, shareholders and partners, as the case
may be, of the Mortgagor have been duly and fully given and performed and
this Mortgage constitutes the legal, valid and binding obligation of the
Mortgagor, enforceable against the Mortgagor in accordance with its terms,
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of
good faith and fair dealing; and
(d) the Mortgagor, at its expense, will warrant and defend the
Mortgagee and any purchaser under the power of sale herein or at any
foreclosure sale such title to the Collateral and the first mortgage lien
and first priority perfected security interest of this Mortgage thereon and
therein against all claims and demands and will maintain, preserve and
protect such lien and security interest and will keep this Mortgage a
valid, direct first mortgage lien of record on and a first priority
perfected security
-6-
<PAGE>
interest in the Collateral, subject only to the Permitted Encumbrances.
SECTION 1.3. Title Insurance.
SECTION 1.3.1. Title Insurance Policy. Concurrently with the execution and
delivery of this Mortgage, the Mortgagor, at its expense, has obtained and
delivered to the Mortgagee a loan policy or policies of title insurance in an
amount satisfactory to the Mortgagee naming the Mortgagee as the insured,
insuring the title to and the first mortgage lien of this Mortgage on the
Property with endorsements requested by the Mortgagee. The Mortgagor has duly
paid in full all premiums and other charges due in connection with the issuance
of such policy or policies of title insurance.
SECTION 1.3.2. Title Insurance Proceeds. All proceeds received by and
payable to the Mortgagee for any loss under the loan policy or policies of title
insurance delivered to the Mortgagee pursuant to Section 1.3.1, or under any
policy or policies of title insurance delivered to the Mortgagee in substitution
therefor or replacement thereof, shall be the property of the Mortgagee and
shall be applied by the Mortgagee in accordance with the provisions of Section
2.3.
SECTION 1.4. Recordation. The Mortgagor, at its expense, will at all times
cause this Mortgage and any instruments amendatory hereof or supplemental hereto
and any instruments of assignment hereof or thereof (and any appropriate
financing statements or other instruments and continuations thereof), and each
other instrument delivered in connection with the Credit Agreement or any Loan
Document and intended thereunder to be recorded, registered and filed, to be
kept recorded, registered and filed, in such manner and in such places, and will
pay all such recording, registration, filing fees, taxes and other charges, and
will comply with all such statutes and regulations as may be required by law in
order to establish, preserve, perfect and protect the lien and security interest
of this Mortgage as a valid, direct first mortgage lien and first priority
perfected security interest in the Collateral, subject only to the Permitted
Encumbrances. The Mortgagor will pay or cause to be paid, and will indemnify the
Mortgagee in respect of, all taxes (including interest and penalties) at any
time payable in connection with the filing and recording of this Mortgage and
any and all supplements and amendments hereto.
SECTION 1.5. Payment of Impositions, etc. Subject to Section 1.8 (relating
to permitted contests), to the extent required by the Credit Agreement, the
Mortgagor will pay or cause to be paid before the same would become delinquent
and before any fine, penalty, interest or cost may be added for non-payment, all
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<PAGE>
taxes, assessments, water and sewer rates, charges, license fees, inspection
fees and other governmental levies or payments, of every kind and nature
whatsoever, general and special, ordinary and extraordinary, unforeseen as well
as foreseen, which at any time may be assessed, levied, confirmed, imposed or
which may become a lien upon the Collateral, or any portion thereof, or which
are payable with respect thereto, or upon the rents, issues, income or profits
thereof, or on the occupancy, operation, use, possession or activities thereof,
whether any or all of the same be levied directly or indirectly or as excise
taxes or as income taxes, and all taxes, assessments or charges which may be
levied on the Obligations, or the interest thereon (collectively, the
"Impositions"). The Mortgagor will deliver to the Mortgagee, upon request,
copies of official receipts or other satisfactory proof evidencing such
payments.
SECTION 1.6. Insurance Requirements. Subject to Section 1.8 (relating to
permitted contests), the Mortgagor, at its expense, will comply, or cause
compliance, in all material respects with all provisions of any insurance policy
covering or applicable to the Collateral or any part thereof, all requirements
of the issuer of any such policy, and all orders, rules, regulations and other
requirements of the National Board of Fire Underwriters (or any other body
exercising similar functions) applicable to or affecting the Collateral or any
part thereof or any use or condition of the Collateral or any part thereof
(collectively, the "Insurance Requirements") whether or not compliance therewith
shall require structural changes in or interference with the use and enjoyment
of the Collateral or any part thereof.
SECTION 1.7. Security Interests, etc. Except as permitted by the Credit
Agreement, the Mortgagor will not directly or indirectly create or permit or
suffer to be created or to remain, and will promptly discharge or cause to be
discharged, any deed of trust, mortgage, encumbrance or charge on, pledge of,
security interest in or conditional sale or other title retention agreement with
respect to or any other lien on or in the Collateral or any part thereof or the
interest of the Mortgagor or the Mortgagee therein, or any Proceeds thereof or
Rents or other sums arising therefrom, other than: (a) Permitted Encumbrances;
and (b) liens of mechanics, materialmen, suppliers or vendors or rights thereto
incurred in the ordinary course of the business of the Mortgagor for sums not
yet due or any such liens or rights thereto which are at the time being
contested as permitted by Section 1.8.
SECTION 1.8. Permitted Contests. The Mortgagor may, at its expense,
contest, or cause to be contested, by appropriate legal proceedings conducted in
good faith and with due diligence, the amount or validity or application, in
whole or in part, of any
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<PAGE>
Imposition, Legal Requirement or Insurance Requirement or lien of a mechanic,
materialman, supplier or vendor, provided that: (a) in the case of an unpaid
Imposition, lien, encumbrance or charge, such proceedings shall suspend the
collection thereof from the Mortgagor, the Mortgagee, and the Collateral
(including any rent or other income therefrom) and shall not interfere with the
payment of any such rent or income; (b) neither the Collateral nor any rent or
other income therefrom nor any material part thereof or material interest
therein would be in any danger of being sold, forfeited, lost, impaired or
interfered with; (c) in the case of a Legal Requirement, neither the Mortgagor
nor the Mortgagee would be in danger of any civil or criminal liability for
failure to comply therewith; (d) the Mortgagor shall have furnished such
security, if any, as may be required in the proceedings or as may be reasonably
requested by the Mortgagee; (e) the non-payment of the whole or any part of any
Imposition will not result in the delivery of a tax deed to the Collateral or
any part thereof because of such non-payment; (f) the payment of any sums
required to be paid with respect to the Loans or under this Mortgage (other than
any unpaid Imposition, lien, encumbrance or charge at the time being contested
in accordance with this Section 1.8) shall not be interfered with or otherwise
affected; (g) in the case of any Insurance Requirement, the failure of the
Mortgagor to comply therewith shall not affect the validity of any insurance
required to be maintained by the Mortgagor under Section 2.1; and (h) that
adequate reserves, determined in accordance with GAAP, shall have been set aside
on the Mortgagor's books.
SECTION 1.9. Leases. The Mortgagor represents and warrants to the Mortgagee
that, as of the date hereof, there are no written or oral leases or other
agreements of any kind or nature relating to the occupancy of any portion of the
Property by any Person other than the Mortgagor. The Mortgagor will not enter
into any such written or oral lease or other agreement with respect to any
portion of the Property, except as permitted under the Credit Agreement in
Section 7.2.9, without first obtaining the written consent of the Mortgagee.
SECTION 1.10. Compliance with Instruments. The Mortgagor at its expense
will promptly comply in all material respects with all rights of way or use,
privileges, franchises, servitudes, licenses, easements, tenements,
hereditaments and appurtenances forming a part of the Property and all
instruments creating or evidencing the same, in each case, to the extent
compliance therewith is required of the Mortgagor under the terms thereof. The
Mortgagor will not take any action which may result in a forfeiture or
termination of the material rights afforded to the Mortgagor under any such
instruments and will not, without the prior written consent of the Mortgagee,
amend any of such instruments.
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SECTION 1.11. Maintenance and Repair, etc. Subject to the provisions of
Section 1.12, the Mortgagor will keep or cause to be kept all presently and
subsequently erected or acquired Improvements and the sidewalks, curbs, vaults
and vault space, if any, located on or adjoining the same, in each case
excluding immaterial assets, and the streets and the ways adjoining the same, in
good and substantial order and repair and in such a fashion that the value and
utility of the Collateral will not be diminished, reasonable wear and tear
excepted, and, at its sole cost and expense, will promptly make or cause to be
made all reasonably necessary and proper repairs, replacements and renewals
thereof, whether interior or exterior, structural or nonstructural, ordinary or
extraordinary, foreseen or unforeseen, so that its business carried on in
connection therewith may be properly conducted at all times. The Mortgagor at
its expense will do or cause to be done all shoring of foundations and walls of
any building or other Improvements on the Property and (to the extent permitted
by law) of the ground adjacent thereto, and every other act reasonably necessary
or appropriate for the preservation and safety of the Property by reason of or
in connection with any excavation or other building operation upon the Property
and upon any adjoining property, whether or not the Mortgagor shall, by any
Legal Requirement, be required to take such action or be liable for failure to
do so.
SECTION 1.12. Alterations, Additions, etc. Unless an Event of Default shall
have occurred and be continuing and the Mortgagee shall have given notice to the
Mortgagor, the Mortgagor shall have the right at any time and from time to time
to make or cause to be made reasonable alterations of and additions to the
Property or any part thereof, provided that any alteration or addition: (a) is
effected with due diligence, in a good and workmanlike manner and in compliance
with all Legal Requirements and Insurance Requirements; (b) is promptly and
fully paid for, or caused to be paid for, by the Mortgagor; (c) is made, in case
the estimated cost of such alteration or addition exceeds Two Million Dollars
($2,000,000), under the supervision of a qualified architect or engineer.
SECTION 1.13. Acquired Property Subject to Lien. All property at any time
acquired by the Mortgagor and provided or required by this Mortgage to be or
become subject to the lien and security interest hereof, whether such property
is acquired by exchange, purchase, construction or otherwise, shall forthwith
become subject to the lien and security interest of this Mortgage without
further action on the part of the Mortgagor or the Mortgagee. The Mortgagor, at
its expense, will execute and deliver to the Mortgagee (and will record and file
as provided in Section 1.4) an instrument supplemental to this Mortgage
satisfactory in substance and form to the Mortgagee, whenever such an instrument
is necessary under applicable law to subject
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to the lien and security interest of this Mortgage all right, title and interest
of the Mortgagor in and to all property provided or required by this Mortgage to
be subject to the lien and security interest hereof.
SECTION 1.14. Assignment of Rents, Proceeds, etc. The assignment, grant and
conveyance of the Leases, Rents, Proceeds and other rents, income, proceeds and
benefits of the Collateral contained in the Granting Clause of this Mortgage
shall constitute an absolute, present and irrevocable assignment, grant and
conveyance, provided that permission is hereby given to the Mortgagor, unless an
Event of Default has occurred and is continuing and the Mortgagee has given
notice to the Mortgagor, to collect, receive and apply such Rents, Proceeds and
other rents, income, proceeds and benefits as they become due and payable, but
not in advance thereof, and in accordance with all of the other terms,
conditions and provisions hereof and of the Leases, contracts, agreements and
other instruments with respect to which such payments are made or such other
benefits are conferred. Upon the occurrence of and during the continuance of an
Event of Default, such permission shall terminate immediately upon notice from
the Mortgagee, and once so terminated shall not be reinstated upon a cure of
such Event of Default without the express written consent of the Mortgagee. Such
assignment shall be fully effective without any further action on the part of
the Mortgagor or the Mortgagee and the Mortgagee shall be entitled, at its
option, upon the occurrence of and during the continuance of an Event of Default
hereunder, upon notice to the Mortgagor, to collect, receive and apply all
Rents, Proceeds and all other rents, income, proceeds and benefits from the
Collateral, including all right, title and interest of the Mortgagor in any
escrowed sums or deposits or any portion thereof or interest therein, whether or
not the Mortgagee takes possession of the Collateral or any part thereof. The
Mortgagor further grants to the Mortgagee the right, at the Mortgagee's option,
upon the occurrence of and during the continuance of an Event of Default
hereunder, upon notice to the Mortgagor, to:
(a) enter upon and take possession of the Property for the purpose of
collecting Rents, Proceeds and said rents, income, proceeds and other
benefits;
(b) dispossess by the customary summary proceedings any tenant,
purchaser or other Person defaulting in the payment of any amount when and
as due and payable, or in the performance of any other obligation, under
the Lease, contract or other instrument to which said Rents, Proceeds or
other rents, income, proceeds or benefits relate;
(c) let or convey the Collateral or any portion thereof or any
interest therein; and
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(d) apply Rents, Proceeds and such rents, income, proceeds and other
benefits, after the payment of all reasonably necessary fees, charges and
expenses, on account of the Obligations in accordance with Section 3.11.
SECTION 1.15. No Claims Against the Mortgagee. Nothing contained in this
Mortgage shall constitute any consent or request by the Mortgagee, express or
implied, for the performance of any labor or the furnishing of any materials or
other property in respect of the Property or any part thereof, or be construed
to permit the making of any claim against the Mortgagee in respect of labor or
services or the furnishing of any materials or other property or any claim that
any lien based on the performance of such labor or the furnishing of any such
materials or other property is prior to the lien and security interest of this
Mortgage. All contractors, subcontractors, vendors and other persons dealing
with the Property, or with any persons interested therein, are hereby required
to take notice of the provisions of this Section.
SECTION 1.16. Indemnification. The Mortgagor will protect, indemnify, save
harmless and defend the Mortgagee, the Lenders and the Issuer, and each of their
respective officers, directors, shareholders, employees, representatives and
agents (collectively, the "Indemnified Parties" and individually, an
"Indemnified Party"), from and against any and all liabilities, obligations,
claims, damages, penalties, causes of action, costs and expenses (including,
without limitation, attorneys' fees and expenses) imposed upon or incurred by or
asserted against any Indemnified Party by reason of: (a) ownership of an
interest in this Mortgage, any other Loan Document, or the Property; (b) any
accident, injury to or death of persons or loss of or damage to or loss of the
use of property occurring on or about the Property or any part thereof or the
adjoining sidewalks, curbs, vaults and vault spaces, if any, streets, alleys or
ways; (c) any use, non- use or condition of the Property or any part thereof or
the adjoining sidewalks, curbs, vaults and vault spaces, if any, streets, alleys
or ways; (d) any failure on the part of the Mortgagor to perform or comply with
any of the terms of this Mortgage; (e) performance of any labor or services or
the furnishing of any materials or other property in respect of the Collateral
or any part thereof made or suffered to be made by or on behalf of the
Mortgagor; (f) any negligence or tortious act on the part of the Mortgagor or
any of its agents, contractors, lessees, licensees or invitees; (g) any work in
connection with any alterations, changes, new construction or demolition of or
additions to the Property; or (h) (1) any investigation, litigation or
proceeding relating to any environmental cleanup, audit, compliance or other
matter relating to the protection of the environment or the Release by the
Mortgagor of any Hazardous Material, and (2) the presence on or under, or the
escape,
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seepage, leakage, spillage, discharge, emission, discharging or releases from
the Property of any Hazardous Material (including any losses, liabilities,
damages, injuries, costs, expenses, or claims asserted or arising under any
Environmental Law) regardless of whether caused by, or within the control of,
the Mortgagor, except to the extent the same results from the gross negligence
or wilful misconduct of such Indemnified Party. If any action or proceeding be
commenced, to which action or proceeding any Indemnified Party is made a party
by reason of the execution of this Mortgage or any other Loan Document, or in
which it becomes necessary to defend or uphold the lien of this Mortgage, all
sums paid by the Indemnified Parties, for the expense of any litigation to
prosecute or defend the rights and lien created hereby or otherwise, shall be
paid by the Mortgagor to such Indemnified Parties, as the case may be, as
hereinafter provided. The Mortgagor will pay and save the Indemnified Parties
harmless against any and all liability with respect to any intangible personal
property tax or similar imposition of the State or any subdivision or authority
thereof now or hereafter in effect, to the extent that the same may be payable
by the Indemnified Parties in respect of this Mortgage, any Loan Document or any
of the Obligations. All amounts payable to the Indemnified Parties under this
Section 1.16 shall be deemed indebtedness secured by this Mortgage and any such
amounts which are not paid within ten (10) days after written demand therefor by
any Indemnified Party shall bear interest at the Interest Rate from the date of
such demand. In case any action, suit or proceeding is brought against any
Indemnified Party by reason of any such occurrence, the Mortgagor, upon request
of such Indemnified Party, will, at the Mortgagor's expense, resist and defend
such action, suit or proceeding or cause the same to be resisted or defended by
counsel designated by the Mortgagor and approved by such Indemnified Party. The
obligations of the Mortgagor under this Section 1.16 shall survive any discharge
or reconveyance of this Mortgage and discharge or termination of the
Obligations.
SECTION 1.17. No Credit for Payment of Taxes. The Mortgagor shall not be
entitled to any credit against the Obligations by reason of the payment of any
tax on the Property or any part thereof or by reason of the payment of any other
Imposition, and shall not apply for or claim any deduction from the taxable
value of the Property or any part thereof by reason of this Mortgage.
SECTION 1.18. Offering of the Notes; Application of Proceeds of Loans.
Neither the Mortgagor nor any Person acting on behalf of the Mortgagor has
directly or indirectly offered the Notes or any portion thereof or any similar
security to, or solicited any offer to buy any of the same from, any Person
other than the Mortgagee. Neither the Mortgagor nor any Person acting
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on behalf of the Mortgagor has taken or will take any action which would subject
the issuance of the Notes to the provisions of section 5 of the Securities Act
of 1933, as amended. The Mortgagor (a) will not use or permit to be used any
proceeds of the Loans, directly or indirectly, for the purpose, whether
immediate, incidental or ultimate, of "purchasing" or "carrying" any "margin
stock" within the meaning of Regulation U of the Federal Reserve Board, as
amended from time to time, and (b) has or will apply all of the proceeds of the
Loans that are paid to it by the Mortgagee to the purposes permitted by the
Credit Agreement.
SECTION 1.19. Hazardous Materials.
(a) Mortgagor hereby represents and warrants to the Mortgagee those
representations and warranties as set forth in Section 6.12 of the Credit
Agreement to the extent applicable to it.
(b) The Mortgagor covenants that it will perform the obligations as
set forth in Section 7.1.6 of the Credit Agreement to the extent applicable
to it.
SECTION 1.20. No Transfer of the Property. Except as permitted by the
Credit Agreement, without the prior written consent of the Mortgagee, which
consent may be granted or withheld in the sole and absolute discretion of the
Mortgagee, the Mortgagor shall not (a) sell, convey, assign or otherwise
transfer the Property or any portion of the Mortgagor's interest therein or (b)
further encumber Property or permit the Property to become encumbered by any
lien, claim, security interest or other indebtedness of any kind or nature other
than the Permitted Encumbrances, except to the extent permitted by Section 1.7
of this Mortgage. For purposes of this Section 1.20, any transfer of any stock
of the Mortgagor shall be deemed to constitute a transfer of the Property within
the meaning of this Section 1.20.
ARTICLE II
INSURANCE; DAMAGE, DESTRUCTION OR TAKING, ETC.
SECTION 2.1. Insurance.
(1) SECTION 2.1.1. Risks to be Insured. The Mortgagor will, at its expense,
maintain or cause to be maintained with insurance carriers approved by the
Mortgagee: (a) insurance with respect to the Improvements against loss or damage
by fire, lightning and such other risks as are included in standard "all-risk"
policies, in amounts sufficient to prevent the Mortgagor and the Mortgagee
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(1) INSURANCE PROVISIONS ARE UNDER REVIEW BY INSURANCE AGENT.
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from becoming a co-insurer of any partial loss under the applicable policies,
but in any event in amounts not less than the then full insurable value (actual
replacement value) of the Improvements, as determined by the Mortgagor in
accordance with generally accepted insurance practice and approved by the
Mortgagee or, at the request of the Mortgagee, as determined at the Mortgagor's
expense by the insurer or insurers or by an expert approved by the Mortgagee;
(b) comprehensive public liability, including bodily injury and product
liability and property damage, insurance, with personal injury endorsements,
applicable to the Property in such amounts as are customarily carried by Persons
operating similar properties in the same general locality, but in any event with
a combined single limit of not less than Ten Million Dollars ($10,000,000) per
occurrence; (c) explosion insurance in respect of any steam and pressure boilers
and similar apparatus located in the Property in such amounts as are usually
carried by persons operating similar properties in the same general locality,
but in any event in an amount not less than reasonably required by the
Mortgagee; (d) worker's compensation insurance to the full extent required by
applicable law for all employees of the Mortgagor engaged in any work on or
about the Property and employer's liability insurance with a limit of not less
than One Million Dollars ($1,000,000) for each occurrence; (e) all-risk,
builders' risk insurance with respect to the Property during any period during
which there is any construction work being performed, against loss or damage by
fire or other risks, including vandalism, malicious mischief and sprinkler
leakage, as are included in so-called "extended coverage" clauses at the time
available; and (f) such other insurance with respect to the Property in such
amounts and against such insurable hazards as the Mortgagee from time to time
may reasonably require by written notice to the Mortgagor.]
SECTION 2.1.2. Policy Provisions. All insurance maintained by the Mortgagor
pursuant to Section 2.1.1 shall: (a) (except for worker's compensation
insurance) name the Mortgagor and the Mortgagee, as insureds as their respective
interests may appear; (b) (except for worker's compensation and public liability
insurance) provide that the proceeds for any losses shall be adjusted by the
Mortgagor subject to the reasonable approval of the Mortgagee in the event the
proceeds shall exceed Two Million Dollars ($2,000,000), and to the extent the
same exceeds Two Million Dollars ($2,000,000), shall be payable to the
Mortgagee, to be held and applied as provided in Section 2.3; (c) provide that
no cancellation, reduction in amount or material change in coverage thereof or
any portion thereof shall be effective until at least thirty (30) days after
receipt by the Mortgagee of written notice thereof; (d) provide that any notice
under such policies shall be simultaneously delivered to the Mortgagee; and (e)
be reasonably satisfactory in all other respects to the
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Mortgagee. Any insurance maintained pursuant to this Section 2.1 may be
evidenced by blanket insurance policies covering the Property and other
properties or assets of the Mortgagor, provided that any such policy shall
specify the portion, if less than all, of the total coverage of such policy that
is allocated to the Property and shall in all other respects comply with the
requirements of this Section 2.1.
SECTION 2.1.3. Delivery of Policies, etc. The Mortgagor will deliver to the
Mortgagee, promptly upon reasonable request: (a) the originals of all policies
evidencing all insurance required to be maintained under Section 2.1.1 (or, in
the case of blanket policies, certificates thereof by the insurers together with
a counterpart of each blanket policy); and (b) evidence as to the payment of all
premiums due thereon (with respect to public liability insurance policies, all
installments for the current year due thereon to such date), provided that the
Mortgagee shall not be deemed by reason of its custody of such policies to have
knowledge of the contents thereof. The Mortgagor will also deliver to the
Mortgagee not later than thirty (30) days prior to the expiration of any policy
a binder or certificate of the insurer evidencing the replacement thereof and
not later than fifteen (15) days prior to the expiration of such policy an
original copy of the new policy (or, in the case of a replacement blanket
policy, a certificate thereof of the insurer together with a counterpart of the
blanket policy). In the event the Mortgagor shall fail to effect or maintain any
insurance required to be effected or maintained pursuant to the provisions of
this Section 2.1, the Mortgagor will indemnify the Mortgagee against damage,
loss or liability resulting from all risks for which such insurance should have
been effected or maintained.
SECTION 2.1.4. Separate Insurance. The Mortgagor will not take out separate
insurance concurrent in form or contributing in the event of loss with that
required to be maintained pursuant to this Section 2.1.
SECTION 2.2. Intentionally Omitted.
SECTION 2.3. Application of Proceeds and Awards. If an Event of Default
shall have occurred and be continuing, the Mortgagee may, at its option, apply
all amounts recovered under any insurance policy required to be maintained by
the Mortgagor hereunder and all other Casualty Proceeds received by it in any
one or more of the following ways:
(a) to the payment of the reasonable costs and expenses incurred by
the Mortgagee in obtaining any such Casualty Proceeds, including the
reasonable fees and expenses of attorneys and insurance and other experts
and
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consultants, the costs of litigation, arbitration, mediation,
investigations and other judicial, administrative or other proceedings and
all other reasonable out-of-pocket expenses;
(b) to the payment of the Obligations and/or the Loans;
(c) to fulfill any of the other covenants contained herein, in the
Credit Agreement, in this Mortgage, or in any other Loan Document, as the
Mortgagee may, in its sole discretion, determine;
(d) to the Mortgagor for application to the cost of restoring the
Collateral and the replacement of Goods destroyed, damaged or taken; or
(e) to the Mortgagor.
Notwithstanding the foregoing provisions of this Section 2.3 to the
contrary (but subject to the provisions of the Credit Agreement), and if each of
the following conditions is satisfied, the Mortgagee, upon request of the
Mortgagor, shall apply Casualty Proceeds received by it to the restoration or
replacement of the Collateral, to the extent necessary for the restoration or
replacement thereof:
(1) there shall then exist no uncured Event of Default; and
(2) in the event that the Casualty Proceeds exceed Two Million Dollars
($2,000,000), the Mortgagor shall furnish to the Mortgagee a certificate of
an architect or engineer reasonably acceptable to the Mortgagee stating
that the Collateral is capable of being restored, prior to the maturity of
the loans described in the Credit Agreement, to substantially the same
condition as existed prior to the Casualty Event.
In the event that such Casualty Proceeds are to be utilized in the
restoration of the Collateral pursuant to the terms of the Credit Agreement, the
Mortgagee shall disburse such Casualty Proceeds and the additional amounts
deposited by the Mortgagor for such restoration after receipt of a written
request for disbursement, on not fewer than five (5) Business Days nor more than
twelve (12) Business Days notice and, to the extent applicable, in accordance
with customary construction loan procedures and conditions. In the event that
such Casualty Proceeds are to be utilized to replace the Collateral so destroyed
or taken, the Mortgagee shall disburse such Casualty Proceeds after receipt of a
written request for disbursement, on
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not fewer than five (5) Business Days nor more than twelve (12) Business
Days notice simultaneously with the acquisition of such replacement
property by the Mortgagor. In the event that, after the restoration or
replacement of the Collateral, any Casualty Proceeds shall remain, such
amount shall be paid to the Mortgagor. Casualty Proceeds shall be invested
in the manner reasonably requested by the Mortgagor and approved by the
Mortgagee, and all interest earned thereon shall be applied as provided in
this Section 2.3. If, prior to the receipt by the Mortgagee of such
Casualty Proceeds, the Collateral shall have been sold on foreclosure, the
Mortgagee shall have the right to receive said Casualty Proceeds to the
extent of any deficiency found to be due upon such sale, with legal
interest thereon, whether or not a deficiency judgment shall have been
sought or recovered or denied, and the reasonable attorneys' fees, costs
and disbursements incurred by the Mortgagee in connection with the
collection of such award or payment.
ARTICLE III
EVENTS OF DEFAULT; REMEDIES, ETC.
SECTION 3.1. Events of Default; Acceleration. If an "Event of Default"
under and as defined in the Credit Agreement shall have occurred (herein called
an "Event of Default") then and in such event the Mortgagee may at any time
thereafter (unless all Events of Default shall theretofore have been remedied
and all costs and expenses, including, without limitation, reasonable attorneys'
fees and expenses incurred by or on behalf of the Mortgagee, shall have been
paid in full by the Mortgagor) declare, by written notice to the Mortgagor, the
Loans and the Obligations to be due and payable immediately or on a date
specified in such notice, and on such date the same shall be and become due and
payable, together with interest accrued thereon, without presentment, demand,
protest or notice, all of which the Mortgagor hereby waives. The Mortgagor will
pay on demand all reasonable costs and expenses, including without limitation,
attorneys' fees and expenses, incurred by or on behalf of the Mortgagee in
enforcing this Mortgage, the Credit Agreement, or any other Loan Document, or
occasioned by any default hereunder or thereunder.
SECTION 3.2. Legal Proceedings; Foreclosure. If an Event of Default shall
have occurred and be continuing, the Mortgagee at any time may, at its election,
proceed at law or in equity or otherwise to enforce the payment of, performance
of, or compliance with the Loans, the Obligations, and the Credit Agreement, in
accordance with the terms hereof and thereof and to foreclose the lien of this
Mortgage as against all or any part of the Collateral and to have the same sold
under the judgment or
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decree of a court of competent jurisdiction. The Mortgagee shall be
entitled to recover in such proceedings all costs incident thereto,
including reasonable attorneys' fees and expenses in such amounts as may be
fixed by the court.
SECTION 3.3. Power of Sale. If an Event of Default shall have occurred and
be continuing, the Mortgagee may sell, assign, transfer and deliver the whole
or, from time to time, any part of the Collateral, or any interest in any part
thereof, at any private sale or at public auction, with or without demand,
advertisement or notice, for cash, on credit or for other property, for
immediate or future delivery, and for such price or prices and on such terms as
the Mortgagee in its uncontrolled discretion may determine, or as may be
required by law. Without limiting the authority granted in the immediately
preceding sentence, the Mortgagee shall, without demand on the Mortgagor, after
the lapse of such time as may then be required by law, and notice of default and
notice of sale having been given as then required by law, sell the Collateral on
the date and at the time and place designated in the notice of sale, either as a
whole or in separate parcels and in such order as the Mortgagee may determine,
but subject to any statutory right of the Mortgagor to direct the order in which
such property, if consisting of several known lots, parcels or interests, shall
be sold, at public auction to the highest bidder, the purchase price payable in
lawful money of the United States at the time of sale. The Person conducting the
sale may, for any cause deemed expedient, postpone the sale from time to time
until it shall be completed and, in every such case, notice of postponement
shall be given by public declaration thereof by such Person at the time and
place last appointed for the sale; provided that, if the sale is postponed for
longer than one (1) day beyond the day designated in the notice of sale, notice
of sale and notice of the time, date and place of sale shall be given in the
same manner as the original notice of sale. The Mortgagee shall execute and
deliver to the purchaser at any such sale a mortgagee's deed conveying the
property so sold, but without any covenant or warranty, express or implied. The
recitals in such mortgagee's deed of any matters or facts shall be conclusive
proof of the truthfulness thereof. Any Person, including the Mortgagee, may bid
at the sale.
SECTION 3.4. Uniform Commercial Code Remedies. If an Event of Default shall
have occurred and be continuing, the Mortgagee may exercise from time to time
and at any time any rights and remedies available to it under applicable law
upon default in the payment of indebtedness, including, without limitation, any
right or remedy available to it as a secured party under the Uniform Commercial
Code of the State. The Mortgagor shall, promptly upon request by the Mortgagee,
assemble the Collateral, or any portion thereof generally described in such
request, and make it
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available to the Mortgagee at such place or places designated by the Mortgagee
and reasonably convenient to the Mortgagee. If the Mortgagee elects to proceed
under the Uniform Commercial Code of the State to dispose of portions of the
Collateral, the Mortgagee, at its option, may give the Mortgagor notice of the
time and place of any public sale of any such property, or of the date after
which any private sale or other disposition thereof is to be made, by sending
notice by registered or certified first class mail, postage prepaid, to the
Mortgagor at least ten (10) Business Days before the time of the sale or other
disposition. If any notice of any proposed sale, assignment or transfer by the
Mortgagee of any portion of the Collateral or any interest therein is required
by law, the Mortgagor conclusively agrees that ten (10) Business Days' notice to
the Mortgagor of the date, time and place (and, in the case of a private sale,
the terms) thereof is reasonable.
SECTION 3.5. Mortgagee Authorized to Execute Deeds, etc. The Mortgagor
irrevocably appoints the Mortgagee (which appointment is coupled with an
interest) the true and lawful attorney of the Mortgagor, in its name and stead
and on its behalf, for the purpose of effectuating any sale, assignment,
transfer or delivery for the enforcement hereof, whether pursuant to power of
sale, foreclosure or otherwise, to execute and deliver all such deeds, bills of
sale, assignments, releases and other instruments as may be designated in any
such request.
SECTION 3.6. Purchase of Collateral by Mortgagee. The Mortgagee may be a
purchaser of the Collateral or of any part thereof or of any interest therein at
any sale thereof, whether pursuant to power of sale, foreclosure or otherwise,
and the Mortgagee may apply upon the purchase price thereof the indebtedness
secured hereby owing to the Mortgagee. Such purchaser shall, upon any such
purchase, acquire good title to the properties so purchased, free of the
security interest and lien of this Mortgage and free of all rights of redemption
in the Mortgagor.
SECTION 3.7. Receipt a Sufficient Discharge to Purchaser. Upon any sale of
the Collateral or any part thereof or any interest therein, whether pursuant to
power of sale, foreclosure or otherwise, the receipt of the Mortgagee or the
officer making the sale under judicial proceedings shall be a sufficient
discharge to the purchaser for the purchase money, and such purchaser shall not
be obliged to see to the application thereof.
SECTION 3.8. Waiver of Appraisement, Valuation, etc. The Mortgagor hereby
waives, to the fullest extent it may lawfully do so, the benefit of all
appraisement, valuation, stay, extension and redemption laws now or hereafter in
force and all rights of
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marshalling in the event of any sale of the Collateral or any part thereof or
any interest therein.
SECTION 3.9. Sale a Bar Against Mortgagor. Any sale of the Collateral or
any part thereof or any interest therein under or by virtue of this Mortgage,
whether pursuant to power of sale, foreclosure or otherwise, shall forever be a
bar against the Mortgagor.
SECTION 3.10. Performance of the Obligations Due on Sale. Upon any sale of
the Collateral or any portion thereof or interest therein by virtue of the
exercise of any remedy by the Mortgagee under or by virtue of this Mortgage,
whether pursuant to power of sale, foreclosure or otherwise in accordance with
this Mortgage or by virtue of any other remedy available at law or in equity or
by statute or otherwise, at the option of the Mortgagee, any sums or monies due
and payable pursuant to the Credit Agreement, and in connection with the Loans
and/or the Obligations shall, if not previously declared due and payable,
immediately become due and payable, together with interest accrued thereon, at
the Interest Rate, and all other indebtedness which this Mortgage by its terms
secures.
SECTION 3.11. Application of Proceeds of Sale and Other Moneys. The
proceeds of any sale of the Collateral or any part thereof or any interest
therein under or by virtue of this Mortgage, whether pursuant to power of sale,
foreclosure or otherwise, and all other moneys at any time held by the Mortgagee
as part of the Collateral, shall be applied as follows:
(a) first, to the payment of the reasonable costs and expenses of such
sale (including, without limitation, the cost of evidence of title and the
costs and expenses, if any, of taking possession of, retaining custody
over, repairing, managing, operating, maintaining and preserving the
Collateral or any part thereof prior to such sale), all reasonable costs
and expenses incurred by the Mortgagee or any other Person in obtaining or
collecting any insurance proceeds, condemnation awards or other amounts
received by the Mortgagee, all reasonable costs and expenses of any
receiver of the Collateral or any part thereof, and any Impositions or
other charges or expenses prior to the security interest or lien of this
Mortgage, which the Mortgagee may consider it necessary or desirable to
pay;
(b) second, to the payment of any sums or monies due and owing under
the Credit Agreement, or otherwise in connection with the Obligations
and/or the Loans;
(c) third, to fulfill any of the other covenants contained herein, in
the Credit Agreement, or in any other
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Loan Document, as the Mortgagee may, in its reasonable discretion,
determine;
(d) fourth, the balance, if any, held by the Mortgagee after payment
in full of all amounts referred to in Sections 3.11 (a), (b) and (c) above,
shall, unless a court of competent jurisdiction may otherwise direct by
final order not subject to appeal, be paid to or upon the direction of the
Mortgagor.
SECTION 3.12. Appointment of Receiver. If an Event of Default shall have
occurred and be continuing, the Mortgagee shall, as a matter of right, without
notice, and without regard to the adequacy of any security for the indebtedness
secured hereby or the solvency of the Mortgagor, be entitled to the appointment
of a receiver for all or any part of the Collateral, whether such receivership
be incidental to a proposed sale of the Collateral or otherwise, and the
Mortgagor hereby consents to the appointment of such a receiver and will not
oppose any such appointment.
SECTION 3.13. Possession, Management and Income. If an Event of Default
shall have occurred and be continuing, in addition to, and not in limitation of,
the rights and remedies provided in Section 1.14, the Mortgagee, upon five (5)
Business Days notice to the Mortgagor, may enter upon and take possession of the
Collateral or any part thereof by force, summary proceeding, ejectment or
otherwise and may remove the Mortgagor and all other Persons and any and all
property therefrom and may hold, operate, maintain, repair, preserve and manage
the same and receive all earnings, income, Rents, issues and Proceeds accruing
with respect thereto or any part thereof. The Mortgagee shall be under no
liability for or by reason of any such taking of possession, entry, removal or
holding, operation or management, except that any amounts so received by the
Mortgagee shall be applied to pay all costs and expenses of so entering upon,
taking possession of, holding, operating, maintaining, repairing, preserving and
managing the Collateral or any part thereof, and any Impositions or other
charges prior to the lien and security interest of this Mortgage which the
Mortgagee may consider it necessary or desirable to pay, and any balance of such
amounts shall be applied as provided in Section 3.11.
SECTION 3.14. Right of Mortgagee to Perform Mortgagor's Covenants, etc. If
the Mortgagor shall fail to make any payment or perform any act required to be
made or performed hereunder, the Mortgagee, upon thirty days' notice to the
Mortgagor, without waiving or releasing any obligation or Default, may (but
shall be under no obligation to) at any time thereafter make such payment or
perform such act for the account and at the expense of the Mortgagor, and may
enter upon the Collateral for such purpose and
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take all such action thereon as, in the Mortgagee's opinion, may be necessary or
appropriate therefor. No such entry and no such action shall be deemed an
eviction of any lessee of the Property or any part thereof. All sums so paid by
the Mortgagee and all reasonable costs and expenses (including, without
limitation, attorneys' fees and expenses) so incurred, together with interest
thereon at the Interest Rate from the date of payment or incurring, shall
constitute additional indebtedness secured by this Mortgage and shall be paid by
the Mortgagor to the Mortgagee on demand.
SECTION 3.15. Subrogation. To the extent that the Mortgagee, on or after
the date hereof, pays any sum due under any provision of any Legal Requirement
or any instrument creating any lien prior or superior to the lien of this
Mortgage, the Mortgagee shall have and be entitled to a lien on the Collateral
equal in priority to the lien discharged, and the Mortgagee shall be subrogated
to, and receive and enjoy all rights and liens possessed, held or enjoyed by,
the holder of such lien, which shall remain in existence and benefit the
Mortgagee in securing the Obligations.
SECTION 3.16. Remedies, etc., Cumulative. Each right, power and remedy of
the Mortgagee provided for in this Mortgage, the Credit Agreement, or any other
Loan Document, or now or hereafter existing at law or in equity or by statute or
otherwise shall be cumulative and concurrent and shall be in addition to every
other right, power or remedy provided for in this Mortgage, the Credit Agreement
or any other Loan Document, or now or hereafter existing at law or in equity or
by statute or otherwise, and the exercise or beginning of the exercise by the
Mortgagee of any one or more of the rights, powers or remedies provided for in
this Mortgage, the Credit Agreement, or any other Loan Document, or now or
hereafter existing at law or in equity or by statute or otherwise shall not
preclude the simultaneous or later exercise by the Mortgagee of any or all such
other rights, powers or remedies.
SECTION 3.17. Provisions Subject to Applicable Law. All rights, powers and
remedies provided in this Mortgage may be exercised only to the extent that the
exercise thereof does not violate any applicable provisions of law and are
intended to be limited to the extent necessary so that they will not render this
Mortgage invalid, unenforceable or not entitled to be recorded, registered or
filed under the provisions of any applicable law. If any term of this Mortgage
or any application thereof shall be invalid or unenforceable, the remainder of
this Mortgage and any other application of such term shall not be affected
thereby.
SECTION 3.18. No Waiver, etc. No failure by the Mortgagee to insist upon
the strict performance of any term hereof or of
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the Credit Agreement, or of any other Loan Document, or to exercise any right,
power or remedy consequent upon a breach hereof or thereof, shall constitute a
waiver of any such term or of any such breach. No waiver of any breach shall
affect or alter this Mortgage, which shall continue in full force and effect
with respect to any other then existing or subsequent breach. By accepting
payment or performance of any amount or other obligations secured hereby before
or after its due date, the Mortgagee shall not be deemed to have waived its
right either to require prompt payment or performance when due of all other
amounts payable or obligations due hereunder or to declare a default for failure
to effect such prompt payment.
SECTION 3.19. Compromise of Actions, etc. Any action, suit or proceeding
brought by the Mortgagee pursuant to any of the terms of this Mortgage, the
Credit Agreement, any Loan Document or otherwise, and any claim made by the
Mortgagee hereunder or thereunder, may be compromised, withdrawn or otherwise
dealt with by the Mortgagee without any notice to or approval of the Mortgagor.
ARTICLE IV
DEFINITIONS
SECTION 4.1. Terms Defined in this Mortgage. When used herein the following
terms have the following meanings:
"Casualty Event" shall have the meaning provided for in the Credit
Agreement.
"Casualty Proceeds" shall have the meaning provided for in the Credit
Agreement.
"Collateral": see the granting clause.
"Credit Agreement": see the second recital.
"Default" means any Event of Default or any condition or event which,
after notice or lapse of time, or both, would constitute an Event of
Default.
"Environmental Law" shall have the meaning provided for in the Credit
Agreement.
"Event of Default": see Section 3.1.
"Goods": see clause (c) of the granting clause.
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"Hazardous Material" shall have the meaning provided for in the Credit
Agreement.
"herein", "hereof", "hereto", and "hereunder" and similar terms refer
to this Mortgage and not to any particular Section, paragraph or provision
of this Mortgage.
"Impositions": see Section 1.5.
"Improvements": see clause (b) of the granting clause.
"Indemnified Parties": see Section 1.16.
"Insurance Requirements": see Section 1.6.
"Intangibles": see clause (d) of the granting clause.
"Interest Rate" means the lower of (i) the Scotiabank Alternate Base
Rate from time to time in effect plus a margin of 2-1/2% and (ii) the
maximum rate of interest not prohibited by law from the due date that any
sums or monies become due and payable pursuant to the terms and conditions
of this Mortgage until the date of payment of such sums or monies.
"Issuer": see the second recital.
"Land": see the first recital.
"Leases": see clause (e) of the granting clause.
"Legal Requirements" means all applicable laws, rules, regulations and
orders.
"Lenders": see the second recital.
"Loan Documents" shall have the meaning ascribed to such term in the
Credit Agreement.
"Loans": see the second recital.
"Mortgage": see the preamble.
"Mortgagee": see the preamble.
"Mortgagor": see the preamble.
"Notes" means, collectively, the Term-A Notes, the Term-B Notes, the
Term-C Notes, the Revolving Notes and the Swing Line Notes.
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"Obligations" shall have the meaning ascribed to such term in the
Credit Agreement.
"Permits": see clause (g) of the granting clause.
"Permitted Encumbrances": see paragraph (a) of Section 1.2.
"Person" means a corporation, an association, a partnership, an
organization, a business, an individual, a government or political
subdivision thereof or a governmental agency or officer.
"Plans": see clause (f) of the granting clause.
"Proceeds": see clause (j) of the granting clause.
"Property": see clause (b) of the granting clause.
"Real Estate": see clause (a) of the granting clause.
"Release" shall have the meaning provided for in the Credit Agreement.
"Rents": see clause (i) of the granting clause.
"State": means the State of ____________.
SECTION 4.2. Use of Defined Terms. Terms for which meanings are provided in
this Mortgage shall, unless otherwise defined or the context otherwise requires,
have such meanings when used in any certificate and any opinion, notice or other
communication delivered from time to time in connection with this Mortgage or
pursuant hereto.
SECTION 4.3. Credit Agreement Definitions. Unless otherwise defined herein
or the context otherwise requires, terms used in this Mortgage, including its
preamble and recitals, have the meanings provided in the Credit Agreement.
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Further Assurances; Financing Statements.
SECTION 5.1.1. Further Assurances. The Mortgagor, at its expense, will
execute, acknowledge and deliver all such instruments and take all such other
action as the Mortgagee from time to time may reasonably request:
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<PAGE>
(a) to better subject to the lien and security interest of this
Mortgage all or any portion of the Collateral,
(b) to perfect, publish notice or protect the validity of the lien and
security interest of this Mortgage,
(c) to preserve and defend the title to the Collateral and the rights
of the Mortgagee therein against the claims of all Persons as long as this
Mortgage shall remain undischarged,
(d) to better subject to the lien and security interest of this
Mortgage or to maintain or preserve the lien and security interest of this
Mortgage with respect to any replacement or substitution for any
Improvements or any other after-acquired property, or
(e) in order to further effectuate the purposes of this Mortgage and
to carry out the terms hereof and to better assure and confirm to the
Mortgagee its rights, powers and remedies hereunder.
SECTION 5.1.2. Financing Statements. Notwithstanding any other provision of
this Mortgage, the Mortgagor hereby agrees that, without notice to or the
consent of the Mortgagor, the Mortgagee may file with the appropriate public
officials such financing statements, continuation statements, amendments and
similar documents as are or may become necessary to perfect, preserve or protect
the security interest granted by this Mortgage. The Mortgagee shall promptly
thereafter deliver copies of such statements to the Mortgagor.
SECTION 5.2. Additional Security. Without notice to or consent of the
Mortgagor, and without impairment of the security interest and lien and rights
created by this Mortgage, the Mortgagee may accept from the Mortgagor or any
other Person additional security for the Loans and/or the Obligations. Neither
the giving of this Mortgage nor the acceptance of any such additional security
shall prevent the Mortgagee from resorting first to such additional security, or
first to the security created by this Mortgage, or concurrently to both, in any
case without affecting the Mortgagee's lien and rights under this Mortgage.
SECTION 5.3. Defeasance; Partial Release, etc.
SECTION 5.3.1. Defeasance. If the Loans and all other amounts owing
pursuant to the Credit Agreement and the other Loan Documents shall be repaid in
full in accordance with the terms thereof, and if the Mortgagor shall pay, in
full, the principal
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of and premium, if any, and interest on any sums due and payable pursuant to the
Obligations in accordance with the terms thereof and hereof and all other sums
payable hereunder by the Mortgagor and shall materially comply with all the
terms, conditions and requirements hereof and of the Obligations, and all of the
Commitments shall have been terminated, then on such date, this Mortgage shall
be (except as provided herein) null and void and of no further force and effect
and the Collateral shall thereupon be, and be deemed to have been, reconveyed,
released and discharged from this Mortgage without further notice on the part of
either the Mortgagor or the Mortgagee.
SECTION 5.3.2. Partial Release, etc. Following the occurrence of an Event
of Default and notice to the Mortgagor, the Mortgagee may, at any time and from
time to time, without liability therefor, release or reconvey any part of the
Collateral to the Mortgagor.
SECTION 5.4. Notices, etc. Any notice, request or other communication
hereunder to any of the parties hereto shall be in writing and be well and
sufficiently given if delivered personally or sent by prepaid registered mail,
return receipt requested, to its address and to the attention of the person set
forth below:
if to the Mortgagee:
The Bank of Nova Scotia
One Liberty Plaza
New York, New York 10006
Attention:
------------------------
with a copy to:
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019
Attention: Andrew Mattei, Esq.
if to the Mortgagor:
Keebler Acquisition Corp.
-------------------------
-------------------------
Attention:
------------------------
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
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<PAGE>
Attention: Jeff Feigelson, Esq.
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<PAGE>
Any such notice shall be deemed to be given and received when delivered, or if
mailed, on the third (3rd) Business Day following the date on which it was
mailed, unless an interruption of postal services occurs or is continuing on or
within the three (3) Business Days after the date of mailing in which case the
notice shall be deemed to have been received on the third (3rd) Business Day
after postal service resumes. Either party may, by notice to the other, given as
aforesaid, designate a changed address.
SECTION 5.5. Waivers, Amendments, etc. The provisions of this Mortgage may
be amended, discharged or terminated and the observance or performance of any
provision of this Mortgage may be waived, either generally or in a particular
instance and either retroactively or prospectively, only by an instrument in
writing executed by the Mortgagor and the Mortgagee.
SECTION 5.6. Cross-References. References in this Mortgage and in each
instrument executed pursuant hereto to any Section or Article are, unless
otherwise specified, to such Section or Article of this Mortgage or such
instrument, as the case may be, and references in any Section, Article or
definition to any clause are, unless otherwise specified, to such clause of such
Section, Article or definition.
SECTION 5.7. Headings. The various headings of this Mortgage and of each
instrument executed pursuant hereto are inserted for convenience only and shall
not affect the meaning or interpretation of this Mortgage or such instrument or
any provisions hereof or thereof.
SECTION 5.8. Currency. Unless otherwise expressly stated, all references to
any currency or money, or any dollar amount, or amounts denominated in "Dollars"
herein will be deemed to refer to the lawful currency of the United States.
SECTION 5.9. Governing Law. THIS MORTGAGE SHALL BE DEEMED TO BE A CONTRACT
MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE.
SECTION 5.10. Successors and Assigns, etc. This Mortgage shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns.
SECTION 5.11. Waiver of Jury Trial; Submission to Jurisdiction. (a) EACH OF
THE MORTGAGOR AND THE MORTGAGEE HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS MORTGAGE, THE
CREDIT AGREEMENT, ANY LOAN DOCUMENT OR ANY OTHER RELATED INSTRUMENT, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING,
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STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF THE MORTGAGOR OR THE
MORTGAGEE. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE MORTGAGEE TO ENTER
INTO THIS MORTGAGE.
(b) FOR THE PURPOSE OF ANY ACTION OR PROCEEDING INVOLVING THIS MORTGAGE,
THE CREDIT AGREEMENT, OR ANY OTHER LOAN DOCUMENT, THE MORTGAGOR HEREBY EXPRESSLY
AND IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ALL FEDERAL AND
STATE COURTS LOCATED IN THE STATE AND CONSENTS THAT IT MAY BE SERVED WITH ANY
PROCESS OR PAPER BY REGISTERED MAIL OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE
STATE IN ACCORDANCE WITH APPLICABLE LAW, PROVIDED A REASONABLE TIME FOR
APPEARANCE IS ALLOWED. THE MORTGAGOR EXPRESSLY WAIVES, TO THE EXTENT IT MAY
LAWFULLY DO SO, ANY OBJECTION, CLAIM OR DEFENSE WHICH IT MAY HAVE AT ANY TIME TO
THE LAYING OF VENUE OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF THIS
MORTGAGE, THE CREDIT AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY SUCH COURT,
IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN
ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND FURTHER IRREVOCABLY
WAIVES THE RIGHT TO OBJECT, WITH RESPECT TO ANY SUCH CLAIM, SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT, THAT SUCH COURT DOES NOT HAVE JURISDICTION
OVER THE PERSON OF THE MORTGAGOR. NOTHING CONTAINED HEREIN WILL BE DEEMED TO
PRECLUDE THE MORTGAGEE FROM BRINGING AN ACTION AGAINST THE MORTGAGOR IN ANY
OTHER JURISDICTION.
SECTION 5.12. Severability. Any provision of this Mortgage, the Credit
Agreement, or any other Loan Document, which is prohibited or unenforceable in
any jurisdiction shall as to such provision and such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Mortgage, the Credit Agreement, or
such Loan Document or affecting the validity or enforceability of such provision
in any other jurisdiction.
SECTION 5.13. Loan Document. This Mortgage is a Loan Document executed
pursuant to the Credit Agreement and, unless otherwise expressly indicated
herein, shall be construed, administered and applied in accordance with the
terms and provisions thereof, including Article X thereof.
SECTION 5.14. Usury Savings Clause. It is the intention of the Mortgagor
and the Mortgagee to conform strictly to the usury laws governing the Loan
Documents, and any interest payable under the Loan Documents shall be subject to
reduction to the amount not in excess of the maximum non-usurious amount allowed
under such laws, as construed by the courts having jurisdiction over such
matters. In the event the maturity of the Obligations is accelerated by reason
of any provision of the Loan Documents, or by reason of an election by the
Mortgagee resulting from an Event of Default, then earned interest may never
include more than the
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maximum amount permitted by law, computed from the dates of each advance of loan
proceeds under the Credit Agreement until payment, and any interest in excess of
the maximum amount permitted by law shall be cancelled automatically or, if
theretofore paid, at the option of the Mortgagee, shall be rebated to the
Mortgagor, or shall be credited on the principal amount of the Obligations or,
if all principal has been repaid, then the excess shall be rebated to the
Mortgagor. If any interest is cancelled, credited against principal or rebated
to the Mortgagor in accordance with the foregoing sentence and, if thereafter
the interest payable hereunder is less than the maximum amount permitted by
applicable law, the rate hereunder shall automatically be increased to the
maximum extent possible to permit repayment to the Mortgagee as soon as possible
of any interest in excess of the maximum amount permitted by law which was
earlier cancelled, credited against principal or rebated to the Mortgagee
pursuant to the provisions of the foregoing sentence.
SECTION 5.15. Conflict with Credit Agreement. In the event of any conflict
between the provisions of the Credit Agreement and the provisions of this
Mortgage, the applicable provisions of the Credit Agreement shall govern and
control.
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IN WITNESS WHEREOF, the Mortgagor has caused this Mortgage to be duly
executed as of the day and year first above written.
MORTGAGOR:
KEEBLER ACQUISITION CORP.
[Corporate Seal]
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
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ACKNOWLEDGEMENT OF MORTGAGOR
STATE OF ___________)
) ss.:
COUNTY OF __________)
[Form of acknowledgement to be added by local counsel]
---------------------
Notary Public
My Commission Expires
Apply Stamp/Seal
<PAGE>
SCHEDULE 1
Legal Description of the Land
<PAGE>
SCHEDULE 2
Permitted Encumbrances
Exhibit 10.7(m)
================================================================================
SUNSHINE BISCUITS, INC., a Delaware corporation
Mortgagor
to
THE BANK OF NOVA SCOTIA,
a Canadian chartered bank, as Administrative Agent,
Mortgagee
================================================================================
MORTGAGE
(AND SECURITY AGREEMENT)
================================================================================
Dated as of June __ , 1996
This instrument affects
certain real and personal property
located in Middlesex County,
State of New Jersey.
================================================================================
Record and return to:
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019
Attention: Richard P. Spinelli, Esq.
This instrument was prepared by the above-named attorney.
Notice: This instrument contains inter alia obligations which may provide for:
(a) a variable rate of interest and/or
(b) future and/or revolving credit advances or readvances, which when
made, shall have the same priority as advances or readvances made on
the date hereof whether or not (i) any advances or readvances were
made on the date hereof and (ii) any indebtedness is outstanding at
the time any advance or re-advance is made.
Notwithstanding anything to the contrary contained herein, the maximum principal
indebtedness secured under any contingency by this instrument shall in no event
exceed $1,000,000,000.
<PAGE>
This mortgage is subject to modification as defined in N.J.S.A. 46: 9-8.1 and
any such modification shall relate back to and have the same priority as if such
modification were incorporated herein.
<PAGE>
TABLE OF CONTENTS
ARTICLE I
COVENANTS AND AGREEMENTS OF THE MORTGAGOR
Section Page
- ------- ----
1.1. Payment, Performance of, and Compliance with
Obligations............................................... 5
1.2. Title to Collateral, etc.................................... 6
1.3. Title Insurance............................................. 7
1.3.1. Title Insurance Policy...................................... 7
1.3.2. Title Insurance Proceeds.................................... 7
1.4. Recordation................................................. 7
1.5. Payment of Impositions, etc................................. 7
1.6. Insurance Requirements...................................... 8
1.7. Security Interests, etc..................................... 8
1.8. Permitted Contests.......................................... 9
1.9. Leases...................................................... 10
1.10. Compliance with Instruments................................. 10
1.11. Maintenance and Repair, etc................................. 10
1.12. Alterations, Additions, etc................................. 10
1.13. Acquired Property Subject to Lien........................... 11
1.14. Assignment of Rents, Proceeds, etc.......................... 11
1.15. No Claims Against the Mortgagee............................. 12
1.16. Indemnification............................................. 12
1.17. No Credit for Payment of Taxes.............................. 14
1.18. Offering of the Notes; Application of Proceeds of
Loans..................................................... 14
1.19. Hazardous Substances and Wastes............................. 14
1.20. No Transfer of the Property............................. 14
ARTICLE II
INSURANCE; DAMAGE, DESTRUCTION OR TAKING, ETC.
2.1. Insurance................................................... 15
2.1.1. Risks to be Insured......................................... 15
2.1.2. Policy Provisions........................................... 16
2.1.3. Delivery of Policies, etc................................... 16
2.1.4. Separate Insurance.......................................... 17
2.2. Intentionally Omitted....................................... 17
2.3. Application of Proceeds and Awards.......................... 18
-i-
<PAGE>
ARTICLE III
EVENTS OF DEFAULT; REMEDIES, ETC.
Section Page
- ------- ----
3.1. Events of Default; Acceleration............................. 19
3.2. Legal Proceedings; Foreclosure.............................. 20
3.3. Power of Sale............................................... 21
3.4. Uniform Commercial Code Remedies............................ 21
3.5. Mortgagee Authorized to Execute Deeds, etc.................. 22
3.6. Purchase of Collateral by Mortgagee......................... 22
3.7. Receipt a Sufficient Discharge to Purchaser................. 22
3.8. Waiver of Appraisement, Valuation, etc...................... 22
3.9. Sale a Bar Against Mortgagor................................ 23
3.10. Performance of the Obligations Due on Sale.................. 23
3.11. Application of Proceeds of Sale and Other Moneys............ 23
3.12. Appointment of Receiver..................................... 24
3.13. Possession, Management and Income........................... 24
3.14. Right of Mortgagee to Perform Mortgagor's Covenants,
etc....................................................... 24
3.15. Subrogation................................................. 25
3.16. Remedies, etc., Cumulative.................................. 25
3.17. Provisions Subject to Applicable Law........................ 25
3.18. No Waiver, etc.............................................. 26
3.19. Compromise of Actions, etc.................................. 26
ARTICLE IV
DEFINITIONS
4.1. Terms Defined in this Mortgage.............................. 26
4.2. Use of Defined Terms........................................ 29
4.3. Credit Agreement Definitions................................ 29
ARTICLE V
MISCELLANEOUS
5.1. Further Assurances; Financing Statements.................... 29
5.1.1. Further Assurances.......................................... 29
5.1.2. Financing Statements........................................ 30
5.2. Additional Security......................................... 30
5.3. Defeasance; Partial Release, etc............................ 30
5.3.1. Defeasance.................................................. 30
5.3.2. Partial Release, etc........................................ 30
5.4. Notices, etc................................................ 31
5.5. Waivers, Amendments, etc.................................... 32
5.6. Cross-References............................................ 32
5.7. Headings.................................................... 32
5.8. Currency.................................................... 32
-ii-
<PAGE>
Section Page
- ------- ----
5.9. Governing Law............................................... 32
5.10. Successors and Assigns, etc................................. 32
5.11. Waiver of Jury Trial; Submission to Jurisdiction............ 32
5.12. Severability................................................ 33
5.13. Loan Document............................................... 33
5.14. Usury Savings Clause........................................ 33
5.15. Conflict with Credit Agreement.............................. 34
Schedule 1 - Legal Description of the Land
Schedule 2 - Permitted Encumbrances
-iii-
<PAGE>
MORTGAGE
(and Security Agreement)
This MORTGAGE (AND SECURITY AGREEMENT), dated as of June , 1996 (this
"Mortgage"), made by Sunshine Biscuits, Inc., a Delaware corporation, as
mortgagor (the "Mortgagor"), having an address at c/o Inflo Holdings
Corporation, 677 Larch Avenue, Elmhurst, Illinois 60126, to The Bank of Nova
Scotia, having an address at One Liberty Plaza, New York, New York 10006, as
administrative agent for the Lenders and the Issuer (as such terms are
hereinafter defined) under the Credit Agreement referred to below (together with
its successors and assigns from time to time acting as agent under such Credit
Agreement, the "Mortgagee").
W I T N E S S E T H T H A T:
WHEREAS, the Mortgagor is on the date of delivery hereof the owner of fee
title to the parcel or parcels of land described in Schedule 1 hereto (the
"Land") and of the Improvements (such term and other capitalized terms used in
this Mortgage having the respective meanings specified or referred to in Article
IV);
WHEREAS, pursuant to the terms, conditions and provisions of an Amended and
Restated Credit Agreement, dated as of the date hereof (as amended,
supplemented, amended and restated or otherwise modified from time to time, the
"Credit Agreement"), among Keebler Holding Corp., a Delaware corporation (as the
surviving corporation of the merger of Keebler Acquisition Corp. with and into
UB Investments US Inc., a Delaware corporation, the "Borrower"), the financial
institutions as are, or may from time to time become, parties thereto (the
"Lenders"), certain financial institutions as the Co-Agents and the Mortgagee,
as Administrative Agent, the Lenders and the Issuer have agreed to extend
Commitments to make Loans to and issue Letters of Credit for the account of the
Borrower (as such terms are defined in the Credit Agreement), which Loans and
Letters of Credit may have a maximum aggregate principal amount at any one time
outstanding of Four Hundred Forty Seven Million Eight Hundred Seventy Five
Thousand Dollars ($447,875,000);
WHEREAS, the Term Loans (as defined in the Credit Agreement) shall consist
of (i) Term-A Loans in a maximum aggregate principal amount not to exceed One
Hundred Thirty Eight Million One Hundred Twenty Five Thousand Dollars
($138,125,000) having a Stated Maturity Date of January 31, 2002, (ii) Term-B
Loans (as defined in the Credit Agreement) in a maximum aggregate principal
amount not to exceed Eighty Nine Million Eight Hundred Fifty Thousand Dollars
($89,850,000) having a Stated Maturity Date of
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July 31, 2003, and (iii) Term-C Loans in a maximum aggregate principal amount
not to exceed Sixty Four Million Nine Hundred Thousand Dollars ($64,900,000)
having a Stated Maturity Date of July 31, 2004;
WHEREAS, the Revolving Loans shall consist of Revolving Loans in a maximum
aggregate principal amount (together with all Swing Line Loans and Letter of
Credit Outstandings) not to exceed One Hundred Fifty Five Million Dollars
($155,000,000) having a Stated Maturity Date of January 31, 2002;
WHEREAS, the Swing Line Loans shall consist of Swing Line Loans in a
maximum aggregate stated amount at any one time outstanding not to exceed Twenty
Million Dollars ($20,000,000) having stated maturity dates no later than January
31, 2002; provided, that the aggregate outstanding principal amount of Revolving
Loans, Swing Line Loans and Letter of Credit Outstandings at any time shall not
exceed One Hundred Fifty Five Million Dollars ($155,000,000);
WHEREAS, the Letters of Credit shall consist of Letters of Credit which
will be issued by the Issuer in a maximum aggregate stated amount at any one
time outstanding not to exceed Forty Five Million Dollars ($45,000,000);
provided, that the aggregate outstanding principal amount of Revolving Loans,
Swing Line Loans and Letter of Credit Outstandings at any time shall not exceed
One Hundred Fifty Five Million Dollars ($155,000,000);
WHEREAS, the Mortgagor, a wholly-owned subsidiary of Borrower, will derive
substantial direct and indirect benefits from the consummation of the
transactions described in the Credit Agreement and from the Loans, and in
consideration of such benefits and as a material inducement for the Lenders to
enter into the Credit Agreement, the Mortgagor has agreed to guarantee the
payment and performance of the Obligations (as defined in the Credit Agreement)
of Borrower pursuant to that certain Supplement to Subsidiary Guaranty executed
by the Mortgagor on the date hereof;
WHEREAS, as a material inducement for the Lenders to enter into the Credit
Agreement and to secure the Mortgagor's obligations as a guarantor under the
Supplement to Subsidiary Guaranty, the Mortgagor has duly authorized the
execution, delivery and performance of this Mortgage.
G R A N T:
NOW, THEREFORE, for and in consideration of the premises, and of the mutual
covenants herein contained, and in order to
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secure the full, timely and proper performance of and compliance with each and
every one of the Obligations, the Mortgagor hereby irrevocably gives, grants,
bargains, sells, mortgages, warrants, aliens, demises, releases, hypothecates,
pledges, assigns, transfers and conveys to the Mortgagee and its successors and
assigns, forever, all of its right, title and interest in the following (the
"Collateral"):
(a) Real Estate. All of the Land and all additional lands and estates
therein now owned or hereafter acquired by the Mortgagor for use or
development with the Land or any portion thereof, together with all and
singular the tenements, rights, easements, hereditaments, rights of way,
privileges, liberties, appendages and appurtenances now or hereafter
belonging or in anywise pertaining to the Land and such additional lands
and estates therein (including, without limitation, all rights relating to
storm and sanitary sewer, water, gas, electric, railway and telephone
services); all development rights, air rights, riparian rights, water,
water rights, water stock, all rights in, to and with respect to any and
all oil, gas, coal, minerals and other substances of any kind or character
underlying or relating to the Land and such additional lands and estates
therein and any interest therein; all estate, claim, demand, right, title
or interest of the Mortgagor in and to any street, road, highway or alley,
vacated or other, adjoining the Land or any part thereof and such
additional lands and estates therein; all strips and gores belonging,
adjacent or pertaining to the Land or such additional lands and estates;
and any after-acquired title to any of the foregoing (herein collectively
called the "Real Estate");
(b) Improvements. All buildings, structures and other improvements and
any additions and alterations thereto or replacements thereof, now or
hereafter built, constructed or located upon the Real Estate; and all
furnishings, fixtures, fittings, appliances, apparatus, equipment,
manufacturing equipment, machinery, building and construction materials and
other articles of every kind and nature whatsoever and all replacements
thereof, now or hereafter affixed or attached to, placed upon or used in
any way in connection with the complete and comfortable use, enjoyment,
occupation, operation, development and/or maintenance of the Real Estate or
such buildings, structures and other improvements, including, but not
limited to, partitions, furnaces, boilers, oil burners, radiators and
piping, plumbing and bathroom fixtures, refrigeration, heating,
ventilating, air conditioning and sprinkler systems, other fire prevention
and extinguishing apparatus and materials, vacuum cleaning systems, gas and
electric fixtures, incinerators, compactors, elevators, engines, motors,
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generators and all other articles of property which are considered fixtures
under applicable law (such buildings, structures and other improvements and
such other property are herein collectively referred to as the
"Improvements"; the Real Estate and the Improvements are herein
collectively referred to as the "Property");
(c) Goods. All building materials, goods, construction materials,
appliances (including, without limitation, stoves, ranges, ovens,
disposals, refrigerators, water fountains and coolers, fans, heaters,
dishwashers, clothes washers and dryers, water heaters, hood and fan
combinations, kitchen equipment, laundry equipment, kitchen cabinets and
other similar equipment), stocks, beds, mattresses, bedding and linens,
supplies, blinds, window shades, drapes, carpets, floor coverings,
manufacturing equipment and machinery, office equipment, growing plants and
shrubberies, control devices, equipment (including window cleaning,
building cleaning, swimming pool, recreational, monitoring, garbage, pest
control and other equipment), motor vehicles, tools, furnishings,
furniture, lighting, non-structural additions to the Real Estate and
Improvements and all other tangible property of any kind or character,
together with all replacements thereof, now or hereafter located on or in
or used or useful in connection with the complete and comfortable use,
enjoyment, occupation, operation, development and/or maintenance of the
Property, whether or not located on or in the Property or located elsewhere
for purposes of storage, fabrication or otherwise (herein collectively
referred to as the "Goods");
(d) Intangibles. All goodwill, trademarks, trade names, option rights,
purchase contracts, books and records and general intangibles of the
Mortgagor relating to the Property and all accounts, contract rights,
instruments, chattel paper and other rights of the Mortgagor for the
payment of money for property sold or lent, for services rendered, for
money lent, or for advances or deposits made, and any other intangible
property of the Mortgagor relating to the Property (herein collectively
referred to as the "Intangibles");
(e) Leases. All rights of the Mortgagor in, to and under all leases,
licenses, occupancy agreements, concessions and other arrangements, oral or
written, now existing or hereafter entered into, whereby any Person agrees
to pay money or any other consideration for the use, possession or
occupancy of, or any estate in, the Property or any portion thereof or
interest therein (herein collectively referred to as the "Leases"), and the
right, upon the occurrence and during the continuance of any Event
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of Default hereunder, after notice to the Mortgagor, to receive and collect
the Rents (as hereinafter defined) paid or payable thereunder;
(f) Plans. All rights of the Mortgagor in and to all plans and
specifications, designs, drawings and other information, materials and
matters heretofore or hereafter prepared relating to the Improvements or
any construction on the Real Estate (herein collectively referred to as the
"Plans");
(g) Permits. All rights of the Mortgagor in, to and under all permits,
franchises, licenses, approvals and other authorizations respecting the
use, occupation and operation of the Property and every part thereof and
respecting any business or other activity conducted on or from the
Property, and any product or proceed thereof or therefrom, including,
without limitation, all building permits, certificates of occupancy and
other licenses, permits and approvals issued by governmental authorities
having jurisdiction (herein collectively called the "Permits");
(h) Leases of Furniture, Furnishings and Equipment. All right, title
and interest of the Mortgagor as lessee in, to and under any leases of
furniture, furnishings and equipment now or hereafter installed in or at
any time used in connection with the Property;
(i) Rents. All rents, issues, profits, royalties, avails, income and
other benefits derived or owned, directly or indirectly, by the Mortgagor
from the Property, including, without limitation, all rents and other
consideration payable by tenants, claims against guarantors, and any cash
or other securities deposited to secure performance by tenants, under the
Leases (herein collectively referred to as "Rents");
(j) Proceeds. All proceeds of the conversion, voluntary or involuntary
of any of the foregoing into cash or liquidated claims, including, without
limitation, Casualty Proceeds (herein collectively referred to as
"Proceeds"), subject to the provisions relating to insurance generally set
forth below; and
(k) Other Property. All other property and rights of the Mortgagor of
every kind and character relating to the Property, and all proceeds and
products of any of the foregoing;
AND, without limiting any of the other provisions of this Mortgage, the
Mortgagor expressly grants to the Mortgagee, as
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secured party, a security interest in all of those portions of the Collateral
which are or may be subject to the State Uniform Commercial Code provisions
applicable to secured transactions;
TO HAVE AND TO HOLD the Collateral unto the Mortgagee, its successors and
assigns, forever.
FURTHER to secure the full, timely and proper payment, performance of and
compliance with the Obligations, the Mortgagor hereby covenants and agrees with
and warrants to the Mortgagee as follows:
ARTICLE I
COVENANTS AND AGREEMENTS OF THE MORTGAGOR
SECTION 1.1. Payment, Performance of, and Compliance with Obligations. The
Mortgagor agrees that:
(a) it will duly and punctually pay, perform and comply with each of
the Obligations; and
(b) when and as due and payable from time to time in accordance with
the terms hereof, it will pay, comply with and perform, or cause payment
of, compliance with and to be performed, all other duties and obligations
hereunder.
SECTION 1.2. Title to Collateral, etc. The Mortgagor represents and
warrants to and covenants with the Mortgagee that:
(a) as of the date hereof and at all times hereafter while this
Mortgage is outstanding, the Mortgagor (1) is and shall be the owner of the
legal and beneficial title to the Property and to all other property
included in the Collateral, except to the extent the same is disposed of in
a transaction permitted by the Credit Agreement and (2) has and shall have
good and marketable title in fee simple absolute to the Property, subject
in each case only to this Mortgage, any encumbrances expressly permitted
under the Credit Agreement, and the encumbrances set forth in Schedule 2
hereto (collectively, the "Permitted Encumbrances");
(b) the Mortgagor has good and lawful right, power and authority to
execute this Mortgage and to convey, transfer, assign, mortgage and grant a
security interest in the Collateral, all as provided herein;
(c) this Mortgage has been duly executed, acknowledged and delivered
on behalf of the Mortgagor, all consents and
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other actions required to be taken by the officers, directors, shareholders
and partners, as the case may be, of the Mortgagor have been duly and fully
given and performed and this Mortgage constitutes the legal, valid and
binding obligation of the Mortgagor, enforceable against the Mortgagor in
accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at
law) and an implied covenant of good faith and fair dealing; and
(d) the Mortgagor, at its expense, will warrant and defend the
Mortgagee and any purchaser under the power of sale herein or at any
foreclosure sale such title to the Collateral and the first mortgage lien
and first priority perfected security interest of this Mortgage thereon and
therein against all claims and demands and will maintain, preserve and
protect such lien and security interest and will keep this Mortgage a
valid, direct first mortgage lien of record on and a first priority
perfected security interest in the Collateral, subject only to the
Permitted Encumbrances.
SECTION 1.3. Title Insurance.
SECTION 1.3.1. Title Insurance Policy. Concurrently with the execution and
delivery of this Mortgage, the Mortgagor, at its expense, has obtained and
delivered to the Mortgagee a loan policy or policies of title insurance in an
amount satisfactory to the Mortgagee naming the Mortgagee as the insured,
insuring the title to and the first mortgage lien of this Mortgage on the
Property with endorsements requested by the Mortgagee. The Mortgagor has duly
paid in full all premiums and other charges due in connection with the issuance
of such policy or policies of title insurance.
SECTION 1.3.2. Title Insurance Proceeds. All proceeds received by and
payable to the Mortgagee for any loss under the loan policy or policies of title
insurance delivered to the Mortgagee pursuant to Section 1.3.1, or under any
policy or policies of title insurance delivered to the Mortgagee in substitution
therefor or replacement thereof, shall be the property of the Mortgagee and
shall be applied by the Mortgagee in accordance with the provisions of Section
2.3.
SECTION 1.4. Recordation. The Mortgagor, at its expense, will at all times
cause this Mortgage and any instruments amendatory hereof or supplemental hereto
and any instruments of assignment hereof or thereof (and any appropriate
financing
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statements or other instruments and continuations thereof), and each other
instrument delivered in connection with the Credit Agreement or any Loan
Document and intended thereunder to be recorded, registered and filed, to be
kept recorded, registered and filed, in such manner and in such places, and will
pay all such recording, registration, filing fees, taxes and other charges, and
will comply with all such statutes and regulations as may be required by law in
order to establish, preserve, perfect and protect the lien and security interest
of this Mortgage as a valid, direct first mortgage lien and first priority
perfected security interest in the Collateral, subject only to the Permitted
Encumbrances. The Mortgagor will pay or cause to be paid, and will indemnify the
Mortgagee in respect of, all taxes (including interest and penalties) at any
time payable in connection with the filing and recording of this Mortgage and
any and all supplements and amendments hereto.
SECTION 1.5. Payment of Impositions, etc. Subject to Section 1.8 (relating
to permitted contests), to the extent required by the Credit Agreement, the
Mortgagor will pay or cause to be paid before the same would become delinquent
and before any fine, penalty, interest or cost may be added for non-payment, all
taxes, assessments, water and sewer rates, charges, license fees, inspection
fees and other governmental levies or payments, of every kind and nature
whatsoever, general and special, ordinary and extraordinary, unforeseen as well
as foreseen, which at any time may be assessed, levied, confirmed, imposed or
which may become a lien upon the Collateral, or any portion thereof, or which
are payable with respect thereto, or upon the rents, issues, income or profits
thereof, or on the occupancy, operation, use, possession or activities thereof,
whether any or all of the same be levied directly or indirectly or as excise
taxes or as income taxes, and all taxes, assessments or charges which may be
levied on the Obligations, or the interest thereon (collectively, the
"Impositions"). The Mortgagor will deliver to the Mortgagee, upon request,
copies of official receipts or other satisfactory proof evidencing such
payments.
SECTION 1.6. Insurance Requirements. Subject to Section 1.8 (relating to
permitted contests), the Mortgagor, at its expense, will comply, or cause
compliance, in all material respects with all provisions of any insurance policy
covering or applicable to the Collateral or any part thereof, all requirements
of the issuer of any such policy, and all orders, rules, regulations and other
requirements of the National Board of Fire Underwriters (or any other body
exercising similar functions) applicable to or affecting the Collateral or any
part thereof or any use or condition of the Collateral or any part thereof
(collectively, the "Insurance Requirements") whether or not compliance therewith
shall require structural changes in or
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interference with the use and enjoyment of the Collateral or any part thereof.
SECTION 1.7. Security Interests, etc. Except as permitted by the Credit
Agreement, the Mortgagor will not directly or indirectly create or permit or
suffer to be created or to remain, and will promptly discharge or cause to be
discharged, any deed of trust, mortgage, encumbrance or charge on, pledge of,
security interest in or conditional sale or other title retention agreement with
respect to or any other lien on or in the Collateral or any part thereof or the
interest of the Mortgagor or the Mortgagee therein, or any Proceeds thereof or
Rents or other sums arising therefrom, other than: (a) Permitted Encumbrances;
and (b) liens of mechanics, materialmen, suppliers or vendors or rights thereto
incurred in the ordinary course of the business of the Mortgagor for sums not
yet due or any such liens or rights thereto which are at the time being
contested as permitted by Section 1.8.
SECTION 1.8. Permitted Contests. The Mortgagor may, at its expense,
contest, or cause to be contested, by appropriate legal proceedings conducted in
good faith and with due diligence, the amount or validity or application, in
whole or in part, of any Imposition, Legal Requirement or Insurance Requirement
or lien of a mechanic, materialman, supplier or vendor, provided that: (a) in
the case of an unpaid Imposition, lien, encumbrance or charge, such proceedings
shall suspend the collection thereof from the Mortgagor, the Mortgagee, and the
Collateral (including any rent or other income therefrom) and shall not
interfere with the payment of any such rent or income; (b) neither the
Collateral nor any rent or other income therefrom nor any material part thereof
or material interest therein would be in any danger of being sold, forfeited,
lost, impaired or interfered with; (c) in the case of a Legal Requirement,
neither the Mortgagor nor the Mortgagee would be in danger of any civil or
criminal liability for failure to comply therewith; (d) the Mortgagor shall have
furnished such security, if any, as may be required in the proceedings or as may
be reasonably requested by the Mortgagee; (e) the non-payment of the whole or
any part of any Imposition will not result in the delivery of a tax deed to the
Collateral or any part thereof because of such non-payment; (f) the payment of
any sums required to be paid with respect to the Loans or under this Mortgage
(other than any unpaid Imposition, lien, encumbrance or charge at the time being
contested in accordance with this Section 1.8) shall not be interfered with or
otherwise affected; (g) in the case of any Insurance Requirement, the failure of
the Mortgagor to comply therewith shall not affect the validity of any insurance
required to be maintained by the Mortgagor under Section 2.1; and (h) that
adequate reserves, determined in accordance with GAAP, shall have been set aside
on the Mortgagor's books.
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SECTION 1.9. Leases. The Mortgagor represents and warrants to the Mortgagee
that, as of the date hereof, there are no written or oral leases or other
agreements of any kind or nature relating to the occupancy of any portion of the
Property by any Person other than the Mortgagor. The Mortgagor will not enter
into any such written or oral lease or other agreement with respect to any
portion of the Property, except as permitted under the Credit Agreement in
Section 7.2.9, without first obtaining the written consent of the Mortgagee.
SECTION 1.10. Compliance with Instruments. The Mortgagor at its expense
will promptly comply in all material respects with all rights of way or use,
privileges, franchises, servitudes, licenses, easements, tenements,
hereditaments and appurtenances forming a part of the Property and all
instruments creating or evidencing the same, in each case, to the extent
compliance therewith is required of the Mortgagor under the terms thereof. The
Mortgagor will not take any action which may result in a forfeiture or
termination of the material rights afforded to the Mortgagor under any such
instruments and will not, without the prior written consent of the Mortgagee,
amend any of such instruments in a manner adverse to the interests of the
Mortgagee.
SECTION 1.11. Maintenance and Repair, etc. Subject to the provisions of
Section 1.12, the Mortgagor will keep or cause to be kept all presently and
subsequently erected or acquired Improvements and the sidewalks, curbs, vaults
and vault space, if any, located on or adjoining the same, in each case
excluding immaterial assets, and the streets and the ways adjoining the same, in
good and substantial order and repair and in such a fashion that the value and
utility of the Collateral will not be diminished, reasonable wear and tear
excepted, and, at its sole cost and expense, will promptly make or cause to be
made all reasonably necessary and proper repairs, replacements and renewals
thereof, whether interior or exterior, structural or nonstructural, ordinary or
extraordinary, foreseen or unforeseen, so that its business carried on in
connection therewith may be properly conducted at all times. The Mortgagor at
its expense will do or cause to be done all shoring of foundations and walls of
any building or other Improvements on the Property and (to the extent permitted
by law) of the ground adjacent thereto, and every other act reasonably necessary
or appropriate for the preservation and safety of the Property by reason of or
in connection with any excavation or other building operation upon the Property
and upon any adjoining property, whether or not the Mortgagor shall, by any
Legal Requirement, be required to take such action or be liable for failure to
do so.
SECTION 1.12. Alterations, Additions, etc. Unless an Event of Default shall
have occurred and be continuing and the
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Mortgagee shall have given notice to the Mortgagor, the Mortgagor shall have the
right at any time and from time to time to make or cause to be made reasonable
alterations of and additions to the Property or any part thereof, provided that
any alteration or addition: (a) is effected with due diligence, in a good and
workmanlike manner and in compliance with all Legal Requirements and Insurance
Requirements; (b) is promptly and fully paid for, or caused to be paid for, by
the Mortgagor; (c) is made, in case the estimated cost of such alteration or
addition exceeds Two Million Dollars ($2,000,000), under the supervision of a
qualified architect or engineer.
SECTION 1.13. Acquired Property Subject to Lien. All property at any time
acquired by the Mortgagor and provided or required by this Mortgage to be or
become subject to the lien and security interest hereof, whether such property
is acquired by exchange, purchase, construction or otherwise, shall forthwith
become subject to the lien and security interest of this Mortgage without
further action on the part of the Mortgagor or the Mortgagee. The Mortgagor, at
its expense, will execute and deliver to the Mortgagee (and will record and file
as provided in Section 1.4) an instrument supplemental to this Mortgage
satisfactory in substance and form to the Mortgagee, whenever such an instrument
is necessary under applicable law to subject to the lien and security interest
of this Mortgage all right, title and interest of the Mortgagor in and to all
property provided or required by this Mortgage to be subject to the lien and
security interest hereof.
SECTION 1.14. Assignment of Rents, Proceeds, etc. The Mortgagor does hereby
sell, assign, transfer and set over to the Mortgagee, all of the rents, income,
proceeds and benefits under the Leases; provided, however, that permission is
hereby given to the Mortgagor unless an Event of Default has occurred and is
continuing and the Mortgagee has given notice to the Mortgagor, to collect,
receive, and apply the Rents, Proceeds and other rents, income, proceeds and
benefits as they become due and payable, but not in advance thereof, and in
accordance with all of the other terms, conditions and provisions hereof, the
Loan Documents and of the Leases, contracts, agreements and other instruments
with respect to which such payments are made or such other benefits are
conferred. Upon the occurrence of and during the continuance of an Event of
Default, such permission shall terminate immediately upon notice from the
Mortgagee, and once so terminated shall not be reinstated upon a cure of such
Event of Default without the express written consent of the Mortgagee. Such
assignment shall be fully effective without any further action on the part of
the Mortgagor or the Mortgagee and the Mortgagee shall be entitled, at its
option, upon the occurrence of and during the continuance of an Event of Default
hereunder, upon notice to the Mortgagor, to collect, receive and apply all
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Rents, Proceeds and all other rents, income, proceeds and benefits from the
Collateral, including all right, title and interest of the Mortgagor in any
escrowed sums or deposits or any portion thereof or interest therein, whether or
not the Mortgagee takes possession of the Collateral or any part thereof. The
Mortgagor further grants to the Mortgagee the right, at the Mortgagee's option,
upon the occurrence of and during the continuance of an Event of Default
hereunder, upon notice to the Mortgagor, to:
(a) enter upon and take possession of the Property for the purpose of
collecting Rents, Proceeds and said rents, income, proceeds and other
benefits;
(b) dispossess by the customary summary proceedings any tenant,
purchaser or other Person defaulting in the payment of any amount when and
as due and payable, or in the performance of any other obligation, under
the Lease, contract or other instrument to which said Rents, Proceeds or
other rents, income, proceeds or benefits relate;
(c) let or convey the Collateral or any portion thereof or any
interest therein; and
(d) apply Rents, Proceeds and such rents, income, proceeds and other
benefits, after the payment of all reasonably necessary fees, charges and
expenses, on account of the Obligations in accordance with Section 3.11.
SECTION 1.15. No Claims Against the Mortgagee. Nothing contained in this
Mortgage shall constitute any consent or request by the Mortgagee, express or
implied, for the performance of any labor or the furnishing of any materials or
other property in respect of the Property or any part thereof, or be construed
to permit the making of any claim against the Mortgagee in respect of labor or
services or the furnishing of any materials or other property or any claim that
any lien based on the performance of such labor or the furnishing of any such
materials or other property is prior to the lien and security interest of this
Mortgage. To the extent permitted by law, all contractors, subcontractors,
vendors and other persons dealing with the Property, or with any persons
interested therein, are hereby required to take notice of the provisions of this
Section.
SECTION 1.16. Indemnification. The Mortgagor will protect, indemnify, save
harmless and defend the Mortgagee, the Lenders and the Issuer, and each of their
respective officers, directors, shareholders, employees, representatives and
agents (collectively, the "Indemnified Parties" and individually, an
"Indemnified Party"), from and against any and all liabilities, obligations,
claims, damages, penalties, causes of action, costs
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and expenses (including, without limitation, reasonable attorneys' fees and
expenses) imposed upon or incurred by or asserted against any Indemnified Party
by reason of: (a) ownership of an interest in this Mortgage, any other Loan
Document, or the Property; (b) any accident, injury to or death of persons or
loss of or damage to or loss of the use of property occurring on or about the
Property or any part thereof or the adjoining sidewalks, curbs, vaults and vault
spaces, if any, streets, alleys or ways; (c) any use, non-use or condition of
the Property or any part thereof or the adjoining sidewalks, curbs, vaults and
vault spaces, if any, streets, alleys or ways; (d) any failure on the part of
the Mortgagor to perform or comply with any of the terms of this Mortgage; (e)
performance of any labor or services or the furnishing of any materials or other
property in respect of the Collateral or any part thereof made or suffered to be
made by or on behalf of the Mortgagor; (f) any negligence or tortious act on the
part of the Mortgagor or any of its agents, contractors, lessees, licensees or
invitees; (g) any work in connection with any alterations, changes, new
construction or demolition of or additions to the Property; or (h) (1) any
investigation, litigation or proceeding relating to any environmental cleanup,
audit, compliance or other matter relating to the protection of the environment
or the Release by the Mortgagor of any Hazardous Material, and (2) the presence
on or under, or the escape, seepage, leakage, spillage, discharge, emission,
discharging or releases from the Property of any Hazardous Material (including
any losses, liabilities, damages, injuries, costs, expenses, or claims asserted
or arising under any Environmental Law) regardless of whether caused by, or
within the control of, the Mortgagor, except to the extent the same results from
the gross negligence or wilful misconduct of such Indemnified Party. If any
action or proceeding be commenced, to which action or proceeding any Indemnified
Party is made a party by reason of the execution of this Mortgage or any other
Loan Document, or in which it becomes necessary to defend or uphold the lien of
this Mortgage, all sums paid by the Indemnified Parties, for the expense of any
litigation to prosecute or defend the rights and lien created hereby or
otherwise, shall be paid by the Mortgagor to such Indemnified Parties, as the
case may be, as hereinafter provided. The Mortgagor will pay and save the
Indemnified Parties harmless against any and all liability with respect to any
intangible personal property tax or similar imposition of the State or any
subdivision or authority thereof now or hereafter in effect, to the extent that
the same may be payable by the Indemnified Parties in respect of this Mortgage,
any Loan Document or any of the Obligations. All amounts payable to the
Indemnified Parties under this Section 1.16 shall be deemed indebtedness secured
by this Mortgage and any such amounts which are not paid within ten (10) days
after written demand therefor by any Indemnified Party shall bear interest at
the Interest Rate from the date of such demand. In case any action,
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suit or proceeding is brought against any Indemnified Party by reason of any
such occurrence, the Mortgagor, upon request of such Indemnified Party, will, at
the Mortgagor's expense, resist and defend such action, suit or proceeding or
cause the same to be resisted or defended by counsel designated by the Mortgagor
and approved by such Indemnified Party. The obligations of the Mortgagor under
this Section 1.16 shall survive any discharge or reconveyance of this Mortgage
and discharge or termination of the Obligations.
SECTION 1.17. No Credit for Payment of Taxes. The Mortgagor shall not be
entitled to any credit against the Obligations by reason of the payment of any
tax on the Property or any part thereof or by reason of the payment of any other
Imposition, and shall not apply for or claim any deduction from the taxable
value of the Property or any part thereof by reason of this Mortgage.
SECTION 1.18. Offering of the Notes; Application of Proceeds of Loans.
Neither the Mortgagor nor any Person acting on behalf of the Mortgagor has
directly or indirectly offered the Notes or any portion thereof or any similar
security to, or solicited any offer to buy any of the same from, any Person
other than the Mortgagee and the Lenders. Neither the Mortgagor nor any Person
acting on behalf of the Mortgagor has taken or will take any action which would
subject the issuance of the Notes to the provisions of section 5 of the
Securities Act of 1933, as amended. The Mortgagor (a) will not use or permit to
be used any proceeds of the Loans, directly or indirectly, for the purpose,
whether immediate, incidental or ultimate, of "purchasing" or "carrying" any
"margin stock" within the meaning of Regulation U of the Federal Reserve Board,
as amended from time to time, and (b) has or will apply all of the proceeds of
the Loans that are paid to it by the Mortgagee to the purposes permitted by the
Credit Agreement.
SECTION 1.19. Hazardous Materials.
(a) Mortgagor hereby represents and warrants to the Mortgagee those
representations and warranties as set forth in Section 6.12 of the Credit
Agreement to the extent applicable to it.
(b) The Mortgagor covenants that it will perform the obligations as
set forth in Section 7.1.6 of the Credit Agreement to the extent applicable
to it.
SECTION 1.20. No Transfer of the Property. Except as permitted by the
Credit Agreement, without the prior written consent of the Mortgagee, which
consent may be granted or withheld in the sole and absolute discretion of the
Mortgagee, the Mortgagor shall not (a) sell, convey, assign or otherwise
transfer the Property or any portion of the Mortgagor's interest
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therein or (b) further encumber the Property or permit the Property to become
encumbered by any lien, claim, security interest or other indebtedness of any
kind or nature other than the Permitted Encumbrances, except to the extent
permitted by Section 1.7 of this Mortgage. For purposes of this Section 1.20,
any transfer of any stock of the Mortgagor shall be deemed to constitute a
transfer of the Property within the meaning of this Section 1.20.
ARTICLE II
INSURANCE; DAMAGE, DESTRUCTION OR TAKING, ETC.
SECTION 2.1. Insurance.
SECTION 2.1.1. Risks to be Insured. The Mortgagor will, at its expense,
maintain or cause to be maintained with insurance carriers approved by the
Mortgagee: (a) insurance with respect to the Improvements against loss or damage
by fire, lightning and such other risks as are included in standard "all-risk"
policies, in amounts sufficient to prevent the Mortgagor and the Mortgagee from
becoming a co-insurer of any partial loss under the applicable policies, but in
any event in amounts not less than the then full insurable value (actual
replacement value) of the Improvements, as determined by the Mortgagor in
accordance with generally accepted insurance practice and approved by the
Mortgagee or, at the request of the Mortgagee, as determined at the Mortgagor's
expense by the insurer or insurers or by an expert approved by the Mortgagee;
(b) comprehensive public liability, including bodily injury and product
liability and property damage, insurance, with personal injury endorsements,
applicable to the Property in such amounts as are customarily carried by Persons
operating similar properties in the same general locality, but in any event with
a combined single limit of not less than One Million Dollars ($1,000,000) per
occurrence and excess liability limits of Ten Million Dollars ($10,000,000) per
occurrence; (c) explosion insurance in respect of any steam and pressure boilers
and similar apparatus located in the Property in such amounts as are usually
carried by persons operating similar properties in the same general locality,
but in any event in an amount not less than reasonably required by the
Mortgagee; (d) worker's compensation insurance to the full extent required by
applicable law for all employees of the Mortgagor engaged in any work on or
about the Property and employer's liability insurance with a limit of not less
than One Million Dollars ($1,000,000) for each occurrence; (e) all-risk,
builders' risk insurance with respect to the Property during any period during
which there is any construction work being performed, against loss or damage by
fire or other risks, including vandalism, malicious mischief and sprinkler
leakage, as are
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included in so-called "extended coverage" clauses at the time available; and (f)
such other insurance with respect to the Property in such amounts and against
such insurable hazards as the Mortgagee from time to time may reasonably require
by written notice to the Mortgagor.
SECTION 2.1.2. Policy Provisions. All insurance maintained by the Mortgagor
pursuant to Section 2.1.1 shall: (a) (except for worker's compensation
insurance) name the Mortgagor and the Mortgagee, as insureds as their respective
interests may appear; (b) (except for worker's compensation and public liability
insurance) provide that the proceeds for any losses shall be adjusted by the
Mortgagor subject to the reasonable approval of the Mortgagee in the event the
proceeds shall exceed Two Million Dollars ($2,000,000), and to the extent the
same exceeds Two Million Dollars ($2,000,000), shall be payable to the
Mortgagee, to be held and applied as provided in Section 2.3; (c) provide that
no cancellation, reduction in amount or material change in coverage thereof or
any portion thereof shall be effective until at least thirty (30) days after
receipt by the Mortgagee of written notice thereof; (d) provide that any notice
under such policies shall be simultaneously delivered to the Mortgagee; and (e)
be reasonably satisfactory in all other respects to the Mortgagee. Any insurance
maintained pursuant to this Section 2.1 may be evidenced by blanket insurance
policies covering the Property and other properties or assets of the Mortgagor,
provided that any such policy shall specify the portion, if less than all, of
the total coverage of such policy that is allocated to the Property and shall in
all other respects comply with the requirements of this Section 2.1.
SECTION 2.1.3. Delivery of Policies, etc. The Mortgagor will deliver to the
Mortgagee, promptly upon reasonable request: (a) the originals of all policies
evidencing all insurance required to be maintained under Section 2.1.1 (or, in
the case of blanket policies, certificates thereof by the insurers together with
a counterpart of each blanket policy); and (b) evidence as to the payment of all
premiums due thereon (with respect to public liability insurance policies, all
installments for the current year due thereon to such date), provided that the
Mortgagee shall not be deemed by reason of its custody of such policies to have
knowledge of the contents thereof. The Mortgagor will also deliver to the
Mortgagee not later than thirty (30) days prior to the expiration of any policy
a binder or certificate of the insurer evidencing the replacement thereof and
not later than fifteen (15) days prior to the expiration of such policy an
original copy of the new policy (or, in the case of a replacement blanket
policy, a certificate thereof of the insurer together with a counterpart of the
blanket policy). In the event the Mortgagor shall fail to effect or maintain any
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insurance required to be effected or maintained pursuant to the provisions of
this Section 2.1, the Mortgagor will indemnify the Mortgagee against damage,
loss or liability resulting from all risks for which such insurance should have
been effected or maintained.
SECTION 2.1.4. Separate Insurance. The Mortgagor will not take out separate
insurance concurrent in form or contributing in the event of loss with that
required to be maintained pursuant to this Section 2.1.
SECTION 2.2. Intentionally Omitted.
SECTION 2.3. Application of Proceeds and Awards. If an Event of Default
shall have occurred and be continuing, the Mortgagee may, at its option, apply
all amounts recovered under any insurance policy required to be maintained by
the Mortgagor hereunder and all other Casualty Proceeds received by it in any
one or more of the following ways:
(a) to the payment of the reasonable costs and expenses incurred by
the Mortgagee in obtaining any such Casualty Proceeds, including the
reasonable fees and expenses of attorneys and insurance and other experts
and consultants, the costs of litigation, arbitration, mediation,
investigations and other judicial, administrative or other proceedings and
all other reasonable out-of-pocket expenses;
(b) to the payment of the Obligations and/or the Loans;
(c) to fulfill any of the other covenants contained herein, in the
Credit Agreement, in this Mortgage, or in any other Loan Document, as the
Mortgagee may, in its sole discretion, determine;
(d) to the Mortgagor for application to the cost of restoring the
Collateral and the replacement of Goods destroyed, damaged or taken; or
(e) to the Mortgagor.
Notwithstanding the foregoing provisions of this Section 2.3 to the
contrary (but subject to the provisions of the Credit Agreement), and if each of
the following conditions is satisfied, the Mortgagee, upon request of the
Mortgagor, shall apply Casualty Proceeds received by it to the restoration or
replacement of the Collateral, to the extent necessary for the restoration or
replacement thereof:
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(1) there shall then exist no uncured Event of Default; and
(2) in the event that the Casualty Proceeds exceed Two Million Dollars
($2,000,000), the Mortgagor shall furnish to the Mortgagee a certificate of
an architect or engineer reasonably acceptable to the Mortgagee stating
that the Collateral is capable of being restored, prior to the maturity of
the loans described in the Credit Agreement, to substantially the same
condition as existed prior to the Casualty Event.
In the event that such Casualty Proceeds are to be utilized in the
restoration of the Collateral pursuant to the terms of the Credit Agreement, the
Mortgagee shall disburse such Casualty Proceeds and the additional amounts
deposited by the Mortgagor for such restoration after receipt of a written
request for disbursement, on not fewer than five (5) Business Days nor more than
twelve (12) Business Days notice and, to the extent applicable, in accordance
with customary construction loan procedures and conditions. In the event that
such Casualty Proceeds are to be utilized to replace the Collateral so destroyed
or taken, the Mortgagee shall disburse such Casualty Proceeds after receipt of a
written request for disbursement, on not fewer than five (5) Business Days nor
more than twelve (12) Business Days notice simultaneously with the acquisition
of such replacement property by the Mortgagor. In the event that, after the
restoration or replacement of the Collateral, any Casualty Proceeds shall
remain, such amount shall be paid to the Mortgagor. Casualty Proceeds shall be
invested in the manner reasonably requested by the Mortgagor and approved by the
Mortgagee, and all interest earned thereon shall be applied as provided in this
Section 2.3. If, prior to the receipt by the Mortgagee of such Casualty
Proceeds, the Collateral shall have been sold on foreclosure, the Mortgagee
shall have the right to receive said Casualty Proceeds to the extent of any
deficiency found to be due upon such sale, with legal interest thereon, whether
or not a deficiency judgment shall have been sought or recovered or denied, and
the reasonable attorneys' fees, costs and disbursements incurred by the
Mortgagee in connection with the collection of such award or payment.
ARTICLE III
EVENTS OF DEFAULT; REMEDIES, ETC.
SECTION 3.1. Events of Default; Acceleration. If an "Event of Default"
under and as defined in the Credit Agreement shall have occurred (herein called
an "Event of Default") then and in such event the Mortgagee may at any time
thereafter (unless all
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Events of Default shall theretofore have been remedied and all costs and
expenses, including, without limitation, reasonable attorneys' fees and expenses
incurred by or on behalf of the Mortgagee, shall have been paid in full by the
Mortgagor) declare, by written notice to the Mortgagor, the Loans and the
Obligations to be due and payable immediately or on a date specified in such
notice, and on such date the same shall be and become due and payable, together
with interest accrued thereon, without presentment, demand, protest or notice,
all of which the Mortgagor hereby waives. The Mortgagor will pay on demand all
reasonable costs and expenses, including without limitation, attorneys' fees and
expenses, incurred by or on behalf of the Mortgagee in enforcing this Mortgage,
the Credit Agreement, or any other Loan Document, or occasioned by any default
hereunder or thereunder.
SECTION 3.2. Legal Proceedings; Foreclosure. If an Event of Default shall
have occurred and be continuing, the Mortgagee at any time may, at its election,
proceed at law or in equity or otherwise to enforce the payment of, performance
of, or compliance with the Loans, the Obligations, and the Credit Agreement, in
accordance with the terms hereof and thereof and to foreclose the lien of this
Mortgage as against all or any part of the Collateral and to have the same sold
under the judgment or decree of a court of competent jurisdiction. The Mortgagee
shall be entitled to recover in such proceedings all costs incident thereto,
including reasonable attorneys' fees and expenses in such amounts as may be
fixed by the court.
SECTION 3.3. Power of Sale. To the maximum extent permitted by law, if an
Event of Default shall have occurred and be continuing, the Mortgagee may grant,
bargain, sell, release, transfer, convey and deliver the whole or, from time to
time, any part of the Collateral at public auction or venue, or any interest in
any part thereof without notice or advertisement, for cash, or credit or for
other property, for immediate or future delivery, and for such price or prices
and on such terms as the Mortgagee in its uncontrolled discretion may determine,
or as may be required by law, and upon such sale the Mortgagee may execute and
deliver to the purchaser(s) instruments of conveyance pursuant to the terms
hereof and to applicable laws. The Mortgagor understands that the Mortgagee is
authorized and empowered to sell the Collateral, or cause the same to be sold
and conveyed to the purchaser(s) in any lawful manner. Without limiting the
authority granted in this Section 3.3, the Mortgagee shall, without demand on
the Mortgagor, after the lapse of such time as may then be required by law, and
notice of default and notice of sale having been given as then required by law,
sell the Collateral on the date and at the time and place designated in the
notice of sale, either as a whole or in separate parcels and in such order as
the Mortgagee may determine, but subject to
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any statutory right of the Mortgagor to direct the order in which such property,
if consisting of several known lots, parcels or interests, shall be sold, at
public auction to the highest bidder, the purchase price payable in lawful money
of the United States at the time of sale. The Person conducting the sale may,
for any cause deemed expedient, postpone the sale from time to time until it
shall be completed and, in every such case, notice of postponement shall be
given by public declaration thereof by such Person at the time and place last
appointed for the sale; provided that, if the sale is postponed for longer than
one (1) day beyond the day designated in the notice of sale, notice of sale and
notice of the time, date and place of sale shall be given in the same manner as
the original notice of sale. The Mortgagee shall execute and deliver to the
purchaser at any such sale a mortgagee's deed conveying the property so sold,
but without any covenant or warranty, express or implied. The recitals in such
mortgagee's deed of any matters or facts shall be conclusive proof of the
truthfulness thereof. Any Person, including the Mortgagee, may bid at the sale.
SECTION 3.4. Uniform Commercial Code Remedies. If an Event of Default shall
have occurred and be continuing, the Mortgagee may exercise from time to time
and at any time any rights and remedies available to it under applicable law
upon default in the payment of indebtedness, including, without limitation, any
right or remedy available to it as a secured party under the Uniform Commercial
Code of the State. The Mortgagor shall, promptly upon request by the Mortgagee,
assemble the Collateral, or any portion thereof generally described in such
request, and make it available to the Mortgagee at such place or places
designated by the Mortgagee and reasonably convenient to the Mortgagee. If the
Mortgagee elects to proceed under the Uniform Commercial Code of the State to
dispose of portions of the Collateral, the Mortgagee, at its option, may give
the Mortgagor notice of the time and place of any public sale of any such
property, or of the date after which any private sale or other disposition
thereof is to be made, by sending notice by registered or certified first class
mail, postage prepaid, to the Mortgagor at least ten (10) Business Days before
the time of the sale or other disposition. If any notice of any proposed sale,
assignment or transfer by the Mortgagee of any portion of the Collateral or any
interest therein is required by law, the Mortgagor conclusively agrees that ten
(10) Business Days' notice to the Mortgagor of the date, time and place (and, in
the case of a private sale, the terms) thereof is reasonable.
SECTION 3.5. Mortgagee Authorized to Execute Deeds, etc. The Mortgagor
irrevocably appoints the Mortgagee (which appointment is coupled with an
interest) the true and lawful attorney of the Mortgagor, in its name and stead
and on its behalf, for the purpose of effectuating any sale, assignment,
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transfer or delivery for the enforcement hereof, whether pursuant to power of
sale, foreclosure or otherwise, to execute and deliver all such deeds, bills of
sale, assignments, releases and other instruments as may be designated in any
such request.
SECTION 3.6. Purchase of Collateral by Mortgagee. The Mortgagee may be a
purchaser of the Collateral or of any part thereof or of any interest therein at
any sale thereof, whether pursuant to power of sale, foreclosure or otherwise,
and the Mortgagee may apply upon the purchase price thereof the indebtedness
secured hereby owing to the Mortgagee. Such purchaser shall, upon any such
purchase, acquire good title to the properties so purchased, free of the
security interest and lien of this Mortgage and free of all rights of redemption
(unless otherwise provided by applicable law) in the Mortgagor.
SECTION 3.7. Receipt a Sufficient Discharge to Purchaser. Upon any sale of
the Collateral or any part thereof or any interest therein, whether pursuant to
power of sale, foreclosure or otherwise, the receipt of the Mortgagee or the
officer making the sale under judicial proceedings shall be a sufficient
discharge to the purchaser for the purchase money, and such purchaser shall not
be obliged to see to the application thereof.
SECTION 3.8. Waiver of Appraisement, Valuation, etc. The Mortgagor hereby
waives, to the fullest extent it may lawfully do so, the benefit of all
appraisement, valuation, stay, extension and redemption laws now or hereafter in
force and all rights of marshalling in the event of any sale of the Collateral
or any part thereof or any interest therein.
SECTION 3.9. Sale a Bar Against Mortgagor. To the extent permitted by
applicable law, any sale of the Collateral or any part thereof or any interest
therein under or by virtue of this Mortgage, whether pursuant to power of sale,
foreclosure or otherwise, shall forever be a bar against the Mortgagor.
SECTION 3.10. Performance of the Obligations Due on Sale. Upon any sale of
the Collateral or any portion thereof or interest therein by virtue of the
exercise of any remedy by the Mortgagee under or by virtue of this Mortgage,
whether pursuant to power of sale, foreclosure or otherwise in accordance with
this Mortgage or by virtue of any other remedy available at law or in equity or
by statute or otherwise, at the option of the Mortgagee, any sums or monies due
and payable pursuant to the Credit Agreement, and in connection with the Loans
and/or the Obligations shall, if not previously declared due and payable,
immediately become due and payable, together with interest accrued thereon, at
the Interest Rate, and all other indebtedness which this Mortgage by its terms
secures.
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SECTION 3.11. Application of Proceeds of Sale and Other Moneys. The
proceeds of any sale of the Collateral or any part thereof or any interest
therein under or by virtue of this Mortgage, whether pursuant to power of sale,
foreclosure or otherwise, and all other moneys at any time held by the Mortgagee
as part of the Collateral, shall be applied as follows:
(a) first, to the payment of the reasonable costs and expenses of such
sale (including, without limitation, the cost of evidence of title and the
costs and expenses, if any, of taking possession of, retaining custody
over, repairing, managing, operating, maintaining and preserving the
Collateral or any part thereof prior to such sale), all reasonable costs
and expenses incurred by the Mortgagee or any other Person in obtaining or
collecting any insurance proceeds, condemnation awards or other amounts
received by the Mortgagee, all reasonable costs and expenses of any
receiver of the Collateral or any part thereof, and any Impositions or
other charges or expenses prior to the security interest or lien of this
Mortgage, which the Mortgagee may consider it necessary or desirable to
pay;
(b) second, to the payment of any sums or monies due and owing under
the Credit Agreement, or otherwise in connection with the Obligations
and/or the Loans;
(c) third, to fulfill any of the other covenants contained herein, in
the Credit Agreement, or in any other Loan Document, as the Mortgagee may,
in its reasonable discretion, determine;
(d) fourth, the balance, if any, held by the Mortgagee after payment
in full of all amounts referred to in Sections 3.11 (a), (b) and (c) above,
shall, unless a court of competent jurisdiction may otherwise direct by
final order not subject to appeal, be paid to or upon the direction of the
Mortgagor.
SECTION 3.12. Appointment of Receiver. If an Event of Default shall have
occurred and be continuing, the Mortgagee shall, as a matter of right, without
notice, and without regard to the adequacy of any security for the indebtedness
secured hereby or the solvency of the Mortgagor, be entitled to the appointment
of a receiver for all or any part of the Collateral, whether such receivership
be incidental to a proposed sale of the Collateral or otherwise, and the
Mortgagor hereby consents to the appointment of such a receiver and will not
oppose any such appointment.
SECTION 3.13. Possession, Management and Income. If an Event of Default
shall have occurred and be continuing, in
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addition to, and not in limitation of, the rights and remedies provided in
Section 1.14, the Mortgagee, upon five (5) Business Days notice to the
Mortgagor, may enter upon and take possession of the Collateral or any part
thereof by force, summary proceeding, ejectment or otherwise and may remove the
Mortgagor and all other Persons and any and all property therefrom and may hold,
operate, maintain, repair, preserve and manage the same and receive all
earnings, income, Rents, issues and Proceeds accruing with respect thereto or
any part thereof. The Mortgagee shall be under no liability for or by reason of
any such taking of possession, entry, removal or holding, operation or
management, except that any amounts so received by the Mortgagee shall be
applied to pay all costs and expenses of so entering upon, taking possession of,
holding, operating, maintaining, repairing, preserving and managing the
Collateral or any part thereof, and any Impositions or other charges prior to
the lien and security interest of this Mortgage which the Mortgagee may consider
it necessary or desirable to pay, and any balance of such amounts shall be
applied as provided in Section 3.11.
SECTION 3.14. Right of Mortgagee to Perform Mortgagor's Covenants, etc. If
the Mortgagor shall fail to make any payment or perform any act required to be
made or performed hereunder, the Mortgagee, upon thirty days' notice to the
Mortgagor, without waiving or releasing any obligation or Default, may (but
shall be under no obligation to) at any time thereafter make such payment or
perform such act for the account and at the expense of the Mortgagor, and may
enter upon the Collateral for such purpose and take all such action thereon as,
in the Mortgagee's opinion, may be necessary or appropriate therefor. No such
entry and no such action shall be deemed an eviction of any lessee of the
Property or any part thereof. All sums so paid by the Mortgagee and all
reasonable costs and expenses (including, without limitation, attorneys' fees
and expenses) so incurred, together with interest thereon at the Interest Rate
from the date of payment or incurring, shall constitute additional indebtedness
secured by this Mortgage and shall be paid by the Mortgagor to the Mortgagee on
demand.
SECTION 3.15. Subrogation. To the extent that the Mortgagee, on or after
the date hereof, pays any sum due under any provision of any Legal Requirement
or any instrument creating any lien prior or superior to the lien of this
Mortgage, the Mortgagee shall have and be entitled to a lien on the Collateral
equal in priority to the lien discharged, and the Mortgagee shall be subrogated
to, and receive and enjoy all rights and liens possessed, held or enjoyed by,
the holder of such lien, which shall remain in existence and benefit the
Mortgagee in securing the Obligations.
SECTION 3.16. Remedies, etc., Cumulative. Each right,
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power and remedy of the Mortgagee provided for in this Mortgage, the Credit
Agreement, or any other Loan Document, or now or hereafter existing at law or in
equity or by statute or otherwise shall be cumulative and concurrent and shall
be in addition to every other right, power or remedy provided for in this
Mortgage, the Credit Agreement or any other Loan Document, or now or hereafter
existing at law or in equity or by statute or otherwise, and the exercise or
beginning of the exercise by the Mortgagee of any one or more of the rights,
powers or remedies provided for in this Mortgage, the Credit Agreement, or any
other Loan Document, or now or hereafter existing at law or in equity or by
statute or otherwise shall not preclude the simultaneous or later exercise by
the Mortgagee of any or all such other rights, powers or remedies.
SECTION 3.17. Provisions Subject to Applicable Law. All rights, powers and
remedies provided in this Mortgage may be exercised only to the extent that the
exercise thereof does not violate any applicable provisions of law and are
intended to be limited to the extent necessary so that they will not render this
Mortgage invalid, unenforceable or not entitled to be recorded, registered or
filed under the provisions of any applicable law. If any term of this Mortgage
or any application thereof shall be invalid or unenforceable, the remainder of
this Mortgage and any other application of such term shall not be affected
thereby.
SECTION 3.18. No Waiver, etc. No failure by the Mortgagee to insist upon
the strict performance of any term hereof or of the Credit Agreement, or of any
other Loan Document, or to exercise any right, power or remedy consequent upon a
breach hereof or thereof, shall constitute a waiver of any such term or of any
such breach. No waiver of any breach shall affect or alter this Mortgage, which
shall continue in full force and effect with respect to any other then existing
or subsequent breach. By accepting payment or performance of any amount or other
obligations secured hereby before or after its due date, the Mortgagee shall not
be deemed to have waived its right either to require prompt payment or
performance when due of all other amounts payable or obligations due hereunder
or to declare a default for failure to effect such prompt payment.
SECTION 3.19. Compromise of Actions, etc. Any action, suit or proceeding
brought by the Mortgagee pursuant to any of the terms of this Mortgage, the
Credit Agreement, any Loan Document or otherwise, and any claim made by the
Mortgagee hereunder or thereunder, may be compromised, withdrawn or otherwise
dealt with by the Mortgagee without any notice to or approval of the Mortgagor.
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ARTICLE IV
DEFINITIONS
SECTION 4.1. Terms Defined in this Mortgage. When used herein the following
terms have the following meanings:
"Casualty Event" shall have the meaning provided for in the Credit
Agreement.
"Casualty Proceeds" shall have the meaning provided for in the Credit
Agreement.
"Collateral": see the granting clause.
"Credit Agreement": see the second recital.
"Default" means any Event of Default or any condition or event which,
after notice or lapse of time, or both, would constitute an Event of
Default.
"Environmental Law" shall have the meaning provided for in the Credit
Agreement.
"Event of Default": see Section 3.1.
"Goods": see clause (c) of the granting clause.
"Hazardous Material" shall have the meaning provided for in the Credit
Agreement.
"herein", "hereof", "hereto", and "hereunder" and similar terms refer
to this Mortgage and not to any particular Section, paragraph or provision
of this Mortgage.
"Impositions": see Section 1.5.
"Improvements": see clause (b) of the granting clause.
"Indemnified Parties": see Section 1.16.
"Insurance Requirements": see Section 1.6.
"Intangibles": see clause (d) of the granting clause.
"Interest Rate" means the lower of (i) the Scotiabank Alternate Base
Rate from time to time in effect plus a margin of 2% and (ii) the maximum
rate of interest not prohibited by law from the due date that any sums or
monies become due and payable pursuant to the terms and conditions of this
Mortgage until the date of payment of such sums or monies.
-25-
<PAGE>
"Issuer": see the second recital.
"Land": see the first recital.
"Leases": see clause (e) of the granting clause.
"Legal Requirements" means all applicable laws, rules, regulations and
orders.
"Lenders": see the second recital.
"Loan Documents" shall have the meaning ascribed to such term in the
Credit Agreement.
"Loans": see the second recital.
"Mortgage": see the preamble.
"Mortgagee": see the preamble.
"Mortgagor": see the preamble.
"Notes" means, as the context may require, a Revolving Note, a Swing
Line Note, a Registered Note, a Term-A Note, a Term-B Note or a Term-C Note
(as such terms are defined in the Credit Agreement).
"Obligations" shall mean all obligations (monetary or otherwise) of
the Mortgagor arising under or in connection with this Mortgage or the
Subsidiary Guaranty to which it is a party, including the Supplement to
Subsidiary Guaranty dated as of the date hereof.
"Permits": see clause (g) of the granting clause.
"Permitted Encumbrances": see paragraph (a) of Section 1.2.
"Person" means a corporation, an association, a partnership, an
organization, a business, an individual, a government or political
subdivision thereof or a governmental agency or officer.
"Plans": see clause (f) of the granting clause.
"Proceeds": see clause (j) of the granting clause.
"Property": see clause (b) of the granting clause.
"Real Estate": see clause (a) of the granting clause.
-26-
<PAGE>
"Release" shall have the meaning provided for in the Credit Agreement.
"Rents": see clause (i) of the granting clause.
"State": means the State of New Jersey.
SECTION 4.2. Use of Defined Terms. Terms for which meanings are provided in
this Mortgage shall, unless otherwise defined or the context otherwise requires,
have such meanings when used in any certificate and any opinion, notice or other
communication delivered from time to time in connection with this Mortgage or
pursuant hereto.
SECTION 4.3. Credit Agreement Definitions. Unless otherwise defined herein
or the context otherwise requires, terms used in this Mortgage, including its
preamble and recitals, have the meanings provided in the Credit Agreement.
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Further Assurances; Financing Statements.
SECTION 5.1.1. Further Assurances. The Mortgagor, at its expense, will
execute, acknowledge and deliver all such instruments and take all such other
action as the Mortgagee from time to time may reasonably request:
(a) to better subject to the lien and security interest of this
Mortgage all or any portion of the Collateral,
(b) to perfect, publish notice or protect the validity of the lien and
security interest of this Mortgage,
(c) to preserve and defend the title to the Collateral and the rights
of the Mortgagee therein against the claims of all Persons as long as this
Mortgage shall remain undischarged,
(d) to better subject to the lien and security interest of this
Mortgage or to maintain or preserve the lien and security interest of this
Mortgage with respect to any replacement or substitution for any
Improvements or any other after-acquired property, or
(e) in order to further effectuate the purposes of this Mortgage and
to carry out the terms hereof and to
-27-
<PAGE>
better assure and confirm to the Mortgagee its rights, powers and remedies
hereunder.
SECTION 5.1.2. Financing Statements. Notwithstanding any other provision of
this Mortgage, the Mortgagor hereby agrees that, without notice to or the
consent of the Mortgagor, the Mortgagee may file with the appropriate public
officials such financing statements, continuation statements, amendments and
similar documents as are or may become necessary to perfect, preserve or protect
the security interest granted by this Mortgage. The Mortgagee shall promptly
thereafter deliver copies of such statements to the Mortgagor.
SECTION 5.2. Additional Security. Without notice to or consent of the
Mortgagor, and without impairment of the security interest and lien and rights
created by this Mortgage, the Mortgagee may accept from the Mortgagor or any
other Person additional security for the Loans and/or the Obligations. Neither
the giving of this Mortgage nor the acceptance of any such additional security
shall prevent the Mortgagee from resorting first to such additional security, or
first to the security created by this Mortgage, or concurrently to both, in any
case without affecting the Mortgagee's lien and rights under this Mortgage.
SECTION 5.3. Defeasance; Partial Release, etc.
SECTION 5.3.1. Defeasance. If the Loans and all other amounts owing
pursuant to the Credit Agreement and the other Loan Documents shall be repaid in
full in accordance with the terms thereof, and if the Mortgagor shall pay, in
full, the principal of and premium, if any, and interest on any sums due and
payable pursuant to the Obligations in accordance with the terms thereof and
hereof and all other sums payable hereunder by the Mortgagor and shall
materially comply with all the terms, conditions and requirements hereof and of
the Obligations, and all of the Commitments shall have been terminated, then on
such date, this Mortgage shall be (except as provided herein) null and void and
of no further force and effect and the Collateral shall thereupon be, and be
deemed to have been, reconveyed, released and discharged from this Mortgage
without further notice on the part of either the Mortgagor or the Mortgagee.
SECTION 5.3.2. Partial Release, etc. Following the occurrence of an Event
of Default and notice to the Mortgagor, the Mortgagee may, at any time and from
time to time, without liability therefor, release or reconvey any part of the
Collateral to the Mortgagor.
SECTION 5.4. Notices, etc. Any notice, request or other communication
hereunder to any of the parties hereto shall be in
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<PAGE>
writing and be well and sufficiently given if delivered personally or sent by
prepaid registered mail, return receipt requested, to its address and to the
attention of the person set forth below:
if to the Mortgagee:
The Bank of Nova Scotia
One Liberty Plaza
New York, New York 10006
Attention: Donald McWeeney
with a copy to:
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019
Attention: Andrew Mattei, Esq.
if to the Mortgagor:
Sunshine Biscuits, Inc.
c/o Inflo Holdings Corporation
677 Larch Avenue
Elmhurst, Illinois 60126
Attn: Chief Executive Officer
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Jeff Feigelson, Esq.
-29-
<PAGE>
Any such notice shall be deemed to be given and received when delivered, or if
mailed, on the third (3rd) Business Day following the date on which it was
mailed, unless an interruption of postal services occurs or is continuing on or
within the three (3) Business Days after the date of mailing in which case the
notice shall be deemed to have been received on the third (3rd) Business Day
after postal service resumes. Either party may, by notice to the other, given as
aforesaid, designate a changed address.
SECTION 5.5. Waivers, Amendments, etc. The provisions of this Mortgage may
be amended, discharged or terminated and the observance or performance of any
provision of this Mortgage may be waived, either generally or in a particular
instance and either retroactively or prospectively, only by an instrument in
writing executed by the Mortgagor and the Mortgagee.
SECTION 5.6. Cross-References. References in this Mortgage and in each
instrument executed pursuant hereto to any Section or Article are, unless
otherwise specified, to such Section or Article of this Mortgage or such
instrument, as the case may be, and references in any Section, Article or
definition to any clause are, unless otherwise specified, to such clause of such
Section, Article or definition.
SECTION 5.7. Headings. The various headings of this Mortgage and of each
instrument executed pursuant hereto are inserted for convenience only and shall
not affect the meaning or interpretation of this Mortgage or such instrument or
any provisions hereof or thereof.
SECTION 5.8. Currency. Unless otherwise expressly stated, all references to
any currency or money, or any dollar amount, or amounts denominated in "Dollars"
herein will be deemed to refer to the lawful currency of the United States.
SECTION 5.9. Governing Law. THIS MORTGAGE SHALL BE DEEMED TO BE A CONTRACT
MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE.
SECTION 5.10. Successors and Assigns, etc. This Mortgage shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns.
SECTION 5.11. Waiver of Jury Trial; Submission to Jurisdiction. (a) EACH OF
THE MORTGAGOR AND THE MORTGAGEE HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS MORTGAGE, THE
CREDIT AGREEMENT, ANY LOAN DOCUMENT OR ANY OTHER RELATED INSTRUMENT, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING,
-30-
<PAGE>
STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF THE MORTGAGOR OR THE
MORTGAGEE. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE MORTGAGEE TO ENTER
INTO THIS MORTGAGE.
(b) FOR THE PURPOSE OF ANY ACTION OR PROCEEDING INVOLVING THIS MORTGAGE,
THE CREDIT AGREEMENT, OR ANY OTHER LOAN DOCUMENT, THE MORTGAGOR HEREBY EXPRESSLY
AND IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ALL FEDERAL AND
STATE COURTS LOCATED IN THE STATE AND CONSENTS THAT IT MAY BE SERVED WITH ANY
PROCESS OR PAPER BY REGISTERED MAIL OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE
STATE IN ACCORDANCE WITH APPLICABLE LAW, PROVIDED A REASONABLE TIME FOR
APPEARANCE IS ALLOWED. THE MORTGAGOR EXPRESSLY WAIVES, TO THE EXTENT IT MAY
LAWFULLY DO SO, ANY OBJECTION, CLAIM OR DEFENSE WHICH IT MAY HAVE AT ANY TIME TO
THE LAYING OF VENUE OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF THIS
MORTGAGE, THE CREDIT AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY SUCH COURT,
IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN
ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND FURTHER IRREVOCABLY
WAIVES THE RIGHT TO OBJECT, WITH RESPECT TO ANY SUCH CLAIM, SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT, THAT SUCH COURT DOES NOT HAVE JURISDICTION
OVER THE PERSON OF THE MORTGAGOR. NOTHING CONTAINED HEREIN WILL BE DEEMED TO
PRECLUDE THE MORTGAGEE FROM BRINGING AN ACTION AGAINST THE MORTGAGOR IN ANY
OTHER JURISDICTION.
SECTION 5.12. Severability. Any provision of this Mortgage, the Credit
Agreement, or any other Loan Document, which is prohibited or unenforceable in
any jurisdiction shall as to such provision and such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Mortgage, the Credit Agreement, or
such Loan Document or affecting the validity or enforceability of such provision
in any other jurisdiction.
SECTION 5.13. Loan Document. This Mortgage is a Loan Document executed
pursuant to the Credit Agreement and, unless otherwise expressly indicated
herein, shall be construed, administered and applied in accordance with the
terms and provisions thereof, including Article X thereof.
SECTION 5.14. Usury Savings Clause. It is the intention of the Mortgagor
and the Mortgagee to conform strictly to the usury laws governing the Loan
Documents, and any interest payable under the Loan Documents shall be subject to
reduction to the amount not in excess of the maximum non-usurious amount allowed
under such laws, as construed by the courts having jurisdiction over such
matters. In the event the maturity of the Obligations is accelerated by reason
of any provision of the Loan Documents, or by reason of an election by the
Mortgagee resulting from an Event of Default, then earned interest may never
include more than the
-31-
<PAGE>
maximum amount permitted by law, computed from the dates of each advance of loan
proceeds under the Credit Agreement until payment, and any interest in excess of
the maximum amount permitted by law shall be cancelled automatically or, if
theretofore paid, at the option of the Mortgagee, shall be rebated to the
Mortgagor, or shall be credited on the principal amount of the Obligations or,
if all principal has been repaid, then the excess shall be rebated to the
Mortgagor. If any interest is cancelled, credited against principal or rebated
to the Mortgagor in accordance with the foregoing sentence and, if thereafter
the interest payable hereunder is less than the maximum amount permitted by
applicable law, the rate hereunder shall automatically be increased to the
maximum extent possible to permit repayment to the Mortgagee as soon as possible
of any interest in excess of the maximum amount permitted by law which was
earlier cancelled, credited against principal or rebated to the Mortgagee
pursuant to the provisions of the foregoing sentence.
SECTION 5.15. Conflict with Credit Agreement. In the event of any conflict
between the provisions of the Credit Agreement and the provisions of this
Mortgage, the applicable provisions of the Credit Agreement shall govern and
control.
SECTION 5.16. Future Advances. Any and all future advances under this
Mortgage and the Loan Documents shall have the same priority as if the future
advance was made on the date that this Mortgage was recorded. This Mortgage
shall secure all indebtedness and Obligations of the Mortgagor, its successors
and assigns under this Mortgage or any of the Loan Documents, whenever incurred,
such indebtedness and Obligations to be due at the times provided in the Loan
Documents. Notice is hereby given that the indebtedness and Obligations secured
hereby may increase as a result of any defaults hereunder by Mortgagor due to,
for example, and without limitation, unpaid interest or late charges, unpaid
taxes or insurance premiums which the Mortgagee elects to advance, defaults
under leases that the Mortgagee elects to cure, attorney fees or costs incurred
in enforcing the Loan Documents or other expenses incurred by the Mortgagee in
protecting the Collateral, the security of this Mortgage or the Mortgagee's
rights and interests.
SECTION 5.17. Last Dollars Secured. This instrument secures only a portion
of the indebtedness owing or which may become owing by the Mortgagor to the
Mortgagee. The parties agree that any payments or repayments of such
indebtedness by the Mortgagor shall be deemed to apply first to the portion of
the indebtedness that is not secured hereby, it being the parties' intent that
the portion of the indebtedness last remaining unpaid shall be deemed secured
hereby.
-32-
<PAGE>
IN WITNESS WHEREOF, the Mortgagor has caused this Mortgage to be duly
executed as of the day and year first above written.
MORTGAGOR:
SUNSHINE BISCUITS, INC., a
Delaware corporation
[Corporate Seal]
By:
----------------------------------
Name:
--------------------------------
Title:
--------------------------------
-33-
<PAGE>
ACKNOWLEDGEMENT OF MORTGAGOR
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
I, CERTIFY that on June __, 1996 ___________________ personally came before
me and this person acknowledged under oath, to my satisfaction, that:
(a) This person signed, sealed and delivered the attached document as
______________ of the corporation named in this document;
(b) the proper corporate seal was affixed; and
(c) this document was signed and made by the corporation as its
voluntary act and deed by virtue of authority from its Board of Directors.
---------------
Notary Public
My Commission Expires on: _________
<PAGE>
SCHEDULE 1
Legal Description of the Land
<PAGE>
SCHEDULE 2
Permitted Encumbrances
Those Items Listed In Chicago Title Insurance Company Commitment
9527-0872 as Exceptions 5 and 6 of Schedule B.
Exhibit 10.7(n)
REVOLVING NOTE
$ June 4, 1996
--------------------
FOR VALUE RECEIVED, the undersigned, KEEBLER HOLDING CORP., a Delaware
corporation and the surviving corporation of the Merger (the "Borrower"),
promises to pay to the order of (the "Lender")
on the Stated Maturity Date for Revolving Loans the principal sum
of ($ ) or, if less, the aggregate unpaid
principal amount of all Revolving Loans shown on the schedule attached hereto
(and any continuation thereof) made (or continued) by the Lender pursuant to the
Amended and Restated Credit Agreement, dated as of June 4, 1996 (as so amended
and restated, and together with any further amendments, supplements, amendment
and restatements and other modifications from time to time thereafter made
thereto, the "Credit Agreement"), among the Borrower, The Bank of Nova Scotia,
as Administrative Agent, the various financial institutions (including the
Lender) as are, or may from time to time become, parties thereto and the
Co-Agents named therein, amending and restating in its entirety the Existing
Credit Agreement.
The Borrower also promises to pay interest on the unpaid principal amount
hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates per annum and on the dates specified in the Credit Agreement.
Payments of both principal and interest are to be made in lawful money of
the United States of America in same day or immediately available funds to the
account designated by the Administrative Agent pursuant to the Credit Agreement.
This Note is one of the Revolving Notes referred to in, and evidences
Indebtedness incurred (or continued) under, the Credit Agreement, to which
reference is made for a description of the security for this Note and for a
statement of the terms and conditions on which the Borrower is permitted and
required to make prepayments and repayments of principal of the Indebtedness
evidenced by this Note and on which such Indebtedness maybe declared to be
immediately due and payable. Unless otherwise defined, terms used herein have
the meanings provided in the Credit Agreement.
<PAGE>
*[This Revolving Note is issued in substitution and exchange for, and not
in satisfaction or payment of, the Revolving Note, dated January 26, 1996,
payable to the order of the Lender and issued under the Existing Credit
Agreement (the "Existing Revolving Note"), and the Indebtedness originally
evidenced by the Existing Revolving Note which is now evidenced by this
Revolving Note shall be a continuing Indebtedness, and nothing herein contained
shall be construed to deem the Existing Revolving Note paid, or to release or
terminate any Lien given to secure the Existing Revolving Note, which Liens
shall continue to secure the Indebtedness evidenced by this Revolving Note.]
All parties hereto, whether as makers, endorsers, or otherwise, severally
waive presentment for payment, demand, protest and notice of dishonor.
THIS NOTE HAS BEEN DELIVERED IN NEW YORK, NEW YORK AND SHALL BE DEEMED TO
BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW
YORK.
KEEBLER HOLDING CORP.
By
-------------------------------------
Title:
- --------
* TO BE INCLUDED IN NOTES TO EXISTING LENDERS.
-2-
<PAGE>
REVOLVING LOANS AND PRINCIPAL PAYMENTS
<TABLE>
<CAPTION>
====================================================================================================================================
Interest
Period
Amount of (If Ap- Amount of Unpaid
Revolving plic- Principal Principal
Date Loan Made able) Repaid Balance
----------------------------- ---------------------------- ----------------------------
Base LIBO Base LIBO Base LIBO Notation
Rate Rate Rate Rate Rate Rate Total Made By
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
====================================================================================================================================
</TABLE>
-3-
Exhibit 10.7(o)
SWING LINE NOTE
$20,000,000 June 4, 1996
FOR VALUE RECEIVED, the undersigned, KEEBLER HOLDING CORP., a Delaware
corporation and the surviving corporation of the Merger (the "Borrower"),
promises to pay to the order of THE BANK OF NOVA SCOTIA (the "Lender") on the
Stated Maturity Date for Swing Line Loans the principal sum of TWENTY MILLION
DOLLARS ($20,000,000) or, if less, the aggregate unpaid principal amount of all
Swing Line Loans shown on the schedule attached hereto (and any continuation
thereof) made (or continued) by the Lender pursuant to the Amended and Restated
Credit Agreement, dated as of June 4, 1996 (as so amended and restated, and
together with any further amendments, supplements, amendment and restatements
and other modifications from time to time thereafter made thereto, the "Credit
Agreement"), among the Borrower, The Bank of Nova Scotia, as Administrative
Agent, the various financial institutions (including the Lender) as are, or may
from time to time become, parties thereto and the Co-Agents named therein,
amending and restating in its entirety the Existing Credit Agreement.
The Borrower also promises to pay interest on the unpaid principal amount
hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates per annum and on the dates specified in the Credit Agreement.
Payments of both principal and interest are to be made in lawful money of
the United States of America in same day or immediately available funds to the
account designated by the Lender pursuant to the Credit Agreement.
This Note is one of the Swing Line Notes referred to in, and evidences
Indebtedness incurred (or continued) under, the Credit Agreement, to which
reference is made for a description of the security for this Note and for a
statement of the terms and conditions on which the Borrower is permitted and
required to make prepayments and repayments of principal of the Indebtedness
evidenced by this Note and on which such Indebtedness may be declared to be
immediately due and payable. Unless otherwise defined, terms used herein have
the meanings provided in the Credit Agreement.
This Swing Line Note is issued in substitution and exchange for, and not in
satisfaction or payment of, the Swing Line Note,
<PAGE>
dated January 26, 1996, payable to the order of the Lender and issued under the
Existing Credit Agreement (the "Existing Swing Line Note"), and the Indebtedness
originally evidenced by the Existing Swing Line Note which is now evidenced by
this Swing Line Note shall be a continuing Indebtedness, and nothing herein
contained shall be construed to deem the Existing Swing Line Note paid, or to
release or terminate any Lien given to secure the Existing Swing Line Note,
which Liens shall continue to secure the Indebtedness evidenced by this Swing
Line Note.
All parties hereto, whether as makers, endorsers, or otherwise, severally
waive presentment for payment, demand, protest and notice of dishonor.
THIS NOTE HAS BEEN DELIVERED IN NEW YORK, NEW YORK AND SHALL BE DEEMED TO
BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW
YORK.
KEEBLER HOLDING CORP.
By
-------------------------------------
Title:
-2-
<PAGE>
SWING LINE LOANS AND PRINCIPAL PAYMENTS
<TABLE>
<CAPTION>
====================================================================================================================================
Amount of Swing Amount of Principal Outstanding Principal
Date Line Loan Payment Balance Notation Made By
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
====================================================================================================================================
</TABLE>
3
Exhibit 10.7(p)
TERM-A NOTE
$ June 4, 1996
-----------------------
FOR VALUE RECEIVED, the undersigned, KEEBLER HOLDING CORP., a Delaware
corporation and the surviving corporation of the Merger (the "Borrower"),
promises to pay to the order of
(the "Lender") the principal sum of
($ ) or, if less, the aggregate unpaid
principal amount of all Term-A Loans shown on the schedule attached hereto (and
any continuation thereof) made (or continued) by the Lender pursuant to the
Amended and Restated Credit Agreement, dated as of June 4, 1996 (as so amended
and restated, and together with any further amendments, supplements, amendment
and restatements and other modifications from time to time thereafter made
thereto, the "Credit Agreement"), among the Borrower, The Bank of Nova Scotia,
as Administrative Agent, the various financial institutions (including the
Lender) as are, or may from time to time become, parties thereto and the
Co-Agents named therein, amending and restating in its entirety the Existing
Credit Agreement, payable in installments as set forth in the Credit Agreement,
with a final installment (in the amount necessary to pay in full this Note) due
and payable on the Stated Maturity Date.
The Borrower also promises to pay interest on the unpaid principal amount
hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates per annum and on the dates specified in the Credit Agreement.
Payments of both principal and interest are to be made in lawful money of
the United States of America in same day or immediately available funds to the
account designated by the Administrative Agent pursuant to the Credit Agreement.
This Note is one of the Term-A Notes referred to in, and evidences
Indebtedness incurred (or continued) under, the Credit Agreement, to which
reference is made for a description of the security for this Note and for a
statement of the terms and conditions on which the Borrower is permitted and
required to make prepayments and repayments of principal of the Indebtedness
evidenced by this Note and on which such Indebtedness may be declared to be
immediately due and payable. Unless otherwise defined, terms used herein have
the meanings provided in the Credit Agreement.
<PAGE>
*[This Term-A Note is issued in substitution and exchange for, and not in
satisfaction or payment of, the Term-A Note, dated January 26, 1996, payable to
the order of the Lender and issued under the Existing Credit Agreement (the
"Existing Term-A Note"), and the Indebtedness originally evidenced by the
Existing Term-A Note which is now evidenced by this Term-A Note shall be a
continuing Indebtedness, and nothing herein contained shall be construed to deem
the Existing Term-A Note paid, or to release or terminate any Lien given to
secure the Existing Term-A Note, which Liens shall continue to secure the
Indebtedness evidenced by this Term-A Note.]
All parties hereto, whether as makers, endorsers, or otherwise, severally
waive presentment for payment, demand, protest and notice of dishonor.
THIS NOTE HAS BEEN DELIVERED IN NEW YORK, NEW YORK AND SHALL BE DEEMED TO
BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW
YORK.
KEEBLER HOLDING CORP.
By
-------------------------------------
Title:
- --------
* TO BE INCLUDED IN NOTES TO EXISTING LENDERS.
-2-
<PAGE>
TERM-A LOANS AND PRINCIPAL PAYMENTS
<TABLE>
<CAPTION>
====================================================================================================================================
Interest
Period
Amount of (If Ap- Amount of Unpaid
Term-A plic- Principal Principal
Date Loan Made able) Repaid Balance
----------------------------- ---------------------------- ----------------------------
Base LIBO Base LIBO Base LIBO Notation
Rate Rate Rate Rate Rate Rate Total Made By
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
====================================================================================================================================
</TABLE>
-3-
Exhibit 10.7(q)
TERM-B NOTE
$ June 4, 1996
------------------------
FOR VALUE RECEIVED, the undersigned, KEEBLER HOLDING CORP., a Delaware
corporation and the surviving corporation of the Merger (the "Borrower"),
promises to pay to the order of
(the "Lender") the principal sum of ($ ) or, if less, the
aggregate unpaid principal amount of all Term-B Loans shown on the schedule
attached hereto (and any continuation thereof) made (or continued) by the Lender
pursuant to the Amended and Restated Credit Agreement, dated as of June 4, 1996
(as so amended and restated, and together with any other amendments,
supplements, amendment and restatements and other modifications from time to
time thereafter made thereto, the "Credit Agreement"), among the Borrower, The
Bank of Nova Scotia, as Administrative Agent, the various financial institutions
(including the Lender) as are, or may from time to time become, parties thereto
and the Co-Agents named therein, amending and restating in its entirety the
Existing Credit Agreement, payable in installments as set forth in the Credit
Agreement, with a final installment (in the amount necessary to pay in full this
Note) due and payable on the Stated Maturity Date.
The Borrower also promises to pay interest on the unpaid principal amount
hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates per annum and on the dates specified in the Credit Agreement.
Payments of both principal and interest are to be made in lawful money of
the United States of America in same day or immediately available funds to the
account designated by the Administrative Agent pursuant to the Credit Agreement.
This Note is one of the Term-B Notes referred to in, and evidences
Indebtedness incurred (or continued) under, the Credit Agreement, to which
reference is made for a description of the security for this Note and for a
statement of the terms and conditions on which the Borrower is permitted and
required to make prepayments and repayments of principal of the Indebtedness
evidenced by this Note and on which such Indebtedness may be declared to be
immediately due and payable. Unless otherwise defined, terms used herein have
the meanings provided in the Credit Agreement.
<PAGE>
*[This Term-B Note is issued in substitution and exchange for, and not in
satisfaction or payment of, the Term-B Note, dated January 26, 1996, payable to
the order of the Lender and issued under the Existing Credit Agreement (the
"Existing Term-B Note"), and the Indebtedness originally evidenced by the
Existing Term-B Note which is now evidenced by this Term-B Note shall be a
continuing Indebtedness, and nothing herein contained shall be construed to deem
the Existing Term-B Note paid, or to release or terminate any Lien given to
secure the Existing Term-B Note, which Liens shall continue to secure the
Indebtedness evidenced by this Term-B Note.]
All parties hereto, whether as makers, endorsers, or otherwise, severally
waive presentment for payment, demand, protest and notice of dishonor.
THIS NOTE HAS BEEN DELIVERED IN NEW YORK, NEW YORK AND SHALL BE DEEMED TO
BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW
YORK.
KEEBLER HOLDING CORP.
By
-------------------------------------
Title:
- --------
* TO BE INCLUDED IN NOTES TO EXISTING LENDERS.
-2-
<PAGE>
TERM-B LOANS AND PRINCIPAL PAYMENTS
<TABLE>
<CAPTION>
====================================================================================================================================
Interest
Period
Amount of (If Ap- Amount of Unpaid
Term-B plic- Principal Principal
Date Loan Made able) Repaid Balance
----------------------------- ---------------------------- ----------------------------
Base LIBO Base LIBO Base LIBO Notation
Rate Rate Rate Rate Rate Rate Total Made By
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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</TABLE>
-3-
Exhibit 10.7(r)
TERM-C NOTE
$ June 4, 1996
------------------------
FOR VALUE RECEIVED, the undersigned, KEEBLER HOLDING CORP., a Delaware
corporation and the surviving corporation of the Merger (the "Borrower"),
promises to pay to the order of
(the "Lender") the principal sum of
($ ) or, if less, the aggregate unpaid
principal amount of all the Term-C Loans shown on the schedule attached hereto
(and any continuation thereof) made (or continued) by the Lender pursuant to the
Amended and Restated Credit Agreement, dated as of June 4, 1996 (as so amended
and restated, and together with any further amendments, supplements, amendment
and restatements and other modifications from time to time thereafter made
thereto, the "Credit Agreement"), among the Borrower, The Bank of Nova Scotia,
as Administrative Agent, the various financial institutions (including the
Lender) as are, or may from time to time become, parties thereto and the
Co-Agents named therein, amending and restating in its entirety the Existing
Credit Agreement, payable in installments as set forth in the Credit Agreement,
with a final installment (in the amount necessary to pay in full this Note) due
and payable on the Stated Maturity Date.
The Borrower also promises to pay interest on the unpaid principal amount
hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates per annum and on the dates specified in the Credit Agreement.
Payments of both principal and interest are to be made in lawful money of
the United States of America in same day or immediately available funds to the
account designated by the Administrative Agent pursuant to the Credit Agreement.
This Note is one of the Term-C Notes referred to in, and evidences
Indebtedness incurred (or continued) under, the Credit Agreement, to which
reference is made for a description of the security for this Note and for a
statement of the terms and conditions on which the Borrower is permitted and
required to make prepayments and repayments of principal of the Indebtedness
evidenced by this Note and on which such Indebtedness may be declared to be
immediately due and payable. Unless otherwise defined, terms used herein have
the meanings provided in the Credit Agreement.
<PAGE>
*[This Term-C Note is issued in substitution and exchange for, and not in
satisfaction or payment of, the Term-C Note, dated January 26, 1996, payable to
the order of the Lender and issued under the Existing Credit Agreement (the
"Existing Term-C Note"), and the Indebtedness originally evidenced by the
Existing Term-C Note which is now evidenced by this Term-C Note shall be a
continuing Indebtedness, and nothing herein contained shall be construed to deem
the Existing Term-C Note paid, or to release or terminate any Lien given to
secure the Existing Term-C Note, which Liens shall continue to secure the
Indebtedness evidenced by this Term-C Note.]
All parties hereto, whether as makers, endorsers, or otherwise, severally
waive presentment for payment, demand, protest and notice of dishonor.
THIS NOTE HAS BEEN DELIVERED IN NEW YORK, NEW YORK AND SHALL BE DEEMED TO
BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW
YORK.
KEEBLER HOLDING CORP.
By
-------------------------------------
Title:
- --------
* TO BE INCLUDED IN NOTES TO EXISTING LENDERS.
-2-
<PAGE>
TERM-C LOANS AND PRINCIPAL PAYMENTS
<TABLE>
<CAPTION>
====================================================================================================================================
Interest
Period
Amount of (If Ap- Amount of Unpaid
Term-C plic- Principal Principal
Date Loan Made able) Repaid Balance
----------------------------- ---------------------------- ----------------------------
Base LIBO Base LIBO Base LIBO Notation
Rate Rate Rate Rate Rate Rate Total Made By
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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</TABLE>
-3-
Exhibit 10.7(s)
REGISTERED NOTE
THIS REGISTERED NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH
THE TERMS AND PROVISIONS OF THE CREDIT AGREEMENT REFERRED TO BELOW.
TRANSFERS OF THIS REGISTERED NOTE MUST BE RECORDED IN THE REGISTER
MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF SUCH
CREDIT AGREEMENT.
$_____________ June 4, 1996
FOR VALUE RECEIVED, the undersigned, KEEBLER HOLDING CORP., a Delaware
corporation and the surviving corporation of the Merger (the "Borrower"),
promises to pay to the order of
(the "Lender") the principal sum of
($ ) or, if less, the aggregate unpaid
principal amount of all Term-[A][B][C] Loans shown on the schedule attached
hereto (and any continuation thereof) made (or continued) by the Lender pursuant
to the Amended and Restated Credit Agreement, dated as of June 4, 1996 (as so
amended and restated, and together with any further amendments, supplements,
amendment and restatements and other modifications from time to time thereafter
made thereto, the "Credit Agreement"), among the Borrower, The Bank of Nova
Scotia, as Administrative Agent, the various financial institutions (including
the Lender) as are, or may from time to time become, parties thereto and the
Co-Agents named therein, amending and restating in its entirety the Existing
Credit Agreement, payable in installments as set forth in the Credit Agreement,
with a final installment (in the amount necessary to pay in full this Note) due
and payable on the Stated Maturity Date. Unless otherwise defined, terms used
herein have the meanings provided in the Credit Agreement.
The Borrower also promises to pay interest on the unpaid principal amount
hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates per annum and on the dates specified in the Credit Agreement.
Payments of both principal and interest are to be made in lawful money of
the United States of America in same day or immediately available funds to the
account designated by the Administrative Agent pursuant to the Credit Agreement.
This Registered Note is one of the Notes referred to in, and evidences
Indebtedness incurred (or continued) under, the Credit Agreement, to which
reference is made for a description of the security for this Registered Note and
for a statement of the
<PAGE>
terms and conditions on which the Borrower is permitted and required to make
prepayments and repayments of principal of the Indebtedness evidenced by this
Registered Note and on which such Indebtedness may be declared to be immediately
due and payable.
As provided in Section 10.11.3 of the Credit Agreement, this Registered
Note and the Obligation(s) evidenced hereby may be assigned or otherwise
transferred in whole or in part only by registration of such assignment or
transfer of this Registered Note and the Obligation(s) evidenced hereby on the
Register described in clause (b) of Section 2.8 of the Credit Agreement. Any
assignment or transfer of all or part of such Obligations(s) and this Registered
Note evidencing the same shall be registered on the Register only upon surrender
for registration of assignment or transfer of this Registered Note evidencing
such Obligations(s), duly endorsed by (or accompanied by a written instrument of
assignment or transfer duly executed by) the Registered Noteholder hereof, and
thereupon one or more new Registered Note(s) in the same aggregate principal
amount shall be issued to the designated Assignee Lender, and this Registered
Note shall be returned by the Administrative Agent to the Borrower marked
"canceled". Prior to the due presentment for registration of assignment or
transfer of this Registered Note, the Borrower and the Administrative Agent
shall treat the Person in whose name such Obligation(s) and this Registered
Note(s) evidencing the same is registered as the owner thereof for the purpose
of receiving all payments thereon and for all other purposes, notwithstanding
any notice to the contrary. This Registered Note may not be exchanged for
promissory notes that are not Registered Notes.
*[This Registered Note is issued in substitution and exchange for, and not
in satisfaction or payment of, the Registered Note, dated January 26, 1996,
payable to the order of the Lender and issued under the Existing Credit
Agreement (the "Existing Registered Note"), and the Indebtedness originally
evidenced by the Existing Registered Note which is now evidenced by this
Registered Note shall be a continuing Indebtedness, and nothing herein contained
shall be construed to deem the Existing Registered Note paid, or to release or
terminate any Lien given to secure the Existing Registered Note, which Liens
shall continue to secure the Indebtedness evidenced by this Registered Note.]
All parties hereto, whether as makers, endorsers, or otherwise, severally
waive presentment for payment, demand, protest and notice of dishonor.
- --------
* TO BE INCLUDED IN REGISTERED NOTES TO EXISTING LENDERS.
2
<PAGE>
THIS NOTE HAS BEEN DELIVERED IN NEW YORK, NEW YORK AND SHALL BE DEEMED TO
BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW
YORK.
KEEBLER HOLDING CORP.
By
-------------------------------------
Title:
3
<PAGE>
TERM [A] [B] [C] LOANS AND PRINCIPAL PAYMENTS
<TABLE>
<CAPTION>
====================================================================================================================================
Interest
Amount of Period
Term [A] [B] (If Ap- Amount of Unpaid
[C] plic- Principal Principal
Date Loan Made able) Repaid Balance
----------------------------- --------------------------- -------------------------------
Base LIBO Base LIBO Base LIBO Notation
Rate Rate Rate Rate Rate Rate Total Made By
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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====================================================================================================================================
</TABLE>
4
Exhibit 10.8
FORM OF MANAGEMENT STOCKHOLDER'S AGREEMENT
This Management Stockholder's Agreement (this "Agreement") is
entered into as of January 26, 1996 between INFLO HOLDINGS CORPORATION, a
Delaware corporation (the "Company"), and _____________________ (the
"Purchaser") (the Company and the Purchaser being hereinafter collectively
referred to as the "Parties").
RECITALS
The Company was recently organized for the purpose of acquiring
(through subsidiaries) certain assets of certain subsidiaries of, and all the
outstanding capital stock, of UB Investments US Inc. (the parent of Keebler
Company). In connection with such acquisition, the Company has sold and proposes
to sell shares of its Common Stock, par value $.01 per share (the "Common
Stock"), to a limited number of investors for $10.00 per share of Common Stock.
This Agreement is one of several agreements ("Other Purchasers'
Agreements") which have been, or which in the future will be, entered into
between the Company and other individuals who are or will be key employees of
the Company or one of its subsidiaries (collectively, the "Other Purchasers").
In addition, the Company has entered, and in the future may enter, into
agreements (the "Investors' Agreements") with certain institutional investors
and other purchasers (collectively, the "Investors") pursuant to which the
Investors purchased or will purchase shares of Common Stock.
The Company has agreed to sell shares of Common Stock to Purchaser
pursuant to the 1996 Stock Purchase and Option Plan for Key Employees of INFLO
Holdings Corporation and Subsidiaries (the "Option Plan") so that Purchaser
shall receive, in the aggregate, the number of shares of Common Stock set forth
on the signature page hereto (the "Purchase Stock"). In addition, the Company
will grant to Purchaser an option or options to purchase Common Stock
("Options") at an exercise price of $10.00 per share of Common Stock pursuant to
the Option Plan and the "Non-Qualified Stock Option Agreement" attached hereto
as Exhibit A. The Options may be granted as Time Options or Performance Options
(each as defined in the Non-Qualified Stock Option Agreement).
<PAGE>
MANAGEMENT STOCKHOLDER'S AGREEMENT
This Management Stockholder's Agreement (this "Agreement") is
entered into as of May 10, 1996 between INFLO HOLDINGS CORPORATION, a Delaware
corporation (the "Company"), and Sam K. Reed (the "Purchaser") (the Company and
the Purchaser being hereinafter collectively referred to as the "Parties").
RECITALS
The Company was recently organized for the purpose of acquiring
(through subsidiaries) certain assets of certain subsidiaries of, and all the
outstanding capital stock, of UB Investments US Inc. (the parent of Keebler
Company). In connection with such acquisition, the Company has sold and proposes
to sell shares of its Common Stock, par value $.01 per share (the "Common
Stock"), to a limited number of investors for $10.00 per share of Common Stock.
This Agreement is one of several agreements ("Other Purchasers'
Agreements") which have been, or which in the future will be, entered into
between the Company and other individuals who are or will be key employees of
the Company or one of its subsidiaries (collectively, the "Other Purchasers").
In addition, the Company has entered, and in the future may enter, into
agreements (the "Investors' Agreements") with certain institutional investors
and other purchasers (collectively, the "Investors") pursuant to which the
Investors purchased or will purchase shares of Common Stock.
The Company has agreed to sell shares of Common Stock to Purchaser
pursuant to the 1996 Stock Purchase and Option Plan for Key Employees of INFLO
Holdings Corporation and Subsidiaries (the "Option Plan") so that Purchaser
shall receive, in the aggregate, the number of shares of Common Stock set forth
on the signature page hereto (the "Purchase Stock"). In addition, the Company
will grant to Purchaser an option or options to purchase Common Stock
("Options") at an exercise price of $10.00 per share of Common Stock pursuant to
the Option Plan and the "Non-Qualified Stock Option Agreement" attached hereto
as Exhibit A. The Options may be granted as Time Options or Performance Options
(each as defined in the Non-Qualified Stock Option Agreement).
AGREEMENT
To implement the foregoing and in consideration of the mutual
agreements contained herein, the Parties agree as follows:
<PAGE>
2
1. Purchase of Stock; Issuance of Options.
(a) On May 10, 1996 (the "Purchase Date"), the Company will deliver
the Purchase Stock against payment by the Purchaser of the aggregate purchase
price set forth on the signature page hereto, and will grant Options to the
Purchaser in accordance with, and subject to the terms and conditions contained
in the Option Plan and the Non-Qualified Stock Option Agreement.
(b) The Parties shall execute and deliver to each other copies of
the Non-Qualified Stock Option Agreement concurrently with the issuance of the
Options.
2. Purchaser's Representations, Warranties and Agreements.
(a) The Purchaser hereby represents and warrants that he is
acquiring the Purchase Stock and, at the time of exercise, the Common Stock
issuable upon exercise of the Options (collectively, the "Stock") for investment
for his own account and not with a view to, or for resale in connection with,
the distribution or other disposition thereof. The Purchaser agrees and
acknowledges that he will not, directly or indirectly, offer, transfer, sell,
assign, pledge, hypothecate or otherwise dispose of any shares of the Stock
unless such transfer, sale, assignment, pledge, hypothecation or other
disposition complies with Section 3 of this Agreement and (i) the transfer,
sale, assignment, pledge, hypothecation or other disposition is pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
or the rules and regulations in effect thereunder (the "Act") or (ii) counsel
for the Purchaser (which counsel shall be acceptable to the Company) shall have
furnished the Company with an opinion, satisfactory in form and substance to the
Company, that no such registration is required because of the availability of an
exemption from registration under the Act. Notwithstanding the foregoing, the
Company acknowledges and agrees that any of the following transfers are deemed
to be in compliance with the Act and this Agreement and no opinion of counsel is
required in connection therewith: (w) a transfer made pursuant to Section 4, 5
or 6 hereof, (x) a transfer upon the death of the Purchaser to his executors,
administrators, testamentary trustees, legatees or beneficiaries (the
"Purchaser's Estate") or a transfer to the executors, administrators,
testamentary trustees, legatees or beneficiaries of a person who has become a
holder of Stock in accordance with the terms of this Agreement, provided that it
is
<PAGE>
3
expressly understood that any such transferee shall be bound by the provisions
of this Agreement, (y) a transfer made after the Purchase Date in compliance
with the federal securities laws to a trust or custodianship the beneficiaries
of which may include only the Purchaser, his spouse or his lineal descendants (a
"Purchaser's Trust") or a transfer made after the third anniversary of the
Purchase Date to such a trust by a person who has become a holder of Stock in
accordance with the terms of this Agreement, provided that such transfer is made
expressly subject to this Agreement and that the transferee agrees in writing to
be bound by the terms and conditions hereof and (z) transfer to the Company
pursuant to a pledge agreement in favor of the Company and subsequent transfers
or assignments thereof by the Company.
(b) The certificate (or certificates) representing the Stock shall
bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED,
SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR
OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF THE MANAGEMENT
STOCKHOLDER'S AGREEMENT DATED AS OF MAY 10, 1996 BETWEEN INFLO
HOLDINGS CORPORATION ("THE COMPANY") AND THE PURCHASER NAMED ON THE
FACE HEREOF (A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY). EXCEPT AS OTHERWISE PROVIDED IN SUCH AGREEMENT, NO
TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION OF THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE
MADE EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR (B) IF
(I) THE COMPANY HAS BEEN FURNISHED WITH A SATISFACTORY OPINION OF
SATISFACTORY COUNSEL FOR THE HOLDER THAT SUCH TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT
FROM THE PROVISIONS OF SECTION 5 OF THE ACT OR THE RULES AND
REGULATIONS IN EFFECT THEREUNDER, AND IN COMPLIANCE WITH APPLICABLE
PROVISIONS OF STATE SECURITIES LAWS, AND (II) IF THE HOLDER IS A
CITIZEN OR RESIDENT OF ANY COUNTRY OTHER THAN THE UNITED STATES, OR
THE HOLDER DESIRES TO EFFECT ANY SUCH TRANSACTION IN ANY SUCH
COUNTRY, THE COMPANY HAS BEEN FURNISHED WITH A SATISFACTORY OPINION
OR OTHER ADVICE OF SATISFACTORY COUNSEL FOR THE HOLDER THAT SUCH
TRANSACTION WILL NOT VIOLATE THE LAWS OF SUCH COUNTRY."
<PAGE>
4
(c) The Purchaser acknowledges that he has been advised that (i) the
Stock has not been registered under the Act, (ii) the Stock must be held
indefinitely and the Purchaser must continue to bear the economic risk of the
investment in the Stock unless it is subsequently registered under the Act or an
exemption from such registration is available, (iii) it is not anticipated that
there will be any public market for the Stock, (iv) Rule 144 promulgated under
the Act is not currently available with respect to the sales of any securities
of the Company, and the Company has made no covenant to make such Rule available
(except as provided in Section 10(b) hereof), (v) when and if shares of the
Stock may be disposed of without registration in reliance on Rule 144, such
disposition can be made only in limited amounts in accordance with the terms and
conditions of such Rule, (vi) if the Rule 144 exemption is not available, public
sale without registration will require compliance with Regulation A or some
other exemption under the Act, (vii) a restrictive legend in the form heretofore
set forth shall be placed on the certificates representing the Stock and (viii)
a notation shall be made in the appropriate records of the Company indicating
that the Stock is subject to restriction on transfer and, if the Company should
at some time in the future engage the services of a stock transfer agent,
appropriate stop transfer restrictions will be issued to such transfer agent
with respect to the Stock.
(d) If any shares of the Stock are to be disposed of in accordance
with Rule 144 under the Act or otherwise, the Purchaser shall promptly notify
the Company of such intended disposition and shall deliver to the Company at or
prior to the time of such disposition such documentation as the Company may
reasonably request in connection with such sale and, in the case of a
disposition pursuant to Rule 144, shall deliver to the Company an executed copy
of any notice on Form 144 required to be filed with the Securities and Exchange
Commission.
(e) The Purchaser agrees that, if any shares of the capital stock of
the Company are offered to the public pursuant to an effective registration
statement under the Act, the Purchaser will not effect any public sale or
distribution of any shares of the Stock not covered by such registration
statement within 10 days prior to, or within 180 days after, the effective date
of such registration statement, unless otherwise agreed to in writing by the
Company.
<PAGE>
5
(f) The Purchaser represents and warrants that (i) he has received
and reviewed a Private Placement Memorandum (the "Private Placement Memorandum")
relating to the Stock and the documents referred to therein, certain of which
documents set forth the rights, preferences and restrictions relating to the
Stock and (ii) he has been given the opportunity to obtain any additional
information or documents and to ask questions and receive answers about such
documents, the Company and the business and prospects of the Company which he
deems necessary to evaluate the merits and risks related to his investment in
the Stock and to verify the information contained in the Private Placement
Memorandum and the information received as indicated in this Section 2(f)(ii),
and he has relied solely on such information.
(g) The Purchaser further represents and warrants that (i) his
financial condition is such that he can afford to bear the economic risk of
holding the Stock for an indefinite period of time and has adequate means for
providing for his current needs and personal contingencies, (ii) he can afford
to suffer a complete loss of his investment in the Stock, (iii) all information
which he has provided to the Company concerning himself and his financial
position is correct and complete as of the date of this Agreement, (iv) he
understands and has taken cognizance of all risk factors related to the purchase
of the Stock, including those set forth in the Private Placement Memorandum
referred to above, and (v) his knowledge and experience in financial and
business matters are such that he is capable of evaluating the merits and risks
of his purchase of the Stock as contemplated by this Agreement.
3. Restriction on Transfer.
Except for transfers permitted by clauses (x), (y) and (z) of
Section 2(a) or a sale of shares of Stock pursuant to an effective registration
statement under the Act filed by the Company or pursuant to the Sale
Participation Agreement (as described in Section 15 hereof), the Purchaser
agrees that he will not transfer, sell, assign, pledge, hypothecate or otherwise
dispose of any shares of the Stock at any time prior to the fifth anniversary of
the Purchase Date. No transfer of any such shares in violation hereof shall be
made or recorded on the books of the Company and any such transfer shall be void
and of no effect.
<PAGE>
6
4. Right of First Refusal.
If, at any time after the fifth anniversary of the Purchase Date and
prior to a Public Offering (as defined below), the Purchaser receives a bona
fide offer to purchase any or all of his shares of Stock (the "Offer") from a
third party (the "Offeror") which the Purchaser wishes to accept, the Purchaser
shall cause the Offer to be reduced to writing and shall notify the Company in
writing of his wish to accept the Offer. The Purchaser's notice shall contain an
irrevocable offer to sell such shares of Stock to the Company, (in the manner
set forth below) at a purchase price equal to the price contained in, and on the
same terms and conditions of, the Offer, and shall be accompanied by a true copy
of the Offer (which shall identify the Offeror). At any time within 45 days
after the date of the receipt by the Company of the Purchaser's notice, the
Company shall have the right and option to purchase, or to arrange for a third
party to purchase, all of the shares of Stock covered by the Offer either (i) at
the same price and on the same terms and conditions as the Offer or (ii) if the
Offer includes any consideration other than cash, then at the sole option of the
Company, at the equivalent all cash price, determined in good faith by the
Company's Board of Directors, by delivering a certified bank check or checks in
the appropriate amount to the Purchaser at the principal office of the Company
against delivery of certificates or other instruments representing the shares of
the Stock so purchased, appropriately endorsed by the Purchaser. If at the end
of such 45 day period, the Company has not tendered the purchase price for such
shares in the manner set forth above, the Purchaser may during the succeeding 30
day period sell not less than all of the shares of Stock covered by the Offer to
the Offeror at a price and on terms no less favorable to the Purchaser than
those contained in the Offer. No sale may be made to any Offeror unless the
Offeror agrees in writing with the Company to be bound by the provisions of this
Section 4 in connection with any resale by the Offeror. Promptly after such
sale, the Purchaser shall notify the Company of the consummation thereof and
shall furnish such evidence of the completion and time of completion of such
sale and of the terms thereof as may reasonably be requested by the Company. If,
at the end of 30 days following the expiration of the 45 day period for the
Company to purchase the Stock, the Purchaser has not completed the sale of such
shares of the Stock as aforesaid, all the restrictions on sale, transfer or
assignment contained in this Agreement shall again be in effect with respect to
such shares of the Stock.
<PAGE>
7
5. Purchaser's Resale of Stock and Options to the Company Upon The
Purchaser's Death or Disability.
(a) Except as otherwise provided herein, if on or before the fifth
anniversary of the Purchase Date (i) the Purchaser is still in the employ of the
Company or any subsidiary of the Company, or had retired from the Company and
its subsidiaries at age 65 or over (or such other age as may be approved by the
Board of Directors of the Company) after having been employed by the Company or
any subsidiary for at least three years after the Purchase Date and (ii) the
Purchaser either dies or suffers a Permanent Disability, then the Purchaser, the
Purchaser's Estate or a Purchaser's Trust, as the case may be, shall have the
right, for a period of six months following the date of death or Permanent
Disability, to (A) sell to the Company, and the Company shall be required to
purchase, on one occasion, all or any portion of the shares of Stock then held
by the Purchaser, the Purchaser's Trust and/or the Purchaser's Estate, as the
case may be, at the Section 5 Repurchase Price, as determined in accordance with
Section 7, and (B) require the Company to pay to the Purchaser, the Purchaser's
Trust or the Purchaser's Estate, as the case may be, an additional amount equal
to the Option Excess Price determined on the basis of a Section 5 Repurchase
Price as provided in Section 8 with respect to the termination of outstanding
Options held by the Purchaser. The Purchaser, the Purchaser's Estate and/or the
Purchaser's Trust, as the case may be, shall send written notice to the Company
of its intention to sell shares of Stock and to terminate such Options in
exchange for the payment referred to in the preceding sentence (the "Redemption
Notice"). The completion of the purchase shall take place at the principal
office of the Company on the tenth business day after the giving of the
Redemption Notice. The Section 5 Repurchase Price and any payment with respect
to the Options as described above shall be paid by delivery to the Purchaser,
the Purchaser's Estate or the Purchaser's Trust, as the case may be, of a
certified bank check or checks in the appropriate amount payable to the order of
the Purchaser, the Purchaser's Estate or the Purchaser's Trust, as the case may
be, against delivery of certificates or other instruments representing the Stock
so purchased and appropriate documents cancelling the Options so terminated
appropriately endorsed or executed by the Purchaser, the Purchaser's Estate or
the Purchaser's Trust, or his or its duly authorized representative. For
purposes of this Agreement, "Permanent Disability" shall have the meaning
ascribed thereto in the "Non-Qualified Stock Option" Agreement.
<PAGE>
8
(b) Notwithstanding anything in Section 5(a) to the contrary and
subject to Section 11, if there exists and is continuing a default or an event
of default on the part of the Company or any subsidiary of the Company under any
loan, guarantee or other agreement under which the Company or any subsidiary of
the Company has borrowed money or such repurchase would result in a default or
an event of default on the part of the Company or any subsidiary of the Company
under any such agreement or if a repurchase would not be permitted under Section
170 of the General Corporation Law of the State of Delaware or would otherwise
violate the General Corporation Law of the State of Delaware (each such
occurrence being an "Event"), the Company shall not be obligated to repurchase
any of the Stock or the Options from the Purchaser, the Purchaser's Estate, or
the Purchaser's Trust, as the case may be, until the first business day which is
15 calendar days after all of the foregoing Events have ceased to exist (the
"Repurchase Eligibility Date"); provided, however, that (i) the number of shares
of Stock subject to repurchase under this Section 5(b) shall be that number of
shares of Stock, and (ii) the number of Exercisable Option Shares (as defined in
Section 8) for purposes of calculating the Option Excess Price payable under
this Section 5(b) shall be the number of Exercisable Option Shares, held by the
Purchaser, the Purchaser's Estate or a Purchaser's Trust, as the case may be, at
the time of delivery of a Redemption Notice in accordance with Section 5(a)
hereof; provided, further, that the Repurchase Calculation Date shall be
determined in accordance with Section 7 as of the Repurchase Eligibility Date.
All Options exercisable as of the date of a Redemption Notice shall continue to
be exercisable until the repurchase pursuant to such Redemption Notice.
(c) Notwithstanding any other provision of this Section 5 to the
contrary and subject to Section 11, the Purchaser, the Purchaser's Estate or the
Purchaser's Trust, as the case may be, shall have the right to withdraw any
Redemption Notice which has been pending for 120 or more days and which has
remained unsatisfied because of the provisions of Section 5(b).
6. The Company's Option to Repurchase Stock and Options of
Purchaser.
(a) If, on or prior to the fifth anniversary of the Purchase Date,
(i) the Purchaser's active employment with the Company (and/or, if applicable,
its subsidiaries) is voluntarily or involuntarily terminated for any reason
whatsoever, with or without cause, (ii) the beneficiaries of a Purchaser's Trust
shall include any person or entity other than the Purchaser, his spouse or his
lineal descendants, or (iii) the Purchaser shall effect a transfer of any of the
Stock other than as permitted in this Agreement (alternatively, a "Call Event"),
the Company shall have the right to purchase all, but not less than all, of the
shares of the Stock then held by the Purchaser or a Purchaser's Trust at the
Section 6 Repurchase Price determined in accordance
<PAGE>
9
with Section 7 hereof; provided, however, that if the termination of employment
results from the death or Permanent Disability of the Purchaser, the Company
shall have the right to purchase all, but not less than all, of the shares of
the Stock then held by the Purchaser or a Purchaser's Trust but the Repurchase
Price shall be the Section 5 Repurchase Price. The Company shall have a period
of 75 days from the date of a Call Event in which to give notice in writing to
the Purchaser of the exercise of such election ("Call Notice"). In the event
that the Company exercises its right to repurchase shares of the Stock pursuant
to this Section 6, the Company shall also pay the Purchaser an amount equal to
the Option Excess Price determined on the basis of the Section 6 Repurchase
Price or the Section 5 Repurchase Price, as the case may be, as provided in
Section 8, with respect to the termination of outstanding Options held by the
Purchaser.
(b) The completion of the purchases pursuant to the foregoing shall
take place at the principal office of the Company on the tenth business day
after the giving of notice of the exercise of the option to purchase. The
Section 5 Repurchase Price or the Section 6 Repurchase Price, as the case may
be, and any payment with respect to the Options as described above shall be paid
by delivery to the Purchaser of a certified bank check or checks in the
appropriate amount payable to the order of the Purchaser against delivery of
certificates or other instruments representing the Stock so purchased and
appropriate documents cancelling the Options so terminated, appropriately
endorsed or executed by the Purchaser, the Purchaser's Trust or his or its
authorized representative.
(c) Notwithstanding any other provision of this Section 6 to the
contrary and subject to Section 11, if there exists and is continuing any Event,
the Company shall delay the repurchase of any of the Stock or the Options
(pursuant to a Call Notice timely given in accordance with Section 6(a) hereof)
from the Purchaser, the Purchaser's Estate, or the Purchaser's Trust, as the
case may be, until the Repurchase Eligibility Date; provided, however, that (i)
the number of shares of Stock subject to repurchase under this Section 6(c)
shall be that number of shares of Stock and (ii) the number of Exercisable
Option Shares for purposes of calculating the Option Excess Price payable under
this Section 6(c) shall be the number of Exercisable Option Shares held by the
Purchaser, the Purchaser's Estate or a Purchaser's Trust, as the case may be, at
the time of delivery of a Call Notice in accordance with Section 6(a) hereof;
provided, further, that the Repurchase Calculation Date shall be determined in
accordance with Section 7 based on the Repurchase Eligibility Date. All Options
exercisable as of the date of a Call Notice shall continue to be exercisable
until the repurchase pursuant to such Call Notice.
<PAGE>
10
7. Determination of Repurchase Price.
(a) The Section 5 Repurchase Price and the Section 6 Repurchase
Price are hereinafter collectively referred to as the "Repurchase Price." The
Repurchase Price shall be calculated on the basis of the unaudited financial
statements of the Company or the Market Price Per Share (as defined in Section
7(f)) as of the last day of the month preceding the later of (i) the month in
which the event giving rise to the repurchase occurs and (ii) the month in which
the Repurchase Eligibility Date occurs (hereinafter called the "Repurchase
Calculation Date"). The event giving rise to the repurchase shall be the death,
Permanent Disability, retirement or termination of employment, as the case may
be, of the Purchaser, not the giving of any notice required pursuant to Section
5 or 6.
(b) Prior to a Public Offering (as hereinafter defined) the "Section
5 Repurchase Price" shall be a per share Repurchase Price equal to $10.00 plus
the amount, if any, by which the Book Value Per Share (as defined in Section
7(d)) as of the Repurchase Calculation Date exceeds $10.00. After a Public
Offering, the "Section 5 Repurchase Price" shall be a per share Repurchase Price
equal to $10.00 plus the amount, if any, by which the Market Price Per Share as
of the Repurchase Calculation Date exceeds $10.00.
(c) Prior to a Public Offering, the "Section 6 Repurchase Price"
shall be a per share Repurchase Price equal to the lesser of (i) the Book Value
Per Share or (ii) $10.00 plus (x) the Percentage (as defined below) multiplied
by (y) the amount, if any, by which the Book Value Per Share as of the
Repurchase Calculation Date exceeds $10.00; after a Public Offering, the
"Section 6 Repurchase Price" shall be a per share Repurchase Price equal to the
lesser of (i) the Market Price Per Share or (ii) $10.00 plus (a) the Percentage
multiplied by (b) the amount, if any, by which the Market Price Per Share as of
the Repurchase Calculation Date exceeds $10.00; provided, however, that in the
event of Purchaser's termination without Cause by the Company (and/or, if
applicable, its subsidiaries), with Good Reason by the Purchaser or as a result
of the retirement of the Purchaser from the Company or any of its subsidiaries
at age 65 or over (or such other age as may be approved by the Board of
Directors of the Company) after having been employed by the Company or its
subsidiaries for at least three years after the Purchase Date, the "Section 6
Repurchase Price" shall be the Book Value Per Share or Market Price Per Share,
as the case may be; and provided further, that in the event of the Purchaser's
termination for Cause by the Company (and/or, if applicable, its subsidiaries)
or if the Purchaser shall effect a transfer of any of the Stock other than as
permitted in this Agreement, the "Section 6 Repurchase Price" shall be the
lesser of (i) the Book Value Per Share or Market Price Per Share, as the case
may be, or (ii) $10.00. For purposes of this Agreement, "Cause" and "Good
<PAGE>
11
Reason" shall have the meanings ascribed thereto in the "Non-Qualified Stock
Option Agreement."
The "Percentage" shall be determined as follows:
Repurchase Calculation Date Percentage
- --------------------------- ----------
Purchase Date through and including the -0-
first anniversary of the Purchase Date
After the first anniversary of the Purchase 20%
Date through and including the second
anniversary of the Purchase Date
After the second anniversary of the 40%
Purchase Date through and including the
third anniversary of the Purchase Date
After the third anniversary of the Purchase 60%
Date through and including the fourth
anniversary of the Purchase Date
After the fourth anniversary of the 80%
Purchase Date through and including the
fifth anniversary of the Purchase Date
After the fifth anniversary of the Purchase 100%
Date
(d) For purposes of this Agreement, "Book Value Per Share" shall be
(a)(i) the stockholders' equity of the Company, excluding amounts attributable
to shares of the Company's capital stock other than its Common Stock and
excluding the amount of any asset reversion resulting from the termination of
any pension plan of the Company or any of its subsidiaries, as of the Repurchase
Calculation Date determined in accordance with generally accepted accounting
principles applied on a basis consistent with any prior periods, without giving
effect to adjustments required or permitted by Accounting Principles Board
Opinion Nos. 16 and 17 with respect to assets acquired or liabilities assumed in
the acquisition of Keebler (except that the determination of gains or losses on
sales of assets and on foreign currency translations shall be computed in
accordance with Accounting Principles Board Opinion Nos. 16 and 17) plus (ii)
the aggregate exercise prices of all outstanding stock options and other rights
to acquire common stock of the Company and the aggregate conversion prices of
all securities convertible into shares of Common Stock divided by (b) the sum of
the number of shares of Common Stock then outstanding and the number of shares
of Common Stock issuable upon the exercise of all outstanding stock options and
other rights to acquire Common Stock and the conversion of all securities
convertible into shares of Common Stock.
<PAGE>
12
(e) As used herein the term "Public Offering" shall mean the sale of
shares of Common Stock to the public pursuant to a registration statement under
the Act which has been declared effective by the Securities and Exchange
Commission (other than a registration statement on Form S-8 or any other similar
form) which results in an active trading market in the Common Stock. A
"Qualified Public Offering" shall mean a Public Offering pursuant to an
effective registration statement relating to the sale of shares of the Company
Stock held by any or all of Artal Luxembourg S.A. ("Artal") and Flowers
Industries, Inc.
("Flowers").
(f) As used herein the term "Market Price Per Share" shall mean the
price per share equal to the average of the last sale price of the Common Stock
on the Repurchase Calculation Date on each exchange on which the Common Stock
may at the time be listed or, if there shall have been no sales on any of such
exchanges on the Repurchase Calculation Date, the average of the closing bid and
asked prices on each such exchange at the end of the Repurchase Calculation Date
or if there is no such bid and asked price on the Repurchase Calculation Date on
the next preceding date when such bid and asked price occurred or, if the Common
Stock shall not be so listed, the average of the closing sales prices as
reported by NASDAQ at the end of the Repurchase Calculation Date in the
over-the-counter market. If the Common Stock is not so listed or reported by
NASDAQ, then the Market Price Per Share shall be the Book Value Per Share.
(g) In determining the Repurchase Price, appropriate adjustments
shall be made for any future issuances of rights to acquire and securities
convertible into Common Stock and any stock dividends, splits, combinations,
recapitalizations or any other adjustment in the number of shares of outstanding
shares of Common Stock.
8. Stock Issued to Purchaser Upon Exercise of Stock Options;
Termination of Options.
(a) The Company may from time to time grant to the Purchaser, in
addition to the Options, options under the Option Plan to purchase shares of
Common Stock at $10.00 per share or at a different option exercise price. The
term "Stock" as used in this Agreement shall include all shares of Common Stock
of the Company purchased by the Purchaser pursuant to this Agreement and issued
to the Purchaser by the Company upon exercise of the Options and of any other
stock options held by the Purchaser and any other Common Stock otherwise
acquired by the Purchaser at any time when this Agreement is in effect.
<PAGE>
13
(b) All outstanding Options granted to the Purchaser under the
Option Plan or otherwise, whether or not then exercisable, will be automatically
terminated upon the payment by the Company to the Purchaser, pursuant to the
provisions of Sections 5 or 6 of this Agreement, of an amount equal to the
Option Excess Price. If the Option Excess Price is zero or a negative number,
all outstanding stock options granted to the Purchaser under the Option Plan or
otherwise, whether or not then exercisable, shall be automatically terminated
upon the repurchase of Stock as provided in Sections 5 or 6. The "Option Excess
Price" is the excess, if any, of the Section 5 Repurchase Price or the Section 6
Repurchase Price, depending on which Repurchase Price is being used to
repurchase the remainder of the Stock, over the Option Price (as defined in the
Option Plan) multiplied by the number of Exercisable Option Shares. For purposes
hereof, "Exercisable Option Shares" shall mean the shares of Common Stock which,
at the time of determination of the Option Excess Price (but after giving effect
to the terms of Section 3.2 of the Non-Qualified Stock Option Agreement), could
be purchased by the Purchaser upon exercise of his outstanding options.
9. The Company's Representations and Warranties.
(a) The Company represents and warrants to the Purchaser that (i)
this Agreement has been duly authorized, executed and delivered by the Company
and (ii) the Stock, when issued and delivered in accordance with the terms
hereof, will be duly and validly issued, fully paid and nonassessable.
(b) If the Company shall have filed a registration statement
pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or engaged in a Public Offering, (i) the
Company shall use reasonable efforts to register the Options and the Stock to be
acquired on exercise thereof on a Form S-8 Registration Statement or any
successor to Form S-8 to the extent that such registration is then available
with respect to such Options and Stock and (ii) the Company will file the
reports required to be filed by it under the Act and the Exchange Act and the
rules and regulations adopted by the Securities and Exchange Commission ("SEC")
thereunder, to the extent required from time to time to enable the Purchaser to
sell shares of Stock without registration under the Act within the limitations
of the exemptions provided by (A) Rule 144 under the Act, as such Rule may be
amended from time to time, or (B) any similar rule or regulation hereafter
adopted by the SEC. Notwithstanding anything contained in this Section 10(b),
the Company may deregister under Section 12 of the Exchange Act if it is then
permitted to do so pursuant to the Exchange Act and the rules and regulations
thereunder. Nothing in this Section 9(b) shall be deemed to limit in any manner
the restrictions on sales of Stock contained in this Agreement.
<PAGE>
14
10. "Piggyback" Registration Rights.
(a) Until the later of the first occurrence of a Qualified Public
Offering or the fifth anniversary of the Purchase Date, the Purchaser hereby
agrees to be bound by all of the terms, conditions and obligations set forth in
Annex A to the Stockholders' Agreement (the "Investor Stockholders' Agreement")
dated January 26, 1996, among the Company and certain of the Investors (the
"Registration Rights Provisions") and, in the case of a Qualified Public
Offering and subject to the limitations set forth in this Section 10, shall have
all of the rights and privileges of the Registration Rights Provisions, in each
case as if the Purchaser were an original party (other than the Company) to the
Investor Stockholders' Agreement; provided, however, that the Purchaser shall
not have any rights to request registration under Section 1.1 of the
Registration Rights Provisions; and provided further, that the Purchaser shall
not be bound by any amendments to the Registration Rights Provisions which would
be materially adverse to the Purchaser unless Purchaser consents thereto.
Notwithstanding anything to the contrary contained in the Registration Rights
Provisions, the Purchaser's rights and obligations under the Registration Rights
Provisions shall be subject to the limitations and additional obligations set
forth in this Section 10. All shares of Stock purchased by the Purchaser
pursuant to this Agreement and held by the Purchaser, the Purchaser's Trust or
the Purchaser's Estate, including shares purchased upon the exercise of Options,
shall be deemed to be Registrable Securities as defined in the Registration
Rights Provisions.
(b) The Company will promptly notify the Purchaser in writing (a
"Notice") of any proposed registration (a "Proposed Registration") in connection
with a Qualified Public Offering. If within 15 days of the receipt by the
Purchaser of such Notice, the Company receives from the Purchaser, the
Purchaser's Trust or the Purchaser's Estate a written request (a "Request") to
register shares of Stock held by the Purchaser, the Purchaser's Estate or the
Purchaser's Trust (which Request will be irrevocable unless otherwise mutually
agreed to in writing by the Purchaser and the Company), shares of Stock will be
so registered as provided in this Section 10; provided, however, that for each
such registration statement only one Request, which shall be executed by the
Purchaser, the Purchaser's Trust or the Purchaser's Estate, as the case may be,
may be submitted for all Registrable Securities held by the Purchaser, the
Purchaser's Estate and the Purchaser's Trust.
<PAGE>
15
(c) The maximum number of shares of Stock which will be registered
pursuant to a Request will be the lowest of (i) the number of shares of Stock
then held by the Purchaser (which for purposes of this subparagraph (c) shall
include shares held by the Purchaser's Estate or a Purchaser's Trust), including
all shares of Stock which the Purchaser is then entitled to acquire under an
unexercised Option to the extent then exercisable, (ii) the number of shares of
Stock then held by the Purchaser, including all shares of Stock which the
Purchaser is entitled to acquire under an unexercised Option, whether or not
fully vested, multiplied by a percentage calculated by dividing the number of
shares of Stock Artal and Flowers propose to sell in the aggregate pursuant to
such Qualified Public Offering by the total number of shares of Stock then owned
by Artal and Flowers in the aggregate, (iii) the maximum number of shares of
Stock which the Company can register in the Proposed Registration without
adverse effect on the offering in the view of the managing underwriters (reduced
pro rata with all Other Purchasers) or (iv) the maximum number of shares which
the Purchaser (pro rata based upon the aggregate number of shares of Common
Stock the Purchaser and all Other Purchasers have requested be registered) and
all Other Purchasers are permitted to register under the Registration Rights
Provisions.
(d) Upon delivering a Request the Purchaser will, if requested by
the Company, execute and deliver a custody agreement and power of attorney in
form and substance satisfactory to the Company with respect to the shares of
Stock to be registered pursuant to this Section 10 (a "Custody Agreement and
Power of Attorney"). The Custody Agreement and Power of Attorney will provide,
among other things, that the Purchaser will deliver to and deposit in custody
with the custodian and attorney-in-fact named therein a certificate or
certificates representing such shares of Stock (duly endorsed in blank by the
registered owner or owners thereof or accompanied by duly executed stock powers
in blank) and irrevocably appoint said custodian and attorney-in-fact as the
Purchaser's agent and attorney-in-fact with full power and authority to act
under the Custody Agreement and Power of Attorney on the Purchaser's behalf with
respect to the matters specified therein.
(e) The Purchaser agrees that he will execute such other agreements
as the Company may reasonably request to further evidence the provision of this
Section 10.
<PAGE>
16
11. Pro Rata Repurchases.
Notwithstanding anything to the contrary contained in Sections 5, 6
or 7, if at any time consummation of all purchases and payments to be made by
the Company pursuant to this Agreement and the Other Purchasers' Agreements
would result in an Event, then the Company shall make purchases from, and
payments to, the Purchaser and Other Purchasers pro rata (on the basis of the
proportion of the number of shares of Stock and the number of Options each such
Purchaser and all Other Purchasers have elected or are required to sell to the
Company) for the maximum number of shares of Stock and shall pay the Option
Excess Price for the maximum number of Options permitted without resulting in an
Event (the "Maximum Repurchase Amount"). The provisions of Section 5(b) and 6(c)
shall apply in their entirety to payments and repurchases with respect to
Options and shares of Stock which may not be made due to the limits imposed by
the Maximum Repurchase Amount under this Section 11. Until all of such Stock and
Options are purchased and paid for by the Company, the Purchaser and the Other
Purchasers whose Stock and Options are not purchased in accordance with this
Section 11 shall have priority, on a pro rata basis, over other purchases of
Common Stock and Options by the Company pursuant to this Agreement and Other
Purchasers' Agreements.
12. Rights to Negotiate Repurchase Price.
Nothing in this Agreement shall be deemed to restrict or prohibit
the Company from purchasing shares of Stock or Options from the Purchaser, at
any time, upon such terms and conditions, and for such price, as may be mutually
agreed upon between the Parties, whether or not at the time of such purchase
circumstances exist which specifically grant the Company the right to purchase,
or the Purchaser the right to sell, shares of Stock or the Company has the right
to pay, or the Purchaser has the right to receive, the Option Excess Price under
the terms of this Agreement.
13. Covenant Regarding 83(b) Election.
Except as the Company may otherwise agree in writing, the Purchaser
hereby covenants and agrees that he will make an election provided pursuant to
Treasury Regulation 1.83-2 with respect to the Stock, including without
limitation, the Stock to be acquired pursuant to Section 1 and the Stock to be
acquired upon each exercise of the Purchaser's Options; and Purchaser further
covenants and agrees that he will furnish the Company with copies of the forms
of election the Purchaser files within 30 days after the date hereof, and within
30 days after each exercise of Purchaser's Non-Qualified Options and with
evidence that each such election has been filed in a timely manner.
<PAGE>
17
14. Notice of Change of Beneficiary.
Immediately prior to any transfer of Stock to a Purchaser's Trust,
the Purchaser shall provide the Company with a copy of the instruments creating
the Purchaser's Trust and with the identity of the beneficiaries of the
Purchaser's Trust. The Purchaser shall notify the Company immediately prior to
any change in the identity of any beneficiary of the Purchaser's Trust.
15. Expiration of Certain Provisions.
The provisions contained in Sections 4, 5 and 6 of this Agreement
and the portion of any other provision of this Agreement which incorporates the
provisions of Sections 4, 5 and 6, shall terminate and be of no further force or
effect with respect to any shares of Stock sold by the Purchaser (i) pursuant to
an effective registration statement filed by the Company pursuant to Section 10
hereof or (ii) pursuant to the terms of the Sale Participation Agreement of even
date herewith, among the Purchaser, Artal Luxembourg S.A. and Flowers
Industries, Inc.
The provisions contained in Sections 2(e), 3, 4, 5, 6 and 13 of this
Agreement, and the portion of any other provisions of this Agreement which
incorporate the provisions of such Sections, shall terminate and be of no
further force or effect upon the consummation of a merger, reorganization,
business combination or liquidation of the Company, or a sale of Common Stock
owned by the Investors, but only if such merger, reorganization, business
combination, liquidation or sale of Common Stock results in the Investors, or
any affiliates thereof, no longer having the power (i) to elect a majority of
the Board of Directors of the Company or such other corporation which succeeds
to the Company's rights and obligations pursuant to such merger, reorganization,
business combination, liquidation or stock sale, or (ii) if the resulting entity
of such merger, reorganization, business combination, liquidation or stock sale
is not a corporation, to select the general partner(s) or other persons or
entities controlling the operations and business of the resulting entity.
16. Recapitalizations, etc.
The provisions of this Agreement shall apply, to the full extent set
forth herein with respect to the Stock or the Options, to any and all shares of
capital stock of the Company or any capital stock, partnership units or any
other security evidencing ownership interests in any successor or assign of the
Company (whether by merger, consolidation, sale of assets or otherwise) which
may be issued in respect of, in exchange for, or substitution of the Stock or
the Options, by reason of any stock dividend, split, reverse split, combination,
recapitalization,
<PAGE>
18
liquidation, reclassification, merger, consolidation or otherwise.
17. Purchaser's Employment by the Company.
Nothing contained in this Agreement or in any other agreement
entered into by the Company and the Purchaser contemporaneously with the
execution of this Agreement (i) obligates the Company or any subsidiary of the
Company to employ the Purchaser in any capacity whatsoever or (ii) prohibits or
restricts the Company (or any such subsidiary) from terminating the employment,
if any, of the Purchaser at any time or for any reason whatsoever, with or
without cause, and the Purchaser hereby acknowledges and agrees that neither the
Company nor any other person has made any representations or promises whatsoever
to the Purchaser concerning the Purchaser's employment or continued employment
by the Company.
18. State Securities Laws.
The Company hereby agrees to use its best efforts to comply with all
state securities or "blue sky" laws which might be applicable to the sale of the
Stock and the issuance of the Options to the Purchaser.
19. Binding Effect.
The provisions of this Agreement shall be binding upon and accrue to
the benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns. In the case of a transferee permitted
under Section 2(a) hereof, such transferee shall be deemed the Purchaser
hereunder; provided, however, that no transferee (including without limitation,
transferees referred to in Section 2(a) hereof) shall derive any rights under
this Agreement unless and until such transferee has delivered to the Company a
valid undertaking and becomes bound by the terms of this Agreement.
20. Amendment.
This Agreement may be amended only by a written instrument signed by
the Parties hereto.
21. Closing.
Except as otherwise provided herein, the closing of each purchase
and sale of shares of Stock and the payment of the Option Excess Price, if any,
pursuant to this Agreement shall take place at the principal office of the
Company on the tenth business day following delivery of the notice by either
Party to the other of its exercise of the right to purchase or sell such Stock
hereunder or to cause the payment of the Option Excess Price, if any.
<PAGE>
19
22. Applicable Law.
The laws of the state of Delaware shall govern the interpretation,
validity and performance of the terms of this Agreement, regardless of the law
that might be applied under principles of conflicts of law. Any suit, action or
proceeding against the Purchaser, with respect to this Agreement, or any
judgment entered by any court in respect of any thereof, may be brought in any
court of competent jurisdiction in the State of Delaware or New York, as the
Company may elect in its sole discretion, and the Purchaser hereby submits to
the non-exclusive jurisdiction of such courts for the purpose of any such suit,
action, proceeding or judgment. By the execution and delivery of this Agreement,
the Purchaser appoints The Corporation Trust Company, at its office in New York,
New York or Wilmington, Delaware, as the case may be, as his agent upon which
process may be served in any such suit, action or proceeding. Service of process
upon such agent, together with notice of such service given to the Purchaser in
the manner provided in Section 25 hereof, shall be deemed in every respect
effective service of process upon him in any suit, action or proceeding. Nothing
herein shall in any way be deemed to limit the ability of the Company to serve
any such writs, process or summonses in any other manner permitted by applicable
law or to obtain jurisdiction over the Purchaser, in such other jurisdictions
and in such manner, as may be permitted by applicable law. The Purchaser hereby
irrevocably waives any objections which he may now or hereafter have to the
laying of the venue of any suit, action or proceeding arising out of or relating
to this Agreement brought in any court of competent jurisdiction in the State of
Delaware or New York, and hereby further irrevocably waives any claim that any
such suit, action or proceeding brought in any such court has been brought in
any inconvenient forum. No suit, action or proceeding against the Company with
respect to this Agreement may be brought in any court, domestic or foreign, or
before any similar domestic or foreign authority other than in a court of
competent jurisdiction in the State of Delaware or New York, and the Purchaser
hereby irrevocably waives any right which he may otherwise have had to bring
such an action in any other court, domestic or foreign, or before any similar
domestic or foreign authority. The Company hereby submits to the jurisdiction of
such courts for the purpose of any such suit, action or proceeding.
23. Assignability of Certain Rights by the Company.
The Company shall have the right to assign any or all of its rights
or obligations to purchase shares of Stock pursuant to Sections 4, 5 and 6
hereof.
<PAGE>
20
24. Miscellaneous.
In this Agreement (i) all references to "dollars" or "$" are to
United States dollars and (ii) the word "or" is not exclusive. If any provision
of this Agreement shall be declared illegal, void or unenforceable by any court
of competent jurisdiction, the other provisions shall not be affected, but shall
remain in full force and effect.
25. Notices.
All notices and other communications provided for herein shall be in
writing and shall be deemed to have been duly given if delivered by hand
(whether by overnight courier or otherwise) or sent by registered or certified
mail, return receipt requested, postage prepaid, to the Party to whom it is
directed:
(a) If to the Company, to it at the following address:
INFLO Holdings Corporation
677 Larch Avenue
Elmhurst, Illinois 60126
Attn: Chief Executive Officer
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017-3909
Attn: Robert E. Spatt, Esq.
(b) If to the Purchaser, to him at the address set
forth below under his signature;
or at such other address as either party shall have specified
by notice in writing to the other.
<PAGE>
21
26. Covenant Not to Compete; Confidential Information; Specific
Performance.
(a) In consideration of the Company entering into this Agreement
with the Purchaser, the Purchaser hereby agrees effective as of the Purchase
Date, for so long as the Purchaser is employed by the Company or one of its
subsidiaries (the "Noncompete Period"), the Purchaser shall not, directly or
indirectly, engage in the production, sale or distribution of any food product
produced, sold or distributed by the Company or its subsidiaries on the date
hereof or during the Noncompete Period anywhere in North America where the
Company or its subsidiaries is doing business other than through the Purchaser's
employment with the Company or any of its subsidiaries. At the Company's option,
the Noncompete Period may be extended on a month-to-month basis beyond the
termination of such Purchaser's employment with the Company or its subsidiaries
for up to an additional two year period, upon payment within the first ten
business days of such month by the Company of such Purchaser's base salary on
the date of termination, divided by twelve. To the extent such Purchaser is
employed without violating this covenant, the Company may reduce the monthly
payment to such Purchaser by an amount equal to such Purchaser's then current
base salary for such month. In any event, such Purchaser agrees to reimburse the
Company for any compensation received by the Purchaser from such permitted
employment (other than any such compensation that has resulted in a reduction in
a monthly payment by the Company up to the amount of such reduction) up to the
amount paid by the Company to such Purchaser during such extended Non Compete
Period. For purposes of this Agreement, the phrase "directly or indirectly
engage in" shall include any direct or indirect ownership or profit
participation interest in such enterprise, whether as an owner, stockholder,
partner, joint venturer or otherwise, and shall include any direct or indirect
participation in such enterprise as a consultant, licensor of technology or
otherwise.
(b) The Purchaser will not disclose or use at any time, any
Confidential Information (as defined below) of which the Purchaser is or becomes
aware, whether or not such information is developed by him, except (i) to the
extent that such disclosure or use is directly related to and required by the
Purchaser's performance of duties, if any, assigned to the Purchaser by the
Company or (ii) pursuant to the order of any court or administrative agency. As
used in this Agreement, the term "Confidential Information" means information
that is not generally known to the public and that is used, developed or
obtained by the Company or its subsidiaries in connection with its business,
including but not limited to (i) products or services, (ii) fees, costs and
pricing structures, (iii) designs, (iv) computer software, including operating
systems, applications and program listings, (v) flow charts, manuals and
documentation, (vi) data bases, (vii) accounting and business methods, (viii)
inventions, devices, new developments, methods and processes,
<PAGE>
22
whether patentable or unpatentable and whether or not reduced to practice, (ix)
customers and clients and customer or client lists, (x) other copyrightable
works, (xi) all technology and trade secrets, and (xii) all similar and related
information in whatever form. Confidential Information will not include any
information that has been published in a form generally available to the public
prior to the date the Purchaser proposes to disclose or use such information.
The Purchaser acknowledges and agrees that all copyrights, works, inventions,
innovations, improvements, developments, patents, trademarks and all similar or
related information which relate to the actual or anticipated business of the
Company and its subsidiaries (including its predecessors) and conceived,
developed or made by the Purchaser while employed by the Company or its
subsidiaries belong to the Company. The Purchaser will perform all actions
reasonably requested by the Company (whether during or after the Noncompete
Period) to establish and confirm such ownership at the Company's expense
(including without limitation assignments, consents, powers of attorney and
other instruments).
(c) Notwithstanding clauses (a) and (b) above, if at any time a
court holds that the restrictions stated in such clauses (a) and (b) are
unreasonable or otherwise unenforceable under circumstances then existing, the
parties hereto agree that the maximum period, scope or geographic area
determined to be reasonable under such circumstances by such court will be
substituted for the stated period, scope or area. Because the Purchaser's
services are unique and because the Purchaser has had access to Confidential
Information, the parties hereto agree that money damages will be an inadequate
remedy for any breach of this Agreement. In the event a breach or threatened
breach of this Agreement, the Company or its successors or assigns may, in
addition to other rights and remedies existing in their favor, apply to any
court of competent jurisdiction for specific
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23
performance and/or injunctive relief in order to enforce, or prevent any
violations of, the provisions hereof (without the posting of a bond or other
security).
IN WITNESS WHEREOF, the Parties have executed this Agreement as of
the date first above written.
INFLO HOLDINGS CORPORATION
By___________________________
Nick McCully
Secretary and Treasurer
-----------------------------
Sam K. Reed
Address of Purchaser:
Keebler Company
677 Larch Avenue
Elmhurst, IL 60126
Number of Shares of Purchase
Stock: 100,000
Aggregate Purchase Price:
$1,000,000
<PAGE>
Exhibit A
Exhibit 10.9
FORM OF NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, dated as of May 10, 1996, is made by and between
INFLO Holdings Corporation, a Delaware corporation hereinafter referred to as
the "Company", and _________________, an employee of the Company or a Subsidiary
(as defined below) or Affiliate (as defined below) of the Company, hereinafter
referred to as "Optionee".
WHEREAS, the Company wishes to afford the Optionee the opportunity
to purchase shares of its $.01 par value Common Stock ("Common Stock");
WHEREAS, the Company wishes to carry out the Plan (as hereinafter
defined), the terms of which are hereby incorporated by reference and made a
part of this Agreement; and
WHEREAS, the Committee (as hereinafter defined), appointed to
administer the Plan, has determined that it would be to the advantage and best
interest of the Company and its stockholders to grant the Non-Qualified Options
provided for herein to the Optionee as an incentive for increased efforts during
his term of office with the Company or its Subsidiaries or Affiliates, and has
advised the Company thereof and instructed the undersigned officers to issue
said Options;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Agreement, they shall
have the meaning specified in the Plan or below unless the context clearly
indicates to the contrary.
Section 1.1 - Affiliate
"Affiliate" shall mean, with respect to a corporation (the
"Corporation"), any corporation directly or indirectly controlling, controlled
by, or under common control with, the Corporation or any other entity designated
by the Board of Directors of the Corporation in which the Corporation or an
Affiliate has an interest.
<PAGE>
2
Section 1.2 - Cause
"Cause" shall mean (i) misconduct by the Optionee involving
dishonesty or breach of trust in connection with Optionee's employment or (ii)
conduct which (A) would be a reasonable basis for an indictment of a felony or a
misdemeanor involving moral turpitude and (B) is reasonably likely to be
injurious to the Company.
Section 1.3 - Code
"Code" shall mean the Internal Revenue Code of 1986, as amended.
Section 1.4 - Committee
"Committee" shall mean the Compensation Committee of the Company.
Section 1.5 - Good Reason
"Good Reason" shall mean (i) a reduction in the Optionee's base
salary, (ii) a substantial reduction in the Optionee's duties and
responsibilities or (iii) the Company requiring the Optionee to work in a new
place of employment for a period longer than twelve months that would not permit
the Optionee to have a reasonable commute from his residence at such time.
Section 1.6 - Grant Date
"Grant Date" shall mean the date on which the Options provided for
in this Agreement were granted.
Section 1.7 - Group
"Group" means two or more Persons acting together as a partnership,
limited partnership, syndicate or other group for the purpose of acquiring,
holding or disposing of securities of the Company.
Section 1.8 - Options
"Options" shall mean the non-qualified options, which may include a
Time Option and/or a Performance Option, to purchase Common Stock granted under
this Agreement.
<PAGE>
3
Section 1.9 - Performance Option
"Performance Option" shall mean an Option with respect to which the
commencement of exercisability is governed by Section 3.1(c) hereof.
Section 1.10 - Permanent Disability
The Optionee shall be deemed to have a "Permanent Disability" if the
Optionee is unable to engage in the activities required by the Optionee's job by
reason of any medically determined physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to last for a
continuous period of not less than 12 months (in each case, as determined in
good faith by a majority of the Board of Directors of the Company, which
determination shall be conclusive).
Section 1.11 - Person
"Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
governmental authority or other entity of whatever nature.
Section 1.12 - Plan
"Plan" shall mean the 1996 Stock Purchase and Option Plan for Key
Employees of INFLO Holdings Corporation and Subsidiaries.
Section 1.13 - Pronouns
The masculine pronoun shall include the feminine and neuter, and the
singular the plural, where the context so indicates.
Section 1.14 - Retirement
"Retirement" shall mean retirement at age 65 or over (or such other
age as may be approved by the Board of Directors of the Company) after having
been employed by the Company or a Subsidiary for at least three years after the
date hereof.
Section 1.15 - Secretary
"Secretary" shall mean the Secretary of the Company.
Section 1.16 - Stockholder's Agreement
"Stockholder's Agreement" shall mean that certain Management
Stockholder's Agreement dated as of May 10, 1996, between the Optionee and the
Company.
<PAGE>
4
Section 1.17 - Subsidiary
"Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations, or group of
commonly controlled corporations, other than the last corporation in the
unbroken chain then owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.
Section 1.18 - Time Option
"Time Option" shall mean an Option with respect to which the
commencement of exercisability is governed by Sections 3.1(a) and 3.1(b) hereof.
Section 1.19 - Trigger Date
"Trigger Date" shall mean January 26, 1996.
ARTICLE II
GRANT OF OPTIONS
Section 2.1 - Grant of Options
For good and valuable consideration, on and as of the date hereof,
the Company irrevocably grants to the Optionee a Time Option and/or a
Performance Option to purchase any part or all of an aggregate of the number of
shares set forth with respect to each such Option on the signature page hereof
of its $.01 par value Common Stock upon the terms and conditions set forth in
this Agreement.
Section 2.2 - Exercise Price
The exercise price of the shares of stock covered by the Options
shall be $10.00 per share without commission or other charge.
Section 2.3 - Consideration to the Company
In consideration of the granting of these Options by the Company,
the Optionee agrees to render faithful and efficient services to the Company or
a Subsidiary or Affiliate, with such duties and responsibilities as the Company
shall from time to time prescribe. Nothing in this Agreement or in the Plan
shall confer upon the Optionee any right to continue in the employ of the
Company or any Subsidiary or Affiliate or shall interfere with or restrict in
any way the rights of the Company and its Subsidiaries or Affiliates, which are
hereby expressly reserved, to terminate the employment of the Optionee at any
time for any reason whatsoever, with or without Cause.
<PAGE>
5
Section 2.4 - Adjustments in Options
Subject to Section 9 of the Plan, in the event that the outstanding
shares of the stock subject to an Option are, from time to time, changed into or
exchanged for a different number or kind of shares of the Company or other
securities of the Company by reason of a merger, consolidation,
recapitalization, change of control, reclassification, stock split, spin-off,
stock dividend, combination of shares, or otherwise, the Committee shall make an
appropriate and equitable adjustment in the number and kind of shares or other
consideration as to which such Option, or portions thereof then unexercised,
shall be exercisable. Any such adjustment made by the Committee shall be final
and binding upon the Optionee, the Company and all other interested persons.
ARTICLE III
PERIOD OF EXERCISABILITY
Section 3.1 - Commencement of Exercisability
(a) No shares granted as Time Options shall be exercisable
immediately upon grant.
(b) The balance of Time Options shall become exercisable as follows:
Percentage of Option Shares
Date Time Option As to Which Time Option
Becomes Exercisable Is Exercisable
- ------------------- ----------------------------
Trigger Date through the
first anniversary of
the Trigger Date 0%
After the first anniversary
of the Trigger Date 20%
After the second anniversary
of the Trigger Date 40%
After the third anniversary
of the Trigger Date 60%
After the fourth anniversary
of the Trigger Date 80%
After the fifth anniversary
of the Trigger Date 100%
<PAGE>
6
Notwithstanding the foregoing, the Time Option shall become
immediately exercisable as to 100% of the shares of Common Stock subject to such
Option immediately prior to a Change of Control (but only to the extent such
Option has not otherwise terminated or become exercisable). A "Change of
Control" means (i) a sale of all or substantially all of the assets of the
Company to a Person who is not an Affiliate of Artal Luxembourg S.A. ("Artal")
or Flowers Industries, Inc. ("Flowers"), (ii) a sale by Artal, Flowers or any of
their Affiliates resulting in more than 50% of the voting stock of the Company
being held by a Person or Group that does not include Artal, Flowers or any of
their Affiliates or (iii) a merger or consolidation of the Company into another
Person which is not an Affiliate of Artal or Flowers.
(c) In accordance with Schedule I attached hereto, the Performance
Option shall become exercisable with respect to the stated percentage of shares
of Common Stock subject to such Option on each Determination Date that the
actual EBITDA for that year equals or exceeds the EBITDA Target for that year.
If the Company's EBITDA for a Plan Year is less than 90% of the EBITDA Target
for such Plan Year (a "Missed Year"), no such Performance Option shall become
exercisable with respect to any additional shares of Common Stock on the
Determination Date for such Plan Year. If the Company's EBITDA for a Plan Year
is 90% or more of the EBITDA Target for a Plan Year (but less than 100%) (a
"Partial Year"), the Performance Option shall become exercisable with respect to
the following percentages of the stated percentage of shares of Common Stock for
that year:
Percent of EBITDA Percent of Stated Percentage
Target Achieved: on Schedule I:
- ----------------- ----------------------------
90% 50%
91% 55%
92% 60%
93% 65%
94% 70%
95% 75%
96% 80%
97% 85%
98% 90%
99% 95%
<PAGE>
7
If, in any year subsequent to a Missed Year or a Partial Year, EBITDA exceeds
the EBITDA Target and Cumulative EBITDA exceeds the Cumulative EBITDA Targets,
then 50% of all unvested Performance Options in respect of prior Missed Years or
Partial Years shall become exercisable (but only to the extent such Option has
not otherwise terminated or become exercisable).
Notwithstanding the foregoing, the Performance Option shall become
exercisable as to 100% of the shares of Common Stock subject to such Option (i)
immediately prior to a Change of Control on or before the fifth anniversary of
the Trigger Date if, and only if, the Company had met or exceeded its Cumulative
EBITDA Target for the preceding Plan Year or (ii) on the ninth anniversary of
the Trigger Date (but only, in each case (i) and (ii) to the extent such Option
has not otherwise terminated or become unexercisable).
(d) For purposes of Section 3.1(c):
(i) "Cumulative EBITDA" means with respect to any Performance
Option, the sum of the EBITDA for Keebler Holding Corporation ("Keebler")
and its consolidated subsidiaries during the period commencing on January
27, 1996, and ending on the last day of the Plan Year preceding
the Determination Date.
(ii) "Cumulative EBITDA Targets" means with respect to any
Performance Option, the sum of the EBITDA Targets for the period
commencing on January 27, 1996, and ending on the last day of the Plan
Year preceding the Determination Date.
(iii) "Determination Date" means the day following the last day of
Keebler's fiscal year.
(iv) "EBITDA" shall be calculated with respect to Keebler and its
consolidated subsidiaries in accordance with generally accepted accounting
principles in effect on the date hereof; provided, however, that EBITDA
for the Plan Year 1996 shall include EBITDA for Keebler only for the
period from and including January 27, 1996 to the last day of Keebler's
1996 fiscal year.
(v) "EBITDA Target" shall have the meaning ascribed to such term in
Schedule I attached hereto for Plan Years 1996 through 2000 and such other
targets as are established by the Committee with respect to subsequent
Plan Years; provided, that to the extent that Keebler or any of its
subsidiaries disposes or acquires assets or businesses out of the ordinary
course of business the Committee will decrease or increase, as the case
may be, the EBITDA Target for such dispositions or acquisitions.
(vi) "Plan Year" means the fiscal year of the Company.
<PAGE>
8
(e) Notwithstanding the foregoing, no Option shall become
exercisable as to any additional shares of Common Stock following the
termination of employment of the Optionee by the Company and its subsidiaries
for any reason other than a termination of employment because of death or
Permanent Disability of the Optionee, and any Option (other than as provided in
the next succeeding sentence) which is non-exercisable as of the Optionee's
termination of employment shall be immediately cancelled. In the event of a
termination of employment because of such death or Permanent Disability, (i) the
Time Options shall immediately become exercisable as to all shares of Common
Stock subject thereto and (ii) if, and only if, such death or Permanent
Disability occurred on or prior to the fifth anniversary of the Trigger Date and
the Company had met or exceeded its Cumulative EBITDA Target for the preceding
Plan Year, the Performance Options shall, in each case, immediately become
exercisable as to all shares of Common Stock subject thereto.
Section 3.2 - Expiration of Options
Except as otherwise provided in Section 5 or 6 of the Stockholder's
Agreement, the Options may not be exercised to any extent by Optionee after the
first to occur of the following events:
(a) The tenth anniversary of the Grant Date; or
(b) The first anniversary of the date of the Optionee's termination
of employment by reason of death or Permanent Disability; or
(c) The first business day which is fifteen calendar days after the
earlier of (i) 75 days after termination of employment of the Optionee for
any reason other than for Cause, death or Permanent Disability or (ii) the
delivery of notice by the Company that it does not intend to exercise its
call right under Section 6 of the Stockholder's Agreement; provided,
however, that in any event the Options shall remain exercisable under this
subsection 3.2(c) until at least 45 days after termination of employment
of the Optionee for any reason other than for death or Permanent
Disability; or
(d) The date the Option is terminated pursuant to Section 5, 6 or
8(b) of the Stockholder's Agreement;
(e) The date of an Optionee's termination of employment by the
Company for Cause; or
<PAGE>
9
(f) If the Committee so determines pursuant to Section 9 of the
Plan, the effective date of either the merger or consolidation of the
Company into another Person, or the exchange or acquisition by another
Person of all or substantially all of the Company's assets or 80% or more
of its then outstanding voting stock, or the recapitalization,
reclassification, liquidation or dissolution of the Company. At least ten
(10) days prior to the effective date of such merger, consolidation,
exchange, acquisition, recapitalization, reclassification, liquidation or
dissolution, the Committee shall give the Optionee notice of such event if
the Option has then neither been fully exercised nor become unexercisable
under this Section 3.2.
ARTICLE IV
EXERCISE OF OPTION
Section 4.1 - Person Eligible to Exercise
During the lifetime of the Optionee, only he may exercise an Option
or any portion thereof. After the death of the Optionee, any exercisable portion
of an Option may, prior to the time when an Option becomes unexercisable under
Section 3.2, be exercised by his personal representative or by any person
empowered to do so under the Optionee's will or under the then applicable laws
of descent and distribution.
Section 4.2 - Partial Exercise
Any exercisable portion of an Option or the entire Option, if then
wholly exercisable, may be exercised in whole or in part at any time prior to
the time when the Option or portion thereof becomes unexercisable under Section
3.2; provided, however, that any partial exercise shall be for whole shares of
Common Stock only.
Section 4.3 - Manner of Exercise
An Option, or any exercisable portion thereof, may be exercised
solely by delivering to the Secretary or his office all of the following prior
to the time when the Option or such portion becomes unexercisable under Section
3.2:
(a) Notice in writing signed by the Optionee or the other person
then entitled to exercise the Option or portion thereof, stating that the
Option or portion thereof is thereby exercised, such notice complying with
all applicable rules established by the Committee;
<PAGE>
10
(b) Full payment (in cash, by check or by a combination thereof) for
the shares with respect to which such Option or portion thereof is
exercised;
(c) A bona fide written representation and agreement, in a form
satisfactory to the Committee, signed by the Optionee or other person then
entitled to exercise such Option or portion thereof, stating that the
shares of stock are being acquired for his own account, for investment and
without any present intention of distributing or reselling said shares or
any of them except as may be permitted under the Securities Act of 1933,
as amended (the "Act"), and then applicable rules and regulations
thereunder, and that the Optionee or other person then entitled to
exercise such Option or portion thereof will indemnify the Company against
and hold it free and harmless from any loss, damage, expense or liability
resulting to the Company if any sale or distribution of the shares by such
person is contrary to the representation and agreement referred to above;
provided, however, that the Committee may, in its absolute discretion,
take whatever additional actions it deems appropriate to ensure the
observance and performance of such representation and agreement and to
effect compliance with the Act and any other federal or state securities
laws or regulations;
(d) Full payment to the Company of all amounts which, under federal,
state or local law, it is required to withhold upon exercise of the
Option; and
(e) In the event the Option or portion thereof shall be exercised
pursuant to Section 4.1 by any person or persons other than the Optionee,
appropriate proof of the right of such person or persons to exercise the
option.
Without limiting the generality of the foregoing, the Committee may require an
opinion of counsel acceptable to it to the effect that any subsequent transfer
of shares acquired on exercise of an Option does not violate the Act, and may
issue stop-transfer orders covering such shares. Share certificates evidencing
stock issued on exercise of this Option shall bear an appropriate legend
referring to the provisions of subsection (c) above and the agreements herein.
The written representation and agreement referred to in subsection (c) above
shall, however, not be required if the shares to be issued pursuant to such
exercise have been registered under the Act, and such registration is then
effective in respect of such shares.
<PAGE>
11
Section 4.4 - Conditions to Issuance of Stock Certificates
The shares of stock deliverable upon the exercise of an Option, or
any portion thereof, may be either previously authorized but unissued shares or
issued shares which have then been reacquired by the Company. Such shares shall
be fully paid and nonassessable. The Company shall not be required to issue or
deliver any certificate or certificates for shares of stock purchased upon the
exercise of an Option or portion thereof prior to fulfillment of all of the
following conditions:
(a) The obtaining of approval or other clearance from any state or
federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable; and
(b) The lapse of such reasonable period of time following the
exercise of the Option as the Committee may from time to time establish
for reasons of administrative convenience.
Section 4.5 - Rights as Stockholder
The holder of an Option shall not be, nor have any of the rights or
privileges of, a stockholder of the Company in respect of any shares purchasable
upon the exercise of the Option or any portion thereof unless and until
certificates representing such shares shall have been issued by the Company to
such holder.
ARTICLE V
MISCELLANEOUS
Section 5.1 - Administration
The Committee shall have the power to interpret the Plan and this
Agreement and to adopt such rules for the administration, interpretation and
application of the Plan as are consistent therewith and to interpret or revoke
any such rules. All actions taken and all interpretations and determinations
made by the Committee shall be final and binding upon the Optionee, the Company
and all other interested persons. No member of the Committee shall be personally
liable for any action, determination or interpretation made in good faith with
respect to the Plan or the Options. In its absolute discretion, the Board of
Directors may at any time and from time to time exercise any and all rights and
duties of the Committee under the Plan and this Agreement.
<PAGE>
12
Section 5.2 - Options Not Transferable
Except as provided in the Stockholder's Agreement, neither the
Options nor any interest or right therein or part thereof shall be liable for
the debts, contracts or engagements of the Optionee or his successors in
interest or shall be subject to disposition by transfer, alienation,
anticipation, pledge, encumbrance, assignment or any other means whether such
disposition be voluntary or involuntary or by operation of law by judgment,
levy, attachment, garnishment or any other legal or equitable proceedings
(including bankruptcy), and any attempted disposition thereof shall be null and
void and of no effect; provided, however, that this Section 5.2 shall not
prevent transfers by will or by the applicable laws of descent and distribution.
Section 5.3 - Shares to Be Reserved
The Company shall at all times during the term of the Options
reserve and keep available such number of shares of stock as will be sufficient
to satisfy the requirements of this Agreement.
Section 5.4 - Notices
Any notice to be given under the terms of this Agreement to the
Company shall be addressed to the Company in care of its Secretary, and any
notice to be given to the Optionee shall be addressed to him at the address
given beneath his signature hereto. By a notice given pursuant to this Section
5.4, either party may hereafter designate a different address for notices to be
given to him. Any notice which is required to be given to the Optionee shall, if
the Optionee is then deceased, be given to the Optionee's personal
representative if such representative has previously informed the Company of his
status and address by written notice under this Section 5.4. Any notice shall
have been deemed duly given when enclosed in a properly sealed envelope or
wrapper addressed as aforesaid, deposited (with postage prepaid) in a post
office or branch post office regularly maintained by the United States Postal
Service.
Section 5.5 - Titles
Titles are provided herein for convenience only and are not to serve
as a basis for interpretation or construction of this Agreement.
<PAGE>
13
Section 5.6 - Applicability of Plan and Stockholder's Agreement
The Options and the shares of Common Stock issued to the Optionee
upon exercise of the Options shall be subject to all of the terms and provisions
of the Plan and the Stockholder's Agreement, to the extent applicable to the
Options and such shares. In the event of any conflict between this Agreement and
the Plan, the terms of the Plan shall control. In the event of any conflict
between this Agreement or the Plan and the Stockholder's Agreement, the terms of
the Stockholder's Agreement shall control.
Section 5.7 - Amendment
This Agreement may be amended only by a writing executed by the
parties hereto which specifically states that it is amending this Agreement.
Section 5.8 - Governing Law
The laws of the State of Delaware shall govern the interpretation,
validity and performance of the terms of this Agreement, regardless of the law
that might be applied under principles of conflicts of laws.
Section 5.9 - Jurisdiction
Any suit, action or proceeding against the Optionee with respect to
this Agreement, or any judgment entered by any court in respect of any thereof,
may be brought in any court of competent jurisdiction in the State of Delaware
or New York, as the Company may elect in its sole discretion, and the Optionee
hereby submits to the non-exclusive jurisdiction of such courts for the purpose
of any such suit, action, proceeding or judgment. The Optionee hereby
irrevocably waives any objections which he may now or hereafter have to the
laying of the venue of any suit, action or proceeding arising out of or relating
to this Agreement brought in any court of competent jurisdiction in the State of
Delaware or New York, and hereby further irrevocably waives any claim that any
such suit, action or proceeding brought in any such court has been brought in
any inconvenient forum. No suit, action or proceeding against the Company with
respect to this Agreement may be brought in any court, domestic or foreign, or
before any similar domestic or foreign authority other than in a court of
competent jurisdiction in the State of Delaware or New York, and the Optionee
hereby irrevocably waives any right which he may otherwise have had to bring
such an action in any other court, domestic or foreign, or before any similar
domestic or
<PAGE>
14
foreign authority. The Company hereby submits to the jurisdiction of such courts
for the purpose of any such suit, action or proceeding.
IN WITNESS WHEREOF, this Agreement has been executed and delivered
by the parties hereto.
INFLO HOLDINGS CORPORATION
By __________________________
Its ______________________
___________________________ Aggregate number of shares
Optionee of Common Stock for which the Time
Option granted hereunder is
exercisable:
_____________
Aggregate number of shares
of Common Stock for which
___________________________ the Performance Option granted
hereunder is exercisable:
___________________________ ______________
Address
Optionee's Taxpayer
Identification Number:
___________________________
<PAGE>
Schedule I
Plan Year EBITDA Target Percentage of
--------- ------------- Shares Exercisable
------------------
1996 25%
1997 25%
1998 25%
1999 12.5%
2000 12.5%
Exhibit 10.10
FORM OF 1996 STOCK PURCHASE AND OPTION
PLAN FOR KEY EMPLOYEES OF INFLO
HOLDINGS CORPORATION AND SUBSIDIARIES
1. Purpose of Plan
The 1996 Stock Purchase and Option Plan for Key Employees of
INFLO Holdings Corporation and Subsidiaries (the "Plan") is
designed:
(a) to promote the long term financial interests and growth of INFLO
Holdings Corporation (the "Corporation") and its subsidiaries by attracting and
retaining management personnel with the training, experience and ability to
enable them to make a substantial contribution to the success of the
Corporation's business;
(b) to motivate management personnel by means of growth- related
incentives to achieve long range goals; and
(c) to further the identity of interests of participants with those of the
stockholders of the Corporation through opportunities for increased stock, or
stock-based, ownership in the Corporation.
2. Definitions
As used in the Plan, the following words shall have the following
meanings:
(a) "Grant" means an award made to a Participant pursuant to the Plan and
described in Paragraph 5, including, without limitation, an award of an
Incentive Stock Option, Stock Option, Stock Appreciation Right, Dividend
Equivalent Right, Restricted Stock, Purchase Stock, Performance Units,
Performance Shares or Other Stock-Based Grant or any combination of the
foregoing.
(b) "Grant Agreement" means an agreement between the Corporation and a
Participant that sets forth the terms, conditions and limitations applicable to
a Grant.
(c) "Board of Directors" means the Board of Directors of the Corporation.
(d) "Committee" means the Compensation Committee of the Board of
Directors.
(e) "Common Stock" or "Share" means common stock of the Corporation which
may be authorized but unissued, or issued and reacquired.
(f) "Employee" means a key person, including an officer, in the regular
full-time employment of the Corporation or one of its
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2
Subsidiaries who, in the opinion of the Committee, is, or is expected, to be
primarily responsible for the management, growth or protection of some part or
all of the business of the Corporation.
(g) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(h) "Fair Market Value" means such value of a Share as reported for stock
exchange transactions and/or determined in accordance with any applicable
resolutions or regulations of the Committee in effect at the relevant time.
(i) "Participant" means an Employee, or other person having a unique
relationship with the Corporation or one of its Subsidiaries, to whom one or
more Grants have been made and such Grants have not all been forfeited or
terminated under the Plan; provided, however, a non-employee director of the
Corporation or one of its Subsidiaries may not be a Participant.
(j) "Stock-Based Grants" means the collective reference to the grant of
Stock Appreciation Rights, Dividend Equivalent Rights, Restricted Stocks,
Performance Units, Performance Shares and Other Stock-Based Grants.
(k) "Stock Options" means the collective reference to "Incentive Stock
Options" and "Other Stock Options".
(l) "Subsidiary" means any corporation other than the Corporation in an
unbroken chain of corporations beginning with the Corporation if each of the
corporations other than the last corporation in the unbroken chain owns 50% or
more of the voting stock in one of the other corporations in such chain.
3. Administration of Plan
(a) The Plan shall be administered by the Committee. None of the members
of the Committee shall be eligible to be selected for Grants under the Plan, or
have been so eligible for selection within one year prior thereto; provided,
however, that the members of the Committee shall qualify to administer the Plan
for purposes of Rule 16b-3 (and any other applicable rule) promulgated under
Section 16(b) of the Exchange Act to the extent that the Corporation is subject
to such rule. The Committee may adopt its own rules of procedure, and the action
of a majority of the Committee, taken at a meeting or taken without a meeting by
a writing signed by such majority, shall constitute action by the Committee. The
Committee shall have the power and authority to administer, construe and
interpret the Plan, to make rules for carrying it out and to make changes in
such rules. Any such interpretations, rules, and administration shall be
consistent with the basic purposes of the Plan.
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3
(b) The Committee may delegate to the Chief Executive Officer and to other
senior officers of the Corporation its duties under the Plan subject to such
conditions and limitations as the Committee shall prescribe, except that only
the Committee may designate and make Grants to Participants who are subject to
Section 16 of the Exchange Act.
(c) The Committee may employ attorneys, consultants, accountants,
appraisers, brokers or other persons. The Committee, the Corporation, and the
officers and directors of the Corporation shall be entitled to rely upon the
advice, opinions or valuations of any such persons. All actions taken and all
interpretations and determinations made by the Committee in good faith shall be
final and binding upon all Participants, the Corporation and all other
interested persons. No member of the Committee shall be personally liable for
any action, determination or interpretation made in good faith with respect to
the Plan or the Grants, and all members of the Committee shall be fully
protected by the Corporation with respect to any such action, determination or
interpretation.
4. Eligibility
The Committee may from time to time make Grants under the Plan to such
Employees, or other persons having a unique relationship with the Corporation or
any of its Subsidiaries, and in such form and having such terms, conditions and
limitations as the Committee may determine. No Grants may be made under this
Plan to non-employee directors of the Corporation or any of its Subsidiaries.
Grants may be granted singly, in combination or in tandem. The terms, conditions
and limitations of each Grant under the Plan shall be set forth in a Grant
Agreement, in a form approved by the Committee, consistent, however, with the
terms of the Plan; provided, however, such Grant Agreement shall contain
provisions dealing with the treatment of Grants in the event of the termination,
death or disability of a Participant, and may also include provisions concerning
the treatment of Grants in the event of a change of control of the Corporation.
5. Grants
From time to time, the Committee will determine the forms and amounts of
Grants for Participants. Such Grants may take the following forms in the
Committee's sole discretion:
(a) Incentive Stock Options - These are stock options within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended ("Code"), to
purchase Common Stock. In addition to other restrictions contained in the Plan,
an option granted under this Paragraph 5(a), (i) may not be exercised more than
10 years after the date it is granted, (ii) may not have an option price less
than the Fair Market Value of the Common Stock on the date the option is
granted, (iii) must otherwise comply with Code Section 422, and (iv) must be
designated as an "Incentive Stock
<PAGE>
4
Option" by the Committee. The maximum aggregate Fair Market Value of Common
Stock (determined at the time of each Grant) with respect to which any
Participant may first exercise Incentive Stock Options under this Plan and any
Incentive Stock Options granted to the Participant for such year under any plans
of the Corporation or any Subsidiary in any calendar year is $100,000. Payment
of the option price shall be made in cash or in shares of Common Stock, or a
combination thereof, in accordance with the terms of the Plan, the Grant
Agreement, and of any applicable guidelines of the Committee in effect at the
time.
(b) Other Stock Options - These are options to purchase Common Stock which
are not designated by the Committee as "Incentive Stock Options". At the time of
the Grant the Committee shall determine, and shall have contained in the Grant
Agreement or other Plan rules, the option exercise period, the option price, and
such other conditions or restrictions on the grant or exercise of the option as
the Committee deems appropriate, which may include the requirement that the
grant of options is predicated on the acquisition of Purchase Shares under
Paragraph 5(e) by the Optionee. In addition to other restrictions contained in
the Plan, an option granted under this Paragraph 5(b), (i) may not be exercised
more than 10 years after the date it is granted and (ii) may not have an option
exercise price less than 50% of the Fair Market Value of the Common Stock on the
date the option is granted. Payment of the option price shall be made in cash or
in shares of Common Stock, or a combination thereof, in accordance with the
terms of the Plan and of any applicable guidelines of the Committee in effect at
the time.
(c) Stock Appreciation Rights - These are rights that on exercise entitle
the holder to receive the excess of (i) the Fair Market Value of a share of
Common Stock on the date of exercise over (ii) the Fair Market Value on the date
of Grant (the "base value") multiplied by (iii) the number of rights exercised
as determined by the Committee. Stock Appreciation Rights granted under the Plan
may, but need not be, granted in conjunction with an Option under Paragraph 5(a)
or 5(b). The Committee, in the Grant Agreement or by other Plan rules, may
impose such conditions or restrictions on the exercise of Stock Appreciation
Rights as it deems appropriate, and may terminate, amend, or suspend such Stock
Appreciation Rights at any time. No Stock Appreciation Right granted under this
Plan may be exercised less than 6 months or more than 10 years after the date it
is granted except in the event of death or disability of a Participant. To the
extent that any Stock Appreciation Right that shall have become exercisable, but
shall not have been exercised or cancelled or, by reason of any termination of
employment, shall have become non-exercisable, it shall be deemed to have been
exercised automatically, without any notice of exercise, on the last day on
which it is exercisable, provided that any conditions or limitations on its
exercise are satisfied (other than (i) notice of exercise and (ii) exercise or
election to exercise
<PAGE>
5
during the period prescribed) and the Stock Appreciation Right shall then have
value. Such exercise shall be deemed to specify that, the holder elects to
receive cash and that such exercise of a Stock Appreciation Right shall be
effective as of the time of automatic exercise.
(d) Restricted Stock - Restricted Stock is Common Stock delivered to a
Participant with or without payment of consideration with restrictions or
conditions on the Participant's right to transfer or sell such stock; provided
that the price of any Restricted Stock delivered for consideration and not as
bonus stock may not be less than 50% of the Fair Market Value of the Common
Stock on the date such Restricted Stock is granted or the price of such
Restricted Stock may be the par value. If a Participant irrevocably elects in
writing in the calendar year preceding a Grant of Restricted Stock, dividends
paid on the Restricted Stock granted may be paid in shares of Restricted Stock
equal to the cash dividend paid on Common Stock. The number of shares of
Restricted Stock and the restrictions or conditions on such shares shall be as
the Committee determines, in the Grant Agreement or by other Plan rules, and the
certificate for the Restricted Stock shall bear evidence of the restrictions or
conditions. No Restricted Stock may have a restriction period of less than 6
months, other than in the case of death or disability of the Participant.
(e) Purchase Stock - Purchase Stock are shares of Common Stock offered to
a Participant at such price as determined by the Committee, the acquisition of
which will make him eligible to receive under the Plan, including, but not
limited to, Other Stock Options; provided, however, that the price of such
Purchase Shares may not be less than 50% of the Fair Market Value of the Common
Stock on the date such shares of Purchase Stock are offered.
(f) Dividend Equivalent Rights - These are rights to receive cash payments
from the Corporation at the same time and in the same amount as any cash
dividends paid on an equal number of shares of Common Stock to shareholders of
record during the period such rights are effective. The Committee, in the Grant
Agreement or by other Plan rules, may impose such restrictions and conditions on
the Dividend Equivalent Rights, including the date such rights will terminate,
as it deems appropriate, and may terminate, amend, or suspend such Dividend
Equivalent Rights at any time.
(g) Performance Units - These are rights to receive at a specified future
date, payment in cash of an amount equal to all or a portion of the value of a
unit granted by the Committee. At the time of the Grant, in the Grant Agreement
or by other Plan rules, the Committee must determine the base value of the unit,
the performance factors applicable to the determination of the ultimate payment
value of the unit and the period over which Corporation performance will be
measured. These factors must
<PAGE>
6
include a minimum performance standard for the Corporation below which no
payment will be made and a maximum performance level above which no increased
payment will be made. The term over which Corporation performance will be
measured shall be not less than six months.
(h) Performance Shares - These are rights to receive at a specified future
date, payment in cash or Common Stock, as determined by the Committee, of an
amount equal to all or a portion of the Fair Market Value for all days that the
Common Stock is traded during the last forty-five (45) days of the specified
period of performance of a specified number of shares of Common Stock at the end
of a specified period based on the Corporation's performance during the period.
At the time of the Grant, the Committee, in the Grant Agreement or by Plan
rules, will determine the factors which will govern the portion of the rights so
payable and the period over which Corporation performance will be measured. The
factors will be based on Corporation's performance and must include a minimum
performance standard for the Corporation below which no payment will be made and
a maximum performance level above which no increased payment will be made. The
term over which the Corporation's performance will be measured shall be not less
than six months. Performance Shares will be granted for no consideration.
(i) Other Stock-Based Grants - The Committee may make other Grants under
the Plan pursuant to which shares of Common Stock (which may, but need not, be
shares of Restricted Stock pursuant to Paragraph 5(d)), are or may in the future
be acquired, or Grants denominated in stock units, including ones valued using
measures other than market value. Other Stock-Based Grants may be granted with
or without consideration; provided, however, that the price of any such Grant
made for consideration that provides for the acquisition of shares of Common
Stock or other equity securities of the Corporation may not be less than 50% of
the Fair Market Value of the Common Stock or such other equity securities on the
date of grant of such Grant. Such Other Stock-Based Grants may be made alone, in
addition to or in tandem with any Grant of any type made under the Plan and must
be consistent with the purposes of the Plan.
6. Limitations and Conditions
(a) The number of Shares available for Grants under this Plan shall be
2,000,000 shares of the authorized Common Stock as of the effective date of the
Plan. The number of Shares subject to Grants under this Plan to any one
Participant for any calendar year shall not be more than 350,000 shares. Unless
restricted by applicable law, Shares related to Grants that are forfeited,
terminated, cancelled or expire unexercised, shall immediately become available
for Grants.
(b) No Grants shall be made under the Plan beyond ten years after the
effective date of the Plan, but the terms of Grants
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7
made on or before the expiration thereof may extend beyond such expiration. At
the time a Grant is made or amended or the terms or conditions of a Grant are
changed, the Committee may provide for limitations or conditions on such Grant.
(c) Nothing contained herein shall affect the right of the Corporation to
terminate any Participant's employment at any time or for any reason.
(d) Deferrals of Grant payouts may be provided for, at the sole discretion
of the Committee, in the Grant Agreements.
(e) Except as otherwise prescribed by the Committee, the amounts of the
Grants for any employee of a Subsidiary, along with interest, dividend, and
other expenses accrued on deferred Grants shall be charged to the Participant's
employer during the period for which the Grant is made. If the Participant is
employed by more than one Subsidiary or by both the Corporation and a Subsidiary
during the period for which the Grant is made, the Participant's Grant and
related expenses will be allocated between the companies employing the
Participant in a manner prescribed by the Committee.
(f) Other than as specifically provided with regard to the death of a
Participant, no benefit under the Plan shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or
charge, and any attempt to do so shall be void. No such benefit shall, prior to
receipt thereof by the Participant, be in any manner liable for or subject to
the debts, contracts, liabilities, engagements, or torts of the Participant.
(g) Participants shall not be, and shall not have any of the rights or
privileges of, stockholders of the Corporation in respect of any Shares
purchasable in connection with any Grant unless and until certificates
representing any such Shares have been issued by the Corporation to such
Participants.
(h) No election as to benefits or exercise of Stock Options, Stock
Appreciation Rights, or other rights may be made during a Participant's lifetime
by anyone other than the Participant except by a legal representative appointed
for or by the Participant.
(i) Absent express provisions to the contrary, any grant under this Plan
shall not be deemed compensation for purposes of computing benefits or
contributions under any retirement plan of the Corporation or its Subsidiaries
and shall not affect any benefits under any other benefit plan of any kind or
subsequently in effect under which the availability or amount of benefits is
related to level of compensation. This Plan is not a "Retirement Plan" or
"Welfare Plan" under the Employee Retirement Income Security Act of 1974, as
amended.
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8
(j) Unless the Committee determines otherwise, no benefit or promise under
the Plan shall be secured by any specific assets of the Corporation or any of
its Subsidiaries, nor shall any assets of the Corporation or any of its
Subsidiaries be designated as attributable or allocated to the satisfaction of
the Corporation's obligations under the Plan.
7. Transfers and Leaves of Absence
For purposes of the Plan, unless the Committee determines otherwise: (a) a
transfer of a Participant's employment without an intervening period of
separation among the Corporation and any Subsidiary shall not be deemed a
termination of employment, and (b) a Participant who is granted in writing a
leave of absence shall be deemed to have remained in the employ of the
Corporation during such leave of absence.
8. Adjustments
In the event of any change in the outstanding Common Stock by reason of a
stock split, spin-off, stock dividend, stock combination or reclassification,
recapitalization, consolidation or merger, change of control, or similar event,
the Committee may adjust appropriately the number of Shares subject to the Plan
and available for or covered by Grants and Share prices related to outstanding
Grants and make such other revisions to outstanding Grants as it deems are
equitably required.
9. Merger, Consolidation, Exchange,
Acquisition, Liquidation or Dissolution
In its absolute discretion, and on such terms and conditions as it deems
appropriate, coincident with or after the grant of any Stock Option or any
Stock-Based Grant, the Committee may provide that such Stock Option or
Stock-Based Grant cannot be exercised after the merger or consolidation of the
Corporation into another corporation, the sale or exchange of all or
substantially all of the assets of the Corporation, the acquisition by another
entity of 80% or more of the Corporation's then outstanding shares of voting
stock or the recapitalization, reclassification, liquidation or dissolution of
the Corporation, and if the Committee so provides, it shall, on such terms and
conditions as it deems appropriate in its absolute discretion, also provide,
either by the terms of such Stock Option or Stock-Based Grant or by a resolution
adopted prior to the occurrence of such merger, consolidation, exchange,
acquisition, recapitalization, reclassification, liquidation or dissolution,
that, for some period of time prior to such event, such Stock Option or
Stock-Based Grant shall be exercisable as to all shares subject thereto,
notwithstanding anything to the contrary herein (but subject to the provisions
of Paragraph 6(b)) and that, upon the occurrence of such event, such Stock
Option or Stock-Based Grant shall terminate and be of no further force or
effect; provided, however, that the Committee may also provide, in its
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9
absolute discretion, that even if the Stock Option or Stock-Based Grant shall
remain exercisable after any such event, from and after such event, any such
Stock Option or Stock-Based Grant shall be exercisable only for the kind and
amount of securities and/or other property, or the cash equivalent thereof,
receivable as a result of such event by the holder of a number of shares of
stock for which such Stock Option or Stock-Based Grant could have been exercised
immediately prior to such event.
10. Amendment and Termination
The Committee shall have the authority to make such amendments to any
terms and conditions applicable to outstanding Grants as are consistent with
this Plan provided that, except for adjustments under Paragraph 8 or 9 hereof,
no such action shall modify such Grant in a manner adverse to the Participant
without the Participant's consent except as such modification is provided for or
contemplated in the terms of the Grant.
The Board of Directors may amend, suspend or terminate the Plan except
that no such action, other than an action under Paragraph 8 or 9 hereof, may be
taken which would, without shareholder approval, increase the aggregate number
of Shares available for Grants under the Plan, decrease the price of outstanding
Options or Stock Appreciation Rights, change the requirements relating to the
Committee or extend the term of the Plan.
11. Foreign Options and Rights
The Committee may make Grants to Employees who are subject to the laws of
nations other than the United States, which Grants may have terms and conditions
that differ from the terms thereof as provided elsewhere in the Plan for the
purpose of complying with foreign laws.
12. Withholding Taxes
The Corporation shall have the right to deduct from any cash payment made
under the Plan any federal, state or local income or other taxes required by law
to be withheld with respect to such payment. It shall be a condition to the
obligation of the Corporation to deliver shares upon the exercise of an Option
or Stock Appreciation Right, upon payment of Performance units or shares, upon
delivery of Restricted Stock or upon exercise, settlement or payment of any
Other Stock-Based Grant that the Participant pay to the Corporation such amount
as may be requested by the Corporation for the purpose of satisfying any
liability for such withholding taxes. Any Grant Agreement may provide that the
Participant may elect, in accordance with any conditions set forth in such Grant
Agreement, to pay a portion or all of such withholding taxes in shares of Common
Stock.
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10
13. Effective Date and Termination Dates
The Plan shall be effective on and as of the date of its approval by the
stockholders of the Corporation and shall terminate ten years later, subject to
earlier termination by the Board of Directors pursuant to Paragraph 10.
14. Governing Law
The laws of the State of Delaware shall govern the interpretation,
validity and performance of the terms of this Agreement, regardless of the law
that might be applied under principles of conflicts of laws.
Exhibit 10.11
FORM OF SALE PARTICIPATION AGREEMENT
May 10, 1996
________________
________________
________________
Dear ___________:
You have entered into a Management Stockholder's Agreement, dated as
of May 10, 1996, between INFLO Holdings Corporation, a Delaware corporation
("the Company"), and you (the Stockholder's Agreement") relating to the purchase
from the Company of shares of the common stock, par value $.01 per share of the
Company (the "Common Stock"). The undersigned, Artal Luxembourg S.A., a private
BENELUX investment company ("Artal"), and Flowers Industries, Inc., a Georgia
corporation ("Flowers"), also have purchased shares of Common Stock and hereby
agree with you as follows, effective upon such purchase of Common Stock by you:
1. In the event that at any time Artal, or Flowers, as the case may
be (each, a "Selling Stockholder"), proposes to sell for cash or any other
consideration any shares of Common Stock owned by it, in any transaction other
than (i) a Public Offering (as defined in the Stockholder's Agreement), (ii) any
sale of Common Stock to any employees of the Company or any of its subsidiaries,
(iii) any sale by either Artal or Flowers at any time, and from time to time, of
up to an aggregate of 10% of the Common Stock held by it as of the date hereof,
(iv) any sale of Common Stock by Artal or Flowers to the other or any affiliate
of the other and any transfers of Common Stock by Artal or Flowers to one of its
affiliates and subsequent transfers among such affiliates or (v) any sale of
Common Stock to G.F. Industries, Inc. and/or its affiliates in connection with
the acquisition of Sunshine Biscuits, Inc., or any of its assets, the Selling
Stockholder will notify you or your Purchaser's Estate or Purchaser's Trust (as
such terms are defined in Section 2 of the Stockholder's Agreement), as the case
may be, in writing (a "Notice") of such proposed sale (a "Proposed Sale") and
the material terms of the Proposed Sale as of the date of the Notice (the
"Material Terms") promptly, and in any event not less than 15 days prior to the
consummation of the Proposed Sale and not more than 5 days after the execution
of the definitive agreement
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2
relating to the Proposed Sale, if any (the "Sale Agreement"). If within 10 days
of your or your Purchaser's Estate's or Purchaser's Trust's, as the case may be,
receipt of such Notice, the Selling Stockholder receives from you or your
Purchaser's Estate or Purchaser's Trust, as the case may be, a written request
(a "Request") to include Common Stock held by you or your Purchaser's Estate or
Purchaser's Trust, as the case may be, in the Proposed Sale (which Request shall
be irrevocable unless (a) there shall be a material adverse change in the
Material Terms or (b) if otherwise mutually agreed to in writing by you or your
Purchaser's Estate or Purchaser's Trust, as the case may be, and the Selling
Stockholder), the Common Stock held by you will be so included as provided
herein; provided that only one Request, which shall be executed by you or your
Purchaser's Estate or Purchaser's Trust, as the case may be, may be delivered
with respect to any Proposed Sale for all Common Stock held by you or your
Purchaser's Estate or Purchaser's Trust. Promptly after the consummation of the
transactions contemplated thereby, the Selling Stockholder will furnish you,
your Purchaser's Trust or your Purchaser's Estate with a copy of the Sale
Agreement, if any.
2. The number of shares of Common Stock which you or your
Purchaser's Estate or Purchaser's Trust, as the case may be, will be permitted
to include in a Proposed Sale pursuant to a Request will be the lesser of (a)
the sum of the number of shares of Common Stock then owned by you or your
Purchaser's Estate or Purchaser's Trust, as the case may be, plus all shares of
Common Stock which you are then entitled to acquire under an unexercised option
to purchase shares of Common Stock, to the extent such option is then vested or
would become vested as a result of the consummation of the Proposed Sale and (b)
the sum of the shares of Common Stock then owned by you or your Purchaser's
Estate or Purchaser's Trust, as the case may be, plus all shares of Common Stock
which you are entitled to acquire under an unexercised option to purchase shares
of Common Stock, whether or not fully vested, multiplied by a percentage
calculated by dividing the aggregate number of shares of Common Stock which the
Selling Stockholders propose to sell in the aggregate in the Proposed Sale by
the total number of shares of Common Stock then owned by the Selling
Stockholders in the aggregate. If one or more holders of shares of Common Stock
who have been granted the same rights granted to you or your Purchaser's Estate
or Purchaser's Trust, as the case may be, hereunder elect not to include the
maximum number of shares of Common Stock which such holders would have been
permitted to include in a Proposed Sale (the "Eligible Shares"), Artal or
Flowers, or such remaining holders of shares of Common Stock, or any of them,
may sell in the Proposed Sale a number of additional shares of Common Stock
owned by any of them
<PAGE>
3
equal to their pro rata portion of the number of Eligible Shares not included in
the Proposed Sale, based on the relative number of shares of Common Stock then
held by each such holder, and such additional shares of Common Stock which any
such holder or holders propose to sell shall not be included in any calculation
made pursuant to this Paragraph 2 for the purpose of determining the number of
shares of Common Stock which you or your Purchaser's Estate or Purchaser's
Trust, as the case may be, will be permitted to include in a Proposed Sale.
Artal and Flowers, or any of them, may sell in the Proposed Sale additional
shares of Common Stock owned by any of them equal to any remaining Eligible
Shares which will not be included in the Proposed Sale pursuant to the
foregoing.
3. Except as may otherwise be provided herein, shares of Common
Stock subject to a Request will be included in a Proposed Sale pursuant hereto
and in any agreements with purchasers relating thereto on the same terms and
subject to the same conditions applicable to the shares of Common Stock which
the Selling Stockholder proposes to sell in the Proposed Sale. Such terms and
conditions shall include, without limitation: the sales price; the payment of
fees, commissions and expenses; the provision of, and representation and
warranty as to, information requested by the Selling Stockholder; and the
provision of requisite indemnifications; provided that any indemnification
provided by you, your Purchaser's Estate or your Purchaser's Trust shall be pro
rata in proportion with the number of shares of Common Stock to be sold.
4. Upon delivering a Request, you or your Purchaser's Estate or
Purchaser's Trust, as the case may be, will, if requested by the Selling
Stockholder, execute and deliver a custody agreement and power of attorney in
form and substance satisfactory to the Selling Partnership with respect to the
shares of Common Stock which are to be sold by you or your Purchaser's Estate or
Purchaser's Trust, as the case may be, pursuant hereto (a "Custody Agreement and
Power of Attorney"). The Custody Agreement and Power of Attorney will provide,
among other things, that you or your Purchaser's Estate or Purchaser's Trust, as
the case may be, will deliver to and deposit in custody with the custodian and
attorney-in-fact named therein a certificate or certificates representing such
shares of Common Stock (duly endorsed in blank by the registered owner or owners
thereof) and irrevocably appoint said custodian and attorney-in-fact as your or
your Purchaser's Estate's or Purchaser's Trust's, as the case may be, agent and
attorney-in-fact with full power and authority to act under the Custody
Agreement and Power of Attorney on your or your Purchaser's Estate's or
Purchaser's Trust's, as the case may be, behalf with respect to the matters
specified therein.
<PAGE>
4
5. Your or your Purchaser's Estate's or Purchaser's Trust's, as the
case may be, right pursuant hereto to participate in a Proposed Sale shall be
contingent on your or your Purchaser's Estate's or Purchaser's Trust's, as the
case may be, strict compliance with each of the provisions hereof and your or
your Purchaser's Estate's or Purchaser's Trust's, as the case may be,
willingness to execute such documents in connection therewith as may be
reasonably requested by the Selling Stockholder.
6. The obligations of Artal and Flowers hereunder shall extend only
to you or your Purchaser's Estate or Purchaser's Trust, as the case may be, and
no other of your or your Purchaser's Estate's or Purchaser's Trust's, as the
case may be, successors or assigns shall have any rights pursuant hereto.
7. This Agreement shall terminate and be of no further force and
effect on the fifth anniversary of the first occurrence of a Public Offering (as
defined in the Stockholder's Agreement).
8. All notices and other communications provided for herein shall be
in writing and shall be deemed to have been duly given when delivered to the
party to whom it is directed:
(a) If to Artal, to it at the following address:
c/o David Van Zandt
Northwestern University School of Law
357 E. Chicago Avenue
Chicago, IL 60611
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attn: Robert E. Spatt, Esq.
(b) If to Flowers, to it at the following address:
Flowers Industries, Inc.
U.S. Highway 19
Thomasville, GA 31792
Attn: Robert P. Crozer
with a copy to:
Jones, Day, Reavis & Pogue
3500 One Peachtree Center
303 Peachtree Street, N.E.
Atlanta, GA 30308-3242
Attn: Robert W. Smith
<PAGE>
5
(c) If to you, to you at the address first set forth
above herein;
(d) If to your Purchaser's Estate or Purchaser's
Trust, at the address provided to such
partnerships by such entity;
or at such other address as any of the above shall have specified by notice in
writing delivered to the others by certified mail.
9. The laws of the State of Delaware shall govern the
interpretation, validity and performance of the terms of this Agreement. No
suit, action or proceeding with respect to this Agreement may be brought in any
court or before any similar authority other than in a court of competent
jurisdiction in the States of Delaware or New York. You hereby irrevocably waive
any right which you may have had to bring such an action in any other court,
domestic or foreign, or before any similar domestic or foreign authority.
10. If Artal or Flowers transfers its interest in the Company to an
affiliate of Artal or Flowers, as the case may be, such affiliate shall assume
the obligations hereunder of Artal or Flowers, as the case may be.
It is the understanding of the undersigned that you are aware that
no Proposed Sale presently is contemplated and that such a sale may never occur.
<PAGE>
This letter may be executed in one or more counterparts, which
together shall constitute one instrument.
If the foregoing accurately sets forth our agreement, please
acknowledge your acceptance thereof in the space provided below for that
purpose.
Very truly yours,
ARTAL LUXEMBOURG S.A.
By______________________________________
Name: David Van Zandt
Title:
FLOWERS INDUSTRIES, INC.
By______________________________________
Name: Robert B. Crozer
Title: Vice Chairman
Accepted and agreed to:
- -------------------------------
Exhibit 10.12
STOCK PURCHASE AGREEMENT
DATED
June 4, 1996
AMONG
INFLO HOLDINGS CORPORATION,
KEEBLER HOLDING CORP.
AND
G.F. INDUSTRIES, INC.
REGARDING STOCK OF
SUNSHINE BISCUITS, INC.
<PAGE>
TABLE OF CONTENTS
Paragraph Page
- --------- ----
ARTICLE I
PURCHASE OF SHARES......................................................... 1
1.1 Purchase of Shares......................................... 1
1.2 Purchase Price............................................. 1
1.3 Stock and Warrant.......................................... 2
ARTICLE II
THE CLOSING................................................................ 3
2.1 Time and Place of Closing.................................. 3
2.2 Actions of the Seller at Closing........................... 3
2.3 Actions of the Buyer at Closing............................ 4
2.4 Escrow..................................................... 4
ARTICLE III
REPRESENTATIONS AND WARRANTIES............................................. 5
3.1 Seller's Representations and Warranties.................... 5
3.2 Buyer's Representations and Warranties..................... 28
3.3 Remedy for Breaches of Representations and
Warranties................................................. 32
ARTICLE IV
ACTIONS PRIOR TO THE CLOSING............................................... 32
4.1 Activities Until Closing Date.............................. 32
4.2 HSR Act.................................................... 37
4.3 Seller's Efforts to Fulfill Conditions..................... 37
4.4 INFLO's and Buyer's Efforts to Fulfill
Conditions................................................. 38
4.5 No Shopping................................................ 38
4.6 Buyer's Efforts to Obtain Financing........................ 39
4.7 Further Assurances......................................... 39
4.8 Resignation of Officers and Directors...................... 40
4.9 Termination of Access to Bank Accounts..................... 40
4.10 Prepayment of Indebtedness................................. 40
4.11 Trademark License.......................................... 41
4.12 No Additional Representations.............................. 42
4.13 Accrued Vacation........................................... 43
4.14 Buyer Analysis and Other Information....................... 43
4.15 Net Operating Loss......................................... 44
4.16 Insurance.................................................. 44
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING............................................ 48
5.1 Conditions to INFLO's and Buyer's Obligations.............. 48
5.2 Conditions to Seller's Obligations......................... 53
i
<PAGE>
Paragraph Page
- --------- ----
ARTICLE VI
TERMINATION................................................................ 56
6.1 Right to Terminate......................................... 56
6.2 Effect of Termination...................................... 56
ARTICLE VII
INDEMNIFICATION............................................................ 57
7.1 Indemnification Against Loss Due to
Inaccuracies in Seller's Representations and
Warranties, Etc............................................ 57
7.2 Indemnification Against Loss Due to
Inaccuracies in Buyer's Representations and
Warranties, Etc............................................ 58
7.3 Limit on Claims............................................ 59
7.4 Environmental Indemnification.............................. 61
7.5 Payment of Taxes........................................... 65
7.6 Indemnification Against Liabilities or
Obligations Relating to the Seller and
Subsidiaries and Affiliates of the Seller
(Other than the Company)................................... 70
7.7 Company's Indemnification Against Liabilities
or Obligations............................................. 71
7.8 Computation of Loss........................................ 72
7.9 Adjustment to Purchase Price............................... 74
7.10 Procedures Relating to Third Party Claims
(other than Environmental and Tax Claims).................. 74
7.11 Procedures Relating to Non-Third Party Claims.............. 77
ARTICLE VIII
ABSENCE OF BROKERS......................................................... 78
8.1 Representations and Warranties Regarding
Brokers and Others......................................... 78
ARTICLE IX
GENERAL.................................................................... 79
9.1 Expenses................................................... 79
9.2 Access to Properties, Books and Records.................... 79
9.3 Publicity.................................................. 82
9.4 Entire Agreement........................................... 83
9.5 Effect of Disclosures...................................... 83
9.6 Captions................................................... 83
9.7 Assignments................................................ 84
9.8 Notices and Other Communications........................... 84
9.9 Governing Law.............................................. 85
9.10 Amendments................................................. 88
9.11 Waivers.................................................... 88
9.12 Guarantees................................................. 88
9.13 Beneficiaries.............................................. 90
9.14 Counterparts............................................... 90
ii
<PAGE>
ExhibitS
Exhibit 1.2 - Operating Leases
Exhibit 1.3(1) - Form of Warrant
Exhibit 1.3(2) - Form of GFI Stockholder's Agreement
Exhibit 2.4 - Form of Escrow Agreement
Exhibit 3.1-C - Seller Consents
Exhibit 3.1-E(1) - Certificates of Incorporation and By-laws
of the Company
Exhibit 3.1-E(2) - Foreign Qualifications
Exhibit 3.1-H - Interests in Other Entities
Exhibit 3.1-I - Company Financial Statements; Deviations
from GAAP
Exhibit 3.1-J(1) - Material Adverse Changes
Exhibit 3.1-J(2) - Interim Operations
Exhibit 3.1-J(3) - Trade Commitments
Exhibit 3.1-J(4) - Certain Indebtedness Information
Exhibit 3.1-J(5) - Asset Transfers
Exhibit 3.1-K - Certain Liabilities and Obligations
Exhibit 3.1-M - Senior Officers
Exhibit 3.1-N - Real Property; Real Property Liens
Exhibit 3.1-O(1) - Other Liens
Exhibit 3.1-O(2) - Condition of Assets
Exhibit 3.1-P - Certain Contracts and Contract Matters
Exhibit 3.1-Q - Intellectual Property
Exhibit 3.1-R - Taxes
Exhibit 3.1-S - Litigation; Proceedings
Exhibit 3.1-T - Unions
Exhibit 3.1-U(1) - Employee Benefit Plans
Exhibit 3.1-U(3) - Certain Company Plan Information
Exhibit 3.1-U(4) - Funding of Certain Company Plans
Exhibit 3.1-U(5) - Multiemployer Plan Liability
Exhibit 3.1-U(6) - Change-of-Control Payments
Exhibit 3.1-U(7) - Excess Parachute Payments
Exhibit 3.1-U(8) - Executive Compensation
Exhibit 3.1-V - Environmental Liabilities
Exhibit 3.1-W - Employment and Severance Agreements
Exhibit 3.1-X - Insurance Policies and Bonds
Exhibit 3.1-Y(1) - Affiliate Transactions
Exhibit 3.1-Y(2) - Affiliate Transactions Not Terminated
Exhibit 3.2-C - Buyer Consents
Exhibit 3.2-F - INFLO Options, Etc.
Exhibit 4.1-G - Maintenance of Books and Records
Exhibit 4.1-J - Changes to Company Plans
Exhibit 4.10 - Indebtedness Not to be Prepaid
Exhibit 4.11 - Philippine Trademarks
Exhibit 4.14 - Buyer Analysis and Other Information
Exhibit 7.5 - Pre-Closing Tax Employees
Exhibit 7.6 - Vehicle Leases
Exhibit 9.12 - Guarantors
iii
<PAGE>
INDEX OF DEFINED TERMS
Page
1996 Statements.............................................................34
Accumulated funding deficiency..............................................23
Acquisition Proposal........................................................38
Affiliate...................................................................27
Agents......................................................................38
Artal........................................................................2
Belco.......................................................................71
Buyer........................................................................1
Buyer Non-Limited Representations...........................................59
Buyer Obligations...........................................................59
Cash Closing Payment.........................................................1
Closing......................................................................3
Closing Date.................................................................3
Code........................................................................17
Common Stock.................................................................1
Company......................................................................1
Company Financial Statements................................................10
Company Plans...............................................................21
Confidentiality Agreement...................................................80
Controlled Group............................................................22
Credit Agreement............................................................50
Employee benefit plan.......................................................20
Environmental Action........................................................64
Environmental Laws..........................................................25
ERISA.......................................................................20
Escrow Account...............................................................5
Escrow Agent.................................................................4
Escrow Agreement.............................................................4
Excess Parachute Payment....................................................25
Flowers......................................................................3
GAAP.........................................................................2
GFI Stockholder's Agreement..................................................3
Guarantors ................................................................88
Income Taxes................................................................65
Indebtedness.................................................................2
Indemnified Party.......................................................72, 74
Indemnifying Party..........................................................72
Individual Guarantor........................................................89
INFLO........................................................................1
INFLO Common Stock...........................................................2
Losses......................................................................57
Material Adverse Effect......................................................7
Multiemployer Plans.........................................................20
Net Proceeds................................................................73
Nomura Sub Debt Agreement...................................................30
Non-Limited Representations.................................................58
Obligations ................................................................58
Pre-Closing Tax Employees...................................................68
Prohibited transaction......................................................23
Purchase Price...............................................................1
Reportable event............................................................23
iv
<PAGE>
INDEX OF DEFINED TERMS (continued)
Page
Seller.......................................................................1
Senior Bank Financing.......................................................29
Senior Officers.............................................................12
Shares.......................................................................1
Tax Benefit.................................................................73
Tax Return..................................................................18
Taxes.......................................................................17
Third Parties...............................................................38
Third Party Claim...........................................................74
Transfer Taxes..............................................................70
WARN Act....................................................................20
Warrant......................................................................3
v
<PAGE>
STOCK PURCHASE AGREEMENT
This is an agreement dated June 4, 1996 among INFLO Holdings
Corporation ("INFLO"), a Delaware corporation, Keebler Holding Corp. (the
"Buyer"), a Delaware corporation, and G.F. Industries, Inc. (the "Seller"), a
Nevada corporation, relating to the purchase by the Buyer from the Seller of 100
shares (the "Shares") of Common Stock, no par value (the "Common Stock"), of
Sunshine Biscuits, Inc. (the "Company"), a Delaware corporation and a wholly
owned subsidiary of the Seller, which agreement is as follows:
ARTICLE I
PURCHASE OF SHARES
1.1 Purchase of Shares. Upon the terms and subject to the conditions
contained herein, at the Closing described in Paragraph 2.1, the Buyer will
purchase the Shares from the Seller and the Seller will sell the Shares to the
Buyer.
1.2 Purchase Price. The total purchase price to be paid by the Buyer
for the Shares will be (i) $148,000,000 in cash minus the outstanding
Indebtedness (other than the Indebtedness listed on Exhibit 4.10) of the Company
on the Closing Date (the "Cash Closing Payment") plus (ii) 990,076 shares of
INFLO Common Stock (as described in Paragraph 1.3), valued at $18.50 per share,
plus (iii) the Warrant (as described in Paragraph 1.3) (the Cash Closing
Payment, such shares of INFLO Common Stock and such Warrant being collectively
referred to herein as the "Purchase Price"), all as set forth in Paragraph 2.3.
As used in
<PAGE>
2
this Agreement, the term "Indebtedness" means (v) obligations with regard to
borrowed money (including reimbursement obligations in respect of letters of
credit, guarantees or similar instruments) (other than accounts payable which
are incurred in the ordinary course of business consistent with past practice),
(w) obligations evidenced by bonds, debentures, notes, letters of credit or
similar instruments, (x) obligations to pay the deferred purchase price of
assets (other than accounts payable which are incurred in the ordinary course of
business consistent with past practice), and (y) obligations under leases which
are required to be classified and accounted for as capital leases on financial
statements prepared in accordance with generally accepted accounting principles
in the United States ("GAAP"). Set forth on Exhibit 1.2 is a list of certain
operating leases, copies of which have been delivered to INFLO and the Buyer,
which the parties hereto agree are not required to be classified and accounted
for as capital leases on financial statements prepared in accordance with GAAP.
1.3 Stock and Warrant. INFLO shall issue, and the Buyer shall
deliver, to the Seller at the Closing 990,076 shares of the Common Stock, par
value $.01 per share, of INFLO (the "INFLO Common Stock"), which, as of the date
hereof, is equal to 7.5% of the total number of shares of INFLO Common Stock on
a fully diluted basis (other than with respect to the Warrant (as defined
below)) that, after giving effect to the issuance of such shares to the Seller,
would be held as of the Closing Date by the Seller, Artal Luxembourg S.A.
("Artal") and Flowers Industries,
<PAGE>
3
Inc. ("Flowers") (or their respective affiliates). INFLO further agrees to
issue, and the Buyer agrees to deliver, to the Seller at the Closing a warrant,
in the form attached as Exhibit 1.3(1) hereto (the "Warrant"), to purchase up to
1,070,352 shares of INFLO Common Stock, which as of the date hereof, is equal to
7.5% of the total number of shares of INFLO Common Stock on a fully diluted
basis that, after giving effect to the issuance of such shares (as well as the
shares described in the immediately preceding sentence) to the Seller, would be
held as of the Closing Date by the Seller, Artal and Flowers (or their
respective affiliates). At the Closing, the Seller, INFLO, Artal and Flowers
shall enter into a stockholder's agreement in the form of Exhibit 1.3(2) hereto
(the "GFI Stockholder's Agreement") with respect to such INFLO Common Stock and
the Warrant to be so issued and delivered to the Seller.
ARTICLE II
THE CLOSING
2.1 Time and Place of Closing. The closing (the "Closing") of the
purchase of the Shares will take place at the offices of Simpson Thacher &
Bartlett, 425 Lexington Avenue, New York, New York, at 10:00 a.m., New York City
time, as promptly as practicable after all the conditions in Article V are
satisfied or waived (the date of such Closing, the "Closing Date").
2.2 Actions of the Seller at Closing. At the Closing, the Seller
will deliver to the Buyer the certificates representing all the Shares, endorsed
or accompanied by documents of assignment which comply with the requirements of
Section 8-401
<PAGE>
4
of the Uniform Commercial Code as in effect in the State of New York and which
are in form and substance reasonably satisfactory to the Buyer, together with
evidence of payment of any applicable transfer taxes.
2.3 Actions of the Buyer at Closing. At the Closing, the Buyer will
deliver to the Seller the following:
(a) Certificates representing the INFLO Common Stock described in
Paragraph 1.3 and the Warrant, in each case in the name of the Seller and
duly executed by INFLO.
(b) Evidence of a wire transfer or wire transfers, to an account or
accounts of Seller's creditors, as specified by the Seller at least one
business day before the Closing, of immediately available funds in amounts
equal to the amounts of outstanding Indebtedness (other than the
Indebtedness set forth on Exhibit 4.10) of the Company set forth on
Exhibit 3.1-J(3).
(c) Evidence of a wire transfer to an account specified by the
Seller at least one business day before the Closing of immediately
available funds in an amount equal to the Cash Closing Payment.
(d) A letter acknowledging that the Buyer will be acquiring the
Shares for investment, and not with a view to their resale or
distribution.
2.4 Escrow. At the Closing, (i) each of the Seller, INFLO, the Buyer
and The Bank of New York, as escrow agent (the "Escrow Agent"), shall execute
and deliver an escrow agreement in the form attached as Exhibit 2.4 hereto (the
"Escrow Agreement")
<PAGE>
5
and (ii) the Seller shall deposit into the escrow account identified in the
Escrow Agreement (the "Escrow Account") (A) all of the shares of the INFLO
Common Stock received by the Seller pursuant to the first sentence of Paragraph
1.3, (B) the Warrant and (C) $10,000,000 of the cash received by Seller as part
of the Cash Closing Payment. Such shares, Warrant and cash amounts shall be held
in the Escrow Account and applied in accordance with the terms and conditions
set forth in the Escrow Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Seller's Representations and Warranties. The Seller represents
and warrants to INFLO and the Buyer as follows:
(a) The Seller is a corporation duly organized and validly existing
under the laws of the State of Nevada.
(b) The Seller has all corporate power and authority necessary to
enable it to enter into this Agreement and carry out the transactions
contemplated by this Agreement. All corporate actions necessary to
authorize the Seller to enter into this Agreement and carry out the
transactions contemplated by it have been taken. This Agreement has been
duly executed by the Seller and is a valid and binding agreement of the
Seller, enforceable against the Seller in accordance with its terms. This
Agreement and the transactions contemplated hereby have been approved by a
resolution of the sole shareholder of the Seller.
(c) If the consents described on Exhibit 3.1-C are obtained, neither
the execution or delivery of this
<PAGE>
6
Agreement or of any document to be delivered in accordance with this
Agreement nor the consummation of the transactions contemplated by this
Agreement or by any document to be delivered in accordance with this
Agreement will (i) violate or conflict with the Certificate of
Incorporation or by-laws of the Seller or the Company, or any law, or any
order, rule or regulation of any court or governmental agency or other
regulatory organization having jurisdiction over the Seller or the
Company, or (ii) violate, breach or conflict with any provision of, or
result in the acceleration of or entitle any party to accelerate (whether
after notice or lapse or time or both) any obligation under, or result in
the imposition of any material lien, charge, pledge, security interest or
other encumbrance upon the property of the Seller or the Company pursuant
to any provision of, or require the consent or approval of any person
under, any mortgage, lien, lease, agreement, license or other instrument
to which the Seller or the Company is a party or by which any of them is
bound, except for such violations, breaches or conflicts or failure to
obtain consents or approvals (or acceleration or imposition of
encumbrance, as applicable) which, in the aggregate, would not reasonably
be expected to have a Material Adverse Effect (as defined below).
(d) The Seller owns all the Shares free and clear of any liens or
encumbrances and the Seller has full authority to sell the Shares as
contemplated by this Agreement. The
<PAGE>
7
Seller has not granted any option or right, and is not a party to any
other agreement, and no such option, right or agreement exists, which
requires, or which upon the passage of time, the payment of money or the
occurrence of any other event, may require, the Seller to transfer any of
the Shares to anyone other than the Buyer. When the Buyer acquires the
Shares as contemplated by this Agreement, the Buyer will receive them free
and clear of any liens, encumbrances or claims of other persons, other
than liens, encumbrances or claims resulting from acts of the Buyer or its
affiliates.
(e) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has full
corporate power to own, lease and operate its assets, properties and
businesses. Copies of the Certificate of Incorporation and all amendments,
and of the by-laws, of the Company, as currently in effect, are attached
as Exhibit 3.1-E(1). The Company is qualified to do business as a foreign
corporation in each jurisdiction in which it is required to be qualified,
except jurisdictions in which the failure to qualify, in the aggregate,
would not reasonably be expected to have a Material Adverse Effect.
Exhibit 3.1-E(2) is a list of all the jurisdictions in which the Company
is qualified to do business as a foreign corporation. As used in this
Agreement, the term "Material Adverse Effect" means a material adverse
effect upon (i) the consolidated financial position of the Company as
determined in a manner consistent with the consolidated balance sheet
<PAGE>
8
of the Company included in the Company Financial Statements (as that term
is defined in Paragraph 3.1(i)), (ii) the consolidated results of
operations of the Company as determined in a manner consistent with the
consolidated profit and loss statement of the Company included in the
Company Financial Statements, or (iii) the assets, liabilities, properties
or business of the Company; provided, however, that any adverse effects
solely due to the seasonality regularly experienced in the Company's
business on an annual basis shall not be deemed to be, or in any way be
deemed to contribute to the existence of, a Material Adverse Effect for
purposes of this Agreement if, but only if, the amount of such seasonal
effects are no more adverse to the Company's business than the amount of
such seasonal effects for prior years and the causes underlying, and the
timing of, such seasonal effects are consistent with those underlying such
seasonal effects for such prior years.
(f) The only authorized capital stock of the Company is 15,000
shares of Common Stock, no par value, 100 of which are issued and
outstanding. The Shares constitute 100% of the outstanding capital stock
of the Company. Each of the Shares has been duly authorized and issued and
is fully paid and nonassessable. There are no existing options, warrants,
calls, agreements or commitments of any character to purchase or otherwise
to receive from the Seller, the Company or any of their respective
affiliates any of the outstanding or authorized and unissued capital stock
of the
<PAGE>
9
Company or any securities of the Company or any of its affiliates which
are convertible into or exchangeable for, or which give any person any
right to subscribe for or acquire or any voting rights with respect to,
any shares of capital stock of the Company, and no such convertible or
exchangeable securities or rights are outstanding.
(g) No governmental filings, authorizations, approvals, or consents,
or other governmental action, other than filings and the termination or
expiration of waiting periods under the HSR Act, are required to permit
the Seller to fulfill all its obligations under this Agreement.
(h) The Company does not own, directly or indirectly, 50% or more in
voting power of the equity of any corporation or other entity. Except as
set forth on Exhibit 3.1-H, the Company does not own, directly or
indirectly, any voting securities of any corporation or other entity,
except such as are not, individually or in the aggregate, material to the
Company. The Company has not issued any options, warrants or convertible
or exchangeable securities, or is a party to any other agreements, which
require, or which upon the passage of time, the payment of money or the
occurrence of any other event may require, the Company to transfer to
anyone or issue any stock of, or other equity interest in, any subsidiary.
(i) Except as shown on Exhibit 3.1-I, the consolidated financial
statements of the Company set forth in such Exhibit at and for the years
ended March 31, 1996 and 1995
<PAGE>
10
(the "Company Financial Statements") have been prepared in accordance with
GAAP applied on a consistent basis and present fairly the consolidated
financial condition and the consolidated results of operations of the
Company at the dates, and for the periods, to which they relate.
(j) Since March 31, 1996, (i) except as described on Exhibit
3.1-J(1), (A) there has not been any change, event or discovery which had
or which would reasonably be expected to have a Material Adverse Effect,
(B) the Company has conducted its business in the ordinary course of
business and consistent with past practice (including, without limitation,
with respect to the maintenance of books and records) and (C) there has
not been any material adverse change in the relationships of the Company
with its customers, suppliers or regulatory authorities and (ii) except as
set forth on Exhibit 3.1-J(2), neither the Seller nor the Company has
taken any action or has failed to take any action, and no event has
occurred, which would have required INFLO's and the Buyer's consent
pursuant to Paragraph 4.1 of this Agreement if such action had been taken
or had failed to have been taken, or if such event had occurred, in each
case, after the date of this Agreement. To the best knowledge of the
Senior Officers after reasonable inquiry, except as set forth on Exhibit
3.1-J(3), the Company does not have any material commitments for trade
marketing, consumer advertising or promotions exceeding $250,000 per
commitment. As of the date hereof, the
<PAGE>
11
outstanding amount of Indebtedness of the Company is $91,078,193.12
(excluding the insurance bonds referred to in Paragraph 4 of Exhibit
4.10), and, as of the date hereof, the outstanding amounts, creditors and
applicable debt instruments relating to each portion of such Indebtedness
are as set forth on Exhibit 3.1-J(4). Since March 31, 1996 through the
date of this Agreement, except as described in Exhibit 3.1-J(5), the
Company has not sold or leased any of its assets other than sales of
inventory, or fixed assets which have come to the end of their useful
life, in the ordinary course of business consistent with past practice.
(k) Except as set forth in Exhibit 3.1-K, the Company has no
liability or obligation, secured or unsecured (whether absolute, accrued,
contingent or otherwise, and whether due or to become due), which would be
required by GAAP to be reflected in a consolidated balance sheet of the
Company or disclosed in the notes thereto, except liabilities and
obligations which (i) are adequately accrued or reserved against in the
Company Financial Statements or disclosed in the notes thereto, (ii) were
incurred after March 31, 1996 in the ordinary course of business and
consistent with past practice and are not in the aggregate material to the
Company, (iii) have been discharged or paid in full or (iv) otherwise will
not be obligations of the Company after the Closing.
<PAGE>
12
(l) The assets of the Company are sufficient to enable it to conduct
its operations after the Closing substantially as they are currently being
operated.
(m) Other than such non-compliance which, and such licenses and
permits the lack of which, would not in the aggregate reasonably be
expected to have a Material Adverse Effect, the Company has all licenses
and permits from all governmental authorities which are necessary or
useful to permit the Company to conduct its business and is, and within
the applicable statute of limitations has been, in compliance in all
material respects with such licenses and permits and all applicable laws
and regulations relating to the operation of its business. To the best
knowledge of the senior officers, directors and executives of each of the
Seller and the Company identified in Exhibit 3.1-M hereto (collectively,
the "Senior Officers") after reasonable inquiry, there is no reason for
any such permit or license not to be renewed as a routine matter prior to
its expiration. Other than such non-compliance and such licenses and
permits from governmental authorities the lack of which would not in the
aggregate reasonably be expected to have a Material Adverse Effect, the
execution and implementation of this Agreement shall have no effect on the
validity, terms, or any other aspect of any such license or permit.
(n) Exhibit 3.1-N is a list of all real property, including office
space, owned or leased by the Company,
<PAGE>
13
showing as to each property whether it is owned or leased, by whom it is
owned or leased and, if it is leased, the identity of the lessor and the
date of the lease. All that real property is being used by the Company in
conformance in all material respects with all material zoning and other
applicable laws and regulations and all applicable deed restrictions,
covenants and lease provisions (other than in any such case Environmental
Laws (as defined in Paragraph 3.1(v)), as to which Paragraph 3.1(v) shall
be applicable). As to real property shown on Exhibit 3.1-N as being owned,
the Company owns fee title to the real property, free and clear of any
liens or other encumbrances, except (i) the lien of taxes not yet due and
other statutory liens relating to governmental obligations which are not
yet due, (ii) liens securing indebtedness reflected on the balance sheet
included in the Company Financial Statements included in Exhibit 3.1-I and
other encumbrances which do not materially interfere with the use of the
properties to which they relate for the purposes for which those
properties are currently used and (iii) liens disclosed on Exhibit 3.1-N.
As to real property which is shown on Exhibit 3.1-N as being leased, the
Company has a valid, binding and enforceable leasehold interest and has
complied in all material respects with the terms of the lease, all rents
and other sums and charges payable by the Company are current and, to the
best knowledge of the Senior Officers after reasonable inquiry, the lessor
is not in default thereunder or has not taken,
<PAGE>
14
and does not intend to take, action to terminate the lease. The real
property listed in Exhibit 3.1-N comprises all of the real property which
is necessary to operate the business of the Company as currently being
operated.
(o) On the Closing Date, the Company will own all its assets free
and clear of any liens or encumbrances other than (i) the liens for taxes
not yet due or other statutory liens relating to governmental obligations
which are not yet due, (ii) liens securing indebtedness reflected on the
balance sheet included in the Company Financial Statements included in
Exhibit 3.1-I and other encumbrances which in the aggregate do not
materially interfere with the use of the assets to which they relate for
the purposes for which those assets are currently used, and (iii) liens
disclosed on Exhibit 3.1-N or 3.1-O(1). All assets owned or leased by the
Company are suitable for the uses for which they are intended and are in a
good state of maintenance and repair, normal wear and tear excepted,
except as disclosed on Exhibit 3.1-0(2) or where failure to meet such
standards, in the aggregate would not reasonably be expected to have a
Material Adverse Effect.
(p) Exhibit 3.1-P is a complete list of each agreement to which the
Company is a party which will require the Company to make payments, or
under which the Company expects to receive revenues, of more than $5
million, including all installments thereunder, or is otherwise material
(including those agreements that may involve amounts of less than $5
<PAGE>
15
million, except with respect to results of operations) in amount or
significance to the assets, liabilities, businesses, results of operations
or financial condition of the Company, other than (i) short-term customer
purchase orders received in the ordinary course of business and (ii)
purchase orders to suppliers entered into in the ordinary course of
business ordering materials which are available from at least several
suppliers in quantities consistent with the customary purchasing practices
of the Company and with the customary purchasing practices in the
industries in which the Company participates. To the best knowledge of the
Senior Officers after reasonable inquiry, each of the agreements listed on
Exhibit 3.1-P is legal, valid, binding and enforceable in accordance with
its terms. The Company has fulfilled in all material respects all its
obligations under all the agreements listed on Exhibit 3.1-P to which it
is a party, and, to the best knowledge of the Senior Officers after
reasonable inquiry, the Company is not in default in any material respect
in its obligations under any of those agreements and no other party to any
of those agreements is in default in any material respect thereon or
intends to terminate the agreement before its stated termination date.
Except as shown on Exhibit 3.1-P, the transactions contemplated by this
Agreement will not be a basis under the terms of any agreement listed on
Exhibit 3.1-P for any party thereto to terminate that agreement or
<PAGE>
16
alter the basis on which it will be doing business with the Company under
that agreement.
(q) Exhibit 3.1-Q is a complete list of all patents, patent
applications, patent licenses, trademarks, trademark licenses, trade
names, copyrights and service marks which are material to the Company. The
Company owns or is entitled to use for their respective lives all the
patents, trademarks, trade names, service marks, technology and copyrights
which it uses (or has used during the year prior to the date of this
Agreement) in connection with its business, other than patents,
trademarks, trade names, service marks, technology and copyrights which,
if the Company were to stop using, would not, in the aggregate, reasonably
be expected to have a Material Adverse Effect. Except as shown on Exhibit
3.1-Q, (i) to the best knowledge of the Senior Officers after reasonable
inquiry, the Company is not violating any patents, trademarks, tradenames,
service marks, copyrights or other intellectual properties owned by any
other persons, and (ii) the transactions which are the subject of this
Agreement will not result in the termination or modification of, or
otherwise require the consent of any party to, any patent license or
trademark license listed on Exhibit 3.1-Q under the terms of such patent
license or trademark license.
(r) Except as shown on Exhibit 3.1-R, the Company has filed when due
all Tax Returns (as defined below) which it has been required to file and
has paid all Taxes (as defined
<PAGE>
17
below) shown on those returns to be due. Those Tax Returns accurately
reflect the Taxes required to have been paid, except to the extent of
items which may be disputed by applicable taxing authorities but for which
there is substantial authority to support the position taken by the
Company and which have been adequately reserved against on the balance
sheet at March 31, 1996 included in the Company Financial Statements.
Except as shown on Exhibit 3.1-R, (i) no extension of time given by the
Company for completion of the audit of any Tax Return is in effect, (ii)
no tax lien has been filed by any taxing authority against the Company or
any of its assets, (iii) no Federal, state or local audits or other
administrative proceedings or court proceedings with regard to Taxes are
presently pending with regard to the Company, (iv) the Company is not a
party to any agreement providing for the allocation or sharing of Taxes,
(v) the Company has not participated in or cooperated with an
international boycott as that term is used in Section 999 of the Internal
Revenue Code of 1986, as amended (the "Code"), and (vi) the Company has
not filed a consent pursuant to Section 341(f) of the Code or agreed to
have Section 341(f)(2) of the Code apply to any disposition of a
Subsection (f) asset (as that term is defined in Section 341(f)(4) of the
Code) owned by the Company. The Seller is not a foreign person within the
meaning of Section 1445(b)(3) of the Code. For the purposes of this
Agreement, the term "Taxes" means all taxes (including, but not limited
<PAGE>
18
to, withholding taxes), assessments, fees, levies and other governmental
charges, and any related interest or penalties. For the purposes of this
Agreement, the term "Tax Return" means any report, return or other
information required to be supplied to a taxing authority in connection
with Taxes.
(s) Except as shown on Exhibit 3.1-S, neither the Company nor any
Company Plan (as hereinafter defined) or, to the best knowledge of the
Senior Officers after reasonable inquiry, any fiduciary with respect
thereto in respect of which the Company has any indemnity or other
obligation is a party to any action, suit or proceeding in any court, or
by or before any governmental agency or authority, any arbitral body or
any other dispute resolution entity, nor, to the best knowledge of the
Senior Officers after reasonable inquiry, has any action, suit or
proceeding been threatened against any of those entities, other than
actions, suits or proceedings which, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect. The
Company is not the subject of any judgment, stipulation, order, decree or
agreement arising from any such action, suit or proceeding which would, in
the aggregate, reasonably be expected to have a Material Adverse Effect.
No action, suit or proceeding is pending, and, to the best knowledge of
the Senior Officers after reasonable inquiry, no action, suit or
proceeding is threatened which (i) as of the date of this Agreement, seeks
to question, delay or prevent the consummation of the transactions
<PAGE>
19
contemplated by this Agreement, or (ii) would reasonably be expected to
materially delay or prevent the consummation of the transactions
contemplated by this Agreement, result in material damages to the Seller
or materially diminish the value of the transactions contemplated by this
Agreement to INFLO and the Buyer.
(t) Exhibit 3.1-T contains a complete list of all unions which
presently represent any employees of the Company and a complete list of
all labor union and collective bargaining agreements to which the Company
is a party or is subject. Except as set forth on Exhibit 3.1-T and for
such matters as would not, in the aggregate, reasonably be expected to
have a Material Adverse Effect, (i) the Company is in compliance with all
applicable laws, agreements, contracts and policies respecting employment
and employment practices, terms and conditions of employment and wages and
hours, and is not engaged in any unfair labor practices, (ii) there is no
unfair labor practice charge or complaint against the Company pending,
and, to the best knowledge of the Senior Officers after reasonable
inquiry, no such action is threatened before any regulatory or judicial
body, (iii) there is no, and during the past three years there has been
no, labor strike, dispute, slowdown, stoppage, lockout or other material
labor controversy in effect, and, to the best knowledge of the Senior
Officers after reasonable inquiry, no such action is threatened against
the Company, (iv) to the best knowledge of the
<PAGE>
20
Senior Officers after reasonable inquiry, no certification petition
respecting the employees of the Company has been filed with the National
Labor Relations Board and no union is attempting to organize or otherwise
become the bargaining representative for any employees of the Company, (v)
except as expressly contemplated by this Agreement or as shown on Exhibit
3.1-T, the Company has not closed any plant or facility, effectuated any
systematic layoffs of employees or implemented any early retirement,
separation or window program within the last three years, nor has the
Company planned or announced any such action or program for the future and
(vi) the Company is in compliance with its obligations pursuant to the
Worker Adjustment and Retraining Notification Act of 1988 (the "WARN
Act"), and all other notification and bargaining obligations arising under
any collective bargaining agreement, statute or otherwise.
(u) (i) Exhibit 3.1-U(1) contains a true and complete list of each
"employee benefit plan" (within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
including, without limitation, multiemployer plans within the meaning of
Section 3(37) of ERISA ("Multiemployer Plans")), stock purchase, stock
option, severance, employment, change-in-control, fringe benefit,
collective bargaining, bonus (including, without limitation, stay or
retention bonuses), incentive, deferred compensation and all other
employee benefit plans, agreements, programs, policies or other
<PAGE>
21
arrangements, whether or not subject to ERISA (including any funding
mechanism therefor now in effect or required in the future as a result of
the transaction contemplated by this Agreement or otherwise), whether
formal or informal, oral or written, under which any employee or former
employee of the Company has any present or future right to benefits or
under which the Company has any present or future liability. All such
plans, agreements, programs, policies and arrangements, other than
Multiemployer Plans, shall be collectively referred to as the "Company
Plans."
(ii) With respect to each Company Plan (and with respect to each
Multiemployer Plan to the extent that the trustee or other administrator
of any such plan has provided a copy to the Company), the Company has
provided to INFLO and the Buyer or made available in the "data room" for
the transactions contemplated hereby a current, accurate and complete copy
(or, to the extent no such copy exists, an accurate description) thereof
and, to the extent applicable: (A) any related trust agreement or other
funding instrument with respect to which the Company would reasonably be
expected to have any liability; (B) the most recent determination letter,
if applicable; (C) any summary plan description and other material written
communications by the Company to its employees concerning the extent of
the benefits provided under a Company Plan; and (D) for the three most
recent years for which such information is, as of the date hereof,
required, under applicable law, to have
<PAGE>
22
been prepared, (I) the Form 5500 and attached schedules; (II) audited
financial statements; (III) actuarial valuation reports; and (IV)
attorney's response to an auditor's request for information.
(iii) Except as set forth on Exhibit 3.1-U(3), (A) each Company
Plan has been established and administered in all material respects in
accordance with its terms, and in compliance with the applicable
provisions of ERISA, the Code and other applicable laws, rules and
regulations; (B) each Company Plan which is intended to be qualified
within the meaning of Code Section 401(a) has received a favorable
determination letter as to its qualification and, to the best knowledge of
the Senior Officers after reasonable inquiry, there are no facts or
circumstances that would be reasonably likely to adversely affect such
determination, and neither the Seller nor the Company has taken any action
or failed to take any action which would be reasonably likely to cause the
loss of such qualification; (C) to the best knowledge of the Senior
Officers after reasonable inquiry, no event has occurred and no condition
exists that would be reasonably likely to subject the Company, either
directly or by reason of its affiliation with any member of its
"Controlled Group" (defined as any organization which is a member of a
controlled group of organizations within the meaning of Sections 414(b),
(c), (m) or (o) of the Code), to any material tax, fine, lien or penalty
imposed by ERISA, the Code or other applicable laws, rules and
regulations;
<PAGE>
23
(D) for each Company Plan with respect to which a Form 5500 has been
filed, no material change has occurred with respect to the matters covered
by the most recent Form since the date thereof; and (E) no Company Plan
has incurred any "accumulated funding deficiency" as such term is defined
in Section 302 of ERISA and Section 412 of the Code (whether or not
waived), no "reportable event" (as such term is defined in ERISA Section
4043) has occurred with respect to any Company Plan, and neither the
Company nor any of its employees, nor to the best knowledge of the Senior
Officers after reasonable inquiry, any non-employee trustee, administrator
or other fiduciary of any trust created under any Company Plan, has
engaged in a "prohibited transaction" (as such term is defined in ERISA
Section 406 and Code Section 4975) with respect to any Company Plan for
which the Company or any of its employees would be liable.
(iv) Except as set forth on Exhibit 3.1-U(4), with respect to
each of the Company Plans which is subject to Title IV of ERISA, as of the
last annual valuation date for each such plan, the fair market value of
the assets of each such Company Plan is not less than the present value of
the accrued benefits (vested and unvested) of the participants in such
Company Plan on an accumulated benefit obligation basis, based on the
actuarial methods and assumptions indicated in the actuarial valuation
reports for such date.
(v) Except as set forth on Exhibit 3.1-U(5), with respect to any
Multiemployer Plan to which the Company or
<PAGE>
24
any member of its Controlled Group has any liability or contributes (or
has at any time contributed or had an obligation to contribute): (A)
neither the Company nor any member of its Controlled Group has incurred
any withdrawal liability under Title IV of ERISA for which the Company
would be reasonably likely to be liable; (B) the Company has not received
written notification from the trustee or other administrator of a
Multiemployer Plan to the effect that such Multiemployer Plan is in
reorganization or insolvent (as those terms are defined in Sections 4241
and 4245 of ERISA, respectively); and (C) the Company has not taken any
action or failed to take any action which was not in compliance with the
applicable provisions of any Multiemployer Plan, any collective bargaining
agreement, ERISA, the Code and other applicable laws, rules and
regulations.
(vi) Except as set forth on Exhibit 3.1-U(6), no Company Plan
exists which would be reasonably likely to result in the payment to any
employee or former employee of the Company of any money or other property
or rights or accelerate or provide any other rights or benefits to any
employee or former employee of the Company as a result of the transactions
contemplated by this Agreement, whether or not such payment would
constitute a parachute payment within the meaning of Section 280G of the
Code.
(vii) Except as shown on Exhibit 3.1-U(7), there are no
contracts, agreements or other arrangements which would be
<PAGE>
25
reasonably likely to result in the payment by the Company of an "Excess
Parachute Payment" as that term is used in Section 280G of the Code.
(viii) Except as otherwise disclosed in Exhibit 3.1-U(8), and
except to the extent required under existing employee and director benefit
plans, agreements or arrangements as in effect on the date of this
Agreement, since April 1, 1996, the Company has not increased the
compensation or fringe benefits of any of its directors, officers or
employees, except for increases in salary or wages of employees of the
Company who are not officers of the Company in the ordinary course of
business and consistent with past practice.
(ix) Except as set forth on Exhibit 3.1-S, with respect to any
Company Plan, no actions, suits or claims (other than routine claims for
benefits in the ordinary course) are pending or, to the best knowledge of
the Senior Officers after reasonable inquiry, threatened.
(v) Except as shown on Exhibit 3.1-V, (i) the Company has not
received notice of material noncompliance or material liability under any
applicable Federal, state, local or foreign laws (including, without
limitation, common law) or regulations relating to the environment or
employee health and safety relating to the Company promulgated and in
effect on or prior to the date hereof ("Environmental Laws"), (ii) to the
best knowledge of the Senior Officers after reasonable inquiry, no fact or
set of facts exists that constitutes or could reasonably be expected to
give
<PAGE>
26
rise to material noncompliance or material liability of the Company under
any Environmental Law, and (iii) the Seller has provided to INFLO and the
Buyer true and complete copies of all reports, studies, assessments,
audits, or other similar documents in the possession or control of Seller
or the Company that address any issue of actual or potential noncompliance
with, or actual or potential liability under, any Environmental Law that
may affect the Company.
(w) The aggregate cost to the Company, in the event that all its
current employees covered by individual employment or severance agreements
are terminated, will not exceed $2.5 million pursuant to the terms of such
agreements. The only such individual agreements currently in effect with
past and present employees, directors and officers of the Company are set
forth on Exhibit 3.1-W. Except as set forth on Exhibit 3.1-W, the Company
has no deferred compensation, excess benefit, supplemental benefit or
other non-qualified retirement, pension or savings plans, agreements,
programs or policies that are currently in effect for any past or present
employee, director or officer of the Company.
(x) The Company maintains policies of insurance and bonds of the
type and in amounts customarily carried by persons conducting businesses
similar to those of the Company. Such policies and bonds are adequate for
the business of the Company as currently conducted. Exhibit 3.1-X sets
forth a list of all policies of insurance and
<PAGE>
27
bonds maintained by the Company which will not continue in effect after
the Closing as to the Company.
(y) Exhibit 3.1-Y(1) sets forth (i) all contracts, agreements, other
arrangements or transactions existing or occurring at any time after March
31, 1996 through the date hereof between the Company and the Seller or any
of its affiliates and (ii) a description of all payments (including,
without limitation, as dividends, distributions, loans, service or trade
payments, salary or otherwise) made to or received from, the Company, on
the one hand, and the Seller or any of its affiliates, on the other hand,
since March 31, 1996. Except as set forth on Exhibit 3.1-Y(1), there are
no material differences between such contracts, agreements, other
arrangements, transactions and payments after or since March 31, 1996 and
those contracts, agreements, other arrangements or transactions existing
or occurring and those payments made or received during the one-year
period prior to March 31, 1996. Except as set forth in Exhibit 3.1-Y(2),
all such contracts, agreements, other arrangements and transactions have
been terminated and are of no further force and effect as of the date
hereof and no further payments are required to be made as of or after the
date hereof. It is understood that for purposes of this Agreement, the
term "affiliate" when used in reference to the Seller shall be deemed to
include, without limitation, the shareholder of the Seller and the
shareholders of Bermore, Ltd., the sole shareholder of the Seller.
<PAGE>
28
3.2 Buyer's Representations and Warranties. The Buyer
represents and warrants to the Seller as follows:
(a) Each of INFLO and the Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware.
(b) Each of INFLO and the Buyer has all corporate power and
authority necessary to enable it to enter into this Agreement and carry
out the transactions contemplated by this Agreement. All corporate actions
necessary to authorize each of INFLO and the Buyer to enter into this
Agreement and carry out the transactions contemplated by it have been
taken. This Agreement has been duly executed by each of INFLO and the
Buyer and is a valid and binding agreement of each of INFLO and the Buyer,
enforceable against each of INFLO and the Buyer in accordance with its
terms.
(c) If the consents described on Exhibit 3.2-C are obtained, neither
the execution and delivery of this Agreement or of any document to be
delivered in accordance with this Agreement nor the consummation of the
transactions contemplated by this Agreement or by any document to be
delivered in accordance with this Agreement will violate, result in a
breach or conflict with any provision of, or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a
default) under, or require the consent or approval of any person under,
the Certificate of Incorporation or by-laws of INFLO or any of
<PAGE>
29
its subsidiaries (including, without limitation, the Buyer), any
agreement, mortgage, lien, lease, license or other instrument to which any
of them is a party or by which any of them is bound, any law, or any
order, rule or regulation of any court or governmental agency or other
regulatory organization having jurisdiction over INFLO or any such
subsidiaries.
(d) No governmental filings, authorizations, approvals or consents,
or other governmental action, other than filings and termination or
expiration of the waiting periods under the HSR Act, are required to
permit each of INFLO and the Buyer to fulfill all its obligations under
this Agreement.
(e) The Buyer has, or has commitments or agreements with banks or
other financially sound financial institutions to provide the Buyer with,
together with available cash and cash equivalents, the funds the Buyer
will need to pay the Purchase Price and otherwise to complete the
transactions which are the subject of this Agreement (including, without
limitation, the making of the wire transfers described in Paragraph
2.3(b)) and such commitments and agreements (the "Senior Bank Financing").
Copies of any such agreements have been delivered to the Seller.
(f) The only authorized capital stock of INFLO is 50 million shares
of INFLO Common Stock, 12,523,438 of which are issued and outstanding as
of the date hereof, 6,105,469 of which are owned by each of Artal and
Flowers and 312,500
<PAGE>
30
of which are owned by management of the Buyer as of the date hereof.
Except as set forth on Exhibit 3.2-F, there are no existing options,
warrants, calls, agreements or commitments of any character to purchase or
otherwise to receive from INFLO, any of its subsidiaries (including,
without limitation, the Buyer) or any of their respective affiliates any
of the outstanding or authorized and unissued capital stock of INFLO or
any such subsidiaries or any securities of INFLO, any such subsidiaries or
any of their respective affiliates which are convertible into or
exchangeable for, or which give any person any right to subscribe for or
acquire or any voting rights with respect to, any shares of capital stock
of INFLO or any such subsidiaries, and no such convertible or exchangeable
securities or rights are outstanding.
(g) The Buyer has delivered to the Seller true and complete copies
of (i) the Stock Purchase Agreement dated November 5, 1995, between the
Buyer and UB Investments (Netherlands) B.V. and all amendments,
supplements and other modifications thereto, (ii) the Credit Agreement (as
defined in Paragraph 5.1), and all amendments, supplements and other
modifications thereto, (iii) the Note and Warrant Purchase Agreement,
dated as of January 26, 1996, among the Buyer, Keebler Holding Corp. and
Nomura Holding America Inc. and all amendments, supplements and other
modifications thereto (collectively, the "Nomura Sub Debt Agreement"),
(iv) the Stockholders' Agreement dated as of January 26, 1996, among
<PAGE>
31
Artal, Flowers and the Buyer and all amendments, supplements and other
modifications thereto and (v) all material documents, exhibits,
statements, certificates, schedules and other agreements relating to each
such agreement.
(h) The INFLO Common Stock to be delivered to the Seller at the
Closing, when issued and delivered in accordance with the terms hereof,
will be duly authorized and validly issued, free and clear of any liens,
encumbrances or claims of other persons (other than liens, encumbrances or
claims resulting from acts of the Seller), and will be fully paid and
nonassessable with no personal liability attached to the ownership thereof
and will not be subject to any preemptive rights under the Delaware
General Corporation Law. On the Closing Date, the Warrant will be duly
authorized and executed and delivered by INFLO and will constitute a valid
and legally binding obligation of INFLO enforceable against INFLO in
accordance with its terms, and the issuance of the INFLO Common Stock for
which the Warrant is exercisable, when issued and delivered in accordance
with the terms of the Warrant, will be duly authorized, validly issued,
free and clear of any liens, encumbrances or claims of other persons
(other than liens, encumbrances or claims resulting from acts of the
Seller), and will be fully paid and nonassessable with no personal
liability attached to the ownership thereof and will not be subject to any
preemptive rights under the Delaware General Corporation Law.
<PAGE>
32
(i) No form of general advertising or general solicitation was or
will be used by INFLO or any of its affiliates in connection with the
offer and sale of the INFLO Common Stock and the Warrant to be issued to
the Seller on the Closing Date. INFLO agrees that neither it nor any of
its affiliates nor any person acting on its behalf will sell or offer for
sale any shares of INFLO Common Stock or warrants to purchase INFLO Common
Stock, or otherwise approach or negotiate in respect thereof with any
person, so as thereby to bring the issuance or sale of the INFLO Common
Stock and the Warrant to the Seller on the Closing Date within the
provisions of Section 5 of the Securities Act of 1933, as amended.
3.3 Remedy for Breaches of Representations and Warranties. Except as
otherwise expressly provided in Article VII, the indemnifications in Paragraphs
7.1 and 7.2 will be the only remedies available thereunder to INFLO, the Buyer
or the Seller after the Closing for breaches of representations or warranties
contained in Paragraph 3.1 or 3.2. Any claim for that indemnification must be
made as provided in Paragraphs 7.3, 7.10 and 7.11.
ARTICLE IV
ACTIONS PRIOR TO THE CLOSING
4.1 Activities Until Closing Date. From the date of this Agreement
to the Closing Date, the Seller will ensure that the Company will, except with
the written consent of INFLO and the Buyer:
<PAGE>
33
(a) Operate its business in the ordinary course and in a manner
consistent with past practices (including, without limitation, with
respect to management of inventory, collection of accounts receivable and
timing of receipts, payment of accounts payable and other disbursements of
cash).
(b) Take all reasonable steps available to it to maintain the
goodwill of its business and the continued employment of its executives
and other employees and to preserve its relationships with customers,
suppliers and others having business relationships with the Company.
(c) Maintain all its assets in good repair and condition, except to
the extent of reasonable wear and use and damage by fire or other
unavoidable casualty.
(d) Not make any borrowings other than intercompany borrowings or
borrowings under the Company's bank revolver and term loan in each case in
the ordinary course of business and consistent with past practice and,
except as provided hereunder or with the prior written consent of INFLO
and the Buyer, not pay any Indebtedness (or any installment thereof) prior
to its stated maturity, other than Indebtedness under the Company's bank
revolver and term loan in each case in the ordinary course of business and
consistent with past practice.
(e) Not enter into any contractual commitments involving capital
expenditures, loans or advances, and not voluntarily incur any contingent
liabilities, except in each
<PAGE>
34
case in the ordinary course of business and consistent with past practice
and the 1997 capital expenditure budget previously disclosed by the Seller
to the Buyer, but in any event not to exceed $3,500,000 in the aggregate
(provided that any individual items over $250,000 will require Buyer's and
INFLO's consent, such consent not to be unreasonably withheld).
(f) Not make any distributions, dividends, loans or advances to
stockholders, directors, officers, employees or affiliates, other than (i)
advances for travel and other normal business expenses to officers and
employees in an aggregate amount outstanding at any one time not to exceed
$500,000 and (ii) interest payments due and payable on intercompany loans
and payments due and payable for corporate services provided to the
Company by the Seller not to exceed $160,000 in the aggregate in any one
month.
(g) Except as set forth on Exhibit 4.1-G, maintain its books of
account and records in the same manner, and on the same basis, that they
were maintained at and for purposes of the consolidated financial
statements of the Company at and for the year ended March 31, 1996 (the
"1996 Statements") and in the same manner and on the same basis as they
were maintained from April 1, 1995 through March 31, 1996 except to the
extent set forth in the notes to the 1996 Statements.
(h) Comply in all material respects with all applicable laws and
regulations of governmental agencies.
<PAGE>
35
(i) Not sell (including pursuant to sale/leaseback transactions),
dispose of or encumber any property or assets, except for transactions
(not exceeding $250,000 per transaction and $1,000,000 in the aggregate)
or sales of inventory in the ordinary course of business and consistent
with past practice, or engage in any activities or transactions, except in
the ordinary course of business and consistent with past practice.
(j) Except as set forth on Exhibit 4.1-J, as required by applicable
law or to the extent required under existing employee and director benefit
plans, agreements or arrangements as in effect on the date of this
Agreement, (i) not increase the compensation or fringe benefits of any of
its directors, officers or employees, except for increases in salary or
wages of employees of the Company who are not officers of the Company in
the ordinary course of business and consistent with past practice, (ii)
not grant any severance or termination pay not currently required to be
paid under existing severance plans and arrangements, (iii) not hire,
except in the ordinary course of business consistent with past practice
and not in the aggregate material (provided that the hiring of any
employee or consultant whose annual compensation is expected to be in
excess of $100,000 shall not be considered to be in the ordinary course),
any new employees or consultants, nor enter into any employment,
consulting or severance agreement or arrangement with any present or
former director, officer
<PAGE>
36
or other employee of the Company, (iv) except to the extent otherwise
permitted by this Paragraph 4.1(j), not establish, adopt, enter into or
amend or terminate any collective bargaining, bonus, profit sharing,
thrift, compensation, stock option, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any past
or present directors, officers or employees and (v) not grant or award any
option, restricted stock, stock award, phantom share, stock appreciation
right or other bonus or benefit not currently required to be granted or
awarded under any existing employment agreement.
(k) Not enter into any transaction with any of its affiliates, other
than with respect to accounts payable in the ordinary course of business
and consistent with past practice on terms no less favorable than would be
negotiated on an arm's-length basis and other than transactions
specifically contemplated by this Agreement.
(l) Not amend its certificate of incorporation or by-laws or the
terms of any outstanding security.
(m) Except as otherwise permitted herein, not amend any contracts or
waive any rights under any contracts, except in the ordinary course of
business and consistent with past practice.
(n) Not dissolve or liquidate, or merge or consolidate with or into
any other entity.
<PAGE>
37
(o) Use its best efforts to maintain in force (including necessary
renewals thereof) the insurance policies referred to in Paragraph 3.1(x),
give reasonable prior notice to INFLO and the Buyer of any cancellation or
expiration of any such insurance policy and consult in good faith with
INFLO and the Buyer as to any replacement policy.
4.2 HSR Act. The Seller, the Company, INFLO and the Buyer will each
make as promptly as practicable all filings it is required to make under the HSR
Act with regard to the transactions which are the subject of this Agreement and
each of them will take all reasonable steps within its control (including
providing information to the Federal Trade Commission and the Department of
Justice) to cause the waiting periods required by the HSR Act to be terminated
or to expire as promptly as practicable. The Seller, the Company, INFLO and the
Buyer will each provide information and cooperate in all other respects to
assist the other of them in making its filings under the HSR Act.
4.3 Seller's Efforts to Fulfill Conditions. The Seller will use its
best efforts to cause (i) all the conditions set forth in Paragraph 5.1 to be
fulfilled prior to or at the Closing, provided, however, that such best efforts
shall not include any requirement of the Seller or any of its affiliates
(including the Company) to expend money, commence or participate in any
litigation or offer or grant any accommodation (financial or otherwise) to any
third party in connection with attempting to obtain the consents set forth on
Exhibit 3.1-C, and (ii) the Closing to occur on June 4, 1996.
<PAGE>
38
4.4 INFLO's and Buyer's Efforts to Fulfill Conditions. INFLO and the
Buyer will use their respective best efforts to cause (i) all the conditions
contained in Paragraph 5.2 to be fulfilled prior to or at the Closing, provided,
however, that such best efforts shall not include any requirement of INFLO, the
Buyer or any of their affiliates to expend money, commence or participate in any
litigation or offer or grant any accommodation (financial or otherwise) to any
third party in connection with attempting to obtain the consents set forth on
Exhibit 3.2-C, and (ii) the Closing to occur on June 4, 1996.
4.5 No Shopping. Until the earlier of the termination of this
Agreement or the Closing Date, the Seller shall not, and shall not permit any of
its representatives, officers, employees, agents and affiliates of any of the
foregoing (collectively, "Agents"), to directly or indirectly (i) solicit,
initiate or encourage the submission of any inquiries, indications of interest,
proposals or offers from any corporation, partnership, person, entity or group,
other than INFLO and the Buyer (collectively, "Third Parties"), concerning the
sale of the Shares, or any equity security of, or any other direct or indirect
interest in, the Company, the sale of any assets of the Company (other than
sales of inventory in the ordinary course of business and consistent with past
practice or any matters specifically disclosed in an Exhibit hereto) or any
merger, recapitalization or other business combination transaction involving the
Company (herein an "Acquisition Proposal"), (ii) participate in any discussions
or negotiations regarding, or
<PAGE>
39
enter into any agreements or understandings (whether or not in writing) relating
to, any of the foregoing with, or provide any information concerning the Company
regarding any of the foregoing to, any Third Parties, or (iii) otherwise
cooperate in any way with, or assist or participate in, facilitate or encourage,
any effort or attempt by any Third Party to do or seek any of the foregoing.
Prior to or promptly following the Closing, if INFLO or the Buyer so requests,
the Seller shall use its best efforts to cause the destruction or return of all
non-public, confidential or proprietary information concerning the Company
provided to potential purchasers of the Company or assets thereof. The Seller
will immediately notify INFLO and the Buyer after the receipt by it or any of
its Agents of any inquiry, indication of interest, proposal or offer with
respect to an Acquisition Proposal by any Third Party and will immediately
deliver to INFLO and the Buyer any written documentation relating thereto.
4.6 Buyer's Efforts to Obtain Financing. The Buyer will use its best
efforts to obtain the financing contemplated by the commitments with respect to
the Senior Bank Financing on or before the date of this Agreement on the terms
contemplated by those commitments.
4.7 Further Assurances. At any time and from time to time after the
Closing, the parties agree to cooperate with each other, to execute and deliver
such other documents, instruments of transfer or assignment, files, books and
records, and do all
<PAGE>
40
such further acts and things as may be reasonably required to carry out the
transactions contemplated hereunder.
4.8 Resignation of Officers and Directors. Prior to or at the
Closing, the Seller will, upon the request of INFLO and the Buyer, obtain the
removal or resignation, effective as of the Closing, of each of the directors
and officers of the Company so requested.
4.9 Termination of Access to Bank Accounts. To the extent there are
any bank accounts existing prior to the Closing through which funds of the
Company are transferred to the Seller and its affiliates (other than the
Company) or from which the Seller and its affiliates (other than the Company)
have any right to draw funds, the Seller will insure that, effective immediately
upon Closing, all such arrangements and rights shall be cancelled, and after the
Closing the Seller and its affiliates (other than the Company) shall not take
any action to withdraw or transfer funds from such accounts.
4.10 Prepayment of Indebtedness. Except for Indebtedness described
on Exhibit 4.10, the Seller shall prepay simultaneously with or prior to the
Closing, all outstanding Indebtedness of the Company. If the Buyer, the Company
or any other subsidiary of the Buyer shall be required to pay any amounts to
BankAmerica Business Credit, Inc. under the terms of the Termination and Release
Agreement, dated as of the date hereof, between the Company and BankAmerica
Business Credit, Inc. in respect of any non-payment or dishonor of checks or
other similar instruments (as described in Section 6 of such Agreement)
<PAGE>
41
after the Company has, for a period of 60 days after the Buyer, the Company or
any such subsidiary so pays such amount, used commercially reasonable efforts
(which shall not include litigation) to collect amounts owed with respect to
such checks or similar instruments, such amounts shall be deemed to be
Indebtedness under this Agreement and the Seller shall, upon notice from the
Buyer, the Company or any such subsidiary with respect thereto, promptly
reimburse the Buyer, the Company or any such subsidiary for all such amounts
paid by the Buyer, the Company or any such subsidiary and the Company shall be
deemed to have assigned to the Seller all its rights with respect to such
amounts, including, without limitation, seeking collection from the debtor under
the check or similar instrument giving rise to such payment by the Seller. In
addition, if the Seller makes any payment pursuant to Section 7 of such
Agreement, then the Company shall be deemed to have assigned to the Seller all
its rights with respect to such payment, including, without limitation, seeking
collection from the debtor under the check or similar instrument giving rise to
such payment by the Seller; provided, however, that the Company shall, for a
period of 60 days after the Seller so makes such payment, use commercially
reasonable efforts (which shall not include litigation) to collect, for the
account of the Seller, the unpaid amount from such debtor.
4.11 Trademark License. Promptly after the Closing, the Buyer and
the Seller agree to negotiate in good faith a license agreement with the Seller,
in form and substance reasonably satisfactory to the Buyer and the Seller,
providing
<PAGE>
42
for the grant by the Buyer to the Seller or any of its affiliates of an
exclusive (as to Third Parties but nonexclusive as to the Buyer and its
affiliates), nonassignable, royalty-free license to sell cookie and cracker
products under the trademarks specified in Exhibit 4.11 in the Philippines for
domestic use (which shall not include sales in the Philippines to any U.S.
governmental agency) and not for export and which license shall be perpetual
(provided, that such license may be terminated by the Buyer (in the case of
clause (ii), on no less than six-months prior written notice if the sales for
the prior twelve-month period were equal to or more than $3.15 million but less
than $3.5 million) if (i) the Seller has not sold any products under such
trademarks by the 18 month anniversary of the Closing Date or (ii) on the fifth
and each subsequent anniversary of the Closing Date, the sales (for the twelve
month period ended on such date) from the products sold under the trademarks
covered by such license are not equal to at least $3.5 million), and containing
such other customary terms and conditions applicable to agreements of its type.
4.12 No Additional Representations. (a) INFLO and the Buyer
acknowledge that none of the Seller, the Company, any of the Seller's
subsidiaries or any other person has made any representation or warranty,
expressed or implied, as to the accuracy or completeness of any information
regarding the Company furnished or made available to INFLO, the Buyer and their
representatives, except as expressly set forth in this Agreement, and none of
the Seller, the Company, any of the Seller's subsidiaries or any other person
shall have or be subject to any
<PAGE>
43
liability to INFLO, the Buyer or any other person resulting from the
distribution to INFLO, the Buyer, or their use of, any such information,
including any information, documents or material made available to INFLO and the
Buyer in certain "data rooms", management presentations or in any other form in
expectation of the transactions contemplated hereby.
(b) The Seller acknowledges that none of INFLO, the Buyer or any
other person has made any representation or warranty, expressed or implied, as
to the accuracy or completeness of any information regarding INFLO and the Buyer
furnished or made available to the Seller and its representatives, except as
expressly set forth in this Agreement, and none of INFLO, the Buyer or any other
person shall have or be subject to any liability to the Seller or any other
person resulting from the distribution to the Seller, or the Seller's use of,
any such information, including any information, documents or material made
available to the Seller in management presentations or in any other form in
expectation of the transactions contemplated hereby.
4.13 Accrued Vacation. The Buyer shall honor all vacation days
accrued by the officers and employees of the Company as of the Closing Date.
4.14 Buyer Analysis and Other Information. The parties agree and
acknowledge that the issues and matters set forth on Exhibit 4.14 were disclosed
or reported to the Buyer and INFLO prior to the completion of the audit of the
Company's financial statements for the year ended March 31, 1996; provided,
however,
<PAGE>
44
that such issues and matters (other than those identified thereon with an
asterisk, to the extent applicable) may not be asserted by the Seller to
constitute scheduled exceptions to the representations contained in Paragraph
3.1(i).
4.15 Net Operating Loss. The Seller agrees that it will not, and
that it will cause its direct and indirect subsidiaries not to, on or prior to
March 31, 1997, (i) take any non-operational actions out of the ordinary course
of business (including, without limitation, sales or transfers of real property)
that would have the effect of reducing the Company's net operating losses or
alternative minimum tax credits or (ii) take any operational actions out of the
ordinary course of business with the primary intention of reducing the Company's
net operating losses or alternative minimum tax credits. Each of INFLO and the
Buyer agree and acknowledge that the Seller has not made any representation or,
except as expressly set forth in the first sentence of this Paragraph 4.15, any
covenant with respect to any net operating losses or alternative minimum tax
credits of the Company or the use thereof, and that the utilization of any such
tax assets by the Seller or any of its affiliates on or prior to March 31, 1997
shall not give rise to any claims under this Agreement.
4.16 Insurance. (a) From and after the Closing, Seller shall retain
the right to make claims and receive recoveries, for the benefit of the Company
under the [insurance policy] (as to which the Company is a named insured but not
the primary insured) (the "Seller's Insurance Policy"), to the extent
<PAGE>
45
covering any loss, liability, claim, damage or expense relating to the assets,
business, operations, conduct, products and employees (including former
employees) of the Company that relates to or arises out of occurrences prior to
the Closing (a "Claim"). Seller agrees to use its best efforts so that the
Company shall have the right, power and authority, subject to any required
consent of the carrier under the Seller's Insurance Policy, in its own name or
in the name of Seller, to make directly any Claims under the Seller's Insurance
Policy and to receive directly recoveries thereunder.
(b) The Company agrees to reimburse, indemnify and hold Seller
harmless for any reasonable out-of-pocket costs and expenses (not including
normal internal administrative expenses) incurred after the Closing Date to
carry out any obligations pursuant to this Paragraph 4.16 or as a result of
Claims being made by the Company (including without limitation the $50,000 per
occurrence Claim deductible under the Seller's Insurance Policy (the
"Deductible")); provided that it is understood and agreed that the Seller's
Insurance Policy is fully paid for all periods through the Closing Date and no
additional premiums (retrospective or otherwise) or premium increases or
adjustments will be payable by the Company hereunder in connection with the
Seller's Insurance Policy; and provided further that the provisions of this
Paragraph 4.16 will not eliminate the right of Buyer to assert that the payment
of such costs and expenses or the payment of other amounts contemplated by this
Paragraph 4.16 in respect of Claims (including deductibles and/or gaps as
<PAGE>
46
provided below) constitute Losses for purposes of the indemnity provisions
contained in Article VII of this Agreement. The Company will pay and bear the
Deductible and any gaps in or limits on coverage applicable to a Claim under the
Seller's Insurance Policy, after taking into account the effect of any prior
claim payments under the terms of such Seller's Insurance Policy; it being
understood that in light of the aggregate coverage limits existing under the
Seller's Insurance Policy which apply to the aggregate of Claims and, in the
case of Seller, its claims under such policy, each of Seller and the Company
(and each of their respective affiliates) will act only in the ordinary course
and in good faith with respect to the making and timing of Claims or, in the
case of Seller, such claims, and not with the intention of depriving the other
of access to the remaining coverage under the Seller's Insurance Policy. In the
event that any legal action, arbitration, negotiation or other proceeding is
required for the Company to assert coverage against any insurer or to perfect
its Claim, (i) the Company shall, to the extent possible, do so at its own
expense or (ii) if the Company is not permitted to assert coverage or perfect a
Claim, Seller shall do so, and, in either event, the Company shall hold harmless
and indemnify Seller and its affiliates for any costs and expenses that they
incur because of such action (other than the incurrence of normal internal
administrative expenses).
(c) The Seller shall (i) cooperate fully with the Buyer and the
Company in submitting Claims on behalf of the
<PAGE>
47
Company under the Seller's Insurance Policy, (ii) execute and deliver to the
Buyer and the Company any and all agreements and other documents, including
reporting to the Buyer quarterly the amount of the cumulative impairment to the
aggregate limits under such insurance policy, and including the execution of
limited powers of attorney, on behalf of the Company, which are reasonably
necessary or appropriate in connection with any of the foregoing, including,
without limitation, the assignment to the Company of any right to receive
payments under such policy with respect to Claims in the event consent to such
assignment is obtained from the insurer, and (iii) to pay promptly over to the
Company any and all amounts received by Seller or its affiliates under such
policies with respect to Claims.
(d) Seller shall retain custody of the Seller's Insurance Policy and
any and all service contracts, claim settlements and all other insurance records
relating thereto (except to the extent that the carrier provides copies of such
information directly to the Buyer) and Buyer and the Company shall have access
to and the right to make copies of all such documents and records upon the
reasonable request to Seller. If Seller desires to destroy any such policies or
records it shall first notify Buyer who shall have the right to cause the same
to be delivered to it upon reimbursing Seller for reasonable out-of-pocket
handling and shipping expenses.
(e) Seller agrees that, with respect to coverage of occurrences
prior to the Closing, it shall take no action to cause, and shall use its best
efforts to prevent, the Seller's
<PAGE>
48
Insurance Policy or the coverage provided to the Company thereunder from being
terminated or voided or reduced in any way (other than as a result of the making
of good faith claims as contemplated by paragraph (b) above). If Seller receives
notice of any such termination, voiding or reduction of such policy or any
written notice under the Seller's Insurance Policy which relates to a Claim or
is otherwise reasonably relevant to the Company, Seller shall advise and send a
copy to Buyer promptly.
(f) Buyer acknowledges that Seller and its affiliates shall have no
responsibility for obtaining any insurance covering any loss, liability, claim,
damage or expense relating to the assets, business, operations, conduct,
products and employees (including former employees) of the Company that relates
to or arises out of occurrences subsequent to the Closing, including, without
limitation, under the Seller's Insurance Policy.
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
5.1 Conditions to INFLO's and Buyer's Obligations. The obligations
of INFLO and the Buyer at the Closing are subject to satisfaction of the
following conditions (any or all of which may be waived by INFLO and the Buyer):
(a) The representations and warranties of the Seller contained in
this Agreement will be true and correct in all material respects at the
Closing Date with the same effect as though made on that date, except to
the extent such representations and warranties expressly relate to an
<PAGE>
49
earlier date (in which case such representations and warranties shall be
true and correct in all material respects on and as of such earlier date),
and the Seller will have delivered to INFLO and the Buyer a certificate
dated that date and signed by the President or a Vice President of the
Seller to that effect.
(b) The Seller will have fulfilled in all material respects all its
obligations under this Agreement required to have been fulfilled prior to
or at the Closing, and the Seller will have delivered to INFLO and the
Buyer a certificate dated that date and signed by the President or a Vice
President of the Seller to that effect.
(c) No order will have been entered by any court or governmental or
regulatory authority and be in force which invalidates this Agreement or
restrains INFLO or the Buyer from completing the transactions which are
the subject of this Agreement.
(d) The applicable waiting periods under the HSR Act shall have
expired or been terminated.
(e) The Buyer shall have received evidence reasonably acceptable to
it that each of the consents set forth on Exhibit 3.1-C have been
obtained, except consents the absence of which would not individually or
in the aggregate have a Material Adverse Effect. Each of INFLO and the
Buyer waive all claims it may have against the Seller for any Losses
incurred because or resulting from or arising out of
<PAGE>
50
the failure of the Seller to have obtained the consent of Fleet Credit
Corporation referenced in Exhibit 3.1(c).
(f) The sale of the Shares contemplated by this Agreement shall have
been approved by a resolution of the sole shareholder of the Seller.
(g) The Buyer shall have obtained, on terms and conditions not
materially less favorable to the Buyer as those contemplated by the
written financing commitments described in Paragraph 4.6, the proceeds of
the Senior Bank Financing.
(h) The consent to this Agreement and the transactions contemplated
hereby (including, without limitation, the financing of the purchase of
the Shares) of (i) the Required Lenders under, and as defined in, the
Credit Agreement, dated as of January 26, 1996, among Keebler Holding
Corp., The Bank of Nova Scotia, as administrative agent, and various
financial institutions, as lenders (the "Credit Agreement"), and (ii) the
Required Purchasers under, and as defined in, the Nomura Sub Debt
Agreement, shall have been obtained by INFLO and the Buyer.
(i) INFLO and the Buyer will have received an opinion from each of
(x) Hale, Lane, Peek, Dennison, Howard, Anderson and Pearl, Nevada counsel
to the Seller, to the effect that (i) the Seller has been duly
incorporated and is validly existing under the laws of the State of
Nevada; (ii) the Seller has all corporate power and authority necessary to
enable it to enter into this Agreement and carry out the
<PAGE>
51
transactions contemplated by this Agreement; (iii) all corporate actions
necessary to authorize the Seller to enter into this Agreement and carry
out the transactions contemplated by it have been taken; (iv) this
Agreement and the other agreements to be executed by the Seller pursuant
hereto have been duly executed by the Seller; (v) the Shares have been
duly authorized and issued and are fully paid and non-assessable; and (vi)
neither the execution and delivery of this Agreement or of any document to
be delivered in accordance with this Agreement nor the consummation of the
transactions contemplated by this Agreement or by any document to be
delivered in accordance with this Agreement will violate the Certificate
of Incorporation or by-laws of the Seller or the Company and (y) Cravath,
Swaine & Moore, counsel to the Seller, to the effect that (i) this
Agreement and the other agreements to be executed by the Seller pursuant
hereto are valid and binding agreements of the Seller, enforceable against
the Seller in accordance with their terms, except to the extent
enforceability may be affected by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other laws relating to or
affecting creditors' rights generally, general equitable principles
(whether considered in a proceeding at law or at equity) and an implied
covenant of good faith and fair dealing and (ii) no governmental filings,
authorizations, approvals or consents, or other governmental actions,
other than filings and the termination or expiration of the
<PAGE>
52
waiting periods under the HSR Act (which has occurred), are required to
permit the Seller to fulfill all its obligations under this Agreement or
such other agreements.
(j) The Seller shall have delivered to INFLO and the Buyer documents
contemplated by Section 1445 of the Code to establish that it is not a
foreign person within the meaning of Section 1445 of the Code.
(k) The service arrangement between the Company and the Seller
referred to in Paragraph 4.1(f) shall have been terminated and the Seller
shall have no further right to receive any payments therefrom.
(l) The Seller shall have duly executed and delivered each of the
Escrow Agreement and the GFI Stockholder's Agreement and the Escrow Agent
shall have duly executed and delivered the Escrow Agreement; each such
agreement shall be in full force and effect; and each of the Seller and
the Escrow Agent shall have complied with all obligations required of it
as of the Closing Date under each such agreement to which it is a party.
(m) Buyer shall have received evidence reasonably satisfactory to it
that, upon its payment on behalf of Seller as part of the Cash Purchase
Price to Industrial Indemnity Company of $513,428, the Company, as a named
insured, will have a fully paid Workmen's Compensation policy covering
existing claims and future claims in respect of occurrences from 12/15/92
through 12/15/95 with no
<PAGE>
53
retrospective premium, contingent surcharge, policyholder dividend or
similar future costs to the Company.
5.2 Conditions to Seller's Obligations. The
obligations of the Seller at the Closing are subject to the
following conditions (any or all of which may be waived by the
Seller):
(a) The representations and warranties of the Buyer contained in
this Agreement will be true and correct in all material respects at the
Closing Date with the same effect as though made on that date, except to
the extent such representations and warranties expressly relate to an
earlier date (in which case such representations and warranties shall be
true and correct in all material respects on and as of such earlier date),
and the Buyer will have delivered to the Seller a certificate dated that
date and signed by the President or a Vice President of the Buyer to that
effect.
(b) Each of INFLO and the Buyer will have fulfilled in all material
respects all its obligations under this Agreement required to have been
fulfilled prior to or at the Closing, and the Buyer will have delivered to
the Seller a certificate dated that date and signed by the President or a
Vice President of the Buyer to that effect.
(c) No order will have been entered by any court or governmental or
regulatory authority and be in force which invalidates this Agreement or
restrains the Seller from
<PAGE>
54
completing the transactions which are the subject of this
Agreement.
(d) The Seller will have received an opinion from Simpson Thacher &
Bartlett, counsel to INFLO and the Buyer, to the effect that (i) each of
INFLO and the Buyer has been duly incorporated and is validly existing and
in good standing under the laws of the State of Delaware; (ii) the Buyer
has all corporate power and authority necessary to enable it to enter into
this Agreement and carry out the transactions contemplated by this
Agreement; (iii) all corporate actions necessary to authorize each of
INFLO and the Buyer to enter into this Agreement and carry out the
transactions contemplated by it have been taken; (iv) this Agreement and
the other agreements to be executed by the Buyer or INFLO pursuant hereto
have been duly executed by each of INFLO and the Buyer (as applicable) and
are valid and binding agreements of each of INFLO and the Buyer,
enforceable against each of them in accordance with their terms, subject
to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of
good faith and fair dealing; (v) neither the execution and delivery of
this Agreement or of any document to be delivered in accordance with this
Agreement nor the consummation of the transactions contemplated by this
<PAGE>
55
Agreement or by any document to be delivered in accordance with this
Agreement will violate the Certificate of Incorporation or by-laws of
INFLO or the Buyer; and (vi) no governmental filings, authorizations,
approvals or consents, or other governmental actions, other than filings
and the termination or expiration of the waiting periods under the HSR Act
(which has occurred), are required to permit INFLO and the Buyer to
fulfill all their obligations under this Agreement or any such other
agreement.
(e) Each of the Buyer, INFLO and the Escrow Agent shall have duly
executed and delivered to the Seller the Escrow Agreement and the Buyer
shall have delivered the certificates referred to in Paragraph 2.3(a) and
the Warrant and INFLO shall have duly executed and delivered to the Buyer
each of such certificates and the Warrant and INFLO, Artal and Flowers
shall have duly executed and delivered the GFI Stockholder's Agreement;
each such agreement and instrument shall be in full force and effect; and
each of INFLO, the Buyer, Artal, Flowers and the Escrow Agent shall have
complied with all obligations required of it as of the Closing Date under
each such agreement and instrument to which it is a party.
(f) The applicable waiting periods under the HSR Act shall have
expired or been terminated.
(g) The Seller shall have received evidence reasonably satisfactory
to it that each of the consents set forth in Exhibit 3.2(c) has been
obtained.
<PAGE>
56
ARTICLE VI
TERMINATION
6.1 Right to Terminate. This Agreement may be
terminated at any time prior to the Closing:
(a) By mutual consent of INFLO and the Buyer, on the one hand, and
the Seller, on the other hand.
(b) By either INFLO and the Buyer, on the one hand, or the Seller,
on the other hand, if, without fault of the terminating party, the Closing
does not occur on or before July 15, 1996.
(c) By INFLO and the Buyer upon any breach of the covenants
contained in Paragraph 4.5.
6.2 Effect of Termination. (a) In the event of termination by
the Seller, on the one hand, or INFLO and the Buyer, on the other hand,
pursuant to Paragraph 6.1, written notice thereof shall forthwith be given
to the other party and the transactions contemplated by this Agreement
shall be terminated, without further action by any party.
(b) If this Agreement is terminated and the transactions
contemplated hereby are abandoned as described in this Paragraph 6.2, this
Agreement shall become null and void and of no further force and effect,
except for the provisions of (i) this Paragraph 6.2, (ii) Article VIII
relating to finder's fees and broker's fees, (iii) Paragraph 9.1 relating
to certain expenses, (iv) Paragraph 9.2(a) relating to confidential
information and data and (v) Paragraph 9.4 relating to publicity. Nothing
in this
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Paragraph 6.2 shall be deemed to release any party from any liability for
any breach by such party of the terms and provisions of this Agreement
(including, without limitation, Paragraph 4.5) or to impair the right of
either party to compel specific performance by the other party of its
obligations under this Agreement.
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification Against Loss Due to Inaccuracies in Seller's
Representations and Warranties, Etc. The Seller indemnifies INFLO and the Buyer
against, and agrees to hold INFLO and the Buyer harmless from, all losses,
costs, damages, liabilities, claims, demands, judgments, settlements and
expenses of any nature whatsoever, governmental or non-governmental (including,
but not limited to, reasonable fees and expenses of counsel and expenses of
investigation) (collectively, "Losses") incurred directly or indirectly because
or resulting from or arising out of (i) the fact that any matter which is the
subject of a representation or warranty contained in Paragraph 3.1 is not as
represented or warranted or the failure of the Seller to fulfill in any respect
any of its obligations under this Agreement (other than any of the Obligations
(as defined below)) which is required to be fulfilled before or after the
Closing Date, but only to the extent of the amount, if any, by which such
Losses, together with all Losses under Paragraph 7.4, computed as provided in
Paragraph 7.8, exceed in total $2.0 million (provided that any claim for
indemnification made with respect to any
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matter which is the subject of a representation or warranty contained in
Paragraph 3.1(a), 3.1(b), 3.1(d), 3.1(f), 3.1(h), 3.1(r), 3.1(y), the first
sentence of Paragraph 3.1(e), clause (ii) of the first sentence of Paragraph
3.1(j) to the extent that such clause relates to Paragraph 4.1(f) or 4.1(k), or
the third sentence of Paragraph 3.1(j) (collectively, the "Non-Limited
Representations"), shall not be subject to any limitations as to amount), or
(ii) the failure of the Seller to fulfill in any respect any of its obligations
under Paragraphs 1.1, 1.2, 2.2, 2.4, 4.7, 4.8, 4.9, 4.10, 4.11, 4.15, 4.16,
5.1(k), 5.1(l), 5.1(m), 8.1, 9.1, 9.2, 9.3 and 9.9 and the second sentence of
Paragraph 4.5 of this Agreement which is required to be fulfilled before or
after the Closing (collectively, the "Obligations"); provided, that this
Paragraph 7.1 shall not be applicable to Losses incurred because or resulting
from or arising out of any breach of a representation or warranty relating to
environmental, health or safety matters or Income Taxes to the extent Paragraphs
7.4 and 7.5, respectively, are applicable.
7.2 Indemnification Against Loss Due to Inaccuracies in Buyer's
Representations and Warranties, Etc. The Buyer indemnifies the Seller against,
and agrees to hold the Seller harmless from, all Losses incurred directly or
indirectly because or resulting from or arising out of (i) the fact that any
matter which is the subject of a representation or warranty contained in
Paragraph 3.2 is not as represented or warranted or the failure of INFLO or the
Buyer to fulfill in any respect any of its obligations under this Agreement
(other than any of the Buyer
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Obligations (as defined below)) which is required to be fulfilled before or
after the Closing Date (but only to the extent of the amount, if any, by which
such Losses, computed as provided in Paragraph 7.8, exceed in total $270,000 and
do not exceed in total $4.5 million) (provided that any claim for
indemnification made with respect to any matter which is the subject of a
representation or warranty contained in Paragraph 3.2(a), (b), (f) or (h) shall
not be subject to any limitations as to amount (the "Buyer Non-Limited
Representations")), or (ii) the failure of INFLO or the Buyer to fulfill in any
respect any of its obligations under Paragraphs 1.1, 1.2, 1.3, 2.3, 2.4, 4.7,
4.11, 4.13, 4.16, 5.2(e), 8.1, 9.1, 9.2, 9.3 and 9.9 of this Agreement which is
required to be fulfilled before or after the Closing (collectively, the "Buyer
Obligations").
7.3 Limit on Claims. (a) Any claim for indemnification under
Paragraph 7.1, 7.2 or 7.4 or otherwise under this Agreement (except as set forth
in the proviso to this sentence) must be made by notice as provided herein not
later than the date which is 18 months after the Closing Date, provided that any
claim for indemnification made under Paragraph 7.6, 7.7 or 8.1 or with respect
to any matter which is the subject of any Non-Limited Representation (other than
the Non-Limited Representation which is the subject of the representation and
warranty contained in Paragraph 3.1(r)) or any Buyer Non-Limited Representation
or any Obligation or any Buyer Obligation may be made at any time, and any claim
for indemnification made under Paragraph 7.5 or with respect to any matter which
is the subject
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of a representation or warranty contained in Paragraph 3.1(r) may be made in the
time periods specified in Paragraph 7.5.
(b) After the Closing, the indemnification in Paragraphs 7.1, 7.2,
7.4, 7.5, 7.6 and 7.7, as the case may be, and any other indemnification or
guarantee expressly provided in this Agreement and the terms of any other
agreements or documents delivered pursuant to this Agreement will be the sole
and exclusive remedy of INFLO and the Buyer, or the Seller, as the case may be,
with respect to any and all Losses incurred directly or indirectly because or
resulting from or arising out of this Agreement, the transactions contemplated
hereby, the Company or its assets, liabilities and businesses (other than claims
of, or causes of action arising from, fraud). In furtherance of the foregoing,
each of the Seller, on the one hand, and INFLO and the Buyer, on the other hand,
hereby waives, to the fullest extent permitted under applicable law, any and all
rights, claims and causes of action (other than as contemplated by the preceding
sentence) it may have against the other party, their affiliates (including,
without limitation, the Guarantors) and their respective officers, directors,
employees, stockholders, agents and representatives which arise under or are
based upon any Federal, state, local or foreign statute, law, ordinance, rule or
regulation (including any such relating to environmental matters) and which are
with respect to such Losses.
(c) Any indemnity obligation of the Seller pursuant to clause (i) of
Paragraph 7.1 or Paragraph 7.4 or otherwise under this Agreement (except as set
forth in the proviso to this
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sentence) shall be satisfied solely and exclusively out of the remaining assets
held, if any, in the Escrow Account, in the manner specified in the Escrow
Agreement; provided, however, that any indemnity obligation of the Seller under
Paragraph 7.5, 7.6 or 8.1 or with respect to any matter which is the subject of
a Non-Limited Representation or an Obligation, shall not be limited to such
remaining assets held in the Escrow Account and INFLO and the Buyer may seek
satisfaction of such obligation, in whole or in part, from the Escrow Account
(in the manner specified in the Escrow Agreement) and/or directly from, and with
full recourse to, the Seller.
7.4 Environmental Indemnification.
(a) The Seller indemnifies INFLO and the Buyer against, and agrees
to hold INFLO and the Buyer harmless from, all Losses of the Company, incurred
directly or indirectly because of: (i) any violation of, or condition that will
give rise to liability under, any Environmental Law, which violation or
condition cannot be identified as having first arisen after the Closing Date,
provided that any lack of compliance with any requirement imposed by any
Environmental Law shall constitute a violation subject to this clause (i)
regardless of whether such lack of compliance is required to be remedied by the
Closing Date; or (ii) any claim against INFLO, the Buyer or the Company with
respect to any such asserted violation or condition; provided that, in any case,
within eighteen months of the Closing Date, INFLO or the Buyer notifies the
Seller in writing of such violation, condition or claim (and, in the case of
such claim,
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provides the Seller with a copy thereof); and provided further that the Seller
shall not have any liability under this Paragraph 7.4 with respect to any of the
matters or conditions disclosed on Exhibit 3.1-V.
(b) With respect to notices of matters covered pursuant to clause
(a) (i) above, such notice shall in reasonable detail summarize the nature of
the violation or condition involved, including the laws and regulations involved
or under which liability arises. With respect to remediation costs that are
among any Losses for which indemnification is sought pursuant to clause (a)(i)
or (a)(ii) above, INFLO, the Buyer and the Company shall be entitled to
reimbursement for their reasonable out-of-pocket costs of remediating in a
reasonably cost-efficient manner the violation or condition giving rise to such
Losses, but only to the extent: (A) necessary to eliminate such violation or to
render such condition in compliance with any Environmental Law or any
requirement that is imposed by any governmental authority with jurisdiction
pursuant to any Environmental Law over the matter (it being agreed that to the
extent a governmental authority has taken jurisdiction over the remediation of
such violation or condition, remediation for such violation or condition will be
limited to any such remediation that renders such violation or condition in
compliance with any such requirement), and (B) if the property involved is real
property occupied by the Company under a lease, the cost is not borne or
reimbursed by the owner or a prior tenant of the real property. For purposes of
clause (a)(i) above and in applying the foregoing
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sentences, the costs of remediating a violation or condition will include,
without limitation, the direct cost of the remediation and all costs of
investigations, studies, tests, or similar items (provided that the cost of any
investigation, study, test, or similar item shall not be considered a cost of
remediation to the extent it is undertaken to identify the existence of
violations or conditions subject to indemnification under clause (a)(i) above
and fails to identify such violations or conditions and is not required by any
Environmental Law or governmental authority).
(c) The Seller will be required by this Paragraph 7.4 to indemnify
or reimburse INFLO, the Buyer and the Company only to the extent of the amount,
if any, by which such Losses under this Paragraph, together with all Losses
under Paragraph 7.1(i) (excluding any Losses with respect to the Non-Limited
Representations), computed as provided in Paragraph 7.8, exceed in total $2.0
million. The Seller will not have any liability or obligation hereunder because
of any violation of, or condition that will give rise to liability under, any
Environmental Law other than as provided in this Paragraph (and in Paragraph 7.1
as a result of a breach of the representation and warranty set forth in
Paragraph 3.1(v)), and the Buyer agrees to indemnify the Seller and its
affiliates against, and to hold them harmless from, all Losses incurred directly
or indirectly because of any such matters, except to the extent that the Seller
has obligations under the preceding provisions of this Paragraph 7.4 (or under
Paragraph 7.1 as a result of a breach of the representation and warranty set
forth in Paragraph 3.1(v)).
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(d) The Buyer, acting in good faith, shall meaningfully consult
reasonably in advance with the Seller and give reasonable consideration to the
Seller's requests and other input with respect to: (i) the scope and type of any
action to be taken or implemented in response to a violation, condition or claim
for which indemnity is being or will be sought from the Seller under Paragraph
7.4 ("Environmental Action"); (ii) the selection of consultants, contractors and
other third-parties with respect to any Environmental Action; and (iii) the form
and substance of any plan, report or submission to be transmitted to any
governmental authority regarding any Environmental Action (including with
respect to the scope and type of Environmental Action) (it being understood that
in the event that after such consultation and consideration, there is any
disagreement between the Buyer and the Seller with respect to the matters set
forth in clauses (i) through (iii), the Buyer shall, notwithstanding Seller's
requests and input, be permitted to take such action as the Buyer is otherwise
permitted to take hereunder). Seller and its employees and agents shall maintain
as confidential, to the full extent permitted by law, any non-public information
exchanged or obtained in the course of such consultation or pursuant to the
following sentence. In addition, the Buyer shall (A) retain and (upon the
Seller's request) provide to the Seller any records and information which are
reasonably relevant to any violation, condition or claim for which indemnity is
being sought from the Seller under Paragraph 7.4 (including, without limitation,
plans, reports and submissions transmitted to
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governmental authorities), (B) provide the Seller, during normal business hours
and upon prior request, reasonable access at Seller's sole risk to any real or
personal property as to which any violation, condition or claim for which
indemnity is being sought from the Seller under Paragraph 7.4 relates and (C)
make employees of INFLO, the Buyer, the Company and their respective affiliates
available on a mutually convenient basis to provide reasonable additional
information and explanation of any material provided hereunder. The Seller shall
permit one or more representatives of INFLO, the Buyer or the Company to
accompany the Seller at any time the Seller obtains such access and, upon
request, promptly shall provide to INFLO and the Buyer any information the
Seller obtains arising out of such access.
7.5 Payment of Taxes.
(a) The Seller will indemnify and reimburse INFLO, the Buyer and the
Company for all Income Taxes of, or payable by, the Company with regard to any
periods ended on or before the Closing Date and for the portion described below
of Income Taxes with regard to periods which include the Closing Date (and the
Seller shall pay all Income Taxes due with respect to such periods). As used in
this Agreement, the term "Income Taxes" means all net income, gains, franchise
and similar Taxes measured by income or gains of an entity. The Buyer will cause
the Company to promptly pay over to the Seller all refunds of Taxes relating to
periods ended on or before the Closing Date and the portion described below of
refunds of Taxes relating to periods which include the Closing Date (whether
such Taxes were paid before or after the
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Closing Date). INFLO and the Buyer agree and acknowledge that any write-down of
tax receivables reflected, or other adverse effect, on the Company's financial
statements as a result of the Seller's entitlement to or receipt of any refund
of Taxes pursuant to this Paragraph 7.5(a) shall not give rise to any claim
against the Seller or the Guarantors under this Agreement. With regard to any
period which begins before but ends after the Closing Date, the amount for which
the Seller will reimburse INFLO, the Buyer or the Company (or refund to which
the Seller will be entitled) will be the amount for which the Seller would have
been required to reimburse INFLO, the Buyer or the Company (or refund to which
the Seller would have been entitled) if the applicable taxable years of the
Company which began before the Closing Date had ended on the Closing Date. If
INFLO and the Buyer, on the one hand, and the Seller, on the other hand, cannot
agree on such amount, the amount will be determined by Arthur Andersen LLP,
whose expenses shall be borne equally by the Buyer and the Seller and whose
determination will bind INFLO, the Buyer and the Seller.
(b) The Buyer agrees to give the Seller prompt written notice of its
receipt of oral or written notice of any Tax examinations, claims, settlements,
proposed adjustments or related matters that may affect the Seller's obligations
or entitlements under Paragraph 7.1 (but only with respect to the Non-Limited
Representation which is the subject of any representation or warranty contained
in Paragraph 3.1(r)) or 7.5(a). The Buyer will cause the Company to give the
Seller
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complete control over the preparation and filing of Tax Returns, and amendments
of Tax Returns, relating to Taxes of the Company with respect to periods ending
on or before the Closing Date, and all audits or other examinations by any
Taxing authority relating to any deficiency or other adjustment asserted with
regard to such Tax Returns, provided, however, that the Seller shall not,
without the prior written consent of INFLO and the Buyer (which shall not be
unreasonably withheld or delayed), settle or compromise any Tax contest or claim
that would reasonably be expected to adversely affect INFLO, the Buyer or the
Company with respect to any period ending after the Closing Date. INFLO and the
Buyer, on the one hand, and the Seller, on the other hand, shall jointly control
the preparation and filing of Tax Returns, and amendments of Tax Returns,
relating to periods beginning before and ending after the Closing Date and all
audits of such Tax Returns; provided, however, that INFLO and the Buyer shall
not, without the prior written consent of the Seller (which shall not be
unreasonably withheld or delayed), settle or compromise any Tax contest or claim
that would reasonably be expected to adversely affect the Seller with respect to
any period ending on or before the Closing Date. INFLO and the Buyer shall
control the preparation and filing of amendments to and audits of all other Tax
Returns. The Buyer will cause the Company to cooperate with the Seller and its
representatives in all reasonable ways in connection with the preparation or
amendment of Tax Returns and audits of Tax Returns relating to Taxes for which
the Buyer or the Company is entitled to reimbursement under Paragraph 7.1 (but
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only with respect to the Non-Limited Representation which is the subject of any
representation or warranty contained in Paragraph 3.1(r)) or under this
Paragraph (including Tax Returns or amendments which will result in refunds of
Taxes). At the request of the Seller, the Buyer will cause the Company to make
available to the Seller the assistance of the employees of the Company listed on
Exhibit 7.5 (the "Pre-Closing Tax Employees"), or other employees of the Company
approved by the Seller, to prepare Tax Returns relating to periods ending on or
before the Closing Date under the supervision of the Seller, in which case the
Seller will reimburse the Company for its reasonable costs (including
reimbursement of the salaries of its employees on a per diem basis) of preparing
such Tax Returns.
(c) If at any time before all the Tax Returns of the Company
relating to periods ending on or before the Closing Date have been filed, the
Buyer determines to terminate the employment of any Pre-Closing Tax Employee,
(i) the Buyer will, or will cause the Company to, give the Seller at least 15
days' notice of its intention to terminate the employment of the Pre-Closing Tax
Employee before carrying out that termination of employment and (ii) if the
Seller agrees to reimburse the Company for all the compensation of the
Pre-Closing Tax Employee (including non-salary employee costs) between the date
specified in the notice and the date the employment of the Pre-Closing Tax
Employee is terminated with the consent of the Seller, the Company will (x)
continue to employ the Pre-Closing Tax Employee until a date consented to by the
Seller and (y) assign the
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Pre-Closing Tax Employee exclusively to preparing, under the supervision of the
Seller or its designee, Tax Returns and amendments to Tax Returns, and assisting
the Seller in connection with audits of Tax Returns, relating to Taxes of the
Company and for periods ending on or before the Closing Date.
(d) INFLO, the Buyer and the Company may make a claim for indemnity
and reimbursement pursuant to Paragraph 7.1 (but only with respect to the
Non-Limited Representation which is the subject of any representation or
warranty contained in Paragraph 3.1(r)) or 7.5(a) hereunder at any time prior to
90 days after the expiration of the applicable Tax statute of limitations with
respect to the relevant taxable period (including all periods of extension,
whether automatic or permissive).
(e) If there is an audit adjustment to any item reported on any Tax
Return pertaining to Taxes subject to indemnification under Paragraph 7.1 (but
only with respect to the Non-Limited Representation which is the subject of any
representation or warranty contained in Paragraph 3.1(r)) or 7.5(a) of this
Agreement, which adjustment results in an increase in the Taxes payable by the
Seller, and such adjustment results in a corresponding adjustment to items
reported on a Tax Return relating to a taxable period ending after the Closing
Date with the result that the Taxes payable either by the Company or any
consolidated group of companies of which the Company is a member are reduced, or
a refund of Taxes for the period ending after the Closing Date is increased, the
Buyer shall cause the Company to promptly pay the Seller the amount by which
such Taxes are
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reduced or such refunds are increased. Prior to the receipt of any indemnity
payment pursuant to Paragraph 7.5(a), the Buyer shall provide to the Seller a
written acknowledgement of its obligation under this Paragraph 7.5(e) to
promptly pay the Seller the amount referred to in the preceding sentence.
(f) The Buyer and the Seller shall each pay one-half of all transfer
taxes and sales taxes arising out of or in connection with the transactions
contemplated by this Agreement ("Transfer Taxes").
(g) The Tax Sharing Agreement dated as of August 4, 1993, by and
among the Seller, the Company and certain other affiliates of the Seller, shall
terminate and be of no further force and effect on the Closing Date with respect
to the Company.
(h) Notwithstanding anything to the contrary contained in this
Agreement, the Seller acknowledges that the utilization of any net operating
losses or alternative minimum tax credits by the Company in any tax period shall
not give rise to any claims against INFLO, the Buyer or the Company under this
Agreement.
7.6 Indemnification Against Liabilities or Obligations Relating to
the Seller and Subsidiaries and Affiliates of the Seller (Other than the
Company). The Seller indemnifies INFLO, the Buyer and the Company against, and
agrees to hold each of them harmless from, all Losses related to or arising as a
result of, the assets, business, operations, conduct, products and employees
(including retired employees and pension plans, post-retirement obligations and
other employee plans) of, and the liabilities created or obligations required to
be fulfilled with
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regard to, the Seller or any subsidiary or affiliate of the Seller (other than
the Company), including, without limitation, Bell Brands Snack Foods, Inc. and
Blue Bell Snack Foods, Inc. (each a "Bellco"), but in any event only to the
extent that such Losses result from Third-Party Claims (as defined in Paragraph
7.10) against INFLO, the Buyer or the Company, and excluding (i) any matter,
liability or obligation under this Paragraph 7.6 with respect to the leases
identified on Exhibit 3.1-N hereto as "Bell Brands Whse." under the column
entitled "Lease/Title") and (ii) any claims made after the Closing Date for
pension, welfare or other benefits under Company Plans or Multiemployer Plans by
or on behalf of employees or former employees (or their eligible dependents) of
the Bellcos (including such employees of the Company to the extent employed by
the Bellcos during the time the Bellcos were divisions of the Company). Each of
INFLO and the Buyer hereby waive, to the fullest extent permitted by law, any
and all rights, claims and causes of action it may have against the Seller or
its subsidiaries or affiliates (including, without limitation, the Bellcos) with
respect to obligations of or the payments made by the Company or the Bellcos
under the vehicle leases set forth on Exhibit 7.6 and claims for trade
receivables due (whether or not written off on the Company Financial Statements)
from either of the Bellcos.
7.7 Company's Indemnification Against Liabilities or Obligations.
(a) The Buyer indemnifies the Seller and each of its affiliates against, and
agrees to hold each of them harmless from, all Losses related to, or arising as
a result of, the
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assets, business, operations, conduct, products and employees (including retired
employees and pension plans, post-retirement obligations and other employee
plans) of, and the liabilities created or obligations required to be fulfilled
with regard to, the Company on or after the Closing Date and (b) the Company
indemnifies the Seller and each of its affiliates against, and agrees to hold
each of them harmless from, all Losses related to, or arising as a result of,
the assets, business, operations, conduct, products and employees (including
retired employees and pension plans, post-retirement obligations and other
employee plans) of, and the liabilities created or obligations required to be
fulfilled with regard to, the Company prior to the Closing Date, in the case of
each of (a) and (b), (1) only to the extent that such Losses result from
Third-Party Claims against the Seller or such affiliates and (2) other than with
respect to (i) any Losses for which the Seller has expressly agreed to indemnify
INFLO and the Buyer under this Agreement, (ii) the terms of any other agreements
delivered pursuant to this Agreement and (iii) claims of, or causes of action
arising from, fraud.
7.8 Computation of Loss. Whenever the Company or the Seller (the
"Indemnifying Party") is required to indemnify another party hereunder (the
"Indemnified Party") against, and hold the Indemnified Party harmless from, or
to reimburse the Indemnified Party for, any item of Loss, the Indemnifying Party
will pay the Indemnified Party the amount of the Loss, including all Federal
(but not state or local) corporate income or gains taxes, or similar Taxes,
resulting from the payment net of (i)
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the Net Proceeds of any insurance policy paid to the Indemnified Party with
respect to such Loss prior to the indemnification payment and (ii) any Tax
Benefit actually received by the Indemnified Party with respect to such Loss
prior to the indemnification payment. For purposes of this Paragraph 7.8, (A)
"Net Proceeds" shall mean the insurance proceeds actually received, less any
deductibles, co-payments or other payment obligations (including attorneys' fees
and other costs of collection) that relates to or arises from the making of the
claim for indemnification and (B) "Tax Benefit" shall mean any refund of Income
Taxes paid or any actual reduction in the amount of Income Taxes which would
otherwise be paid currently, in each case computed by assuming that the tax
attribute resulting from such Loss results in a refund or in an actual reduction
in income Taxes only after all the other tax attributes of the Indemnified Party
have been utilized, provided, that no Tax Benefit shall be deemed to have
occurred while a reasonable possibility exists of a challenge by any federal,
state or local tax authority. If any Indemnified Party receives a Tax Benefit or
Net Proceeds after an indemnification payment is made which relates thereto, the
Indemnified Party shall promptly repay to the Indemnifying Party such amount of
the indemnification payment as would not have been paid had the Tax Benefit or
Net Proceeds reduced the original payment (any such repayment shall be a credit
against any applicable indemnification basket or cap set forth in this Article
VII) at such time or times as and to the extent that such Tax Benefit or Net
Proceeds is actually received. Prior to the
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receipt of any indemnity payment under this Agreement, the Indemnified Party
shall provide to the Indemnifying Party a written acknowledgement of its
obligation under this Paragraph 7.8 to repay to the Indemnifying Party any Tax
Benefit or Net Proceeds realized with respect to the related indemnity payment
or Loss.
7.9 Adjustment to Purchase Price. The parties agree to treat all
payments made under this Article VII or under other indemnity provisions of this
Agreement as adjustments to the Purchase Price for Tax purposes.
7.10 Procedures Relating to Third Party Claims (other than
Environmental and Tax Claims). (a) In order for any party (the "indemnified
party") to be entitled to any indemnification provided for under this Agreement
because or resulting from or arising out of a third-party claim made by any
party against the indemnified party (other than a claim as to which Paragraph
7.4 or 7.5 applies, procedures for which are specified in such Paragraphs) (a
"Third Party Claim"), such indemnified party must notify the indemnifying party
in writing, and in reasonable detail, of the Third Party Claim within 10
business days after receipt by such indemnified party of written notice of the
Third Party Claim; provided, however, that failure to give such notification
shall not affect the indemnification provided hereunder except to the extent the
indemnifying party shall have been actually prejudiced as a result of such
failure (except that the indemnifying party shall not be liable for any expenses
incurred during the period in which the indemnified party failed
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to give such notice). Thereafter, the indemnified party shall deliver to the
indemnifying party, promptly after the indemnified party's receipt thereof,
copies of all notices and documents (including court papers) received by, or
otherwise under the control or in the possession of, the indemnified party
relating to the Third Party Claim.
(b) If a Third Party Claim is made against an indemnified party, the
indemnifying party will be entitled to participate in the defense thereof and,
if it so chooses, to assume the defense thereof with counsel selected by the
indemnifying party and reasonably acceptable to the indemnified party. Should
the indemnifying party so assume the defense of a Third Party Claim, the
indemnifying party will not be liable to the indemnified party for any legal
expenses subsequently incurred by the indemnified party in connection with the
defense thereof; provided, however, that the indemnified party shall have the
right to employ counsel, separate from the counsel employed by the indemnifying
party, if it reasonably determines that representation by the same counsel would
be inappropriate under applicable standards of appropriate conduct due to actual
or potential differing interests between them, and in that event the fees and
expenses of such separate counsel shall be paid by the indemnifying party. If
the indemnifying party assumes such defense, the indemnified party shall have
the right to participate in the defense thereof and to employ counsel, at its
own expense, separate from the counsel employed by the indemnifying party, it
being understood that the indemnifying
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party shall control such defense. The indemnifying party shall be liable for the
fees and expenses of counsel employed by the indemnified party for any period
during which the indemnifying party has not assumed the defense thereof. If the
indemnifying party chooses to defend or prosecute a Third Party Claim, all the
parties hereto shall cooperate in good faith in the defense or prosecution
thereof. Such cooperation shall include the retention and (upon the indemnifying
party's request) the provision to the indemnifying party of records and
information which are reasonably relevant to such Third Party Claim, and making
employees available on a mutually convenient basis to provide reasonable
additional information and explanation of any material provided hereunder.
Subject to the proviso hereto, if the indemnifying party chooses to defend or
prosecute any Third Party Claim, the indemnified party will enter into any
settlement, compromise or discharge of such Third Party Claim which the
indemnifying party may recommend and which includes a provision unconditionally
releasing the indemnified party from and holding the indemnified party harmless
against all liability in connection with such Third Party Claim; provided,
however, that the indemnifying party shall not, without the prior written
consent of the indemnified party, such consent not to be unreasonably withheld
or delayed, enter into any such settlement, compromise or discharge which (i)
commits the indemnified party to take, or forbear to take, any action or
compromises the ability of the indemnified party to take any action in the
future, (ii) requires INFLO or the Buyer as the indemnified party
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77
to make any payments with respect to such Third-Party Claim by reason of there
being insufficient amounts in the Escrow Account or (iii) would be reasonably
likely to adversely affect the business or reputation of the indemnified party.
Whether or not the indemnifying party shall have assumed the defense of a Third
Party Claim, the indemnified party shall not admit any liability with respect
to, or settle, compromise or discharge, such Third Party Claim without the
indemnifying party's prior written consent (which consent shall not be
unreasonably withheld) but, if such consent is given, the indemnifying party
agrees to indemnify and hold harmless the indemnified party from and against any
loss or liability by reason of such admission, settlement, compromise or
discharge.
7.11 Procedures Relating to Non-Third Party Claims. In order for an
indemnified party to be entitled to any indemnification provided for under this
Agreement in respect of a claim that does not involve a Third Party Claim or a
claim as to which Paragraph 7.4 or 7.5 applies being asserted against or sought
to be collected from such indemnified party, the indemnified party shall deliver
notice of such claim with reasonable promptness to the indemnifying party. The
failure by any indemnified party to so notify the indemnifying party shall not
relieve the indemnifying party from any liability which it may have to such
indemnified party under this Agreement, except to the extent that the
indemnifying party shall have been actually prejudiced by such failure. If the
indemnifying party does not notify the indemnified party within 30 calendar days
<PAGE>
78
following its receipt of such notice that the indemnifying party disputes its
liability to the indemnified party under this Agreement, such claim specified by
the indemnified party in such notice shall be conclusively deemed a liability of
the indemnifying party under this Agreement and the indemnifying party shall pay
the amount of such liability to the indemnified party on demand or, in the case
of any notice in which the amount of the claim (or any portion thereof) is
estimated, on such later date when the amount of such claim (or such portion
thereof) becomes finally determined. If the indemnifying party has timely
disputed its liability with respect to such claim, as provided above, the
indemnifying party and the indemnified party shall proceed in good faith to
negotiate a resolution of such dispute and, if not resolved through
negotiations, such dispute shall be resolved by litigation in an appropriate
court of competent jurisdiction.
ARTICLE VIII
ABSENCE OF BROKERS
8.1 Representations and Warranties Regarding Brokers and Others. The
Buyer (as to itself and INFLO), on the one hand, and the Seller, on the other
hand, each represents and warrants to the other of them that nobody acted as a
broker, a finder or in any similar capacity in connection with the transactions
which are the subject of this Agreement, except that Salomon Brothers Inc acted
as financial advisor to the Seller. All fees of Salomon Brothers Inc will be
paid by the Seller. The Buyer, on the one hand, and the Seller, on the other
hand, each indemnifies
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79
the other of them against, and agrees to hold the other of them harmless from,
all Losses incurred because of any claim by anyone against the indemnified party
for compensation as a broker, a finder or in any similar capacity by reason of
services allegedly rendered to the indemnifying party in connection with the
transactions which are the subject of this Agreement.
ARTICLE IX
GENERAL
9.1 Expenses. Unless otherwise specified in this Agreement, the
Buyer and the Seller will each pay its own expenses in connection with the
transactions which are the subject of this Agreement, including legal fees. The
Seller will pay, or otherwise insure that there is no diminution in the value to
be transferred hereunder to the Buyer as a result of, all expenses of the
Company in connection with the transactions which are the subject of this
Agreement, including legal fees (it being agreed that if the Company's 1996
audit fees and expenses of Deloitte & Touche LLP pursuant to the FY 1996
engagement letter as in effect on the date hereof has not been paid prior to the
Closing, the Seller shall after the Closing reimburse the Company for any
payment made thereon by the Company).
9.2 Access to Properties, Books and Records.
(a) From the date of this Agreement until the Closing
Date, the Seller will cause the Company to give representatives of INFLO and the
Buyer reasonable access during normal business hours on a pre-scheduled basis to
all of its properties, books, records and knowledgeable personnel. Until the
completion of the
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80
transactions which are to take place at the Closing, INFLO and the Buyer will,
and will cause their representatives to, hold all information they receive as a
result of their access to the properties, books and records of the Company in
confidence pursuant to the terms of the Confidentiality Agreement dated January
30, 1996 between INFLO and the Seller (the "Confidentiality Agreement"), the
terms of which are incorporated herein by reference. Effective upon the Closing,
the Confidentiality Agreement shall terminate with respect to information
relating to the Company. If this Agreement is terminated prior to completion of
the transactions which are to take place at the Closing, (i) INFLO and the Buyer
will, at the Seller's request, deliver to the Seller all documents and other
material obtained by INFLO and its affiliates and representatives from the
Seller and its affiliates and representatives in connection with the
transactions which are the subject of this Agreement or evidence that such
documents and material have been destroyed by INFLO or the Buyer, (ii) the
Seller and the Company will, at INFLO's request, deliver to INFLO all documents
and other material obtained by the Seller and its affiliates and representatives
from INFLO and its affiliates and representatives in connection with the
transactions which are the subject of this Agreement or evidence that such
documents and material have been destroyed by the Seller and (iii) all
confidential information received (A) by INFLO and its affiliates and
representatives with respect to the businesses of the Seller and its affiliates
or (B) by the Seller and its affiliates and representatives with respect
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81
to the businesses of INFLO and its affiliates, shall be treated in accordance
with the Confidentiality Agreement (which shall remain in full force and effect
notwithstanding the termination of this Agreement).
(b) After the Closing, INFLO and the Buyer will cause the Company to
provide the Seller with access to the books and records and knowledgeable
personnel of the Company during normal business hours in connection with the
preparation of financial statements by the Seller or its affiliates, the
preparation of Tax Returns by the Seller or its affiliates, the preparation of
Tax Returns by the Company under the control of the Seller as provided in
Paragraph 7.5, audits of Tax Returns filed by the Seller or its affiliates or
audits of Tax Returns filed by the Company which are controlled by the Seller as
provided in Paragraph 7.5.
(c) After the Closing, the Seller will, and will cause its
subsidiaries to, provide the Company with reasonable access to their books and
records relating, to the extent reasonably relevant, to the Company during
normal business hours on a pre-scheduled basis in connection with the
preparation of financial statements by INFLO, the Buyer, the Company or their
respective affiliates, the preparation of Tax Returns by INFLO, the Buyer, the
Company or their respective affiliates or audits of Tax Returns of INFLO, the
Buyer, the Company or their respective affiliates. The Seller shall use its best
efforts to cause Deloitte & Touche LLP to assist INFLO and the Buyer, at their
expense, in the preparation of audited financial statements of
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82
the Company and provide reasonable access to such accountants' work papers that
have been prepared in connection with reviews or audits of accounts and
financial statements of the Company performed prior to the Closing.
9.3 Publicity. Neither the Seller, on the one hand, nor INFLO and
the Buyer, on the other hand, shall issue or cause the publication of any press
release or other public announcement with respect to the transactions
contemplated by this Agreement without the consent of the other party, which
consent shall not be unreasonably withheld; provided that any party may make any
disclosure required to be made by it under applicable law (including Federal
securities laws) if it determines in good faith that it is appropriate to do so
and gives prior notice to the other party hereto, which notice shall include the
contents of such press release or other public announcement; and provided,
further, that the Buyer and its affiliates may make any disclosure in any
prospectus or offering memorandum relating to an offering of securities by the
Buyer (the proceeds of which are intended to be used in connection with the
Refinancing (as defined in the Nomura Sub Debt Agreement)) if the Buyer gives
prior notice to the Seller, which notice shall include the contents of such
prospectus or offering memorandum relating to the transactions contemplated by
this Agreement, and gives reasonable consideration to any comments which are
made by the Seller in a timely manner (it being understood that in the event
that, after such notice and consideration has been given, there is any
disagreement between the Buyer and the Seller with respect
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83
to such comments, the Buyer shall, notwithstanding the Seller's comments, be
permitted to make any such disclosure).
9.4 Entire Agreement. This Agreement, the Exhibits hereto, the
documents to be delivered in accordance with this Agreement, the letter
agreement dated the date hereof among INFLO, the Buyer and the Seller and the
Confidentiality Agreement contain the entire agreement among INFLO, the Buyer
and the Seller relating to the transactions which are the subject of this
Agreement and those other documents, all prior negotiations, understandings and
agreements between or among INFLO, the Buyer and the Seller are superseded by
this Agreement and those other documents, and there are no representations,
warranties, understandings or agreements concerning the transactions which are
the subject of this Agreement or those other documents other than those
expressly set forth in this Agreement or those other documents.
9.5 Effect of Disclosures. Any issues or matters disclosed or
reported in connection with any representation or warranty contained in this
Agreement (including Exhibits to this Agreement) or in connection with Exhibit
4.14, will be treated as having been disclosed in connection with each
representation and warranty made in this Agreement, but only to the extent the
information disclosed is reasonably clearly applicable to such other
representation and warranty.
9.6 Captions. The captions of the articles and paragraphs of this
Agreement are for reference only, and do not affect the meaning or
interpretation of this Agreement.
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84
9.7 Assignments. Neither this Agreement nor any right of any party
under it may be assigned, except that each of INFLO and the Buyer may assign its
rights and obligations under this Agreement to a lender in connection with the
financing referred to in Paragraph 3.2(e) and to any of their affiliates, if
INFLO or the Buyer, as the case may be, unconditionally guarantees that such
affiliate or corporation to which its rights and obligations are assigned will
perform fully all the obligations of INFLO or the Buyer, as the case may be,
under this Agreement.
9.8 Notices and Other Communications. Any notice or other
communication under this Agreement must be in writing and will be deemed given
when delivered in person or sent by facsimile (with proof of receipt at the
number to which it is required to be sent), or on the third business day after
the day on which mailed by first class mail from within the United States of
America, to the following addresses (or such other address as may be specified
after the date of this Agreement by the party to which the notice or
communication is sent):
If to the Seller or the Guarantors:
G.F. Industries, Inc.
999 Baker Way, Suite 200
San Mateo, California 94404
Facsimile No.: (415) 312-8077
Attention: President
with a copy to:
Stephen Barbieri
214 Grant Avenue, Suite 400
San Francisco, California 94108
Facsimile No.: (415) 986-1730
If to INFLO or the Buyer:
c/o INFLO Holdings Corporation
<PAGE>
85
677 Larch Avenue
Elmhurst, Illinois 60126
Facsimile No.: (708) 833-3372
Attention: Chief Executive Officer
with copies to:
The Invus Group, Ltd.
135 East 57th Street, 30th Floor
New York, New York 10022
Facsimile No.: (212) 371-1829
Attention: Raymond Debbane
and
Flowers Industries, Inc.
U.S. Highway 19
Thomasville, Georgia 31792
Facsimile No.: (912) 225-3808
Attention: Robert P. Crozer
and
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Facsimile No.: (212) 455-2502
Attention: Robert E. Spatt
9.9 Governing Law.
(a) This Agreement will be governed by, and construed under, the
laws of the State of New York in the United States of America relating to
contracts made and to be performed in that state.
(b) The Seller, INFLO and the Buyer each agrees that any action or
proceeding relating to this Agreement or the transactions contemplated by it may
be brought in any Federal or state court sitting in the State of New York in the
United States of America and each of them (i) consents to the jurisdiction of
each of those courts in any such action or proceeding, (ii) agrees not to seek
to have the venue of any such action or proceeding changed because of
inconvenience of the forum or
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86
otherwise (except that nothing in this Paragraph will prevent a party from
removing an action from a state court to a Federal court sitting in that state),
and (iii) agrees that process in any such action or proceeding may be served by
registered mail or in any other manner permitted by the rules of the court in
which the action or proceeding is brought.
(c) Each of the Guarantors hereby designates, appoints and empowers
Stephen Barbieri, 214 Grant Avenue, Suite 400, San Francisco, California 94108,
as its authorized agent, to accept, receive and acknowledge for and on behalf of
each Guarantor and its property, service of any and all process which may be
served in any action, suit or proceeding of the nature referred to above in the
State of New York, which appointment shall be irrevocable until the appointment
and acceptance of a successor authorized agent. Each Guarantor further submits
to the personal jurisdiction of any court referred to in subparagraph (b) above
in any such legal action, suit or proceeding and agrees that, to the fullest
extent permitted by applicable law, such service of process may be made
personally or by mailing or delivering a copy of the summons and complaint or
other legal process in any such legal suit, action or proceeding to such
Guarantor in care of such agent at the aforesaid address, and such agent is
hereby authorized to accept, receive and acknowledge the same for and on behalf
of the applicable Guarantor and to admit service with respect thereto. Upon
service of process being made on such agent as aforesaid, a copy of the summons
and complaint or other legal process shall be mailed to the applicable Guarantor
by
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87
registered mail, return receipt requested, at its address specified in or
pursuant to Paragraph 9.8 hereof. In the event that for any reason the agent
mentioned above shall not serve as agent to receive service of process in
accordance with the provisions of this Paragraph 9.9(c), each of the Guarantors
shall promptly appoint a successor agent reasonably satisfactory to the Buyer
and INFLO and deliver evidence in writing of the successor agent's acceptance of
such appointment. To the extent that any Guarantor has or hereafter may acquire
any immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or other similar process) with respect to itself or its
property, each Guarantor hereby irrevocably waives, to the fullest extent
permitted by applicable law, such immunity in respect of its obligations with
respect to this Agreement. Each Guarantor agrees, to the extent permitted by
law, that a final and unappealable judgment against any of them in any action,
suit or proceeding contemplated above shall be conclusive and may be enforced in
any other jurisdiction within or outside the United States by suit on the
judgment, a certified or exemplified copy of which shall be conclusive evidence
of the fact and amount of such judgment. Each of the Guarantors agrees that the
provisions of Paragraphs 9.9(a) and (b) of the Agreement shall apply to and be
binding upon each of them.
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88
9.10 Amendments. This Agreement may be amended only
by a document in writing signed by each of INFLO, the Buyer and
the Seller.
9.11 Waivers. No waiver of any provision of this Agreement will
constitute a waiver of any other provision of this Agreement, and no waiver of a
provision in one instance will constitute a waiver of that or any other
provision in any other instance.
9.12 Guarantees.
(a) Bermore, Ltd., Wilfred Uytengsu and George K. Young
(collectively, the "Guarantors") hereby guarantee the performance of the
financial obligations of the Seller to indemnify INFLO and the Buyer pursuant to
(i) clause (i) of Paragraph 7.1 hereof with respect to any breach of any
Non-Limited Representation, (ii) Paragraph 7.5 hereof and (iii) Paragraph 8.1
hereof; provided that the aggregate liability of the Guarantors under this
provision shall not exceed the Purchase Price; provided, further, that the
liability of a Guarantor under this provision shall not exceed the amount set
forth opposite such Guarantor's name on Exhibit 9.12-1 hereto. The Guarantors
shall not have any liability under this provision for any such financial
obligations of the Seller unless the related claim of INFLO or the Buyer for
indemnification shall have been made not later than (x) in the case of
obligations referred to in clause (i) (other than the Non-Limited Representation
contained in Paragraph 3.1(r)), the date that is five years from the Closing
Date and (y) in the case of the obligations referred to in clause
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89
(ii) and with respect to the Non-Limited Representation contained in Paragraph
3.1(r), the date that is 30 days after the end of the statute of limitations
period applicable to the matter which is the subject of the claim, but in no
event later than the date that is six years from the Closing Date.
(b) Bermore, Ltd. hereby represents and warrants to INFLO and the
Buyer that: (i) it is a corporation duly organized, validly existing and in good
standing under the laws of Bermuda; (ii) it has all corporate power and
authority necessary to enable it to enter into this Agreement and to perform its
obligations hereunder; (iii) all corporate actions necessary to authorize
Bermore, Ltd. to enter into this Agreement and to perform its obligations
hereunder have been taken; and (iv) the agreements of Bermore, Ltd. contained in
Paragraph 9.9 and this Paragraph 9.12 are valid and binding agreements of
Bermore, Ltd., enforceable against it in accordance with its terms.
(c) Each of Wilfred Uytengsu and George K. Young (each, an
"Individual Guarantor") hereby represents and warrants to INFLO and the Buyer
that: (i) it has all requisite power and authority necessary to enable it to
enter into this Agreement and to perform its obligations hereunder; and (ii) the
agreements of such Individual Guarantor contained in Paragraph 9.9 and this
Paragraph 9.12 are valid and binding agreements of such Individual Guarantor,
enforceable against it in accordance with its terms.
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90
9.13 Beneficiaries. This Agreement is for the exclusive benefit of
the parties and their respective successors and permitted assigns under
Paragraph 9.7. This Agreement is not for the benefit of any other person and no
other person will have any rights under or by reason of this Agreement.
9.14 Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same agreement.
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91
IN WITNESS WHEREOF, the undersigned have executed this Agreement,
intending to be legally bound by it, on the day shown on the first page of this
Agreement. INFLO HOLDINGS CORPORATION
By:_____________________________________
Title: Chief Executive Officer
and President
KEEBLER HOLDING CORP.
By:_____________________________________
Title: Chief Executive Officer
and President
G.F. INDUSTRIES, INC.
By:_____________________________________
Title: President
BERMORE, LTD.
(only as to Paragraphs 9.9 and
9.12)
By:_____________________________________
Title: Managing Director
Wilfred Uytengsu
(only as to Paragraphs 9.9 and
9.12)
George K. Young
(only as to Paragraphs 9.9 and
9.12)
Exhibit 10.13
GFI STOCKHOLDER'S AGREEMENT
Dated as of
June 4, 1996
Among
INFLO HOLDINGS CORPORATION,
G.F. INDUSTRIES, INC.,
ARTAL LUXEMBOURG S.A.
and
FLOWERS INDUSTRIES, INC.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS;
REPRESENTATIONS AND WARRANTIES....................................... 1
1.1 Definitions.................................................. 1
1.2 Representations and Warranties of the Company................ 5
1.3 Representations and Warranties of GFI........................ 6
1.4 Representations and Warranties of Artal and
Flowers...................................................... 7
ARTICLE II
VOTING ARRANGEMENTS.................................................. 8
2.1 GFI Board Representative........................................ 8
2.2 Committees...................................................... 9
2.3 Removal of GFI Board Representative............................. 9
2.4 Restrictions on Other Agreements................................ 10
2.5 Fundamental Corporate Actions................................... 10
2.6 Certificate of Incorporation and By-Laws........................ 11
2.7 Changes Upon Public Offering.................................... 11
2.8 Director Fees and Expenses................................... 11
2.9 Financial and Other Information; Auditors.................... 11
ARTICLE III
COVENANTS............................................................ 12
3.1 Transfers of Securities......................................... 12
3.2 Right of First Refusal.......................................... 15
3.3 Tag Along....................................................... 16
3.4 Drag Along...................................................... 19
3.5 Preemptive Rights............................................... 20
3.6 Certain Transfers by Artal and Flowers.......................... 21
ARTICLE IV
REGISTRATION RIGHTS.................................................. 22
ARTICLE V
AGREEMENTS REGARDING THE PURCHASED SECURITIES........................ 22
5.1 Securities Unregistered......................................... 22
5.2 Legend.......................................................... 23
ARTICLE VI
MISCELLANEOUS........................................................ 23
6.1 Termination..................................................... 23
6.2 Remedies........................................................ 24
6.3 Consent to Amendments........................................... 24
6.4 Successors and Assigns.......................................... 25
6.5 Severability.................................................... 25
6.6 Counterparts.................................................... 25
6.7 Notices......................................................... 25
6.8 Governing Law................................................... 25
6.9 Further Assurances.............................................. 26
6.10 Jurisdiction; Venue; Process................................... 26
6.11 Mutual Waiver of Jury Trial.................................... 26
<PAGE>
GFI STOCKHOLDER'S AGREEMENT
GFI STOCKHOLDER'S AGREEMENT (this "Agreement"), dated as of June 4,
1996, among INFLO HOLDINGS CORPORATION, a Delaware corporation (the "Company"),
G.F. INDUSTRIES, INC., a Nevada corporation ("GFI"), ARTAL LUXEMBOURG S.A., a
Luxembourg corporation ("Artal"), and FLOWERS INDUSTRIES, INC., a Georgia
corporation ("Flowers").
WHEREAS, pursuant to the Stock Purchase Agreement dated June 4,
1996, among the Company, Keebler Holding Corp. ("Holdco") and GFI (the "Stock
Purchase Agreement"), Holdco has agreed to purchase all of the outstanding
shares of common stock, without par value, of Sunshine Biscuits, Inc., a
Delaware corporation (the "Acquisition"); and
WHEREAS, pursuant to the Stock Purchase Agreement, in partial
payment for such Acquisition the Company is issuing to GFI on the date hereof
shares of Common Stock, par value $.01 per share, of the Company, and is
granting to GFI warrants (the "Warrants") to purchase additional shares of such
Common Stock; and
WHEREAS, Artal, Flowers and the Company are parties to a certain
Stockholders' Agreement dated as of January 26, 1996 (as in effect on the date
hereof and, except as otherwise provided herein, as the same may be amended,
supplemented or otherwise modified in accordance with its terms, the "Original
Stockholders' Agreement"), which sets forth certain agreements between and among
Artal, Flowers and the Company;
NOW, THEREFORE, in order to implement the foregoing and in
consideration of the mutual representations, warranties, covenants and
agreements contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS;
REPRESENTATIONS AND WARRANTIES
1.1 Definitions. Capitalized terms used herein shall have the
meanings set forth below:
"Acquisition" shall have the meaning specified in the recitals
hereto.
"Affiliate" means any Person which, directly or indirectly through
one or more intermediaries, controls, is controlled by, or is under common
control with, another Person. The term "control" includes, without limitation,
the possession, directly or indirectly, of the power to direct the management
and policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
<PAGE>
2
"Agreement" shall have the meaning specified in the first paragraph
hereof.
"Artal" shall have the meaning specified in the first paragraph
hereof.
"Board" means the Board of Directors of the Company.
"By-Laws" means the By-Laws of the Company as in effect on the date
hereof, as the same may be amended, supplemented or otherwise modified from time
to time in accordance with the terms thereof, the terms of the Original
Stockholders' Agreement and the terms of this Agreement.
"Certificate of Incorporation" means the Certificate of
Incorporation of the Company as in effect on the date hereof, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
the terms thereof, the terms of the Original Stockholders' Agreement and the
terms of this Agreement.
"Change of Control" means the occurrence of a Company Sale (as
defined in the Original Stockholders' Agreement as in effect on the date hereof
and without giving effect to any amendment, supplement or other modification
thereof after the date hereof) in which the acquiring Person or group of Persons
is a Third Party.
"Common Stock" means the Company's Common Stock, par value $.01 per
share, and any capital stock of any class of the Company hereafter authorized
which is not limited to a fixed sum or percentage of par or stated value in
respect to the rights of the holders thereof to participate in dividends or in
the distribution of assets upon any liquidation, dissolution or winding up of
the Company.
"Common Stock Equivalents" means (without duplication with any
Common Stock or other Common Stock Equivalents) rights, warrants, options,
convertible securities, or exchangeable securities or indebtedness, or other
rights, exercisable for or convertible or exchangeable into, directly or
indirectly, Common Stock or securities exercisable for or convertible or
exchangeable into Common Stock, whether at the time of issuance or upon the
passage of time or the occurrence of some future event.
"Company" shall have the meaning specified in the first paragraph
hereof.
"Confidential Information" shall have the meaning specified in
Section 2.1(c).
"Corporate Group" means (i) with respect to Flowers, (A) Flowers
together with its direct and indirect wholly owned
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3
subsidiaries or (B) if permitted by each of the agreements governing material
debt of the Company, Flowers together with its Affiliates, (ii) with respect to
Artal, (I) Artal together with its direct and indirect wholly owned subsidiaries
and any entity, directly or indirectly through wholly owned subsidiaries, wholly
owning Artal or (II) if permitted by each of the agreements governing material
debt of the Company, Artal together with its Affiliates, and (iii) with respect
to GFI, (I) GFI together with its direct and indirect wholly owned subsidiaries
and any entity, directly or indirectly through wholly owned subsidiaries, wholly
owning GFI or (II) if permitted by each of the agreements governing material
debt of the Company, GFI together with its Affiliates.
"Drag Along Number" shall have the meaning specified in Section 3.4.
"Election Period" shall have the meaning specified in Section 3.2.
"Executive Agreements" means the executive security purchase
agreements entered into from time to time among the Company and the management
stockholders or other similar executive agreements entered into from time to
time, as the same may be amended, supplemented or otherwise modified from time
to time.
"Family Group" means, with respect to any individual, such
individual's spouse and descendants and such individual's parents, grandparents,
aunts, uncles, brothers, sisters and their respective spouses and descendants
(in each case, whether natural or adopted) and any trust or similar entity
established and maintained solely for the benefit of such individual and/or his
spouse, descendants and/or such above-listed relatives and all of the aforesaid
of the grantor of a trust that is a stockholder of the Company.
"Flowers" shall have the meaning specified in the first paragraph
hereof.
"Fully Diluted Shares" means, as of any date of determination, the
number of shares of Common Stock outstanding plus (without duplication) all
shares of Common Stock issuable, whether at such time or upon the passage of
time or the occurrence of future events, upon the exercise, conversion or
exchange of all then-outstanding Common Stock Equivalents.
"GFI" shall have the meaning specified in the first paragraph
hereof.
"GFI Board Representative" means the non-voting, ex-officio
representative of GFI to the Board designated pursuant to Section 2.1(a).
<PAGE>
4
"Investor Joinder" means a joinder agreement, substantially in the
form of Exhibit 3.1(a) hereto, by which a Person becomes an Investor Stockholder
after the date hereof.
"Investor Stockholders" means, collectively, Artal, Flowers, GFI and
any Person who hereafter becomes an Investor Stockholder pursuant to an Investor
Joinder under this Agreement.
"Offer" shall have the meaning specified in Section 3.2.
"Offered Securities" shall have the meaning specified in Section
3.2.
"Offer Notice" shall have the meaning specified in Section 3.2.
"Offeror" shall have the meaning specified in Section 3.2.
"Original Stockholders' Agreement" shall have the meaning specified
in the recitals hereto.
"Permitted Transferee" shall mean those Persons to whom Transfers
are permitted pursuant to clauses (i), (ii), (iv) and (v)(A) of Section 3.1(b).
"Person" means an individual, a partnership, a joint venture, a
corporation, an association, a joint stock company, a limited liability company,
a trust, an unincorporated organization or a governmental entity or any
department, agency or political subdivision thereof.
"Preemptive Rights Securities" shall have the meaning specified in
Section 3.5.
"Preferred Stock" means any capital stock of any class of the
Company hereafter authorized that provides for a preference on liquidation or
with respect to dividends over any other class of capital stock of the Company
or any similar kind of equity security.
"Public Offering" means a public offering of Common Stock pursuant
to a registration statement declared effective under the Securities Act.
"Recapitalization" means any stock split, reverse stock split,
dividend or combination, or any recapitalization, reclassification, merger,
consolidation, sale of all or substantially all assets, exchange or other
similar reorganization.
"Release Date" shall have the meaning specified in Section 3.1.
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5
"Rule 144A" means Rule 144A under the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
"Sale Notice" shall have the meaning specified in Section 3.3.
"SEC" means the Securities and Exchange Commission.
"Securities" means, (a) the Common Stock acquired by GFI on the date
of this Agreement, (b) the Warrants, (c) all Common Stock and Preferred Stock
acquired by GFI after the date hereof (whether pursuant to the exercise of the
Warrants or otherwise), (d) all Common Stock, Preferred Stock and indebtedness
issued in respect thereof, in exchange therefor, or in substitution thereof, in
connection with a Recapitalization, (e) all Common Stock Equivalents issued to
GFI and (f) all Common Stock and Preferred Stock which constitutes "Securities"
for purposes of the Original Stockholders' Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Holding Company" shall have the meaning specified in
Section 3.3.
"Subsidiary" means any corporation of which the securities having a
majority of the ordinary voting power in electing the board of directors are, at
the time as of which any determination is being made, owned by a Person either
directly or through one or more of its Subsidiaries.
"Third Party" means any Person other than the Investor Stockholders
and their respective Affiliates.
"Transfer" shall be construed broadly and shall include any transfer
by way of issuance, sale, assignment, hypothecation, disposition, participation,
pledge, gift, bequeath, intestate transfer, distribution, liquidation, merger or
consolidation.
"Transferring Party" shall have the meaning specified in Section
3.3.
"Trigger Date" means January 26, 1996.
"Warrants" shall have the meaning specified in the recitals hereto.
"Warrant Share Number" shall have the meaning specified in Section
3.4.
1.2 Representations and Warranties of the Company. The Company
represents and warrants to each of the Investor Stockholders as follows:
<PAGE>
6
(a) The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware and has the
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. The execution and delivery by the Company of
this Agreement and the performance by it of its obligations hereunder have been
duly authorized by all necessary corporate action of the Company. This Agreement
has been duly executed and delivered by the Company and, assuming the due
authorization, execution and delivery thereof by GFI, Artal and Flowers,
constitutes the valid and legally binding obligation of the Company, enforceable
against the Company in accordance with its terms; and
(b) The execution, delivery and performance by the Company of this
Agreement will not, with or without the giving of notice or lapse of time, or
both, (i) conflict with the Certificate of Incorporation or By-Laws of the
Company (or the corresponding documents of any of its Subsidiaries), (ii) result
in any breach of any terms or provisions of, or constitute a default under, or
conflict with any material contract, agreement or instrument to which the
Company or any of its Subsidiaries is a party or by which the Company or any of
its Subsidiaries is bound, except for such breaches, defaults or conflicts
which, in the aggregate, would not reasonably be expected to have a material
adverse effect on the financial condition, results of operations, assets,
liabilities, properties or business of the Company and its Subsidiaries, taken
as a whole or (iii) violate any material provision of law, statute, rule or
regulation to which it is subject or any material order, judgment or decree
applicable to it.
1.3 Representations and Warranties of GFI. GFI hereby represents and
warrants to the Company and each of the other Investor Stockholders as follows:
(a) GFI is duly organized, validly existing and in good standing
under the laws of the State of Nevada and has the requisite power and authority
to own, lease and operate its properties and assets and to conduct its business
as now conducted by it. GFI has all requisite power and authority to enter into
this Agreement and to perform its obligations hereunder. The execution and
delivery by GFI of this Agreement and the performance by it of its obligations
hereunder have been duly authorized by all necessary action of GFI. This
Agreement has been duly executed and delivered by GFI and, assuming the due
authorization, execution and delivery thereof by the Company and each of the
other Investor Stockholders, constitutes the valid and legally binding
obligation of GFI, enforceable against GFI in accordance with its terms;
(b) The execution, delivery and performance of this Agreement by GFI
will not, with or without the giving of notice or lapse of time, or both, (i)
conflict with the certificate of incorporation or by-laws of GFI or (ii) result
in any breach of
<PAGE>
7
any terms or provisions of, or constitute a default under, or conflict with any
material contract, agreement or instrument to which GFI is a party or by which
GFI is bound, except for such breaches, defaults or conflicts which, in the
aggregate, would not reasonably be expected to have a material adverse effect on
the financial position, results of operations, assets, liabilities, properties
or business of GFI or (iii) violate any material provision of law, statute, rule
or regulation to which it is subject or any material order, judgment or decree
applicable to it; and
(c) GFI is an "accredited investor" as that term is defined in Rule
501 of Regulation D under the Securities Act and is acquiring the Common Stock
and Warrants for investment solely for its own account and not with a view to,
or for resale in connection with, the distribution or other disposition thereof.
1.4 Representations and Warranties of Artal and Flowers. Each of
Artal and Flowers (solely as to itself) hereby represents and warrants to the
Company and each of the other Investor Stockholders as follows:
(a) It is duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization and has the requisite power
and authority to own, lease and operate its properties and assets and to conduct
its business as now conducted by it. It has all requisite power and authority to
enter into this Agreement and to perform its obligations hereunder. The
execution and delivery by it of this Agreement and the performance by it of its
obligations hereunder have been duly authorized by all necessary action. This
Agreement has been duly executed and delivered by it and, assuming the due
authorization, execution and delivery thereof by the Company and each of the
other Investor Stockholders, constitutes its valid and legally binding
obligation, enforceable against it in accordance with its terms; and
(b) The execution, delivery and performance of this Agreement by it
will not, with or without the giving of notice or lapse of time, or both, (i)
conflict with its certificate of incorporation or by-laws (or the corresponding
documents of any of its Subsidiaries) or (ii) result in any breach of any terms
or provisions of, or constitute a default under, or conflict with any material
contract, agreement or instrument to which it or any of its Subsidiaries is a
party or by which it or any of its Subsidiaries is bound, except for such
breaches, defaults or conflicts which, in the aggregate, would not reasonably be
expected to have a material adverse effect on the financial position, results of
operations, assets, liabilities, properties or business of it and its
Subsidiaries, taken as a whole or (iii) violate any material provision of law,
statute, rule or regulation to which it is subject or any material order,
judgment or decree applicable to it.
<PAGE>
8
ARTICLE II
VOTING ARRANGEMENTS
2.1 GFI Board Representative.
(a) From and after the date hereof, GFI shall be entitled to
designate one individual as a non-voting, ex-officio representative to the
Board; provided that if GFI and its Affiliates and Permitted Transferees cease
to collectively beneficially own (it being understood that the Warrants and any
other rights or options to acquire shares of Common Stock shall not be deemed to
be beneficially owned for this purpose) at least that number of shares of Common
Stock actually issued and outstanding (adjusted to take account of any
Recapitalization) equal to 90% of the number of shares of Common Stock
originally acquired by GFI pursuant to the Stock Purchase Agreement, GFI shall
no longer be entitled to designate an individual pursuant to this Section 2.1(a)
and any previously designated GFI Board Representative shall immediately be
removed and shall cease to have any right to notice, attendance, information or
otherwise under this Article II. GFI's right to designate a GFI Board
Representative shall be suspended during any period in which GFI or any of its
Affiliates, directors, officers or stockholders or the GFI Board Representative
or its Affiliates or associates (within the meaning of the Exchange Act) is
competing directly in any material respect with the primary business operations
of the Company and its Subsidiaries; provided, that it is agreed and
acknowledged that co-packing arrangements with respect to products that are not
directly competitive in any material respect with products sold by the Company
or its Subsidiaries will not be deemed to be or considered competition directly
with the primary business operations of the Company and its Subsidiaries
(regardless of whether the Person with whom such arrangements exist are
competitors of the Company and its Subsidiaries in other segments of such
Person's business).
(b) The GFI Board Representative shall be entitled to receive notice
of (to the same extent and at the same time given to the members of the Board)
and attend and fully participate in (on a non-voting, ex-officio basis) all
meetings of the Board and shall be entitled to receive (at the same time as or
promptly after received by members of the Board) all information and materials
provided or distributed to the Board.
(c) GFI agrees, and GFI agrees to cause the GFI Board
Representative, to keep all non-public information and materials provided or
distributed to or discussed with the GFI Board Representative (collectively, the
"Confidential Information") strictly confidential and not to disclose such
information to any Person (other than any of GFI's Affiliates, directors,
officers or stockholders or the GFI Board Representative or its Affiliates or
associates who need to know such Confidential Information for purposes of
assisting the GFI Board Representative in its duties
<PAGE>
9
and for GFI to comply with its obligations hereunder; it being understood that
no Confidential Information shall be given to any such associate, except that
the general category of activities that implicate the noncompetition provision
of this Agreement may be identified (it being understood that in no event shall
any Confidential Information with respect to such activities be given to such
associate), and it being further understood that in no event shall any
Confidential Information be given to any Person, including those Persons
identified in this parenthetical, if such Person is competing directly in any
material respect with the primary business operations of the Company and its
Subsidiaries), including, without limitation, in connection with any attempt to
sell the Securities owned by GFI as permitted under the terms of this Agreement,
without the prior written consent of the Company and to treat and use all such
information and materials in the same manner and subject to the same duties as
if the GFI Board Representative was a member of the Board. Notwithstanding the
foregoing, at any time that the Company is not required to file quarterly and
annual reports with the SEC under the Exchange Act and the rules and regulations
of the SEC promulgated thereunder, GFI shall be entitled to provide information
similar to the information that would be required to be provided in such reports
under the Exchange Act to Third Parties who do not compete directly in any
material respect with the primary business operations of the Company and its
Subsidiaries provided that such party enters into a confidentiality agreement in
form and substance reasonably satisfactory to the Company. In the event that GFI
shall no longer have a right to designate a representative to the Board pursuant
to Section 2.1(a), GFI shall and shall cause all previous GFI Board
Representatives to return all Confidential Information (including all copies,
extracts, or other reproductions in whole or in part of such Confidential
Information) to the Company. The obligations under this Section 2.1(c) shall
survive the termination of the right of GFI to designate a representative to the
Board pursuant to Section 2.1(a).
2.2 Committees. If the Board shall utilize an executive or similar
committee and such committee shall become in practice the functional equivalent
of the Board, the GFI Board Representative shall be entitled to notice of (to
the same extent and at the same time given to the members of such committee) and
to attend on a non-voting, ex-officio basis, the meetings of such committee and
shall be entitled to receive (at the same time as or promptly after received by
members of such committee) all information and materials provided or distributed
to such committee. Any such information or materials so distributed shall be
held subject to the terms of Section 2.1(c).
2.3 Removal of GFI Board Representative. At all times GFI shall have
the right to remove the GFI Board Representative and, so long as it is permitted
to designate a representative to the Board, to designate an alternative
individual to act as such representative.
<PAGE>
10
2.4 Restrictions on Other Agreements.
(a) GFI shall not grant any proxy or enter into or agree to be bound
by any voting trust or voting agreement with respect to the Securities of the
Company, other than pursuant to this Agreement.
(b) GFI shall not enter into any stockholder agreements or
arrangements of any kind with any Person with respect to any Securities on terms
inconsistent with the provisions of this Agreement (whether or not such
agreements or arrangements are with other Investor Stockholders or with Persons
that are not parties to this Agreement), including but not limited to,
agreements or arrangements with respect to the acquisition or disposition of
Securities of the Company in a manner which is inconsistent with this Agreement.
(c) By execution of this Agreement, GFI represents that it is not
presently a party to, or bound by, any arrangement prohibited by this Section
2.4.
2.5 Fundamental Corporate Actions. So long as GFI is entitled to
designate a representative to the Board pursuant to Section 2.1(a), each of the
following actions (other than any such actions required pursuant to a contract
or agreement properly entered into after the date hereof by the Company or any
of its Subsidiaries, provided such contract or agreement was approved pursuant
to clause (c) below if approval pursuant to such clause was required at the time
such contract or agreement was entered into) will require the prior approval of
the GFI Board Representative:
(a) any amendments to the Certificate of Incorporation (including
any certificate of designations) or By-Laws of the Company which
would adversely affect (except in immaterial respects) GFI's rights
under this Agreement (it being expressly agreed that customary
defensive charter, by-law and related provisions or plans adopted or
approved by the Board in connection with or after a Public Offering
do not adversely affect GFI's rights under, and are not inconsistent
with the provisions of, this Agreement for purposes of this Section
2.5 or Section 2.6 below);
(b) any related-party transaction, except for transactions in the
ordinary course of business on terms no less favorable to the
Company than could be obtained in a comparable arm's-length
transaction with an independent Third Party; and
<PAGE>
11
(c) any contract or agreement to do any of the foregoing.
2.6 Certificate of Incorporation and By-Laws. Each Investor
Stockholder shall take or cause to be taken all lawful action necessary to
ensure at all times that the Company's Certificate of Incorporation and By-Laws
are not, at any time, inconsistent with the provisions of this Agreement.
2.7 Changes Upon Public Offering. Each of the Investor Stockholders
agrees to discuss in good faith making such changes to this Agreement and to the
Company's Certificate of Incorporation and By-Laws, and taking any and all other
actions, as may be necessary or appropriate in connection with the consummation
of a Public Offering and which are, to the greatest extent possible, designed to
reflect the intent of this Agreement; provided, that in no event shall any
Investor Stockholder have any obligation to agree to make any such change or
take any such action.
2.8 Director Fees and Expenses. The GFI Board Representative shall
receive the same fees, reimbursement or other compensation for serving as a
representative to the Board (or any committees thereof) as the directors of the
Board receive for serving on the Board (or any such committees thereof), it
being understood that it is the intention of the Company to reimburse directors
for reasonable out-of-pocket expenses actually incurred for the purpose of
attending meetings of the Board (or committees thereof) (which expenses shall
not include the cost of any non-domestic travel) or performing other duties
required to be performed in furtherance of their service as a director of the
Company.
2.9 Financial and Other Information; Auditors. The Company shall
provide to the GFI Board Representative as promptly as practicable after the
preparation thereof quarterly unaudited and annual audited financial statements
of the Company and such other information and materials, including, without
limitation, management reports of the Company's auditors, that the GFI Director
may reasonably request to the extent that any such financial statements and
other information or materials are otherwise prepared by or on behalf of the
Company. The Company shall at all times engage as its auditors a nationally
recognized and independent accounting firm. Any such financial statements and
other information or materials so provided shall be held subject to the terms of
Section 2.1(c).
<PAGE>
12
ARTICLE III
COVENANTS
3.1 Transfers of Securities.
(a) Except as permitted pursuant to Section 3.1(b) or with the prior
written consent of both Artal and Flowers (which, after the third anniversary of
the Closing Date (as defined in the Stock Purchase Agreement) may not be
unreasonably withheld or delayed) GFI shall not Transfer any Securities until
the earlier of (1) the seventh anniversary of the Trigger Date and (2) such
time, if any, as either Artal or Flowers is entitled to transfer generally its
respective Securities without the consent of such other party other than as
permitted under Article III or IV or Annex A (it being understood that the
Original Stockholder's Agreement (as in effect on the date hereof and without
regard to any amendment, supplement or other modification thereof after the date
hereof) does not permit either Artal or Flowers to sell its Securities under
Rule 144A vis a vis the other without the consent of the other) to the Original
Stockholders' Agreement (as the same is in effect on the date hereof and without
giving any effect to any amendment, supplement or other modification thereof
after the date hereof, except for such amendments, supplements or other
modifications (a) which provide for transfers of a nature similar to those set
forth in Section 3.1(b) of the Original Stockholders' Agreement or Section
3.1(b) of this Agreement or (b) the benefits of which are made available in a
similar respect to GFI by Artal, Flowers and the Company pursuant to an
amendment, supplement or modification to this Agreement) (the earlier of the
foregoing being the "Release Date"). Prior to making any permitted (whether as
result of the exceptions set forth in Section 3.1(b) or otherwise) Transfer of
Securities to any Person at any time prior to the termination of this Agreement
(other than a Transfer pursuant to a Public Offering or a Transfer pursuant to
Sections 3.1(b)(iii) or (vii)), GFI shall obtain an Investor Joinder from such
transferee, and such transferee shall, by execution thereof, agree to become and
automatically be deemed to be an Investor Stockholder subject to all of the
rights (other than the right of GFI pursuant to Section 2.1(a) to designate the
GFI Board Representative) and obligations contained in this Agreement applicable
to GFI and to have made on the date thereof all representations and warranties
made on the date hereof by GFI (modified, if necessary, to reflect the nature of
such Person as a corporation, partnership, other entity or natural person).
Promptly thereafter, GFI shall cause originally executed copies of such Investor
Joinder to be delivered to the Company and the other Investor Stockholders and
shall notify such Investor Stockholders of the number and type of Securities
Transferred.
(b) The restriction on Transfer contained in the first sentence of
Section 3.1(a) above shall be inapplicable with respect to:
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13
(i) any Transfers of Securities made by an individual Investor
Stockholder to his or her Family Group and, thereafter, among members of
such Family Group;
(ii) any Transfers of Securities by an Investor Stockholder to a
member of its Corporate Group and, thereafter, among members of such
Corporate Group;
(iii) any Transfer of Securities pursuant to the terms of Section
3.3 or 3.4 or Article IV;
(iv) any Transfers of Securities made by an individual Investor
Stockholder upon his or her death to his or her estate, provided that the
beneficiaries of the estate are Persons specified in clauses (i) or (ii)
of this Section 3.1(b);
(v) any Transfers of Securities made by an Investor Stockholder (A)
to the extent of the grant of a security interest in such Securities
pursuant to a pledge or similar agreement to secure debt of such Investor
Stockholder (incurred in good faith and not for purposes of avoiding the
transfer restrictions contained in this Agreement) owing to a bank or
other bona fide financial institution; provided that such security
interest has not yet been exercised by the pledgee, and (B) upon the
exercise by such bank or other bona fide financial institution of its
rights under such pledge or similar agreement to acquire beneficial or
other ownership of the Securities pledged thereunder;
(vi) any Transfers of Securities pursuant to the Escrow Agreement
dated as of the date hereof among the Company, GFI and The Bank of New
York, as escrow agent (the "Escrow Agreement"), including, without
limitation, the release of Securities thereunder to the Company or GFI; or
(vii) any Transfer after an initial Public Offering under Rule 144
of the Securities Act as contemplated by Section 1.7 of Annex A;
provided, that no such Transfer shall be permitted under this Section 3.1(b) or
Section 3.2 if it would constitute a default or event of default under any
agreement governing material debt of the Company or any of its Subsidiaries;
provided, further, that in order to facilitate compliance with federal
securities laws and the provisions of this Agreement, the aggregate number of
Permitted Transferees under Section 3.1(b) shall not exceed 45 Persons at any
time without the consent of each of Artal and Flowers, which consent shall not
be unreasonably withheld or delayed, and in no event shall the Warrants be
Transferred to any Person or Persons if such Transfer or Transfers, in and of
itself and without regard to the requirements imposed on or obligations of the
Company under this Agreement, would reasonably be expected to result in the
Company being obligated to register under the
<PAGE>
14
Securities Act the Common Stock underlying the Warrant for issuance upon the
exercise of the Warrant.
Notwithstanding the above, so long as the Securities are held in
escrow pursuant to the Escrow Agreement, such Securities may only be Transferred
as set forth in the Escrow Agreement.
(c) By execution of an Investor Joinder, each Permitted Transferee
shall be deemed to designate the GFI Board Representative or, if GFI shall no
longer be permitted to designate a representative to the Board pursuant to
Section 2.1(a), Michael Uytengsu or such one other Person as GFI and all the
Permitted Transferees shall agree upon, as such Permitted Transferee's
attorney-in-fact for purposes of exercising such Permitted Transferee's rights
and obligations pursuant to Sections 3.3, 3.4 and 3.5 and Annex A.
(d) Any Transfer made in violation of this Section 3.1 (including,
without limitation, a Transfer made without obtaining a necessary Investor
Joinder) shall be null and void. The Company shall not permit such Transfer to
be recorded on the Company's books and records and shall not otherwise cooperate
in consummating such Transfer.
(e) No Person shall be permitted to become a party to this Agreement
except by executing an Investor Joinder pursuant to the terms set forth in this
Section 3.1.
(f) During the pendency of the initial term of any Liquidity Period
(as defined in the Original Stockholders' Agreement as the same is in effect on
the date hereof and without regard to any amendment, supplement or other
modification thereof after the date hereof) and any one six-month or shorter
extension thereof (pursuant to the terms of the Original Stockholders'
Agreement), (i) GFI agrees (A) not to market, attempt to arrange for or, except
as a result of the application of Section 3.3 or 3.4 or pursuant to clauses (i),
(ii), (iv), (v) and (vi) of Section 3.1(b), consummate the Transfer of any of
its Securities and (B) to refrain from taking any action that would be
reasonably likely to interfere with the consummation of a Liquidity Transaction
(as defined in the Original Stockholders' Agreement) and (ii) the withholding by
either of Artal or Flowers of the consent referred to in the first sentence of
Section 3.1(a) shall be deemed to be reasonable; provided, that this Section
3.1(f) shall not apply after the Release Date, whether or not such Liquidity
Period shall have commenced prior to the Release Date; provided, further, that
if either Artal or Flowers commences a new Liquidity Period following the
expiration of any Liquidity Period or extension thereof with the intention of
avoiding the time limitation provided in this subsection, then the restrictions
set forth in this subsection shall not apply to GFI with respect to such new
Liquidity Period.
<PAGE>
15
3.2 Right of First Refusal.
(a) If, at any time after the third anniversary of the Closing Date
but prior to the Release Date, GFI receives a bona fide offer to purchase any or
all of its Securities (the "Offer") from a Third Party (the "Offeror") which GFI
wishes to accept, GFI shall cause the Offer to be reduced to writing and shall
notify Artal and Flowers in writing (the "Offer Notice") of its wish to accept
the Offer. The Offer Notice will disclose in reasonable detail the proposed type
and number of Securities (the "Offered Securities") and the proposed terms and
conditions of the Transfer (including, in the event that the consideration to be
received by GFI in the Offer includes non-cash consideration, GFI's good faith
reasonable estimate (the "GFI Estimate") of the cash value of such non-cash
consideration), and shall be accompanied by a true copy of the Offer (which
shall identify the Offeror). GFI shall not be permitted to accept any such Offer
unless (i) each of Artal and Flowers consents to such transaction as
contemplated by the first sentence of Section 3.1(a) and (ii) the right of first
refusal procedures set forth in this Section 3.2 are complied with. If each of
Artal and Flowers do provide such consent, then in addition (and not in
limitation of, or substitution for, such consent) each of Artal and Flowers may
elect to purchase all (but not, in the aggregate, less than all) of such Offered
Securities at the price and on the terms specified in the Offer Notice by
delivering written notice of such election to GFI as soon as practicable, but in
any event within 15 days after delivery of the Offer Notice (the "Election
Period"). In the event that the terms of any Offer provide for the delivery of
non-cash consideration for the Offered Securities, each of Artal and Flowers may
deliver cash for such Offered Securities in an amount equal to the value of such
non-cash consideration either in accordance with the GFI Estimate (or such other
amount as agreed by GFI, Artal and Flowers) or as determined by an investment
banking firm of national reputation selected by mutual agreement of the parties
hereto, provided, that such investment banking firm shall not have a material
direct or indirect financial interest in or other relationship with any of the
parties hereto or their respective Subsidiaries or Affiliates. If Artal and
Flowers have in the aggregate elected to purchase an amount of Offered
Securities that exceeds the amount of Offered Securities being offered by GFI,
the Offered Securities shall be allocated ratably among Artal and Flowers pro
rata based upon the relative number of Fully Diluted Shares owned by them. Each
of Artal and Flowers shall be required, as a condition to being permitted to
purchase Offered Securities pursuant to this Section 3.2(a), to elect to
purchase each of the different types of Securities included in the Offered
Securities in amounts which are proportional to the respective total amounts of
each such Security that comprise the Offered Securities.
(b) If Artal and/or Flowers has elected to purchase all the Offered
Securities from GFI, the Transfer of such Offered
<PAGE>
16
Securities shall be consummated as soon as practicable after the delivery of the
election notices, but in any event within 15 days after the expiration of the
Election Period (unless a longer period of time is necessary to comply with the
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, in which case such longer period). If Artal and Flowers have not
elected to purchase (or have failed within such 15-day period or longer period,
if applicable, to purchase after electing to do so) all of the Offered
Securities being offered, GFI may, within 75 days after the date of the Offer
Notice, Transfer all the Offered Securities to the Offeror at a price no less
than the price specified in the Offer Notice and on other terms no less
favorable to GFI than those contained in the Offer. If, at the end of such 75
day period, GFI has not completed the Transfer of such Securities as aforesaid,
all the restrictions on Transfer contained in this Agreement shall again be in
effect with respect to such Securities.
(c) This Section 3.2 shall not apply with respect to any Transfer
permitted under Section 3.1(b).
3.3 Tag Along. (a) At least 30 days prior to making any Transfer of
any Securities held by Artal and/or Flowers (other than pursuant to a Public
Offering which does not constitute a Liquidity Transaction under the Original
Stockholders' Agreement, as in effect on the date hereof and without regard to
any amendment, supplement or other modification thereof after the date hereof),
the transferring party (the "Transferring Party") shall deliver a written notice
(the "Sale Notice") to the other Investor Stockholders, specifying in reasonable
detail the type and number of Securities proposed to be transferred, the
identity of the prospective transferee(s), the terms and conditions of the
Transfer (including without limitation, the price to be paid for each type of
Security) and all information reasonably required to make the calculations set
forth in this Section 3.3(a); provided, however, that the provisions of this
Section shall not apply to (i) any Transfer of any Securities to any of the
employees of the Company or any of its Subsidiaries (or to the Company for
related issuance to such employees) in connection with management equity
participation or similar contracts, plans or programs (provided, that such
contracts, plans or programs are created in good faith and not for purposes of
avoiding the transfer restrictions contained in this Section), (ii) any
Transfers at any time, and from time to time, of up to (determined by reference
to all such Transfers) an aggregate of 7.5% of the Securities held by such
Transferring Party as of the date hereof (the "De Minimus Limit"), provided,
that the De Minimus Limit shall not be deemed to permit Transfers by Artal or
Flowers to the other or to any member of the Corporate Group of the other, (iii)
any Transfer of Securities made by an individual to his or her Family Group and,
thereafter, among members of such Family Group, (iv) any Transfers by Artal or
Flowers to the other or to any member of the Corporate Group of the other of
less than (determined by reference to all such
<PAGE>
17
Transfers) an aggregate of 5% of the Securities held by the Transferring Party
as of the date hereof, (v) any Transfers by Artal or Flowers to a member of its
own Corporate Group and thereafter among members of such Corporate Group, (vi)
any Transfers of Securities pursuant to a pledge or similar agreement to secure
debt of such Transferring Party (incurred in good faith and not for purposes of
avoiding the rights granted to GFI in this Section 3.3) owing to a bank or other
bona fide financial institution, including, without limitation, any such
Transfer upon the exercise by such bank or other bona fide financial institution
of its rights under such pledge or similar agreement to acquire beneficial or
other ownership of the Securities pledged thereunder or (vii) any Transfer of
Securities made by an individual upon his or her death to his or her estate;
provided, that the beneficiaries of the estate are Persons specified in (iii) or
(v) of the foregoing clauses. GFI may elect to participate in the proposed
Transfer by delivering written notice to the Transferring Party within 15 days
after delivery of the Sale Notice. If GFI has elected to participate in such
Transfer pursuant to the terms hereof, GFI shall be entitled to sell in the
proposed Transfer, at the same price (treating debt of Artal or Flowers actually
assumed by the transferee as a cash payment to Artal or Flowers, as the case may
be, equal to the amount assumed) and on the same terms and conditions (provided
that such conditions are capable of being fulfilled by GFI) as the Transferring
Party, up to a number of Securities of each type being Transferred by the
Transferring Party equal to the product of (i) the number of such Securities
then beneficially owned by GFI multiplied by, (ii) a percentage calculated by
dividing the aggregate number of Securities which Artal and Flowers propose to
sell in the aggregate in such Transfer by the total number of such Securities
then owned by Artal and Flowers in the aggregate; provided that the number of
Securities which GFI is permitted to sell pursuant to this Section 3.3(a) shall
not include any Securities acquired by GFI in connection with or after the
consummation of a Public Offering (other than shares of Common Stock acquired
upon exercise of the Warrants). It is expressly understood by the parties hereto
that if the Transferring Party is selling Common Stock in such Transfer, GFI may
only participate in such Transfer by selling Common Stock (and not Warrants or
other Common Stock Equivalents) and that to the extent that GFI wishes to sell
shares of Common Stock underlying such Warrants or Common Stock Equivalents, it
must exercise, convert or exchange such Warrants or Common Stock Equivalents, as
the case may be, in order to Transfer such underlying shares of Common Stock. If
GFI elects to participate in such Transfer, it shall be obligated to pay its pro
rata portion of the transaction costs associated therewith. If the aggregate
amount of Securities GFI elects and is permitted under the foregoing provisions
to sell in the proposed Transfer is, together with the aggregate amount of
Securities Artal and Flowers propose to so sell, more than the total number of
Securities that the transferee wishes to purchase, then each of GFI, Artal and
Flowers shall be entitled to sell to the transferee that number
<PAGE>
18
of Securities equal to the number of Securities to be so purchased by the
transferee from all such selling parties multiplied by a fraction, the numerator
of which is the number of such Securities such selling party elects and is
permitted under the foregoing provisions to sell and the denominator of which is
the aggregate number of Securities all such selling parties elect to sell and
are permitted to sell under the foregoing provisions. If and to the extent that
the transferee purchases any Securities of the Transferring Party but does not
purchase, upon the same terms and conditions and for the same price, the
Securities GFI elects and is permitted under the foregoing provisions to sell to
the transferee, the Transferring Party shall, simultaneously with the sale of
its Securities, purchase from GFI, at the same price and on the same terms and
conditions as are applicable to the purchased Securities of the Transferring
Party, such Securities of GFI. If GFI has not delivered written notice to the
Transferring Party that GFI elects to participate in a proposed Transfer within
the 15-day period provided above for the delivering of such notice, then the
Transferring Party shall have the right, for a period of 45 days after the
expiration of such 15-day period, to consummate such proposed Transfer to the
proposed transferee named in the related Sales Notice and at the same price and
on the same terms and conditions stated in such Sales Notice. If, at the end of
such 45-day period, the Transferring Party has not consummated such proposed
Transfer, the terms of this Section 3.3 shall again be in effect with respect to
such proposed Transfer.
(b) For purposes of Section 3.3(a), if either Artal or Flowers has
Transferred all or part of its Securities to one or more of its Subsidiaries or
other similar entities controlled by it (a "Securities Holding Company"), a sale
or other disposition by Artal or Flowers (by merger or otherwise) of an equity
or beneficial interest in a Securities Holding Company (other than a sale or
disposition of the nature set forth in the proviso to the first sentence of
Section 3.3(a)) shall be treated as follows: (i) if such sale or other
disposition is of 50% or more of the equity or beneficial interest in such
Securities Holding Company, then such sale or other disposition shall be deemed
to be a Transfer of all such Securities directly or indirectly owned or
controlled by such Securities Holding Company, and (ii) if such sale or other
disposition is of less than 50% of the equity or beneficial interest in such
Securities Holding Company, then such sale or other disposition shall be deemed
to be Transfer of a percentage of the number of shares of Securities directly or
indirectly owned or controlled by such Securities Holding Company equal to the
percentage of the equity or beneficial interest in such Securities Holding
Company sold or disposed of in such transaction. In either such event, if the
Securities Holding Company owns assets other than the Securities, the
consideration paid to the Transferring Party for the Transfer and allocable to
the Securities, in the absence of agreement of the parties to this Agreement,
shall be determined by an investment banking firm of national reputation
selected by mutual agreement of the
<PAGE>
19
parties hereto, provided, that such investment banking firm shall not have a
material direct or indirect financial interest in or other relationship with the
Company or any of its Subsidiaries or Affiliates.
(c) The exercise of nonexercise of the rights of GFI in this Section
3.3 to participate in one or more Transfers by Artal or Flowers shall not
adversely affect GFI's rights to participate in subsequent Transfers by Artal or
Flowers.
3.4 Drag Along.
(a) In the case that Artal and/or Flowers proposes to make a
Transfer of Securities (or of a Securities Holding Company) that would trigger
GFI's tag along rights pursuant to Section 3.3, Artal and Flowers may elect, by
so specifying in the Sale Notice (which in such case must be executed by both
Artal and Flowers), to require GFI to, and GFI will, participate in such
transaction on the same terms and conditions as Artal and/or Flowers with
respect to a number of Securities determined as set forth below. GFI shall be
required to sell in the proposed Transfer, at the same price and on the same
terms and conditions as Artal and/or Flowers, a number of Securities of each
type being Transferred by Artal and/or Flowers equal to the lesser of (i) the
product of (A) the number of such Securities then beneficially owned by GFI
multiplied by, (B) a percentage calculated by dividing the aggregate number of
Securities which Artal and Flowers propose to sell in the aggregate in such
Transfer by the total number of such Securities then owned by Artal and Flowers
in the aggregate and (ii) the number of such Securities specified by Artal and
Flowers in the relevant Sale Notice (such number being hereinafter referred to
as the "Drag Along Number"). It is expressly understood by the parties hereto
that if Artal and/or Flowers proposes to Transfer Common Stock and so elects,
GFI must Transfer a number of shares of Common Stock (and not Warrants or other
Common Stock Equivalents) equal to the Drag Along Number and if the total number
of shares of Common Stock owned by GFI is less than the Drag Along Number at the
time of such Transfer, it shall exercise the Warrants to the extent required to
obtain a number of shares of Common Stock (the "Warrant Share Number") which,
together with the number of shares of Common Stock already owned by GFI, will
equal the Drag Along Number; provided, that if GFI does not exercise the Warrant
to obtain such shares of Common Stock, the Warrant shall be cancelled to the
extent of the Warrant Share Number.
(b) In connection with any proposed transaction described in Section
3.4(a) above, GFI agrees (i) to consent to and raise no objections (other than
with respect to its rights under this Section 3.4) to, and to take all other
actions (including, without limitation, voting, or entering into written
consents with respect to, all of its Securities in favor of such transaction)
necessary or desirable to cause, the consummation of
<PAGE>
20
such transaction and (ii) to sell, Transfer and deliver its Securities as
required by the terms of such transaction.
(c) If the Drag Along Number is less than the number of Securities
GFI may sell in the proposed Transfer pursuant to its rights under Section 3.3.,
then, notwithstanding the exercise by Artal and/or Flowers of their rights under
this Section 3.4, GFI may elect to sell such additional Securities pursuant to
its rights under Section 3.3.
(d) Artal and Flowers shall not be entitled to exercise its rights
to drag GFI pursuant to this Section 3.4 in connection with any Transfer of
Securities occurring on or prior to June 4, 1999, if (i) such Transfer would not
result in a Change of Control and (ii) the gross price to be received by GFI for
each Security in such Transfer (x) in the case of the Securities identified in
clause (a) of the definition thereof or any Common Stock received upon exercise
of the Warrants, is less than $18.50 per share plus a premium of 10% per share
(as such price may be adjusted in connection with any Recapitalization) or (y)
in the case of any Securities other than Common Stock, the corresponding price
for such Securities as the parties hereto shall in good faith reasonably agree
to at the time such Securities are issued or granted to GFI.
3.5 Preemptive Rights.
(a) In the case of the proposed issuance of, or the proposed
granting by the Company of warrants, options or other rights to purchase or
otherwise acquire Common Stock, Preferred Stock or other equity securities of
the Company or any of its Subsidiaries (or debt or equity securities or other
rights convertible into or exchangeable or exercisable for, directly or
indirectly, Common Stock, Preferred Stock or other equity securities, whether at
the time of issuance or upon the passage of time or the occurrence of some
future event), in each case to either or both of Artal and Flowers or any of
their respective Affiliates (other than the Company and its Subsidiaries) after
the date hereof (collectively, the "Preemptive Rights Securities"), GFI shall
have the right, on the same terms as those of the proposed issuance and during a
reasonable time no less than 30 days after the Company has given notice to the
Investor Stockholders of such proposed issuance or granting (containing terms
and conditions of such issuance or grant, including, in the event the Preemptive
Rights Securities are being issued or granted for non-cash consideration, a good
faith reasonable estimate of the cash value of such non-cash consideration, and
the terms and conditions of the Preemptive Rights Securities proposed to be
issued or granted), to purchase or acquire an amount of such Preemptive Rights
Securities equal to the product of (i) the total number of shares or other
amount of Preemptive Rights Securities which the Company proposes to so issue or
grant at such time multiplied by, (ii) a fraction, the numerator of which shall
be the total number of Fully Diluted
<PAGE>
21
Shares then beneficially owned by GFI and the denominator of which shall be the
total number of Fully Diluted Shares then beneficially owned by GFI, Artal and
Flowers. The price or prices and terms of such Preemptive Rights Securities
shall be identical to the price or prices and terms at which such Preemptive
Rights Securities are proposed to be issued or granted to Artal, Flowers and/or
their respective Affiliates. If any Preemptive Rights Securities are being
issued or granted to Artal, Flowers and/or their respective Affiliates in
exchange for a contribution of noncash consideration, then, in the absence of
agreement among the parties to this Agreement, (A) such consideration shall be
valued for such purpose by an independent appraiser of recognized standing (who
shall be reasonably acceptable to GFI) appointed by the Company and (B) GFI
shall have the right, in accordance with this Section 3.5(a), to subscribe for
such Preemptive Rights Securities, by contributing cash therefor.
(b) The provisions of Section 3.5(a) above shall not apply to any
proposed issuance or granting made pursuant to: (i) the exercise or conversion
of warrants, options or other rights to purchase Common Stock, Preferred Stock
or other equity securities of the Company (or securities convertible into or
exchangeable for Common Stock, Preferred Stock or other equity securities), (ii)
any stock split, reverse stock split, stock dividend or similar recapitalization
made available to all holders of such class of securities on a pro rata basis,
or (iii) the exchange by the Company of one equity security for another to the
extent such securities are made available to all holders of such class of
securities on a pro rata basis.
(c) Notwithstanding anything to the contrary in this Agreement, the
rights set forth in this Section 3.5 shall terminate immediately upon the
consummation of a Public Offering.
3.6 Certain Transfers by Artal and Flowers.
Each of Artal and Flowers agrees that it will not effect any
Transfer of Securities held by it as described in clause (iii), (iv), (v), (vi)
or (vii) of the proviso in the first sentence of Section 3.3(a), unless such
transferee has delivered to the Company and each of the other Investor
Stockholders an Investor Joinder whereby such transferee shall, by execution
thereof, agree to become and shall automatically be deemed to be an Investor
Stockholder subject to all of the rights and obligations contained in this
Agreement applicable to Artal or Flowers, as the case may be, and to have made
on the date thereof all representations and warranties made on the date hereof
by Artal or Flowers, as the case may be (modified, if necessary, to reflect the
nature of such Person as a corporation, partnership, other entity or natural
person).
<PAGE>
22
ARTICLE IV
REGISTRATION RIGHTS
The procedures and further agreements of the parties hereto set
forth in Annex A to this Agreement are incorporated herein by reference.
ARTICLE V
AGREEMENTS REGARDING THE PURCHASED SECURITIES
5.1 Securities Unregistered. GFI acknowledges and represents that,
with respect to the Securities issued to it pursuant to the Stock Purchase
Agreement, it has been advised by the Company that:
(a) The issuances of Securities have not been and will not be
registered under the Securities Act;
(b) The Securities may be required to be held indefinitely and GFI
may be required to continue to bear the economic risk of its investment in the
Securities unless the offer and sale of such Securities are subsequently
registered under the Securities Act and all applicable state securities laws or
an exemption from such registration is available;
(c) There is no established market for the Securities and it is not
anticipated that there will be any public market for the Securities in the
foreseeable future;
(d) Rule 144 promulgated under the Securities Act is not presently
available with respect to the sale of any securities of the Company (including
the Securities);
(e) When and if the Securities may be disposed of without
registration under the Securities Act in reliance on Rule 144, such disposition
can be made only in limited amounts in accordance with the terms and conditions
of such Rule;
(f) If a Rule 144 exemption is not available, public offer or sale
of the Securities without registration will require compliance with some other
exemption under the Securities Act;
(g) A restrictive legend in the form set forth in Section 5.2 hereof
shall be placed on the Securities; and
(h) A notation shall be made in the appropriate records of the
Company indicating that the Securities are subject to restrictions on transfer
and, if the Company should at some time in the future engage the services of a
securities transfer agent, appropriate stop-transfer instructions will be issued
to such transfer agent with respect to the Securities.
<PAGE>
23
5.2 Legend. (a) Each certificate or instrument evidencing
Securities, which is issued to GFI or a transferee thereof which is required to
execute an Investor Joinder pursuant to Section 3.1(a) of this Agreement on or
after the date hereof shall bear the following legend on the face thereof:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
STOCKHOLDER'S AGREEMENT (A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF
THE COMPANY). NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR
OTHER DISPOSITION OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE
MADE EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SUCH STOCKHOLDER'S
AGREEMENT AND (A) PURSUANT TO A REGISTRATION STATEMENT EFFECTIVE UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR (B) PURSUANT TO AN EXEMPTION FROM
REGISTRATION THEREUNDER. THE HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE OF
THIS CERTIFICATE, AGREES TO BE BOUND BY ALL OF THE PROVISIONS OF SUCH
STOCKHOLDER'S AGREEMENT.
(b) Each certificate or instrument evidencing Securities, which is
issued to a transferee of GFI which is not required to execute an Investor
Joinder pursuant to Section 3.1(a) of this Agreement (other than transferees in
a Public Offering or under clause (vii) of Section 3.1(b)) on or after the date
hereof shall bear the following legend on the face thereof:
NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION
OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT (A)
PURSUANT TO A REGISTRATION STATEMENT EFFECTIVE UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION
THEREUNDER.
(c) Upon the sale of any Securities pursuant to an effective
registration statement under the Securities Act or pursuant to Rule 144
promulgated under the Securities Act or another such exemption from registration
under the Securities Act or upon the termination or expiration of this
Agreement, the certificates or instruments representing such Securities shall be
replaced, at the expense of the Company, with certificates or instruments not
bearing the legends required by this Section 5.2.
ARTICLE VI
MISCELLANEOUS
6.1 Termination.
(a) This Agreement shall terminate, and, except as otherwise
expressly provided herein, shall thereafter have no further force or effect and
shall not be binding on any party hereto if the Acquisition shall not have been
consummated or on the tenth anniversary of the Trigger Date, except that
agreements
<PAGE>
24
set forth in Section 2.1(c) shall survive for three years after such
termination.
(b) As to any particular Investor Stockholder, this Agreement shall
no longer be binding or of further force or effect as to such Investor
Stockholder, except as noted below, as of the date such Investor Stockholder has
Transferred all such Investor Stockholder's interest in the Company's
Securities; provided, however, that no such termination shall be effective if
such Investor Stockholder is in breach of this Agreement.
6.2 Remedies.
(a) Each Investor Stockholder shall have all rights and remedies
reserved for such Investor Stockholder pursuant to this Agreement, the Company's
Certificate of Incorporation and By-Laws and all rights and remedies which such
holders have been granted at any time under any other agreement or contract and
all of the rights which such holders have under any law or equity. Any Person
having any rights under any provision of this Agreement will be entitled to
enforce such rights specifically, to recover damages by reason of any breach of
any provision of this Agreement and to exercise all other rights granted by law
or equity.
(b) The parties hereto agree that if any parties seek to resolve any
dispute arising under this Agreement pursuant to a legal proceeding, the
"prevailing" parties to such proceeding shall be entitled to receive reasonable
fees and expenses (including reasonable attorneys' fees and expenses) incurred
in connection with such proceedings. For purposes of this Section 6.2(b), a
party shall be deemed to be a "prevailing" party only if it prevails on each
element of its claim (including the amount and type of damages sought). If
neither party is the prevailing party, the parties agree to request the court or
other decision making body to make a separate determination as to the allocation
of fees and expenses.
(c) It is acknowledged that it will be impossible to measure in
money the damages that would be suffered if the parties fail to comply with any
of the obligations herein imposed on them and that in the event of any such
failure, an aggrieved Person will be irreparably damaged and will not have an
adequate remedy at law. Any such Person shall, therefore, be entitled to
injunctive relief, including specific performance, to enforce such obligations,
and if any action should be brought in equity to enforce any of the provisions
of this Agreement, none of the parties hereto shall raise the defense that there
is an adequate remedy at law.
6.3 Consent to Amendments. Except as expressly set forth herein, the
provisions of this Agreement may only be amended or waived with the prior
written consent of each of the parties hereto.
<PAGE>
25
6.4 Successors and Assigns. Except as otherwise expressly provided
herein, all provisions contained in this Agreement by or on behalf of any of the
parties hereto will bind and inure to the benefit of the respective successors
and permitted transferees of the parties hereto whether so expressed or not.
This Agreement is not intended to create any third party beneficiaries.
6.5 Severability. Whenever possible, each provision of this
Agreement will be interpreted in such a manner as to be effective and valid
under applicable law. The parties agree that (i) the provisions of this
Agreement shall be severable in the event that any of the provisions hereof are
held by a court of competent jurisdiction to be invalid, void or otherwise
unenforceable, (ii) such invalid, void or otherwise unenforceable provisions
shall be automatically replaced by other provisions which are as similar as
possible in terms to such invalid, void or otherwise unenforceable provisions
but are valid and enforceable and (iii) the remaining provisions shall remain
enforceable to the extent permitted by law. To the extent there exists any
inconsistency between the provisions of this Agreement and the by-laws of the
Company, the provisions of this Agreement shall govern in all instances.
6.6 Counterparts. This Agreement may be executed in two or more
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together will constitute one and the same
Agreement. It shall not be necessary in making proof of this Agreement to
produce or account for more than one such counterpart.
6.7 Notices. All notices, demands and other communications to be
given or delivered under or by reason of the provisions of this Agreement shall
be in writing or sent by facsimile and shall be deemed to have been given (i)
when personally delivered or sent by facsimile (with proof of receipt at the
number to which notices are required to be sent), (ii) one business day after
being sent by overnight courier (receipt confirmation requested) or (iii) five
business days after being mailed by certified or registered mail (return receipt
requested and postage prepaid) to the recipient. Such notices, demands and other
communications will be sent to the Company and each Investor Stockholder at the
address or addresses indicated on the signature pages hereto or on the Investor
Joinder (as the case may be), or to such other address or to the attention of
such other person as the recipient party has specified by prior written notice
under this Section 6.7 to the sending party.
6.8 Governing Law. In all respects, including all matters of
construction, validity and performance, this Agreement and the obligations
arising hereunder shall be governed by, and construed and enforced in accordance
with, the laws of the State of New York applicable to contracts made and
performed in such state, without regard to the principles thereof regarding
<PAGE>
26
conflict of laws, except for matters directly within the purview of the General
Corporation Law of the State of Delaware (the "DGCL") which shall be governed by
the DGCL.
6.9 Further Assurances. Each party hereto shall do and perform or
cause to be done and performed all such further acts and things and shall
execute and deliver all such other agreements, certificates, instruments, and
documents as any other party hereto reasonably may request in order to carry out
the provisions of this Agreement and the consummation of the transactions
contemplated hereby.
6.10 Jurisdiction; Venue; Process. (a) The parties to this Agreement
agree that jurisdiction and venue in any action brought by any party hereto
pursuant to this Agreement shall properly lie and shall be brought in any
federal or state court located in the State of New York. By execution and
delivery of this Agreement, each party hereto irrevocably submits to the
jurisdiction of such courts for itself or himself and in respect of its or his
property with respect to such action. The parties hereto irrevocably agree that
venue would be proper in such court, and hereby irrevocably waive any objection
that such court is an improper or inconvenient forum for the resolution of such
action.
(b) Artal hereby irrevocably and unconditionally designates and
directs Mr. David Van Zandt, with offices on the date hereof at Northwestern
University School of Law, 357 East Chicago Avenue, Chicago, Illinois 60611, as
its agent to receive service of any and all process and documents on its behalf
in any legal action or proceeding related to this Agreement and agrees that
service upon such agent shall constitute valid and effective service upon Artal
and that failure of such agent to give any notice of such service to Artal shall
not affect or impair in any way the validity of such service or of any judgment
rendered in any action or proceeding based thereon.
6.11 MUTUAL WAIVER OF JURY TRIAL. THE PARTIES HERETO WAIVE ALL RIGHT
TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND
ANY RIGHTS OR REMEDIES UNDER THIS AGREEMENT OR ANY DOCUMENTS RELATED HERETO.
* * * *
<PAGE>
27
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
INFLO HOLDINGS CORPORATION
By:_________________________
Name: Sam K. Reed
Title: Chief Executive Officer
and President
Address for Notices: With copies to:
INFLO Holdings Corporation Simpson Thacher & Bartlett
677 Larch Avenue 425 Lexington Avenue
Elmhurst, Illinois 60126 New York, New York 10017
Facsimile No.: 1-708-833-3372 Facsimile No.: 1-212-455-2502
Attn: Chief Executive Officer Attn: Robert E. Spatt, Esq.
<PAGE>
28
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
INVESTOR STOCKHOLDER SIGNATURE PAGE
Name: G.F. INDUSTRIES, INC.
Address for with copies
Notices: to:
G.F. Industries, Inc. Stephen Barbieri
999 Baker Way, Suite 200 214 Grant Avenue, Suite 400
San Mateo, California 94404 San Francisco, California 94108
Facsimile No.: 1-415-312-8077 Facsimile No.: 1-415-986-1730
Attn: President
G.F. INDUSTRIES, INC.
By:___________________________
Name:
Title:
<PAGE>
29
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
INVESTOR STOCKHOLDER SIGNATURE PAGE
Name: ARTAL LUXEMBOURG S.A.
Address for with copies
Notices: to:
Artal Luxembourg S.A. David Van Zandt
39 Boulevard Royal Northwestern University School
Luxembourg City, Luxembourg of Law
Facsimile No.: 352-22-42-66 357 East Chicago Avenue
Attn: Managing Director Chicago, Illinois 60611
Facsimile No.: 1-312-503-7694
and
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Facsimile No.: 1-212-455-2502
Attn: Robert E. Spatt, Esq.
ARTAL LUXEMBOURG S.A.
By:___________________________
Name: David Van Zandt
Title:
<PAGE>
30
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
INVESTOR STOCKHOLDER SIGNATURE PAGE
Name: FLOWERS INDUSTRIES, INC.
Address for with copies
Notices: to:
Flowers Industries, Inc. Jones, Day, Reavis & Pogue
11796 US Highway 19 South 3500 One Peachtree Center
Thomasville, Georgia 31799 303 Peachtree Street, N.E.
Facsimile No.: 1-912-225-3808 Atlanta, GA 30308
Attn: Robert P. Crozer Facsimile No.: 1-404-581-8330
Attn: Robert W. Smith, Esq.
and
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Facsimile No.: 1-212-455-2502
Attn: Robert E. Spatt, Esq.
FLOWERS INDUSTRIES, INC.
By:___________________________
Name: Robert P. Crozer
Title: Vice Chairman
<PAGE>
Exhibit 3.1(a)
INVESTOR JOINDER
By execution of this Investor Joinder, the undersigned agrees to
become a party to that certain GFI Stockholder's Agreement, dated as of June 4,
1996 (the "Agreement"), among INFLO Holdings Corporation (the "Company") and
certain stockholders of the Company, which stockholders included on such date
G.F. Industries, Inc., Artal Luxembourg S.A. and Flowers Industries, Inc. By
execution of this Investor Joinder, the undersigned shall have all rights, and
shall observe all the obligations, applicable to [fill in name of transferee]
(except as otherwise set forth in the Agreement), and to have made on the date
hereof all representations and warranties made by such Investor Stockholder,
modified, if necessary, to reflect the nature of the undersigned as a
corporation, partnership, other entity or natural person.
[If completed by a Permitted Transferee of GFI] [The undersigned
hereby appoints the GFI Board Representative or, if GFI shall no longer be
permitted to designate a representative to the Board pursuant to Section 2.1(a)
of the Agreement, Michael Uytengsu or such one Person as GFI and all the
Permitted Transferees shall agree upon, as the undersigned's true and lawful
attorney-in-fact for purposes of exercising the undersigned's rights and
obligations pursuant to Sections 3.3, 3.4 and 3.5 of the Agreement and Annex A
thereto.]
Name:_________________________
Address for with copies
Notices: to:
- ------------------------------ ------------------------------
- ------------------------------ ------------------------------
- ------------------------------ ------------------------------
- ------------------------------ ------------------------------
- ------------------------------ ------------------------------
If an individual, are you presently married or separated?
yes _____ no _____
(If yes, you must also have your spouse execute a spousal consent in the form
attached hereto.)
Signature:___________________
Date:___________________
<PAGE>
CONSENT AND AGREEMENT OF SPOUSE
I, _________________________________, am the spouse of
____________________, one of the stockholders of INFLO Holdings Corporation, a
Delaware corporation (the "Company"). I acknowledge that my spouse is a party to
that certain GFI Stockholder's Agreement, dated as of June 4, 1996, among the
Company and certain stockholders of the Company, which stockholders included on
such date G.F. Industries, Inc., Artal Luxembourg S.A. and Flowers Industries,
Inc. (the "Agreement"), and that I have read the Agreement. I consent to, agree
to, approve and ratify each and every one of the terms and provisions of the
Agreement, and I further agree to provide all notices and information required
of me in the time and manner set forth in the Agreement.
Executed this ____ day of __________, 199_.
--------------------------------
(Signature of Consenting Spouse)
<PAGE>
ANNEX A
PROVISIONS REGARDING REGISTRATION RIGHTS
This Annex A is part of and is incorporated into that certain GFI
Stockholder's Agreement (the "Agreement"), dated as of June 4, 1996, among INFLO
Holdings Corporation, a Delaware corporation (the "Company"), G.F. Industries,
Inc., a Nevada corporation ("GFI"), Artal Luxembourg S.A., a Luxembourg
corporation ("Artal"), and Flowers Industries, Inc., a Georgia corporation
("Flowers"). Capitalized terms used in this Annex A and not otherwise defined
shall have the meanings ascribed to them in the Agreement. Certain capitalized
terms used herein are defined in Section 2.1 of this Annex A.
It is understood that registration rights similar to those contained
in this Annex A have been granted to various management investors pursuant to
that certain Management Stockholder's Agreement and other entities pursuant to
Annex A to the Original Stockholders' Agreement and that additional registration
rights may be extended in the future to holders of securities of the Company.
1.1 Demand Registrations.
(a) Demand Registrations. At any time, the Company shall, upon
receipt of a written request (the "Demand Notice") given by GFI to register
Registrable Securities held by GFI, as promptly as practicable but in any event
within 60 days after receiving such Demand Notice, file a Registration Statement
and shall include in the Registration Statement for registration the Registrable
Securities requested to be registered by GFI; provided, however, that GFI agrees
not to deliver any such Demand Notice to the Company prior to the earlier of (i)
the seventh anniversary of the Trigger Date and (ii) the earliest date Artal or
Flowers is entitled to exercise any demand registration rights with respect to
the Securities (other than in connection with a Public Offering that is a
Liquidity Transaction under the Original Stockholders' Agreement, as in effect
on the date hereof and without giving any effect to any amendment, supplement or
other modification thereof after the date hereof), under Section 1.1(a) of Annex
A to the Original Stockholders' Agreement, under any amendment, supplement or
other modification to the Original Stockholders' Agreement, or pursuant to any
other contractual or similar right. A registration effected pursuant to this
Section 1.1(a) is referred to herein as a "Demand Registration."
(b) Number of Demand Registrations. GFI shall be entitled to two (2)
Demand Registrations in the aggregate, provided that if (i) a Demand
Registration is not declared and maintained effective for the period required by
Section 1.1(d) hereof or if the consummation of the offering of Registrable
Securities pursuant to such Demand Registration is interfered
<PAGE>
2
with by any stop order, injunction or other order or requirement of the SEC or
other governmental agency or court, or (ii) GFI shall be prevented through the
operation of clause first of Section 1.1(e) from registering any of its
Registrable Securities requested to be registered in a Demand Notice, GFI shall
be entitled to an additional Demand Registration in lieu thereof.
(c) Minimum Amount of Registrable Securities. The Company shall not
be required to effect any Demand Registration unless the aggregate amount of the
class of Registrable Securities requested to be registered by GFI shall equal at
least (i) if such Registrable Securities shall be Common Stock, 495,038 shares
of Common Stock (adjusted to take account of any Recapitalization) and (ii) if
such Registrable Securities shall be other than Common Stock, a comparable
amount of such Registrable Securities.
(d) Filing and Effectiveness. Each Demand Registration shall be on
Form S-1 or another available form acceptable to the Holders of a majority of
the Registrable Securities offered thereby, permitting registration of such
securities for resale by such Holders in the manner or manners designated by
them (including, without limitation, one or more underwritten offerings). The
Company shall file the Demand Registration within 60 days (the "Filing Date")
and shall use its best efforts to cause the same to be declared effective by the
SEC within 120 days (in each case, the "Effectiveness Date") of the date on
which the Holders of Registrable Securities give the Demand Notice required by
Section 1.1(a) hereof with respect to such Demand Registration.
Within ten days after receipt of such Demand Notice, the Company
shall serve written notice (the "Registration Notice") of such registration
request to all other Holders of Registrable Securities and shall, subject to the
provisions of Section 1.1(e) hereof, include in such registration all
Registrable Securities with respect to which the Company received written
requests for inclusion therein within fifteen (15) business days after the
receipt of the Registration Notice by the applicable Holder. All requests made
pursuant to this Section 1.1 will specify the number of Registrable Securities
to be registered and will also specify the intended methods of disposition
thereof, provided that if the Holders of a majority of the Registrable
Securities then outstanding requested and permitted to be included in such
registration specify one particular type of underwritten offering, such method
of disposition shall be such type of underwritten offering or a series of such
underwritten offerings (as the Holders of such majority may elect) during the
time period the Registration Statement is effective.
The Company hereby agrees to use its best efforts to comply with all
necessary provisions of the federal securities
<PAGE>
3
laws in order to keep such Registration Statement effective for a period of 180
days from its Effectiveness Date.
(e) Priority on Demand Registrations. If the Registrable Securities
registered pursuant to a Demand Registration are to be sold in one or more firm
commitment underwritten offerings, and the sole or managing Underwriter, as the
case may be, of such underwritten offering advises the Holders of such
securities that, in its opinion, the amount of securities requested to be
included in such registration exceeds the amount which can be sold in such
offering without adversely affecting the distribution of the securities being
offered, then the Company shall register first, the maximum number of securities
requested to be included in such registration by the Company which in the
Underwriter's opinion can be sold, second, the maximum number of Registrable
Securities requested to be included in such registration by the Holders which in
the Underwriter's opinion can be sold, pro rata based on the number of
Registrable Securities requested to be included by such Holders, until all of
such Registrable Securities have been registered, and third, subject to the last
proviso set forth in Section 1.2(b) (or any similar limitation in any other
applicable agreement), the number of securities requested to be included in such
registration by the holders of the Company's securities pursuant to any
incidental or piggyback registration rights which in the Underwriter's opinion
can be sold, pro rata based on the number of securities requested to be included
by such holders.
(f) Other Registrations. The Company shall not effect any
registration of its securities (except on Form S-8, S-4 or any successor forms
to such Forms), or effect any public or private sale or distribution of any of
its securities, including, without limitation, a sale pursuant to Regulation D
under the Securities Act, whether on its own behalf or at the request of any
holder or holders of such securities (other than pursuant to and in accordance
with this Section 1.1), from the date of a request to register Registrable
Securities pursuant to and in accordance with this Section 1.1 until the earlier
of (i) 90 days after the date on which all Registrable Securities covered by
such Demand Registration have been sold or (ii) 180 days after the date such
Demand Registration has been declared effective by the SEC unless the Company
shall have first notified in writing the Holders of the Registrable Securities
covered by such Registration Statement of its intention to do so, and the
Holders of a majority of such Registrable Securities or the managing
Underwriter, if any, shall have consented thereto in writing; provided, that the
restriction contained in this clause shall only be applicable to securities of
the Company of the same class as the Registrable Securities which are the
subject of any such request.
(g) Postponement of Registration. Notwithstanding anything to the
contrary contained herein, the Company may postpone for up to ninety (90) days
the filing or the
<PAGE>
4
effectiveness of a Registration Statement for a registration requested if its
Board of Directors reasonably believes the requested registration would have a
material adverse effect on, or interfere in any material respect with, any
proposal or plan by the Company to engage in any public financing or any
material pending corporate development or transaction, including, without
limitation, a material acquisition of assets (other than in the ordinary course
of business), any tender offer or any merger, consolidation or other similar
transaction material to the Company and its subsidiaries taken as a whole.
1.2 Incidental Registrations.
(a) "Piggy-back" Registrations. If the Company at any time proposes
to register any securities under the Securities Act (other than a registration
on Form S-8, S-4 or any successor or similar forms) for public offerings for
cash, whether or not for its own account, it will each such time give prompt
written notice to all Investor Stockholders of record of Registrable Securities
of the class then being registered of its intention to do so and of such
Holders' rights under this Section 1.2 (it being understood that only those
Holders of Registrable Securities of the class then being registered shall have
any rights under this Section 1.2 with respect to such registration), at least
30 days prior to the anticipated date of the initial filing of the registration
statement relating to such registration. Such notice shall offer all such
Holders the opportunity to include in such registration statement such number of
Registrable Securities of the class then being registered as each such Holder
may request, provided that GFI agrees not to make any such written request to
register any of its Registrable Securities in connection with a Public Offering
which constitutes a Liquidity Transaction under the Original Stockholders'
Agreement (as in effect on the date hereof and without giving effect to any
amendment, supplement or other modification thereof after the date hereof),
except with the consent of Artal. Upon the written request of any such Holder
made within 20 days after the receipt of the Company's notice (which request
shall specify the number of Registrable Securities intended to be disposed of by
such Holder), the Company shall use its best efforts to effect the registration
under the Securities Act of all Registrable Securities of the class then being
registered which the Company has been so requested to register by the Holders
thereof, to permit the disposition of the Registrable Securities so to be
registered, provided that (i) if such registration involves an underwritten
offering, all Holders of Registrable Securities requesting to be included in the
Company's registration must sell their Registrable Securities to the
underwriters selected by the Company on the same terms and conditions as apply
to the Company (except that indemnification obligations of the Holders shall be
limited to those obligations set forth in Section 1.6(b)); (ii) if, at any time
after giving written notice of its intention to register any securities pursuant
to this Section 1.2 and prior to the effective date of the registration
statement filed in
<PAGE>
5
connection with such registration, the Company shall determine for any reason
not to register such securities, the Company shall give written notice to all
Holders of Registrable Securities and, thereupon, shall be relieved of its
obligation to register any Registrable Securities in connection with such
registration; and (iii) any Holder that owns less than 3% of the outstanding
class of any securities to be registered in accordance with this Section shall
request to include in such registration all of such Holder's shares of such
class (it being understood that for purposes of this clause (iii), GFI and its
Permitted Transferees shall be treated as one "Holder"). A registration effected
pursuant to this Section 1.2(a) is referred to herein as an "Incidental
Registration".
(b) Priority in Incidental Registrations. If a registration pursuant
to this Section 1.2 involves an underwritten offering and the managing
underwriter advises the Company that, in its opinion, the number of securities
(including all Registrable Securities) which the Company, the Holders and any
other persons propose to include in such registration exceeds the largest number
of securities which can be sold without having an adverse effect on such
offering, including the price at which such securities can be sold, the Company
will include in such registration up to such maximum number of securities (i)
first, all the securities the Company initially proposes to sell for its own
account or for the account of any security holder pursuant to any contractual
requirement to register securities (unless such holder is exercising incidental
registration rights subject to a proration provision similar to the provisions
applicable to GFI as set forth in this Section 1.2(b) or demand registration
rights subject to a proration provision similar to the provisions applicable to
GFI as set forth in Section 1.1(e) hereof, in which case the provisions of the
following clause (ii) shall apply to the securities of such holder), and (ii)
second, to the extent that the number of securities referred to in clause (i) is
less than the number of Securities which the Company has been advised can be
sold in such offering without having the adverse effect referred to above, all
Registrable Securities requested to be included in such registration by the
Holders pursuant to Section 1.2(a) or by any other holder of securities electing
to register securities pursuant to any similar registration rights agreement,
provided that if the number of Registrable Securities or other securities to be
included in such registration by the Holders pursuant to clause (ii) of this
Section, together with the number of securities which the Company proposes to
sell in such registration pursuant to clause (i) of this Section exceeds the
number which the Company has been advised can be sold in such offering without
having the adverse effect referred to above, the number of such Registrable
Securities or other securities included in such registration pursuant to clause
(ii) of this Section shall be limited to such extent and shall be allocated pro
rata among all Holders or other holders requesting such registration pursuant to
Section 1.2(a) or any similar registration rights agreement on the basis of the
relative number
<PAGE>
6
of securities requested to be included in such registration, and provided
further that if the sole or managing underwriter advises the Company that
including the Registrable Securities of any particular Holder in such
registration would be reasonably likely to have an adverse effect on such
offering, including the price at which such securities can be sold, the Company
shall not be obligated to include any Registrable Securities of such Holder.
1.3 Hold-Back Agreements. Each Holder of Registrable Securities
whose Registrable Securities are covered by a Registration Statement filed
pursuant to Section 1.1 or Section 1.2 hereof agrees, if requested (pursuant to
a timely written notice) by the managing Underwriter or Underwriters in an
underwritten offering, not to effect any public sale or distribution of any of
the issue being registered or a similar security of the Company or any
securities convertible or exchangeable or exercisable for such securities
including a sale pursuant to Rule 144 (except as part of such underwritten
offering), during the period beginning 10 days prior to, and ending up to 180
days (as requested by the managing underwriter) after, the closing date of each
underwritten offering made pursuant to such Registration Statement (or such
shorter period as the managing Underwriter or Underwriters may agree), to the
extent timely notified in writing by the Company or by the managing Underwriter
or Underwriters.
1.4 Registration Procedures. In connection with the registration of
any Registrable Securities, the Company shall effect such registrations to
permit the sale of such Registrable Securities in accordance with the intended
method or methods of disposition thereof, and pursuant thereto the Company shall
as expeditiously as possible:
(a) Prepare and file with the SEC a Registration Statement or
Registration Statements on Form S-1 or such other form available for the
sale of the Registrable Securities by the Holders thereof in accordance
with the intended method of distribution thereof, and use its best efforts
to cause each such Registration Statement to become effective and remain
effective as provided herein; provided, however, that before filing any
Registration Statement or Prospectus or any amendments or supplements
thereto (not including documents that would be incorporated or deemed to
be incorporated therein by reference), the Company shall afford the
Holders of the Registrable Securities covered by such Registration
Statement, their Special Counsel and the managing or sole Underwriter, if
any, an opportunity to review copies of all such documents proposed to be
filed. The Company shall not file any Registration Statement or Prospectus
or any amendments or supplements thereto in respect of which the Holders
have a right to review prior to the filing of such document, if the
Holders of a majority of the Registrable Securities covered by such
Registration Statement, their Special Counsel, or the managing
<PAGE>
7
Underwriters, if any, shall reasonably object, in writing, on a timely
basis.
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep such
Registration Statement continuously effective for the effectiveness
period; cause the related Prospectus to be supplemented by any required
prospectus supplement, and as so supplemented to be filed pursuant to Rule
424 (or any similar provisions then in force) under the Securities Act;
and comply with the provisions of the Securities Act, the Exchange Act and
the rules and regulations of the SEC promulgated thereunder applicable to
it with respect to the disposition of all securities covered by such
Registration Statement as so amended or in such Prospectus as so
supplemented.
(c) Notify the selling Holders of Registrable Securities, their
Special Counsel and the managing Underwriters, if any, promptly (but in
any event within 10 business days), and confirm such notice in writing,
(i) when a Registration Statement, Prospectus or any prospectus supplement
or post-effective amendment has been filed, and, with respect to a
Registration Statement or any post-effective amendment, when the same has
become effective (including in such notice a written statement that any
holder may, upon request, obtain, without charge, one conformed copy of
such Registration Statement or post-effective amendment including
financial statements and schedules but excluding documents incorporated or
deemed to be incorporated by reference and exhibits), (ii) of the issuance
of any order suspending the effectiveness of a Registration Statement or
of any order preventing or suspending the use of any Prospectus or the
initiation of any proceedings for that purpose, (iii) if at any time when
a Prospectus is required by the Securities Act to be delivered in
connection with sales of the Registrable Securities the representations
and warranties of the Company contained in any agreement (including any
underwriting agreement) contemplated by Section 1.4(k) below cease to be
true and correct in any material respect, (iv) of the receipt by the
Company of any notification with respect to the suspension of the
qualification or exemption from qualification of a Registration Statement
or any of the Registrable Securities for offer or sale in any
jurisdiction, or the initiation or threatening of any proceeding for such
purpose, (v) of the happening of any event that makes any statement made
in such Registration Statement or related Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in
any material respect or that requires the making of any changes in such
Registration Statement, Prospectus or documents so that, in the case of
such Registration Statement, it will not contain any untrue statement of a
<PAGE>
8
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and
that in the case of the Prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, and (vi)
of the Company's reasonable determination that a post-effective amendment
to a Registration Statement would be appropriate.
(d) Use its best efforts (including, if necessary, by the filing of
any amendments or supplements to the Registration Statement or the
Prospectus) to prevent the issuance of any order suspending the
effectiveness of a Registration Statement or of any order preventing or
suspending the use of a Prospectus or suspending the qualification (or
exemption from qualification) of a Registration Statement or any of the
Registrable Securities for sale in any jurisdiction, and, if any such
order is issued, to obtain the withdrawal of any such order at the
earliest possible moment.
(e) If requested by the managing or sole Underwriter, if any, or the
Holders of a majority of the Registrable Securities being sold in
connection with an underwritten offering, (i) promptly incorporate in a
prospectus supplement or post-effective amendment such information as the
managing or sole Underwriter, if any, or such Holders reasonably request
to be included therein to comply with applicable law, (ii) make all
required filings of such prospectus supplement or such post-effective
amendment as soon as practicable after the Company has received
notification of the matters to be incorporated in such prospectus
supplement or post-effective amendment, and (iii) supplement or make
amendments to such Registration Statement; provided, however, that the
Company shall not be required to take any actions under this Section
1.4(e) that are not, in the opinion of counsel for the Company, in
compliance with applicable law.
(f) Furnish to each selling Holder of Registrable Securities who so
requests and to Special Counsel and each managing Underwriter, if any,
without charge, one conformed copy of the Registration Statement or
Statements and each post-effective amendment thereto, including financial
statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference and all exhibits.
(g) Deliver to each selling Holder of Registrable Securities, their
Special Counsel, and the Underwriters, if any, without charge, as many
copies of the Prospectus or Prospectuses (including each form of
prospectus) and each
<PAGE>
9
amendment or supplement thereto as such Persons may reasonably request;
and the Company hereby consents to the use of such Prospectus and each
amendment or supplement thereto by each of the selling Holders of
Registrable Securities and the Underwriters, if any, in connection with
the offering and sale of the Registrable Securities covered by such
Prospectus and an amendment or supplement thereto.
(h) Prior to any public offering of Registrable Securities, to use
its best efforts to register or qualify, and cooperate with the selling
Holders of Registrable Securities, the Underwriters, if any, the sales
agent and their respective counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of,
such Registrable Securities for offer and sale under the securities or
"blue sky" laws of such jurisdictions within the United States as any
selling Holder or the managing Underwriters, if any, reasonably request in
writing, provided that the Company agrees to cause its counsel to perform
"blue sky" investigations and file registrations and qualifications
required to be filed pursuant to this Section 1.4(h) (unless the
Registrable Securities are offered through an underwritten offering); use
its best efforts to keep each such registration or qualification (or
exemption therefrom) effective during the period during which the related
Registration Statement is required to be kept effective; and use its best
efforts to do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions of the Registrable Securities
covered by the applicable Registration Statement; provided, however, that
the Company will not be required to (A) qualify generally to do business
in any jurisdiction where it is not then so qualified or (B) take any
action that would subject it to general service of process in any such
jurisdiction where it is not then so subject.
(i) Cooperate with the selling Holders of Registrable Securities and
the managing or sole Underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be sold, which certificates shall not bear any restrictive
legends and shall be in a form eligible for deposit with The Depository
Trust Company; and enable such Registrable Securities to be in such
denominations and registered in such names as the managing or sole
Underwriter, if any, or Holders may reasonably request at least two
business days prior to any sale of Registrable Securities in a firm
commitment underwritten public offering, or at least 10 business days
prior to any other such sale.
(j) Upon the occurrence of any event contemplated by clause (v) or
(vi) of Section 1.4(c) above, as promptly as practicable prepare a
supplement or post-effective amendment
<PAGE>
10
to the Registration Statement or a supplement to the related Prospectus or
any document incorporated or deemed to be incorporated therein by
reference, or file any such document or other required document so that,
as thereafter delivered to the purchasers of the Registrable Securities
being sold thereunder, such Prospectus will not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, and so that
such Registration Statement will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.
(k) If the offering is to be underwritten, enter into an
underwriting agreement in form, scope and substance as is customary in
underwritten offerings and take all such other actions as are reasonably
requested by the managing or sole Underwriter in order to expedite or
facilitate the registration or the disposition of such Registrable
Securities, and in such connection, (i) make such representations and
warranties to the Underwriters, with respect to, among other things, the
business of the Company and its subsidiaries, and the Registration
Statement, Prospectus and documents, if any, incorporated or deemed to be
incorporated by reference therein, in each case, in form, substance and
scope as are customarily made by issuers to Underwriters in underwritten
offerings, and confirm the same if and when requested; (ii) obtain
opinions of counsel to the Company and updates thereof (which counsel and
opinions shall be reasonably satisfactory (in form, scope and substance)
to the managing or sole Underwriters), addressed to the Underwriters
covering the matters customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably
requested by the Underwriters; (iii) obtain "cold comfort" letters and
updates thereof from the independent certified public accountants of the
Company (and, if necessary, any other independent certified public
accountants of any subsidiary of the Company or of any business acquired
by the Company for which financial statements and financial data are, or
are required to be, included in the Registration Statement), addressed to
each of the Underwriters, such letters to be in customary form and
covering matters of the type customarily covered in "cold comfort" letters
in connection with underwritten offerings; and (iv) if an underwriting
agreement is entered into, the same shall contain indemnification
provisions and procedures no less favorable than those set forth in
Section 1.6 hereof (or such other provisions and procedures acceptable to
Holders of a majority of the Registrable Securities covered by such
Registration Statement and the managing Underwriters or agents) with
respect to all parties to be indemnified
<PAGE>
11
pursuant to said Section and with respect to the underwriters and each
Person, if any, who controls such underwriters (within the meaning of
either Section 15 or the Securities Act or Section 20 of the Exchange Act)
and any other Persons customarily covered by an indemnity of underwriters.
The above shall be done at each closing under such underwriting agreement,
or as and to the extent required thereunder.
(l) Use its best efforts to cause the Registrable Securities covered
by a Registration Statement to be rated with the appropriate rating
agencies, if applicable, if so requested by the Holders of a majority of
the Registrable Securities covered by such Registration Statement or the
managing or sole Underwriter, if any.
(m) Use its best efforts to cause all Registrable Securities covered
by such Registration Statement to be (i) listed on each securities
exchange on which securities issued by the Company are then listed, or
(ii) authorized to be quoted on the NASDAQ or the National Market System
of the NASDAQ if the securities so qualify, in each case, if requested by
the Holders of a majority of the Registrable Securities covered by such
Registration Statement or the managing or sole Underwriter, if any.
(n) Make available for inspection by a representative of the Holders
of Registrable Securities being sold, any Underwriter participating in any
such disposition of Registrable Securities, if any, any accountant
retained by such representative of the Holders or the Underwriters, any
Special Counsel and any counsel to the Underwriters (collectively, the
"Inspectors"), at the offices where normally kept, during reasonable
business hours, all financial and other records, pertinent corporate
documents and properties of the Company and its subsidiaries, and cause
the officers, directors and employees of the Company and its subsidiaries
to supply all information, in each case reasonably requested by any such
Inspector in connection with such Registration Statement; provided,
however, that any information that is designated in writing by the
Company, in good faith, as confidential at the time of delivery of such
information, shall be kept confidential by such Inspector unless (i)
disclosure of such information is required by court or administrative
order, (ii) disclosure of such information, in the opinion of counsel to
such Inspector, is necessary to avoid or correct a misstatement or
omission of a material fact in the Registration Statement, Prospectus or
any supplement or post-effective amendment thereto or disclosure is
otherwise required by law, or (iii) such information becomes generally
available to the public other than as a result of a disclosure or failure
to safeguard by such Inspector; without limiting the foregoing, no such
information shall be used by such
<PAGE>
12
Inspector as the basis for any market transactions in securities of the
Company or its subsidiaries in violation of law.
(o) Comply with all applicable rules and regulations of the SEC and
make generally available to its securityholders earnings statements
satisfying the provisions of Section 11(a) of the Securities Act and Rule
158 thereunder (or any similar rule promulgated under the Securities Act)
no later than 45 days after the end of any 12-month period (or 90 days
after the end of any 12-month period if such period is a fiscal year) (i)
commencing at the end of any fiscal quarter in which Registrable
Securities are sold to Underwriters in a firm commitment or best efforts
underwritten offering and (ii) if not sold to Underwriters in such an
offering, commencing on the first day of the first fiscal quarter of the
Company after the Effectiveness Date of a Registration Statement, which
statements shall cover said 12-month periods.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish to the Company such
information regarding such seller and the distribution of such Registrable
Securities as the Company may, from time to time, reasonably request in writing,
provided that such information shall be used only in connection with such
registration. The Company may exclude from such registration the Registrable
Securities of any seller who unreasonably fails to furnish such information as
promptly as practicable after receiving such request.
Each Holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event of the kind described in clause (ii), (iv) or (v) of
Section 1.4(c), such holder will forthwith discontinue disposition of such
Registrable Securities covered by such Registration Statement or Prospectus
until such Holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 1.4(j), or until it is advised in writing
(the "Advice") by the Company that the use of the applicable Prospectus may be
resumed, and has received copies of any amendments or supplements thereto. In
the event the Company shall give any such notice at any time during the
effectiveness period of a Registration Statement for registration of an offering
on a continuous basis under Rule 415, the effectiveness period shall be extended
by the number of days during such periods from and including the date of the
giving of such notice to and including the date when each seller of Registrable
Securities covered by such Registration Statement shall have received (x) the
copies of the supplemented or amended Prospectus contemplated by Section 1.4(j)
or (y) the Advice.
<PAGE>
13
1.5 Registration Expenses.
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company
whether or not any Registration Statement is filed or becomes effective,
including, without limitation, (i) all registration and filing fees (including,
without limitation, (A) fees with respect to filings required to be made with
the National Association of Securities Dealers, Inc. in connection with an
underwritten offering and (B) fees and expenses of compliance with state
securities or "blue sky" laws (including, without limitation, fees and
disbursements of counsel for the Underwriters or counsel for the Company, in
connection with "blue sky" qualifications of the Registrable Securities and
determination of the eligibility of the Registrable Securities for investment
under the laws of such jurisdictions as provided in Section 1.4(h), in the case
of Registrable Securities), (ii) printing expenses (including, without
limitation, expenses of printing certificates for Registrable Securities in a
form eligible for deposit with The Depository Trust Company and of printing
Prospectuses if the printing of Prospectuses is requested by the managing or
sole Underwriter, if any, or by the Holders of a majority of the Registrable
Securities included in any Registration Statement), (iii) messenger, telephone
and delivery expenses, (iv) fees and disbursements of counsel for the Company,
(v) fees and disbursements of all independent certified public accountants
referred to in Section 1.4(k) (including, without limitation, the expenses of
any special audit and "cold comfort" letters required by or incident to such
performance), (vi) Underwriters' fees and expenses (excluding discounts,
commissions, or fees of Underwriters, selling brokers, dealer managers or
similar securities industry professionals relating to the distribution of the
Registrable Securities, but including the fees and expenses of any "qualified
independent Underwriter" or other independent appraiser participating in an
offering pursuant to Schedule E to the By-laws of the National Association of
Securities Dealers, Inc.), (vii) rating agency fees, (viii) Securities Act
liability insurance, if the Company so desires such insurance, (ix) internal
expenses of the Company (including, without limitation, all salaries and
expenses of officers and employees of the Company performing legal or accounting
duties), (x) the expense of any annual audit, (xi) the fees and expenses
incurred in connection with the listing of the securities to be registered on
any securities exchange, and (xii) the fees and expenses of any Person,
including special experts, retained by the Company.
(b) In connection with any Registration Statement hereunder, the
Holders of the Registrable Securities being registered shall bear the discounts,
commissions, or fees of Underwriters, selling brokers, dealer managers or
similar securities industry professionals relating to the distribution of the
Registrable Securities and the fees and disbursements of Special Counsel or such
other counsel chosen by the Holders.
<PAGE>
14
1.6 Indemnification, Contribution.
(a) Indemnification by the Company. The Company shall indemnify and
hold harmless, to the full extent permitted by law, each Holder of Registrable
Securities, the officers, directors and agents and employees of each of them,
each Person who controls each such Holder (within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act), the officers, directors,
agents and employees of each such controlling person and any financial or
investment adviser or other representatives thereto (each, an "Indemnified
Party"), from and against any and all losses, claims, damages, liabilities,
actions or proceedings (whether commenced or threatened), reasonable costs
(including, without limitation, reasonable costs of preparation and reasonable
attorneys' fees and expenses) and reasonable expenses (including reasonable
expenses of investigation) (collectively, "Losses"), as incurred, arising out of
or based upon (i) any untrue or alleged untrue statement of a material fact
contained in any Registration Statement, Prospectus or form of prospectus or in
any amendment or supplements thereto or in any preliminary prospectus, or
arising out of or based upon any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein (in
the case of any Prospectus or form of prospectus or any amendment or supplement
thereto or any preliminary prospectus, in light of the circumstances under which
they were made) not misleading, except to the extent that the same arise out of
or are based upon information furnished in writing to the Company by such
Indemnified Party or the related Holder of Registrable Securities expressly for
use therein or (ii) any violation by the Company of any federal, state or common
law rule or regulation applicable to the Company and relating to action required
of or inaction by the Company in connection with any such registration;
provided, however, that the Company shall not be liable to any Indemnified Party
to the extent that any such Losses arise out of or are based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
any preliminary prospectus if (x) such Indemnified Party or the related Holder
of Registrable Securities failed to send or deliver (if it had a duty to do so)
a copy of the Prospectus with or prior to the delivery of written confirmation
of the sale by such Indemnified Party or the related Holder of Registrable
Securities to the Person asserting the claim from which such Losses arise, (y)
the Prospectus would have corrected such untrue statement or alleged untrue
statement or such omission or alleged omission, and (z) the Company has complied
with its obligations under Section 1.4(c). Such indemnity and reimbursement of
costs and expenses shall remain in full force and effect regardless of any
investigation made by or on behalf of such Indemnified Party.
(b) Indemnification by Holder of Registrable Securities. In
connection with any Registration Statement in which a Holder of Registrable
Securities is participating, an authorized officer of such Holder of Registrable
Securities shall
<PAGE>
15
furnish to the Company in writing such information as the Company reasonably
requests for use in connection with any Registration Statement or Prospectus and
such Holder shall, severally and not jointly, indemnify, to the full extent
permitted by law, the Company and its respective directors, officers, agents and
employees, each Person who controls the Company (within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act), and the directors,
officers, agents or employees of such controlling persons, from and against all
Losses arising out of or based upon any untrue or alleged untrue statement of a
material fact contained in any Registration Statement, Prospectus, or form of
prospectus, or arising out of or based upon any omission or alleged omission of
a material fact required to be stated therein or necessary to make the
statements therein not misleading, to the extent, but only to the extent, that
such untrue or alleged untrue statement is contained in, or such omission or
alleged omission is required to be contained in, any information so furnished in
writing by such Holder to the Company expressly for use in such Registration
Statement or Prospectus and that such statement or omission was relied upon by
the Company in preparation of such Registration Statement, Prospectus or form of
prospectus; provided, however, that such Holder of Registrable Securities shall
not be liable in any such case to the extent that the Holder has furnished in
writing to the Company within a reasonable period of time prior to the filing of
any such Registration Statement or Prospectus or amendment or supplement thereto
information expressly for use in such Registration Statement or Prospectus or
any amendment or supplement thereto which corrected or made not misleading,
information previously furnished to the Company, and the Company failed to
include such information therein. In no event shall the liability of any selling
Holder of Registrable Securities hereunder be greater in amount than the dollar
amount of the proceeds (net of payment of all expenses) received by such Holder
upon the sale of the Registrable Securities giving rise to such indemnification
obligation. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such indemnified party.
(c) Conduct of Indemnification Proceedings. If any Person shall be
entitled to indemnity hereunder (an "indemnified party"), such indemnified party
shall give prompt notice to the party or parties from which such indemnity is
sought (the "indemnifying parties") of the commencement of any action, suit,
proceeding or investigation or written threat thereof (a "Proceeding") with
respect to which such indemnified party seeks indemnification or contribution
pursuant hereto; provided, however, that the failure to so notify the
indemnifying parties shall not relieve the indemnifying parties from any
obligation or liability except to the extent that the indemnifying parties have
been prejudiced by such failure. The indemnifying parties shall have the right,
exercisable by giving written notice to an indemnified party promptly after the
receipt of written notice from such indemnified party of such Proceeding, to
assume, at the
<PAGE>
16
indemnifying parties' expense, the defense of any such Proceeding, with counsel
reasonably satisfactory to such indemnified party; provided, however, that an
indemnified party or parties (if more than one such indemnified party is named
in any Proceeding) shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such indemnified party or parties
unless: (1) the indemnifying parties agree to pay such fees and expenses; (2)
the indemnifying parties fail promptly to assume the defense of such Proceeding
or fail to employ counsel reasonably satisfactory to such indemnified party or
parties; or (3) the named parties to any such Proceeding (including any
impleaded parties) include both such indemnified party or parties and the
indemnifying parties or an affiliate of the indemnifying parties or such
indemnified parties, and there may be one or more defenses available to such
indemnified party or parties that are different from or additional to those
available to the indemnifying parties, in which case, if such indemnified party
or parties notifies the indemnifying parties in writing that it elects to employ
separate counsel at the expense of the indemnifying parties, the indemnifying
parties shall not have the right to assume the defense thereof and such counsel
shall be at the expense of the indemnifying parties, it being understood,
however, that, unless there exists a conflict among indemnified parties, the
indemnifying parties shall not, in connection with any one such Proceeding but
substantially similar or related Proceedings in the same jurisdiction, arising
out of the same general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (together with appropriate
local counsel) at any time for such indemnified party or parties. Whether or not
such defense is assumed by the indemnifying parties, such indemnifying parties
or indemnified party or parties will not be subject to any liability for any
settlement made without its or their consent (but such consent will not be
unreasonably withheld). The indemnifying parties shall not consent to entry of
any judgment or enter into any settlement (i) which provides for other than
monetary damages without the consent of the indemnified party or parties (which
consent shall not be unreasonably withheld or delayed) or (ii) that does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party or parties of a release, in form and substance
satisfactory to the indemnified party or parties, from all liability in respect
of such Proceeding for which such indemnified party would be entitled to
indemnification hereunder.
(d) Contribution. If the indemnification provided for in this
Section 1.6 is unavailable to an indemnified party or is insufficient to hold
such indemnified party harmless for any Losses in respect of which this Section
1.6 would otherwise apply by its terms, then each applicable indemnifying party,
in lieu of indemnifying such indemnified party, shall have a joint and several
obligation to contribute to the amount paid or payable by
<PAGE>
17
such indemnified party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the indemnifying party, on the one
hand, and such indemnified party, on the other hand, in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such indemnifying
party, on the one hand, and indemnified party, on the other hand, shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact, has been taken by, or relates to
information supplied by, such indemnifying party or indemnified party, and the
parties relative intent, knowledge, access to information and opportunity to
correct or prevent any such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include any
legal or other fees or expenses incurred by such party in connection with any
Proceeding, to the extent such party would have been indemnified for such
expenses if the indemnification provided for in Section 1.6(a) or 1.6(b) was
available to such party.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 1.6(d) were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provision of this Section 1.6(d), an indemnifying party that
is a selling Holder of Registrable Securities shall not be required to
contribute any amount in excess of the amount by which the net proceeds received
by such indemnifying party exceeds the amount of any damages that such
indemnifying party has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
1.7 Rule 144. The Company shall file the reports required to be
filed by it under the Securities Act and the Exchange Act and the rules and
regulations promulgated thereunder, and will take such further action as any
Holder of Registrable Securities may reasonably request, all to the extent
required from time to time to enable such Holder to sell Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144. Upon the request of any Holder of Registrable
Securities, the Company shall deliver to such Holder a written statement as to
whether it has complied with such requirements. Anything to the contrary
contained in this Section 1.7 notwithstanding, the Company may deregister any of
its securities and/or suspend its reporting obligations under the Exchange Act
if it is then permitted to do so pursuant to the Exchange Act.
<PAGE>
18
1.8 Underwritten Registrations. If any of the Registrable Securities
covered by any Demand Registration are to be sold in an underwritten offering,
the investment banker or investment bankers and manager or managers that will
manage the offering will be selected by the Company with the consent of a
majority of the Registrable Securities included in such registration. No Holder
of Registrable Securities may participate in any underwritten registration
hereunder unless such Holder (a) agrees to sell such Holder's Registrable
Securities on the basis provided in any underwriting arrangements approved by
the Persons entitled hereunder to approve such arrangements and (b) completes
and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements.
2.1 Definitions. Capitalized terms used in this Annex A shall have
the meanings set forth below:
"Advice" shall have the meaning specified in Section 1.4.
"Common Stock" means the Company's Common Stock, par value $.01 per
share, and any capital stock of any class of the Company hereafter authorized
which is not limited to a fixed sum or percentage of par or stated value in
respect to the rights of the holders thereof to participate in dividends or in
the distribution of assets upon any liquidation, dissolution or winding up of
the Company.
"Demand Notice" shall have the meaning specified in Section 1.1(a).
"Demand Registration" shall have the meaning specified in Section
1.1(a).
"Effectiveness Date" shall have the meaning specified in Section
1.1(d).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and relations of the SEC promulgated thereunder.
"Filing Date" shall have the meaning specified in Section 1.1(d).
"GFI Registrable Securities" means, collectively, (a) the shares of
Common Stock acquired by GFI on the date hereof, (b) all shares of Common Stock
acquired or that may be acquired by GFI upon exercise of the Warrants, and (c)
all Securities issued in respect of, in exchange for, or in substitution of, the
Securities described in clauses (a) and (b) above in connection with a
Recapitalization. GFI Registrable Securities shall remain GFI Registrable
Securities in the hands of any transferee (if they constitute Restricted
Securities in the hands of such
<PAGE>
19
transferee) and shall continue to be GFI Registrable Securities so long as they
remain Restricted Securities.
"Holder" means any holder of Registrable Securities.
"Indemnified Party" shall have the meaning specified in Section
1.6(a).
"Inspectors" shall have the meaning specified in Section 1.4(n).
"Losses" shall have the meaning specified in Section 1.6(a).
"NASDAQ" means the National Association of Securities Dealers
Automated Quotation System.
"Proceeding" shall have the meaning specified in Section 1.6(c).
"Prospectus" means the prospectus included in the Registration
Statement, including any form of prospectus or any preliminary prospectus, as
amended or supplemented by any prospectus supplement and by all other amendments
or supplements to such prospectus, including all post-effective amendments and
all material, if any, incorporated by reference or deemed to be incorporated by
reference into such prospectus.
"Registrable Securities" means the GFI Registrable Securities, and
any Securities deemed to be Registrable Securities pursuant to the Original
Stockholders' Agreement.
"Registration Notice" shall have the meaning specified Section
1.1(d).
"Registration Statement" means any registration statement of the
Company under which any of the Registrable Securities are included therein
pursuant to the provisions of this Agreement, including the Prospectus,
amendments and supplements to such registration statement, including
post-effective amendments, all exhibits, and all material incorporated by
reference or deemed to be incorporated by reference in such registration
statement.
"Restricted Securities" means the Securities (and securities issued
in respect thereof) upon original issuance thereof, and at all times subsequent
thereto, until, in the case of any such securities, the occurrence of any of the
following events: (i) a Registration Statement with respect to such securities
shall have been declared effective under the Securities Act and such securities
shall have been disposed of by the Holder thereof pursuant to such Registration
Statement; (ii) such securities are distributed to the public pursuant to Rule
144 (or any successor provisions promulgated under the Securities
<PAGE>
20
Act); (iii) such securities shall have been otherwise transferred and new
certificates for it not bearing a legend restricting further transfer shall have
been delivered by the Company and no such legal restriction on further transfers
exists; or (iv) such securities shall have ceased to be outstanding.
"Rule 144" means Rule 144 promulgated by the SEC under the
Securities Act as such rule may be amended from time to time, or any similar
rule then in force.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and
all rules and regulations promulgated thereunder, as the same may be amended
from time to time.
"Special Counsel" means a single law firm selected by a majority of
the Holders of the Registrable Securities being registered pursuant to any
Registration Statement.
"Underwriter" has the meaning set forth in Section 2(11) of the
Securities Act.
Exhibit 10.14
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT
BE SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, OR AN
EXEMPTION FROM REGISTRATION, UNDER SAID ACT.
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF ARE SUBJECT
TO A STOCKHOLDER'S AGREEMENT (A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE ISSUER). NO TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION OF THIS WARRANT OR THE SECURITIES
ISSUABLE UPON EXERCISE HEREOF MAY BE MADE EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF SUCH STOCKHOLDER'S AGREEMENT. THE HOLDER OF THIS WARRANT, BY
ACCEPTANCE OF THIS WARRANT AGREES TO BE BOUND BY ALL OF THE PROVISIONS OF
SUCH STOCKHOLDER'S AGREEMENT.
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
INFLO HOLDINGS CORPORATION
Expires June 4, 2003
No. GFI-1 New York, New York
June 4, 1996
FOR VALUE RECEIVED, subject to the provisions hereinafter set forth,
the undersigned, INFLO Holdings Corporation, a Delaware corporation (together
with its successors and assigns, the "Issuer"), hereby certifies that
G.F. Industries, Inc. ("GFI")
or its registered assigns from time to time (herein referred to as the "Holder")
is entitled to purchase from the Issuer, during the period specified in this
Warrant, 1,070,352 shares of the common stock, par value $.01 per share, of the
Issuer (the "Common Stock"), at $18.50 per share, subject to adjustment as
provided herein. All capitalized terms used but not otherwise defined have the
respective meanings set forth in Section 6 of this Warrant.
1. Duration. The right to subscribe for and purchase shares of
Warrant Stock represented hereby shall commence at 5:00 P.M. Eastern Time, on
June 4, 1996 (the "Initial Exercise Date") and shall expire at 5:00 P.M. Eastern
Time, on June 4, 2003 (such period being the "Exercise Period").
2. Method of Exercise; Payment; Issuance of New Warrant; Transfer
and Exchange. (a) The purchase right
<PAGE>
2
represented by this Warrant may be exercised in whole or in part at any time and
from time to time during the Exercise Period.
(b) The Holder hereof may exercise the Warrant, in whole or in part,
by the surrender of the Warrant (with the subscription form attached hereto duly
executed) at the principal office of the Issuer, and by the payment to the
Issuer of the aggregate Warrant Price for the shares of Warrant Stock being
purchased upon such exercise by certified or official bank check or wire
transfer.
(c) In the event of any exercise of the rights represented by this
Warrant, (i) certificates for the shares of Warrant Stock so purchased shall be
dated the date of such exercise and delivered to the Holder hereof within a
reasonable time, not exceeding fifteen days after such exercise, and the Holder
hereof shall be deemed for all purposes to be the holder of the shares of
Warrant Stock so purchased as of the date of such exercise, and (ii) unless this
Warrant has expired, a new Warrant representing the right to purchase the number
of shares of Warrant Stock, if any, with respect to which this Warrant shall not
then have been exercised shall also be issued to the Holder hereof within such
time.
(d) Subject to the provisions of Section 5 of this Warrant, this
Warrant may be transferred on the books of the Issuer by the Holder hereof in
person or by duly authorized attorney, upon surrender of this Warrant at the
principal office of the Issuer, properly endorsed and upon payment by the Holder
hereof of any necessary transfer tax or other governmental charge imposed upon
such transfer. This Warrant is exchangeable at the principal office of the
Issuer for Warrants for the purchase of the same aggregate number of shares of
Warrant Stock, each new Warrant to represent the right to purchase such number
of shares of Warrant Stock as the Holder hereof shall designate at the time of
such exchange. All Warrants issued on transfers or exchanges shall be dated the
date hereof and shall be identical with this Warrant except as to the number of
shares of Warrant Stock issuable pursuant hereto. A Warrant may be exercised by
a new Holder thereof without a new Warrant having been issued.
(e) The Issuer will, at the time of or at any time after each
exercise of this Warrant, upon the request of the Holder hereof or of any shares
of Warrant Stock issued upon such exercise, acknowledge in writing its
continuing obligation to afford to such Holder all rights to which such Holder
shall continue to be entitled after such exercise in accordance with the terms
of this Warrant; provided that if any such Holder shall fail to make any such
request, the failure shall not affect the continuing obligation of the Issuer to
afford such rights to such Holder.
<PAGE>
3
3. Stock Fully Paid; Reservation of Shares. (a) The Issuer
represents, warrants, covenants and agrees that all shares of Warrant Stock
which may be issued upon the exercise of the rights represented by this Warrant
will, upon issuance, be duly authorized, validly issued, fully paid and
non-assessable and free from all taxes, liens and charges with respect to
issuance. The Issuer further covenants and agrees that during the period within
which the rights represented by this Warrant may be exercised, the Issuer will
at all times have authorized and reserved for the purpose of the issue upon
exercise of this Warrant a sufficient number of shares of the Common Stock to
provide for the exercise of all the rights represented by this Warrant.
(b) If any shares of Common Stock required to be reserved for
issuance upon exercise of this Warrant require registration or qualification
with any governmental authority under any federal or state law before such
shares of Common Stock may be so issued, the Issuer will in good faith and as
expeditiously as possible and at its expense endeavor to cause such shares to be
duly registered or qualified; provided that the Issuer shall not be required to
so register or qualify such shares if any transfer or transfers of the Warrants
by the Holder hereof, in and of itself and without regard to the requirements
imposed on or obligations of the Issuer under the GFI Stockholder's Agreement,
resulted in the Issuer being obligated to register such shares under the
Securities Act. If the Issuer shall list any shares of the Common Stock on any
securities exchange it will, to the extent required by any such securities
exchange, at its expense, list thereon, maintain and increase when necessary
such listing of, all shares of Warrant Stock from time to time issued upon
exercise of this Warrant, so long as any shares of the Common Stock shall be so
listed. The Issuer will, to the extent required, also at its expense so list on
each securities exchange, and will maintain and increase when necessary such
listing of, any other securities which the Holder of this Warrant shall be
entitled to receive upon the exercise thereof if at the time any securities of
the same class shall be listed on such securities exchange by the Issuer.
4. Adjustment of Number of Shares and Warrant Price. The number and
kind of securities purchasable upon the exercise of this Warrant and the payment
of the Warrant Price shall be subject to adjustment from time to time upon the
happening of certain events as follows:
(a) Recapitalization, Reorganization, Reclassification,
Consolidation, Merger or Sale. In case of any recapitalization or reorganization
of the Issuer or any reclassification or change of outstanding Securities
issuable upon exercise of this Warrant (other than a change in par value, or
from par value to no par value, or from no par value to par value or as a result
of a subdivision or combination), or in case
<PAGE>
4
of any consolidation or merger of the Issuer with or into another corporation
(other than a merger with another corporation in which the Issuer is the
surviving corporation and which does not result in any reclassification or
change (other than a change in par value, or from par value to no par value, or
from no par value to par value, or as a result of a subdivision or combination)
of outstanding Securities issuable upon exercise of this Warrant), or in case of
any sale or transfer to another corporation of the Property of the Issuer as an
entirety or substantially as an entirety, the Issuer or such successor or
purchasing corporation, as the case may be, without payment of additional
consideration therefor, shall make appropriate provision by amendment of this
Warrant so that the Holder hereof shall have the right thereafter, upon the
exercise of this Warrant, to receive solely the kind and the same amount of
shares of Capital Stock, other securities, money and/or property receivable upon
such recapitalization, reorganization, reclassification, change, consolidation,
merger, sale or transfer by a holder of the number of shares of Common Stock for
which this Warrant is exercisable immediately prior to such event. In case of
any such recapitalization, reorganization, reclassification, change,
consolidation, merger, sale or transfer, (i) the successor or purchasing
corporation (if other than the Issuer) shall expressly assume the due and
punctual observance and performance of each and every covenant and condition of
this Warrant to be performed and observed by the Issuer and all the obligations
and liabilities hereunder, subject to such modifications as may be deemed
appropriate (as determined in good faith by the Board of Directors of the
successor or purchasing corporation whose determination shall be evidenced by a
resolution of such Board of Directors) in order to provide for adjustments of
shares of the Common Stock for which this Warrant is thereafter exercisable
which shall be as nearly equivalent as practicable to the adjustments provided
for in this Section 4, and (ii) if such Warrant shall then cover securities
other than shares of Common Stock, then such Warrant shall provide for
adjustments of such securities which shall be as nearly equivalent as
practicable to the adjustments provided for in this Section 4 (as determined in
good faith by the Board of Directors of the Issuer or the successor or
purchasing corporation, as the case may be, whose determination shall be
evidenced by a resolution of such Board of Directors). The foregoing provisions
of this clause (a) shall similarly apply to successive recapitalizations,
reorganizations, reclassifications, changes, consolidations, mergers, sales and
transfers.
(b) Subdivision or Combination of Shares. If the Issuer, at any time
while this Warrant is outstanding, shall subdivide or combine any class or
classes of its Common Stock, the Warrant Share Number shall be proportionately
increased, in case of subdivision of shares, to reflect the increase in the
total number of shares of Common Stock outstanding as a result of such
subdivision, as at the effective date of such subdivision, or if the Issuer
shall take a record of holders of any class or
<PAGE>
5
classes of its Common Stock for the purpose of so subdividing, as at the
applicable record date, whichever is earlier, or shall be proportionately
reduced, in the case of combination of shares, to reflect the reduction in the
total number of shares of Common Stock outstanding as a result of such
combination, as at the effective date of such combination or, if the Issuer
shall take a record of holders of any class or classes of its Common Stock for
the purpose of so combining, as at the applicable record date, whichever is
earlier.
(c) Certain Dividends and Distributions. If the Issuer, at any time
while this Warrant is outstanding, shall:
(i) Stock Dividends. Pay a dividend to the holders of any
class or classes of its Common Stock in, or make any other
distribution to the holders of any class or classes of its Common
Stock of, any class or classes of Common Stock, the Warrant Share
Number shall be adjusted, as at the date the Issuer shall take a
record of the holders of such class or classes of Common Stock, for
the purpose of receiving such dividend or other distribution (or if
no such record is taken, as at the date of such payment or other
distribution), to that number determined by multiplying the Warrant
Share Number in effect immediately prior to such record date (or if
no such record is taken, then immediately prior to such payment or
other distribution), by a fraction (1) the numerator of which shall
be the total number of shares of Common Stock outstanding
immediately after such dividend or distribution (plus in the event
that the Issuer paid cash for fractional shares, the number of
additional shares which would have been outstanding had the Issuer
issued fractional shares in connection with said dividends), and (2)
the denominator of which shall be the total number of shares of
Common Stock outstanding immediately prior to such dividend or
distribution; or
(ii) Other Dividends, etc. Pay or make a distribution of its
Property (other than its Common Stock) to the holders of any class
or classes of its Common Stock as a dividend or other distribution,
including, without limitation, in liquidation or partial liquidation
or by way of return of capital, other than regular, periodic
dividends payable out of retained earnings after the Issuer
consummates an initial public offering of its Common Stock (and
during such time as such Common Stock is so publicly traded), GFI
shall, upon exercise, be entitled to receive, in addition to the
number of shares of Warrant Stock
<PAGE>
6
receivable thereupon, and without payment of any consideration
therefor, a sum equal to the amount of such Property as would have
been payable or distributable to the Holder hereof as owner of that
number of shares of Warrant Stock of the Issuer receivable by
exercise of this Warrant, had the Holder hereof been the holder of
record of such Warrant Stock on the record date for such
distribution (or, if there is no such record date, on the date such
distribution was paid or made); and an appropriate provision
therefor shall be made a part of any such distribution.
(d) Other Provisions Applicable to Adjustments Under this Section 4.
The following provisions shall be applicable to the making of adjustments in the
Warrant Share Number hereinbefore provided in this Section 4:
(i) Readjustment of Warrant Share Number. If any adjustment is
made upon the establishment of a record date for a distribution or
issuance subject to subsection (a), (b) or (c) and such distribution
or issuance is subsequently cancelled, the Warrant Share Number then
in effect shall be readjusted, effective as of the date when the
Board of Directors determines to cancel such distribution or
issuance, to that which would have been in effect if such record
date or issuance date had not been fixed.
(ii) Cash. To the extent the Warrants become exercisable for
cash, no adjustment need be made thereafter as to the amount of cash
into which such Warrants are exercisable and interest shall not
accrue on such amount of cash.
(iii) Treasury Shares. The number of shares of Common Stock at
any time outstanding shall not include any shares thereof then
directly or indirectly owned or held by or for the account of the
Issuer or any of its Subsidiaries.
(e) Adjustment of Warrant Price. Upon each adjustment in the Warrant
Share Number pursuant to any provision of this Section 4, the Warrant Price
shall be adjusted, to the nearest one hundredth of one cent, to the product
obtained by multiplying the Warrant Price in effect immediately prior to such
adjustment by a fraction the numerator of which shall be the Warrant Share
Number immediately prior to such adjustment and the denominator of which shall
be the Warrant Share Number immediately thereafter; provided, however, that if
at any time, as a result of any adjustments hereunder, the Warrant Price shall
be less than the par value per share of Warrant Stock, then the price payable
per share of Warrant Stock by GFI in the event of an
<PAGE>
7
exercise of this Warrant at such time in whole or in part shall be an amount
equal to the par value per share of such Warrant Stock.
5. GFI Stockholder's Agreement. This Warrant and the Securities
issuable upon exercise hereof are subject in all respects to the terms and
conditions of the GFI Stockholder's Agreement dated as of June 4, 1996 among the
Issuer, GFI, Artal Luxembourg S.A. and Flowers Industries, Inc., as the same may
be amended, supplemented or otherwise modified from time to time (the "GFI
Stockholder's Agreement"). No transfer, sale, assignment, pledge, hypothecation
or other disposition of this Warrant or the Securities issuable upon exercise
hereof may be made except in accordance with the provisions of the GFI
Stockholder's Agreement. The Holder of this Warrant, by acceptance of this
Warrant, agrees to be bound by all of the applicable provisions of the GFI
Stockholder's Agreement, and all applicable benefits of the GFI Stockholder's
Agreement shall inure to such Holder.
6. Notice of Adjustments. Whenever the Warrant Share Number or the
Warrant Price shall be adjusted pursuant to Section 4 hereof, the chief
financial officer of the Issuer shall prepare and execute a certificate setting
forth, in reasonable detail, the event requiring the adjustment, the amount of
the adjustment, the method by which such adjustment was calculated (including a
description of the basis on which the Board of Directors made any determination
hereunder), and the Warrant Share Number and Warrant Price after giving effect
to such adjustment, and shall cause copies of such certificate to be mailed (by
first class mail postage prepaid) to the Holder of this Warrant promptly after
each adjustment.
7. Definitions. As used in this Warrant, the terms set forth below
shall have the following meanings:
"Board of Directors" shall mean the Board of Directors of the Issuer
as from time to time hereafter constituted.
"Capital Stock" means and includes (i) any and all shares,
interests, participations or other equivalents of or interests in (however
designated) corporate stock, including, without limitation, shares of preferred
or preference stock, (ii) all partnership interests (whether general or limited)
in any Person which is a partnership, (iii) all membership interests or limited
liability company interests in any limited liability company, and (iv) all
equity or ownership interests in any Person of any other type.
"Common Stock" shall mean the common stock, par value $.01 per
share, of the Issuer.
"Person" shall mean an individual, a partnership, a joint venture, a
corporation, an association, a joint stock
<PAGE>
8
company, a limited liability company, a trust, an unincorporated organization or
a governmental entity or any department, agency or political subdivision
thereof.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible, including, without
limitation, cash, capital stock and other securities.
"Securities" shall mean any debt or equity securities of the Issuer,
whether now or hereafter authorized, and any instrument convertible into or
exchangeable or exercisable for Securities or a Security. "Security" shall mean
one of the Securities.
"Securities Act" shall mean, as of any date, the Securities Act of
1933, as amended, or any similar Federal statute then in effect, and in
reference to a particular section thereof shall include a reference to the
comparable section, if any, of any such similar Federal statute and the rules
and regulations thereunder.
"Stock Purchase Agreement" means the stock purchase agreement dated
June 4, 1996 among the Issuer, Keebler Holding Corp. and GFI, as the same may be
amended, supplemented or otherwise modified from time to time.
"Warrants" shall mean the Warrants issued pursuant to the Stock
Purchase Agreement, including, without limitation, this Warrant, and any
Warrants hereafter issued by the Issuer in substitution or exchange for any
thereof.
"Warrant Price" shall mean $18.50 and such other prices as shall
result from any adjustment thereof, including, without limitation, as
contemplated by Section 4 hereof.
"Warrant Share Number" shall mean at any time the aggregate number
of shares of Warrant Stock which may at such time be purchased upon exercise of
this Warrant, after giving effect to all prior adjustments to such number made
or required to be made under the terms hereof.
"Warrant Stock" shall mean shares of the Common Stock issuable upon
the exercise of any Warrant or Warrants.
8. Stock and Warrant Transfer Books. The Issuer shall not at any
time, except upon its dissolution, liquidation or winding up, close its stock
transfer books so as to result in preventing or delaying the exercise or
transfer of this Warrant.
9. Loss or Mutilation. Upon receipt by the Issuer of evidence
satisfactory to it (in the exercise of its reasonable discretion) of the
ownership and loss, theft, destruction or mutilation of this Warrant and (in
case of loss, theft or
<PAGE>
9
destruction) of indemnity satisfactory to it in the exercise of its reasonable
discretion (it being understood that the written agreement of the Holder hereof
shall be sufficient indemnity) and (in case of mutilation (provided that this
Warrant is in recognizable form)) upon surrender and cancellation hereof, the
Issuer shall execute and deliver in lieu hereof a new Warrant of like tenor.
10. Limitation of Liability. No provision hereof, in the absence of
affirmative action by the Holder hereof to purchase shares of Common Stock, and
no mere enumeration herein of the rights or privileges of the Holder hereof,
shall give rise to any liability of such Holder for the Warrant Price or as a
stockholder of the Company, whether such liability is asserted by the Issuer or
by creditors of the Issuer.
11. Amendment and Waiver. Any term, covenant, agreement or condition
in this Warrant may be amended, or compliance therewith may be waived (either
generally or in a particular instance and either retroactively or
prospectively), by a written instrument or written instruments executed by the
Issuer and GFI.
12. Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
PRINCIPLES THEREOF REGARDING CONFLICT OF LAWS.
13. Notices. All notices and other communications provided for
hereunder shall be in writing and delivered by hand or sent by first class mail
or sent by telecopy (with such telecopy to be confirmed promptly in writing sent
by first class mail), to the following addresses:
If to the Issuer:
INFLO Holdings Corporation
677 Larch Avenue
Elmhurst, Illinois 60126
Facsimile No.: (708) 833-3372
Attention: Chief Executive Officer
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Facsimile No.: (212) 455-2502
Attention: Robert E. Spatt
<PAGE>
10
If to GFI:
G.F. Industries, Inc.
999 Baker Way, Suite 200
San Mateo, California 94404
Facsimile No.: (415) 312-8077
Attention: President
with a copy to:
Stephen Barbieri
214 Grant Avenue, Suite 400
San Francisco, California 94108
Facsimile No.: (415) 986-1730
or to such other address or addresses or telecopy number or numbers as any such
party may most recently have designated in writing to the other party by such
notice. All such communications shall be deemed to have been given or made when
so delivered by hand or sent by telecopy, or three business days after being so
mailed.
14. Remedies. The Issuer and the Holder hereof each stipulates that
the remedies at law of each party hereto in the event of any default or
threatened default by the other party in the performance of or compliance with
any of the terms of this Warrant are not and will not be adequate and that, to
the fullest extent permitted by law, such terms may be specifically enforced by
a decree for the specific performance of any agreement contained herein or by an
injunction against a violation of any of the terms hereof or otherwise.
15. Successors and Assigns. Subject to Section 5 hereof, this
Warrant and the rights evidenced hereby shall inure to the benefit of and be
binding upon the successors and assigns of the Issuer and the Holder hereof, and
shall be enforceable by any such successors and assigns.
16. Modification and Severability. If, in any action before any
court or agency legally empowered to enforce any provision contained herein, any
provision hereof is found to be unenforceable, then such provision shall be
deemed modified to the extent necessary to make it enforceable by such court or
agency. If any such provision is not enforceable as set forth in the preceding
sentence, the unenforceability of such provision shall not affect the other
provisions of this Warrant, but this Warrant shall be construed as if such
unenforceable provision had never been contained herein.
17. Integration. This Warrant and the other Warrants issued pursuant
to the Stock Purchase Agreement replace all prior agreements, supersede all
prior negotiations and constitute the
<PAGE>
11
entire agreement of the parties with respect to the transactions contemplated
herein.
<PAGE>
12
18. Headings. The headings of the Sections of this Warrant are for
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
Dated: June 4, 1996 INFLO HOLDINGS CORPORATION
By:__________________________
Name:
Title:
Attest:
- -------------------------
Name:
Title: Secretary
<PAGE>
13
SUBSCRIPTION
INFLO HOLDINGS CORPORATION
The undersigned _________________, pursuant to the provisions of the
within Warrant, hereby elects to purchase ________ shares of the Common Stock of
INFLO Holdings Corporation covered by the within Warrant.
Dated: _______________ Signature ____________________
Address ____________________
____________________
ASSIGNMENT
FOR VALUE RECEIVED, __________________, hereby sells, assigns and
transfers unto ___________ the within Warrant and all rights evidenced thereby
and does irrevocably constitute and appoint ___________________, attorney, to
transfer the said Warrant on the books of the within named corporation.
Dated: _______________ Signature ____________________
Address ____________________
____________________
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED, _________________ hereby sells, assigns and
transfers unto ___________________ the right to purchase ________ shares of
Warrant Stock evidenced by the within Warrant together with all rights therein,
and does irrevocably constitute and appoint ___________________, attorney, to
transfer that part of the said Warrant on the books of the within named
corporation.
Dated: _______________ Signature ____________________
Address ____________________
____________________
FOR USE BY THE CORPORATION ONLY:
This Warrant No. GFI-_ cancelled (or transferred or exchanged) this ____ day of
_________ 19__, _________ shares of the Common Stock issued therefor in the name
of ___________________, Warrant No. GFI-_ issued for ________ shares of the
Common Stock in the name of ___________________________.
Exhibit 21
SUBSIDIARIES OF KEEBLER CORPORATION
===============================================================================
COMPANY STATE OF
INCORPORATION
- -------------------------------------------------------------------------------
Wholly-owned subsidiaries of Keebler
Corporation
- -------------------------------------------------------------------------------
1. Keebler Leasing Corp. Delaware
- -------------------------------------------------------------------------------
2. Keebler Biscuit Company Delaware
- -------------------------------------------------------------------------------
3. Shaffer, Clarke & Co., Inc. Delaware
- -------------------------------------------------------------------------------
4. Johnston's Ready-Crust Company Delaware
- -------------------------------------------------------------------------------
5. Emerald Industries, Inc. Delaware
- -------------------------------------------------------------------------------
6. Athens Packaging, Inc. Georgia
- -------------------------------------------------------------------------------
7. Bake-Line Products, Inc. Illinois
- -------------------------------------------------------------------------------
8. Sunshine Biscuits, Inc. Delaware
- -------------------------------------------------------------------------------
Wholly-owned subsidiaries of Keebler
Biscuit Company
- -------------------------------------------------------------------------------
1. Steamboat Corporation Georgia
- -------------------------------------------------------------------------------
2. Illinois Baking Corporation Delaware
- -------------------------------------------------------------------------------
3. Keebler Cookie and Cracker Company Nevada
- -------------------------------------------------------------------------------
4. Hollow Tree Company Delaware
- -------------------------------------------------------------------------------
5. Keebler Company/Puerto Rico, Inc. Delaware
- -------------------------------------------------------------------------------
6. Keebler H.C., Inc. Illinois
- -------------------------------------------------------------------------------
7. Keebler-Georgia, Inc. Georgia
- -------------------------------------------------------------------------------
8. Keebler Foreign Sales Corporation Virgin Islands
- -------------------------------------------------------------------------------
Not for profit corporations of which
Keebler Biscuit Company is the sole
member:(1)
- -------------------------------------------------------------------------------
1. Keebler International Prep Track & Illinois
Field Invitational Foundation
- -------------------------------------------------------------------------------
2. Keebler Company Foundation Illinois
===============================================================================
- --------
(1) Illinois Not For Profit Corporation Act Section 106.05 prohibits not for
profit corporations from having or issuing stock.
Exhibit 23.2
CONSENT
We consent to the inclusion in this registration statement on Form S-4 (File
No. ) of our report dated April 2, 1996, on our audits of the financial
---
statements of Keebler Cookie/Cracker Company. We also consent to the
reference to our firm under the caption "Independent Auditors".
/s/ Coopers & Lybrand L.L.P.
- ----------------------------
Coopers & Lybrand L.L.P.
Chicago, Illinois
July 18, 1996
Exhibit 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of Keebler Corporation on
Form S-4 of our report dated May 15, 1996 on our audit of the financial
statements of Sunshine Biscuits, Inc., appearing in the Prospectus, which is
part of this Registration Statement.
We also consent to the reference to us under the heading "Independent Auditors"
in such Prospectus.
Deloitte & Touche LLP
Parsippany, New Jersey
July 18, 1996
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
--------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
--------------------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)________
--------------------
UNITED STATES TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-3818954
(Jurisdiction of incorporation (I.R.S. Employer
if not a U.S. national bank) Identification No.)
114 West 47th Street
New York, New York 10036-1532
(Address of principal (Zip Code)
executive offices)
--------------------
Keebler Corporation
(Exact name of obligor as specified in its charter)
Delaware 36-3839556
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
--------------------
Keebler Biscuit Company
(Exact name of obligor as specified in its charter)
Delaware 36-1894790
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
<PAGE>
- 2 -
Shaffer, Clarke & Co., Inc.
(Exact name of obligor as specified in its charter)
Delaware 13-2948476
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
--------------------
Johnston's Ready-Crust Company
(Exact name of obligor as specified in its charter)
Delaware 36-3110530
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
--------------------
Emerald Industries, Inc.
(Exact name of obligor as specified in its charter)
Delaware 62-1350629
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
--------------------
Athens Packaging, Inc.
(Exact name of obligor as specified in its charter)
Georgia 36-3840961
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
--------------------
Keebler Leasing Corp.
(Exact name of obligor as specified in its charter)
Delaware 13-3869240
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
<PAGE>
- 3 -
Bake-Line Products, Inc.
(Exact name of obligor as specified in its charter)
Illinois 36-2318208
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
--------------------
Sunshine Biscuits, Inc.
(Exact name of obligor as specified in its charter)
Delaware 11-2111159
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
--------------------
Steamboat Corporation
(Exact name of obligor as specified in its charter)
Georgia 36-2801224
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
--------------------
Illinois Baking Corporation
(Exact name of obligor as specified in its charter)
Delaware 36-2589168
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
--------------------
Keebler Cookie and Cracker Company
(Exact name of obligor as specified in its charter)
Nevada 36-2590868
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
<PAGE>
- 4 -
Hollow Tree Company
(Exact name of obligor as specified in its charter)
Delaware 36-3027531
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
--------------------
Keebler Company/Puerto Rico, Inc.
(Exact name of obligor as specified in its charter)
Delaware 36-2689289
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
--------------------
Keebler H.C., Inc.
(Exact name of obligor as specified in its charter)
Illinois 36-3756201
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
--------------------
Keebler-Georgia, Inc.
(Exact name of obligor as specified in its charter)
Georgia 35-2781281
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
--------------------
10-3/4% Senior Subordinated Notes due 2006
(Title of the indenture securities)
- --------------------------------------------------------------------------------
<PAGE>
- 5 -
GENERAL
1. General Information
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Federal Reserve Bank of New York (2nd District), New York, New York
(Board of Governors of the Federal Reserve System).
Federal Deposit Insurance Corporation, Washington, D.C.
New York State Banking Department, Albany, New York
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. Affiliations with the Obligor
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
3. Voting Securities of the Trustee
2,999,020 shares of Common Stock - par value $5 per share.
4. Trusteeships under Other Indentures
(a) Title of the securities outstanding under each such indenture.
Not applicable.
5. Interlocking Directorates and Similar Relationships with the Obligor or
Underwriters
Not applicable.
<PAGE>
- 6 -
6. Voting Securities of the Trustee Owned by the Obligor or its Officials
Not applicable.
7. Voting Securities of the Trustee Owned by Underwriters or their Officials
Not applicable.
8. Securities of the Obligor Owned or Held by the Trustee
Not applicable.
9. Securities of Underwriters Owned or Held by the Trustee
Not applicable.
10. Ownership or Holdings by the Trustee of Voting Securities of Certain
Affiliates or Securityholders of the Obligor
Not applicable.
11. Ownership or Holdings by the Trustee of any Securities of a Person Owning
50 Percent or More of the Voting Securities of the Obligor
Not applicable.
12. Indebtedness of the Obligor to the Trustee
Not applicable.
13. Defaults by the Obligor
Not applicable.
<PAGE>
- 7 -
14. Affiliations with the Underwriters
Not applicable.
15. Foreign Trustee
Not applicable.
16. List of Exhibits
T-1.1 -- Organization Certificate, as amended, issued by the State of
New York Banking Department to transact business as a Trust
Company, is incorporated by reference to Exhibit T-1.1 to
Form T-1 filed on September 15, 1995 with the Commission
pursuant to the Trust Indenture Act of 1939, as amended by
the Trust Indenture Reform Act of 1990 (Registration No.
33-97056).
T-1.2 -- Included in Exhibit T-1.1.
T-1.3 -- Included in Exhibit T-1.1.
T-1.4 -- The By-laws of the United States Trust Company of New York,
as amended, is incorporated by reference to Exhibit T-1.4 to
Form T-1 filed on September 15, 1995 with the Commission
pursuant to the Trust Indenture Act of 1939, as amended by
the Trust Indenture Reform Act of 1990 (Registration No.
33-97056).
T-1.6 -- The consent of the trustee required by Section 321(b) of the
Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990.
T-1.7 -- A copy of the latest report of condition of the trustee
pursuant to law or the requirements of its supervising or
examining authority.
<PAGE>
- 8 -
NOTE
As of July 15, 1996, the trustee had 2,999,020 shares of Common Stock
outstanding, all of which are owned by its parent company, U.S. Trust
Corporation. The term "trustee" in Item 2, refers to each of United States Trust
Company of New York and its parent company, U.S. Trust Corporation.
In answering Item 2 in this statement of eligibility, as to matters peculiarly
within the knowledge of the obligor or its directors, the trustee has relied
upon information furnished to it by the obligor and will rely on information to
be furnished by the obligor and the trustee disclaims responsibility for the
accuracy or completeness of such information.
--------------------
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended by
the Trust Indenture Reform Act of 1990, the trustee, United States Trust Company
of New York, a corporation organized and existing under the laws of the State of
New York, has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of new
York, and State of new York, on the 16th day of July, 1996.
UNITED STATES TRUST COMPANY OF
NEW YORK, Trustee
By: /s/James E. Logan
-----------------------------------------
James E. Logan
Vice President
PSt/hlg
(rv.kk071696)
<PAGE>
Exhibit T-1.6
The consent of the trustee required by Section 321(b)
of the Act.
United States Trust Company of New York
114 West 47th Street
New York
NY 10036
March 19, 1992
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Gentlemen:
Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990. and subject to the
limitations set forth therein, United States Trust Company of New York ("U.S.
Trust") hereby consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
By: /s/Gerard F. Ganey
--------------------------------------
Gerard F. Ganey
Senior Vice President
CCC/pg
(rev. TMc 031992)
<PAGE>
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
MARCH 31, 1996
--------------
($ IN THOUSANDS)
ASSETS
- ------
Cash and Due from Banks $ 47,046
Short-Term Investments 50
Securities, Available for Sale 758,118
Loans 1,221,210
Less: Allowance for Credit Losses 13,113
-----------
Net Loans 1,208,097
Premises and Equipment 58,360
Other Assets 125,979
-----------
Total Assets $ 2,197,650
===========
LIABILITIES
- -----------
Deposits:
Non-Interest Bearing $ 387,509
Interest Bearing 1,446,148
-----------
Total Deposits 1,833,657
Short-Term Credit Facilities 82,285
Accounts Payable and Accrued Liabilities 128,745
-----------
Total Liabilities $ 2,044,687
===========
STOCKHOLDER'S EQUITY
- --------------------
Common Stock 14,995
Capital Surplus 42,394
Retained Earnings 96,511
Unrealized Gains on Securities Available
for Sale (Net of Taxes) (937)
-----------
Total Stockholder's Equity 152,963
-----------
Total Liabilities and
Stockholder's Equity $ 2,197,650
===========
I, Richard I. Brinkmann, Senior Vice President & Comptroller of the named bank
do hereby declare that this Statement of Condition has been prepared in
conformance with the instructions issued by the appropriate regulatory authority
and is true to the best of my knowledge and belief.
Richard E. Brinkmann, SVP & Comptroller
June 7, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 12-MOS
<FISCAL-YEAR-END> DEC-28-1996 DEC-30-1995
<PERIOD-END> APR-20-1996 DEC-30-1995
<CASH> 46,863 2,945
<SECURITIES> 0 0
<RECEIVABLES> 92,229 109,371
<ALLOWANCES> 4,200 3,200
<INVENTORY> 58,631 58,271
<CURRENT-ASSETS> 252,837 225,105
<PP&E> 417,812 708,485
<DEPRECIATION> 7,896 335,742
<TOTAL-ASSETS> 867,535 677,865
<CURRENT-LIABILITIES> 259,850 534,260
<BONDS> 0 0
0 0
0 0
<COMMON> 1 1
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 867,535 677,865
<SALES> 335,259 1,442,882
<TOTAL-REVENUES> 335,259 1,442,882
<CGS> 157,449 672,800
<TOTAL-COSTS> 323,985 1,411,646
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 7,725 28,421
<INCOME-PRETAX> 3,549 2,967
<INCOME-TAX> 1,966 0
<INCOME-CONTINUING> 1,583 2,967
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,583 2,967
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
Exhibit 99.1
$125,000,000
KEEBLER CORPORATION
10 3/4% Senior Subordinated Notes due 2006
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
June 26, 1996
Nomura Securities International, Inc.
Morgan Stanley & Co. Incorporated
c/o Nomura Securities International, Inc.
Two World Financial Center, Building B
New York, New York 10281-1198
Dear Sirs:
Keebler Corporation, a Delaware corporation (the "Company"),
proposes to issue and sell to you (the "Initial Purchasers"), upon the terms set
forth in a purchase agreement of even date herewith (the "Purchase Agreement"),
$125,000,000 aggregate principal amount of its 10 3/4% Senior Subordinated Notes
due 2006 (the "Notes"). The Subsidiaries of the Company listed on the signature
page hereto as guarantors (the "Guarantors" and together with the Company, the
"Issuers") will jointly and severally guarantee the Notes on a senior
subordinated basis (the "Guarantees" and together with the Notes, the
"Securities"). The Notes will be issued pursuant to an indenture (the
"Indenture") by and among the Company, the Guarantors and U.S. Trust Company of
New York, as trustee (the "Trustee"), substantially in the form previously
furnished to the Initial Purchasers. Capitalized terms used but not specifically
defined herein are defined in the Purchase Agreement and used herein as so
defined. As an inducement to the Initial Purchasers to enter into the Purchase
Agreement and in satisfaction of a condition to the Initial Purchasers'
obligations thereunder, the Issuers agree with the Initial Purchasers, for the
benefit of the holders of the Securities (including the Initial Purchasers), as
follows:
<PAGE>
1. Registered Exchange Offer.
(a) The Issuers will (i) prepare and, within 45 days after the
Closing Date, file with the Commission a registration statement on an
appropriate form under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to a proposed offer (the "Registered Exchange Offer") to the
holders of the Securities to issue and deliver to such holders, in exchange for
the Securities, a like principal amount of debt securities of the Company
guaranteed by the Guarantors having terms that are identical in all material
respects to the terms of the Securities (the "Exchange Notes"), (ii) use their
best efforts to cause such registration statement to become effective under the
Securities Act no later than 120 days after the Closing Date, (iii) upon the
effectiveness of that registration statement, commence the Registered Exchange
Offer and cause the same to remain open for such period of time (but no less
than 20 Business Days after the commencement of the Registered Exchange Offer),
and to be conducted in accordance with such procedures as may be required by the
applicable provisions of the Securities Exchange Act of 1934, as amended, and
(iv) use their best efforts to consummate the Registered Exchange Offer within
150 days after the Closing Date. The objective of such Registered Exchange Offer
is to enable each holder of Securities electing to exchange such Securities for
Exchange Notes (assuming that such holder meets the requirements of Section 1(d)
hereof) to trade such Exchange Notes from and after their receipt without any
limitations or restrictions under the Securities Act or the Exchange Act and
without material restrictions under the securities laws of a substantial
proportion of the several states of the United States.
(b) The Issuers shall indicate in a "Plan of Distribution" section
contained in the final prospectus constituting a part of the registration
statement relating to the Registered Exchange Offer that any broker or dealer
registered under the Exchange Act (each a "Broker-Dealer") who holds Securities
that were acquired for its own account as a result of market-making activities
or other trading activities (other than Securities acquired directly from the
Company), may exchange such Securities for Exchange Notes pursuant to the
Registered Exchange Offer; however, such Broker-Dealer may be deemed an
"underwriter" within the meaning of the Securities Act and, therefore, must
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resales of the Exchange Notes received by it in the
Registered Exchange Offer, which prospectus delivery requirement may be
satisfied by the delivery by such Broker- Dealer of the final prospectus
contained in the registration
2
<PAGE>
statement relating to the Registered Exchange Offer. Such "Plan of Distribution"
section also shall state that the delivery by a Broker-Dealer of the final
prospectus relating to the Registered Exchange Offer in connection with resales
of Exchange Notes shall not be deemed to be an admission by such Broker-Dealer
that it is an "underwriter" within the meaning of the Securities Act, and shall
contain all other information with respect to resales of the Exchange Notes by
Broker-Dealers that the Commission may require in connection therewith, but such
"Plan of Distribution" shall not name any such Broker-Dealer or disclose the
amount of Exchange Notes held by any such Broker-Dealer except to the extent
required by the Commission as a result of a change in policy after the date of
this Agreement.
(c) In connection with such Registered Exchange Offer and the offer
and sale of Exchange Notes by Broker-Dealers as contemplated above, the Issuers
shall take such other and further action, including making appropriate filings
under state securities laws and delivering such number of final prospectuses
relating to the Registered Exchange Offer as any Broker-Dealer proposing to
deliver the same in connection with its resales of Exchange Notes may reasonably
request, as may be necessary to realize the foregoing objectives. The Issuers
shall cause the registration statement relating to the Registered Exchange Offer
to remain continuously effective for a period of 180 days after consummation of
the Registered Exchange Offer, and shall supplement or amend the prospectus
contained therein to the extent necessary to permit such prospectus (as
supplemented or amended) to be delivered by Broker-Dealers in connection with
their resales of Exchange Notes as aforesaid.
(d) Each Holder who participates in the Exchange Offer will be
required to represent that (i) any Exchange Notes received by it will be
acquired in the ordinary course of its business, (ii) it has no arrangement or
understanding with any Person to participate in the distribution of the Exchange
Notes in violation of the provisions of the Securities Act, (iii) it is not a
Broker-Dealer that acquired the Securities directly from the Company, (iv) it is
not an "affiliate" (as defined in Rule 405 under the Securities Act) of the
Company or, if it is such an affiliate, it will comply with the registration and
prospectus delivery requirements of the Securities Act to the extent applicable,
and (v) it is not acting on behalf of any person who could not truthfully make
the foregoing representations. If such Holder is not a Broker-Dealer, such
Holder will be required to represent that it is not engaged in, and does not
intend to engage in, the distribution of the Exchange Notes. If such Holder is a
Broker-Dealer that will receive Exchange Notes for
3
<PAGE>
its own account in exchange for the Securities that were acquired as a result of
market-making activities or other trading activities, it will be required to
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Notes.
2. Shelf Registration. If, because of any change in currently
prevailing interpretations of the Commission's staff, such that the Company
reasonably determines that a Registered Exchange Offer as contemplated by
Section 1 hereof cannot be consummated, the following provisions shall apply:
(a) The Issuers shall file with the Commission, as soon as
practicable after such determination, a registration statement on an appropriate
form under the Securities Act relating to the offer and sale of the Securities
by the holders thereof from time to time in accordance with the methods of
distribution set forth in such registration statement and Rule 415 under the
Securities Act (hereafter, a "Notes Shelf Registration"). The Issuers will use
their best efforts to cause the Notes Shelf Registration to become effective on
or prior to the later of (x) the 120th calendar day after the Closing Date, or
(y) the 45th calendar day after the publication of the change in law or
interpretation.
(b) The Issuers agree to use their best efforts to keep the
registration statement relating to the Notes Shelf Registration continuously
effective in order to permit the prospectus included therein to be usable by the
holders of the Securities for a period of three years from the date the
registration statement is declared effective by the Commission or such shorter
period that will terminate when all the Securities covered by the registration
statement have been sold pursuant to such registration statement or when the
Securities become eligible for resale pursuant to Rule 144 under the Securities
Act without volume restrictions; provided that the Issuers shall be deemed not
to have used their best efforts to keep the registration statement effective
during the requisite period if they voluntarily take any action that would
result in holders of the Securities covered thereby not being able to offer and
sell such Securities during that period, unless such action is required by
applicable law, and provided, further, that the foregoing shall not apply to
actions taken by the Issuers in good faith and for valid business reasons (not
including avoidance of the Issuers' obligations hereunder), including without
limitation the acquisition or divestiture of assets, so long as the Issuers
promptly thereafter comply with the requirements of Section 3(i) hereof, if
applicable. Any such period during which the Issuers
4
<PAGE>
fail to keep the registration statement effective and usable for offers and
sales of Securities is referred to as a "Suspension Period." A Suspension Period
shall commence on and include the date that the Issuers give notice that the
registration statement is no longer effective or the prospectus included therein
is no longer usable for offers and sales of Securities and shall end on the date
when each seller of Securities covered by such registration statement either
receives the copies of the supplemented or amended prospectus contemplated by
Section 3(i) hereof or is advised in writing by the Issuers that use of the
prospectus may be resumed. If one or more Suspension Periods occur, the
three-year time period referenced above shall be extended by the number of days
included in each such Suspension Period.
(c) Notwithstanding any other provisions of this agreement to the
contrary, the Issuers will cause the registration statement and the related
prospectus and any amendment or supplement thereto, as of the effective date of
such registration statement, amendment or supplement, (i) to comply in all
material respects with the applicable requirements of the Securities Act and the
rules and regulations of the Commission and (ii) not to contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading.
3. Registration Procedures. In connection with any Notes Shelf
Registration pursuant to Section 2 hereof, and, to the extent applicable, any
Registered Exchange Offer pursuant to Section 1 hereof, the following provisions
shall apply:
(a) The Issuers shall furnish to the Initial Purchasers, prior to
the filing thereof with the Commission, a copy of the registration statement
proposed to be filed, and each amendment thereof and each supplement, if any, to
the prospectus included therein.
(b) The Issuers shall advise each Initial Purchaser and the holders
of the Securities or the Exchange Notes, and, if requested by either Initial
Purchaser or any such holder, confirm such advice in writing --
(i) when the registration statement and any amendment thereto
has been filed with the Commission and when the registration
statement or any post-effective amendment thereto has become
effective;
5
<PAGE>
(ii) of any request by the Commission for amendments or
supplements to the registration statement or the prospectus included
therein or for additional information;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement or the
initiation of any proceedings for that purpose;
(iv) of the receipt by the Issuers of any notification with
respect to the suspension of the qualification of the Securities or
the Exchange Notes for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and
(v) of the happening of any event that requires the making of
any changes in the registration statement or the prospectus in order
to make the statements therein not misleading (which advice shall be
accompanied by an instruction to suspend the use of the prospectus
until the requisite changes have been made).
(c) The Issuers will make every reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of the registration
statement at the earliest possible time.
(d) The Issuers will furnish to each holder of the Securities or the
Exchange Notes included within the coverage of the Registered Exchange Offer or
the Notes Shelf Registration, as appropriate, without charge, at least one copy
of the registration statement and any post-effective amendment thereto,
including financial statements and schedules, and, if the holder so requests in
writing, all exhibits (including those incorporated by reference).
(e) The Issuers will deliver to each holder of Securities or
Exchange Notes included within the coverage of the Registered Exchange Offer or
the Notes Shelf Registration, as appropriate, without charge, as many copies of
the prospectus (including each preliminary prospectus) included in the
registration statement and any amendment or supplement thereto as such persons
may reasonably request; the Issuers consent to the use of the prospectus or any
amendment or supplement thereto by each of the selling holders of the Securities
or the Exchange Notes in connection with the offering and sale of the Securities
or the Exchange Notes covered by the prospectus or any amendment or supplement
thereto.
6
<PAGE>
(f) Prior to any public offering of the Securities or the Exchange
Notes pursuant to the Registered Exchange Offer or the Notes Shelf Registration,
as the case may be, the Issuers will register or qualify or cooperate with the
holders of the Securities or the Exchange Notes included therein and their
respective counsel in connection with the registration or qualification of such
Securities or the Exchange Notes for offer and sale under the securities or blue
sky laws of such jurisdictions as any seller reasonably requests in writing and
do any and all other acts or things necessary or advisable to enable the offer
and sale in such jurisdictions of the Securities or the Exchange Notes covered
by the Registered Exchange Offer or the Notes Shelf Registration, as the case
may be; provided that the Issuers will not be required to qualify generally to
do business in any jurisdiction where they are not then so qualified or to take
any action which would subject it to general service of process or to taxation
in any such jurisdiction where it is not then so subject.
(g) The Issuers will use their best efforts to cause the Securities
or the Exchange Notes, as the case may be, to be registered with or approved by
such other governmental agencies or authorities as may be necessary by virtue of
the business and operations of the Issuers in connection with the Registered
Exchange Offer or the Notes Shelf Registration, as the case may be, or to enable
the seller or sellers thereof to consummate the disposition of the Securities or
the Exchange Notes, as the case may be.
(h) The Company will cooperate with the holders of the Securities or
the Exchange Notes to facilitate the timely preparation and delivery of
certificates representing the Securities or the Exchange Notes to be sold in the
Registered Exchange Offer or the Notes Shelf Registration, as the case may be,
free of any restrictive legends and in such denominations and registered in such
names as the holders may request prior to sales of the Securities or the
Exchange Notes pursuant to the Registered Exchange Offer or the Notes Shelf
Registration, as the case may be.
(i) Upon the occurrence of any event contemplated by paragraph
(b)(v) above, the Issuers will prepare a post-effective amendment to the
registration statement or a supplement to the related prospectus or file any
other required document so that, as thereafter delivered to purchasers of the
Securities or the Exchange Notes, as the case may be, the prospectus will not
contain an untrue statement of a material fact or omit to state
7
<PAGE>
any material fact necessary to make the statements therein not
misleading.
(j) Not later than the effective date of the applicable registration
statement, the Issuers will provide a CUSIP number for the Notes or the Exchange
Notes, as the case may be, and provide the Trustee with printed certificates for
the Securities or Exchange Notes, as the case may be, in a form eligible for
deposit with The Depositary Trust Company.
(k) The Issuers will use their best efforts to comply with all
applicable rules and regulations of the Commission and will make generally
available to their security holders an earnings statement satisfying the
provisions of Section 11(a) of the Securities Act, no later than 45 days after
the end of a 12- month period (or 90 days, if such period is a fiscal year)
beginning with the first month of the Issuers' first fiscal quarter commencing
after the effective date of each of the Registered Exchange Offer or the Notes
Shelf Registration, which statements shall cover such 12-month period.
(l) The Issuers will cause the Indenture to be qualified under the
Trust Indenture Act.
(m) The Issuers may require each holder of Securities to be sold
pursuant to the Notes Shelf Registration to furnish to the Company such
information regarding the holder and the distribution of such Securities as the
Issuers may from time to time reasonably require for inclusion in the
registration statement.
4. Registration Expenses. In connection with any registration
statement required to be filed pursuant to Section 1 or 2 hereunder, the Issuers
shall pay the following registration expenses (the "Registration Expenses"): (i)
all registration and filing fees, (ii) fees and expenses of compliance with
securities or blue sky laws (including reasonable fees and disbursements of
counsel in connection with blue sky qualifications of the Securities or the
Exchange Notes, as the case may be), (iii) printing expenses, (iv) internal
Issuers' expenses (including, without limitation, all salaries and expenses of
their officers and employees performing legal or accounting duties), (v) the
fees and expenses incurred in connection with any listing of the Securities or
the Exchange Notes, as the case may be, (vi) fees and disbursements of counsel
for the Issuers and customary fees and expenses for independent certified public
accountants retained by the Issuers (including the expenses of any comfort
8
<PAGE>
letters or costs associated with the delivery by independent certified public
accountants of a comfort letter or comfort letters requested), (vii) the fees
and expenses of any special experts retained by the Issuers in connection with
such registration, and (viii) in the event of a Notes Shelf Registration,
reasonable fees and expenses of one counsel (who shall be selected by holders of
a majority of the Securities and who shall be reasonably acceptable to the
Company) for the holders incurred in connection with the registration hereunder.
The Issuers shall not have any obligation to pay any underwriting fees,
discounts or commissions attributable to the sale of the Securities or the
Exchange Notes, as the case may be (including, without limitation, fees and
expenses of any qualified independent underwriter that may be required under the
rules of the National Association of Securities Dealers), or, except as
otherwise provided in clause (viii) above, any out-of-pocket expenses of the
holders (or any agents who manage their accounts) or fees and disbursements of
any counsel for any underwriter in any underwritten offering.
5. Indemnification.
(a) Indemnification by Issuers. In the event of (i) a Notes Shelf
Registration, the Issuers will, jointly and severally, indemnify and hold
harmless each holder of Securities and (ii) the Registered Exchange Offer, each
Broker-Dealer who holds Exchange Notes acquired for its own account pursuant to
the Exchange Offer, and, in any such case, each person who controls such holder
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act (each such person being sometimes hereinafter referred to as an
"Indemnified Holder") against any losses, claims, damages or liabilities, joint
or several, to which such holder may become subject under the Securities Act or
otherwise, insofar as such losses, claims or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in any registration statement or
prospectus or in any amendment or supplement thereto or in any preliminary
prospectus relating to the Notes Shelf Registration, the Registered Exchange
Offer or the delivery by Broker-Dealers who are required to do so of the final
prospectus contained in the registration statement relating to the Registered
Exchange Offer in connection with their resales of the Exchange Notes, as the
case may be, or arise out of or are based upon the omission or alleged omission
to state therein a material fact necessary to make the statements therein not
misleading and will reimburse each holder for any legal and other expenses
reasonably incurred by such holder in connection with investigating or defending
any
9
<PAGE>
such action or claim as such expenses are incurred; provided, however, that the
Issuers shall not be liable in any such case to the extent that such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission (i) which is made in
reliance upon and in conformity with written information furnished to the
Company by such holder or (ii) which is made in any preliminary prospectus if
such holder failed to send or deliver a copy of the final prospectus with or
prior to the delivery of written confirmation of the sale of the Securities or
the Exchange Notes, as the case may be, by such holder to the person asserting
such loss, claim, damage or liability who purchased Securities or Exchange
Notes, as the case may be, that are the subject thereof from such holder, if it
is determined that it was the responsibility of such holder to provide such
person with a copy of the final prospectus and such final prospectus would have
cured the defect giving rise to such loss, claim, damage or liability. This
indemnity will be in addition to any liability which the Issuers may otherwise
have. The Issuers will also indemnify underwriters, selling brokers, dealer
managers and similar securities industry professionals participating in the
distribution, and each person who controls such persons (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) to the same
extent as provided above with respect to the indemnification of the holders of
the Securities or the Exchange Notes, as the case may be.
(b) Indemnification by Holders. In the event of a Notes Shelf
Registration, each holder of Securities will, severally and not jointly,
indemnify and hold harmless the Issuers and each person, if any, who controls
any Issuer within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, against any losses, claims, damages, or
liabilities to which the Issuers may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any registration statement or
prospectus or in any amendment or supplement thereto or in any preliminary
prospectus relating to the Notes Shelf Registration, the Registered Exchange
Offer or the delivery by Broker-Dealers who are required to do so of the final
prospectus contained in the registration statement relating to the Registered
Exchange Offer in connection with their resales of the Exchange Notes, as the
case may be, or arise out of or are based upon the omission or alleged omission
to state therein a material fact necessary to make the statements therein not
misleading, in any such case to the extent, but only to the extent, that such
10
<PAGE>
untrue statement or alleged untrue statement or omission or alleged omission
which is made in reliance upon and in conformity with written information
furnished to the Company by such holder expressly for use therein and will
reimburse the Company for any legal or other expenses reasonably incurred by the
Issuers in connection with investigating or defending any such action or claim
as such expenses are incurred; provided, however, that no such holder shall be
liable for any indemnity claims hereunder in excess of the amount of net
proceeds received by such holder from the sale of Notes pursuant to the Notes
Shelf Registration. If any action or proceeding shall be brought against the
Issuers or any such controlling person, in respect of which indemnity may be
sought against a holder of the Securities, such holder shall have the rights and
duties given the Issuers, and the Issuers or such controlling person shall have
the rights and duties given to each holder, by Section 5(a) hereof. The Issuers
shall be entitled to receive indemnities from underwriters, selling brokers,
dealer managers and similar securities industry professionals participating in
the distribution, to the same extent as provided above with respect to
information so furnished in writing by such persons specifically for inclusion
in any prospectus or registration statement or any amendment or supplement
thereto or any preliminary prospectus.
(c) Contribution. Promptly after receipt by an indemnified party
under subsection (a) or (b) above of notice of the commencement of any action,
such indemnified party shall, if a claim in respect thereof is to be made
against an indemnifying party under such subsection, notify the indemnifying
party in writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (which shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. No indemnifying party shall, without the
written
11
<PAGE>
consent of the indemnified party, effect the settlement or compromise of, or
consent to the entry of any judgment with respect to, any pending or threatened
action or claim in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified party is an actual or potential
party to such action or claim) unless such settlement, compromise or judgment
(i) includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act, by or
on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 5 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect not
only the relative benefits but also the relative faults of the Issuers on the
one hand and the Indemnified Holder on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Issuers on the one hand or the
Indemnified Holder on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Issuers and the Indemnified Holder agree that it would not be just
and equitable if contributions pursuant to this subsection (d) were determined
by pro rata allocation (even if the Indemnified Holders were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this
subsection (d). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), no Indemnified Holder shall be required to
contribute any amount in excess of the amount by which the net proceeds received
by such Indemnified Holder from
12
<PAGE>
the sale of the Securities exceeds the amount of any damages which such
Indemnified Holder has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission.
(e) The obligations of the Issuers under this Section 5 shall be in
addition to any liability which the Issuers may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Indemnified Holder within the meaning of the Securities Act; and the obligations
of a Holder under this Section 5 shall be in addition to any liability which the
respective Holder may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls any Issuer within the meaning
of the Securities Act.
6. Additional Interest Under Certain Circumstances; Remedies. (a) In
the event that (i) neither the Registered Exchange Offer registration statement
nor the Notes Shelf Registration is filed on or prior to the 45th calendar day
following the Closing Date, (ii) the Registered Exchange Offer registration
statement is not declared effective on or prior to the 120th calendar day
following the Closing Date, (iii) the Registered Exchange Offer is not
consummated on or prior to the 150th calendar day following the Closing Date, or
(iv) changes in law or the applicable interpretation of the Commission staff do
not permit the Issuers to effect the Registered Exchange Offer and a Notes Shelf
Registration with respect to the Securities is not declared effective under the
Securities Act on or prior to the later of (x) the 120th day after the Closing
Date and (y) the 45th calendar day after the publication of the change in law or
interpretation, the interest rate borne by the Notes shall be increased by
one-half of one percent per annum following, in the case of clause (i) such 45
day period, or in the case of clauses (ii) or (iii), such 120- or 150-day
period, as the case may be or, in the case of clause (iv), such 45- or 120- day
period, as applicable. The aggregate amount of such increase from the original
interest rate pursuant to these provisions will in no event exceed one-half of
one percent per annum. Such increase will cease to be effective on the date of
filing of the Registered Exchange Offer registration statement, effectiveness of
the Registered Exchange Offer registration statement, consummation of the
Registered Exchange Offer or the effectiveness of a Notes Shelf Registration, as
the case may be.
(b) Any amounts of additional interest due pursuant to the paragraph
above will be payable in cash, on the same original interest payment dates as
the Securities. The amount of
13
<PAGE>
additional interest will be determined by multiplying the applicable additional
interest rate by the principal amount of the affected Securities of such
Holders, multiplied by a fraction, the numerator of which is the number of days
such additional interest rate was applicable during such period (determined on
the basis of a 360-day year comprised of twelve 30-day months and, in the case
of a partial month, the actual number of days elapsed), and the denominator of
which is 360.
7. Miscellaneous.
(a) Amendments and Waivers. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, unless the Issuers has obtained the
written consent of holders of a majority in aggregate principal amount of the
Notes (insofar as such matters relate to the Securities) or the Exchange Notes
(insofar as such matters relate to the Exchange Notes).
(b) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telex, telecopier, or air courier guaranteeing overnight delivery:
(1) if to a holder of Securities or Exchange Notes, at the
most current address given by such holder to the Company in
accordance with the provisions of this Section 7(b), which address
initially is, with respect to each holder, the address of such
holder to which confirmation of the sale of Securities was first
sent by the Initial Purchasers, with a copy in like manner to the
Initial Purchasers at the Initial Purchasers' address first above
written, Attention: Charles K. Whitehead;
(2) if to an Initial Purchaser, to such Initial Purchaser's
address first above written, Attention: Charles K. Whitehead; and
(3) if to the Issuers, initially at the Company's address set
forth in the Purchase Agreement.
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt acknowledged by recipient's
telecopy
14
<PAGE>
operator, if telecopied; and on the day delivered, if sent by overnight air
courier guaranteeing next day delivery.
(c) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent holders of the Securities.
(d) Counterparts. This agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(e) Headings. The headings in this agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(f) Governing Law. This agreement shall be governed by and construed
in accordance with the laws of the State of New York without regard to the
conflict of laws provisions thereof.
(g) Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.
15
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
among the Issuers and the Initial Purchasers.
Very truly yours,
KEEBLER CORPORATION
By:/s/ Sam K. Reed
------------------------------
Name: Sam K. Reed
Title: President
GUARANTORS
----------
KEEBLER LEASING CORPORATION
KEEBLER BISCUIT COMPANY
SHAFFER, CLARKE & CO., INC.
JOHNSTON'S READY-CRUST COMPANY
EMERALD INDUSTRIES, INC.
ATHENS PACKAGING, INC.
STEAMBOAT CORPORATION
ILLINOIS BAKING CORPORATION
KEEBLER COOKIE AND CRACKER
COMPANY
HOLLOW TREE COMPANY
KEEBLER COMPANY/PUERTO
RICO, INC.
KEEBLER H.C., INC.
KEEBLER-GEORGIA, INC.
SUNSHINE BISCUITS, INC.
By:/s/ E. Nichol McCully
------------------------------
Name: E. Nichol McCully
Title: Vice President
BAKE-LINE PRODUCTS, INC.
By:/s/ E. Nichol McCully
------------------------------
Name: E. Nichol McCully
Title: Vice President
16
<PAGE>
Accepted in New York, New York
June 25, 1996
NOMURA SECURITIES INTERNATIONAL, INC.
By:/s/ Robert D. Long
------------------------------
Name: Robert D. Long
Title: Executive Managing Director
MORGAN STANLEY & CO. INCORPORATED
By:
------------------------------
Name: Eugene A. Miac
Title: Principal
17
<PAGE>
Accepted in New York, New York
June 25, 1996
NOMURA SECURITIES INTERNATIONAL, INC.
By:
------------------------------
Name: Robert D. Long
Title: Executive Managing Director
MORGAN STANLEY & CO. INCORPORATED
By:/s/ Eugene A. Miac
------------------------------
Name: Eugene A. Miac
Title: Principal
17
Exhibit 99.2
LETTER OF TRANSMITTAL
for
10 3/4% Senior Subordinated Notes
due 2006
of
KEEBLER CORPORATION
Unconditionally Guaranteed on a Senior Subordinated Basis by
KEEBLER BISCUIT COMPANY, SHAFFER, CLARKE & CO., INC., JOHNSTON'S READY- CRUST
COMPANY, EMERALD INDUSTRIES, INC., ATHENS PACKAGING, INC., KEEBLER LEASING
CORP., BAKE-LINE PRODUCTS, INC., SUNSHINE BISCUITS, INC., STEAMBOAT CORPORATION,
ILLINOIS BAKING CORPORATION, KEEBLER COOKIE AND CRACKER COMPANY, HOLLOW TREE
COMPANY, KEEBLER COMPANY/PUERTO RICO, INC., KEEBLER H.C., INC., KEEBLER-GEORGIA,
INC. (the "Guarantors")
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON _________ __, 1996 (the "EXPIRATION DATE") UNLESS EXTENDED BY
KEEBLER CORPORATION
EXCHANGE AGENT:
UNITED STATES TRUST COMPANY OF NEW YORK
By Hand: By Mail:
United States Trust Company of New York (insured or registered recommended)
20 Exchange Place--Ground Level United States Trust Company of New York
New York, New York 10005 P.O. Box 843
Attention: Corporate Trust Peter Cooper Station
New York, New York 10276
Attention: Corporate Trust
By Overnight Express:
United States Trust Company of New York
770 Broadway, 7th Floor
New York, New York 10003
Attention: Corporate Trust Services Window
By Facsimile:
(212) 420-6152
(For Eligible Institutions Only)
By Telephone:
(800) 548-6565
Delivery of this Letter of Transmittal to an address other than as set
forth above or transmission of instructions via a facsimile transmission to a
number other than as set forth above will not constitute a valid delivery.
The undersigned acknowledges receipt of the Prospectus dated _______ __,
1996 (the "Prospectus") of Keebler Corporation ("Keebler") and the Guarantors,
and this Letter of Transmittal (the "Letter of Transmittal"), which together
describe Keebler's offer (the "Exchange Offer") to exchange $1,000 in principal
amount of its new 10 3/4% Senior Subordinated Notes due 2006 (the "Exchange
Notes") for each $1,000 in principal amount of outstanding 10 3/4% Senior
Subordinated Notes due 2006 (the "Notes"). The terms of the Exchange Notes are
identical in all material respects (including principal amount, interest rate
and maturity) to the terms of the Notes for which they may be exchanged pursuant
to the Exchange Offer, except that the Exchange Notes are freely transferable by
holders thereof (except as provided herein or in the Prospectus) and are not
subject to any covenant regarding registration under the Securities Act of 1933,
as amended (the "Securities Act").
The undersigned has checked the appropriate boxes below and signed this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer.
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE PROSPECTUS
CAREFULLY BEFORE CHECKING ANY BOX BELOW
<PAGE>
YOUR BANK OR BROKER CAN ASSIST YOU IN COMPLETING THIS FORM. THE INSTRUCTIONS
INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED. QUESTIONS AND
REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS AND THIS
LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.
List below the Notes to which this Letter of Transmittal relates. If the space
provided below is inadequate, the Certificate Numbers and Principal Amounts
should be listed on a separate signed schedule affixed hereto.
<TABLE>
<CAPTION>
=================================================================================================================
DESCRIPTION OF NOTES TENDERED HEREWITH
- -----------------------------------------------------------------------------------------------------------------
Aggregate
Principal Amount Principal
Name(s) and Address(es) of Registered Certificate Represented Amount
Holder(s) (Please fill in) Number(s)* by Notes* Tendered**
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
Total
=================================================================================================================
</TABLE>
* Need not be completed by book-entry holders.
** Unless otherwise indicated, the holder will be deemed to have tendered the
full aggregate principal amount represented by such Notes. See instruction
2.
This Letter of Transmittal is to be used either if certificates of Notes
are to be forwarded herewith or if delivery of Notes is to be made by book-entry
transfer to an account maintained by the Exchange Agent at The Depository Trust
Company, pursuant to the procedures set forth in "The Exchange Offer--Tender
Procedure" in the Prospectus. Delivery of documents to the book-entry transfer
facility does not constitute delivery to the Exchange Agent.
Holders whose Notes are not immediately available or who cannot deliver
their Notes and all other documents required hereby to the Exchange Agent on or
prior to the Expiration Date must tender their Notes according to the guaranteed
delivery procedure set forth in the Prospectus under the caption "The Exchange
Offer--Tender Procedure."
|_| CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution
|_| The Depository Trust Company
Account Number
Transaction Code Number
|_| CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s)
<PAGE>
Name of Eligible Institution that Guaranteed Delivery
Date of Execution of Notice of Guaranteed Delivery
If Delivered by Book-Entry Transfer:
Account Number
|_| CHECK HERE IF EXCHANGE NOTES ARE TO BE DELIVERED TO PERSON OTHER THAN
PERSON SIGNING THE LETTER OF TRANSMITTAL:
Name
(Please Print)
Address
(Including Zip Code)
|_| CHECK HERE IF EXCHANGE NOTES ARE TO BE DELIVERED TO ADDRESS DIFFERENT FROM
THAT LISTED ELSEWHERE IN THIS LETTER OF TRANSMITTAL:
Address
(Including Zip Code)
|_| CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES TO THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name:
Address:
If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of
Exchange Notes. If the undersigned is a broker-dealer that will receive Exchange
Notes for its own account in exchange for Notes that were acquired as result of
market-making activities or other trading activities, it acknowledges that it
will deliver a prospectus in connection with any resale of such Exchange Notes;
however, by so acknowledging and by delivering a prospectus, the undersigned
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to Keebler the above-described principal amount of
the Notes indicated above. Subject to, and effective upon, the acceptance for
exchange of the Notes tendered herewith, the undersigned hereby exchanges,
assigns and transfers to, or upon the order of, Keebler all right, title and
interest in and to such Notes. The undersigned hereby irrevocably constitutes
and appoints the Exchange Agent the true and lawful agent and attorney-in-fact
of the undersigned (with full knowledge that said Exchange Agent acts as the
agent of Keebler, in connection with the Exchange Offer) to cause the Notes to
be assigned, transferred and exchanged. The undersigned represents and warrants
that it has full power and authority to tender, exchange, assign and transfer
the Notes and to acquire Exchange Notes issuable upon the exchange of such
tendered Notes, and that, when the same are accepted for exchange, Keebler will
acquire good and unencumbered title to the tendered Notes, free and clear of all
liens, restrictions, charges and encumbrances and not subject to any adverse
claim. The undersigned also warrants that it will, upon request, execute and
deliver any additional documents deemed by the Exchange Agent or Keebler to be
necessary or desirable to complete the exchange, assignment and transfer of
tendered Notes or transfer ownership of such Notes on the account books
maintained by the book-entry transfer facility. The undersigned further agrees
that acceptance of any and all validly tendered Notes by Keebler and the
issuance of Exchange Notes in exchange therefor shall constitute performance in
full by Keebler of its obligations under the Registration Rights Agreement (as
defined in the Prospectus) and that Keebler shall have no further obligations or
liabilities thereunder.
The Exchange Offer is subject to certain conditions as set forth in the
Prospectus under the caption "The Exchange Offer--Conditions to the Exchange
Offer." The undersigned recognizes that as a result of these conditions (which
may be waived, in whole or in part, by Keebler), as more particularly set forth
in the Prospectus, Keebler may not be required to exchange any of the Notes
tendered hereby and, in such event, the Notes not exchanged will be returned to
the undersigned at the address shown above.
By tendering, the undersigned hereby represents to the Company that, among
other things, (i) Exchange Notes to be acquired by it in connection with the
Exchange Offer are being acquired by such holder in the ordinary course of
business of such holder, (ii) the undersigned has no arrangement or
understanding with any person to participate in the distribution of the Exchange
Notes, (iii) the undersigned acknowledges and agrees that any person who is a
broker-dealer registered under the Exchange Act or is participating in the
Exchange Offer for the purposes of distributing the Exchange Notes must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with a secondary resale transaction of the Exchange Notes acquired
by such person and cannot rely on the position of the staff of the Commission
set forth in certain no-action letters, (iv) the undersigned understands that a
secondary resale transaction described in clause (iii) above and any resales of
Exchange Notes obtained by the undersigned in exchange for Notes acquired by
such holder directly from the Company should be covered by an effective
registration statement containing the selling securityholder information
required by Item 507 or Item 508, as applicable, of Regulation S-K of the
Commission and (v) such holder is not an "affiliate," as defined in Rule 405 of
the Securities Act, of the Company. If the undersigned is a broker-dealer that
will receive Exchange Notes for its own account in exchange for Notes that were
acquired as a result of market-making activities or other trading activities,
the undersigned hereby acknowledges that it will deliver a prospectus in
connection with any resale of such Exchange Notes; however, by so acknowledging
and delivering a prospectus, the undersigned will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act. Any holder of
Notes using the Exchange Offer to participate in a distribution of the Exchange
Notes (i) cannot rely on the position of the staff of the Securities and
Exchange Commission (the "Commission") enunciated in its interpretive letter
with respect to Exxon Capital Holdings Corporation (available April 13, 1989) or
similar letters and (ii) must comply with the registration and prospectus
requirements of the Securities Act in connection with a secondary resale
transaction.
If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of
Exchange Notes. If the undersigned is a broker-dealer that will receive Exchange
Notes for its own account in exchange for Notes that were acquired as a result
of market-making activities or other trading as a result of market-making
activities or other trading activities, it acknowledges that it will deliver a
prospectus in connection with any resale of such Exchange Notes; however, by so
acknowledging and by delivering a prospectus, the undersigned will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal
<PAGE>
representatives, successors and assigns of the undersigned. Tendered Notes may
be withdrawn at any time prior to the Expiration Date in accordance with the
terms of the Letter of Transmittal.
Certificates for all Exchange Notes delivered in exchange for tendered
Notes and any Notes delivered herewith but not exchanged, and registered in the
name of the undersigned, shall be delivered to the undersigned at the address
shown below the signature of the undersigned.
<PAGE>
TENDERING HOLDER(S) SIGN HERE
(Complete accompanying substitute Form W-9)
Signature(s) of Holder(s)
Dated Area Code and Telephone Number:
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
certificate(s) of Notes. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other person acting in a
fiduciary or representative capacity, please set forth the full title of such
person.) See Instruction 3.
Name(s)
(Please Print)
Capacity (full title)
Address
(Including Zip Code)
Area Code and Telephone No.
Taxpayer Identification No.
GUARANTEE OF SIGNATURE(S)
(If Required-See Instruction 3)
Authorized Signature
Name
Title
Address
Name of Firm
Area Code and Telephone No.
Dated
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. Delivery of this Letter of Transmittal and Certificates.
Certificates for all physically delivered Notes or confirmation of any
book-entry transfer to the Exchange Agent's or its agent's account at a
book-entry transfer facility of Notes tendered by book-entry transfer, as well
as a properly completed and duly executed copy of this Letter of Transmittal or
facsimile thereof, and any other documents required by this Letter of
Transmittal, must be received by the Exchange Agent at any of its addresses set
forth herein on or prior to the Expiration Date (as defined in the Prospectus).
The method of delivery of this Letter of Transmittal, the Notes and any
other required documents is at the election and risk of the holder, and except
as otherwise provided below, the delivery will be deemed made only when actually
received or confirmed by the Exchange Agent. If such delivery is by mail, it is
suggested that registered mail with return receipt requested, properly insured,
be used. In all cases sufficient time should be allowed to permit timely
delivery.
Holders whose Notes are not immediately available or who cannot deliver
their Notes and all other required documents to the Exchange Agent on or prior
to the Expiration Date or comply with book-entry transfer procedures on a timely
basis must tender their Notes pursuant to the guaranteed delivery procedure set
forth in that Prospectus under "The Exchange Offer--Tender Procedure." Pursuant
to such procedure: (i) such tender must be made by or through an Eligible
Institution (as defined in the Prospectus); (ii) on or prior to the Expiration
Date the Exchange Agent must have received from such Eligible Institution a
letter, telex, telegram or facsimile transmission (receipt confirmed by
telephone and an original delivered by guaranteed overnight courier) setting
forth the name and address of the tendering holder, the names in which such
Notes are registered, and, if possible, the certificate numbers of the Notes to
be tendered; and (iii) all tendered Notes (as a confirmation of any book-entry
transfer of such Notes into the Exchange Agent's account at a book-entry
transfer facility) as well as this Letter of Transmittal and all other documents
required by this Letter of Transmittal, must be received by the Exchange Agent
within five New York Stock Exchange trading days after the date of execution of
such letter, telex, telegram or facsimile transmission, all as provided in the
Prospectus under the caption "The Exchange Offer--Tender Procedure."
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders, by execution of this Letter of Transmittal (or
facsimile thereof), shall waive any right to receive notice of the acceptance of
the Notes for exchange.
2. Partial Tenders; Withdrawals.
If less than the entire principal amount of Notes evidenced by a submitted
certificate is tendered, the tendering holder should fill in the principal
amount tendered in the box entitled "Principal Amount Tendered." A newly issued
certificate for the principal amount of Notes submitted but not tendered will be
sent to such holder as soon as practicable after the Expiration Date. All Notes
delivered to the Exchange Agent will be deemed to have been tendered unless
otherwise clearly indicated.
Tenders of Notes pursuant to the Exchange Offer are irrevocable, except
that Notes tendered pursuant to the Exchange Offer may be withdrawn at any time
prior to the Expiration Date. To be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent by 5:00 P.M., New York City time, on the Expiration Date unless extended
by Keebler. Any such notice of withdrawal must specify the person named in the
Letter of Transmittal as having tendered Notes to be withdrawn, the certificate
numbers of the Notes to be withdrawn, the principal amount of Notes delivered
for exchange, a statement that such holder is withdrawing his or her election to
have such Notes exchanged, and the name of the registered holder of such Notes,
and must be signed by the holder in the same manner as the original signature on
the Letter of Transmittal (including any required signature guarantees) or be
accompanied by evidence satisfactory to Keebler that the person withdrawing the
tender has succeeded to the beneficial ownership of the Notes being withdrawn.
The Exchange Agent will return the properly withdrawn Notes promptly following
receipt of notice of withdrawal. If Notes have been tendered pursuant to the
procedure for book-entry transfer, any notice of withdrawal must specify the
name and number of the account at the book-entry transfer facility to be
credited with the withdrawn Notes or otherwise comply with the book-entry
transfer facility's procedures. All questions as to the validity of notices of
withdrawals, including time of receipt, will be determined by Keebler, and such
determination will be final and binding on all parties.
<PAGE>
3. Signature on this Letter of Transmittal; Written Instruments and
Endorsements; Guarantee of Signatures.
If this Letter of Transmittal is signed by the registered holder(s) of the
Notes tendered hereby, the signature must correspond with the name(s) as written
on the face of the certificates without alteration, enlargement or any change
whatsoever.
If any of the Notes tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If a number of Notes registered in different names are tendered, it will
be necessary to complete, sign and submit as many separate copies of this Letter
of Transmittal as there are different registrations of Notes.
When this Letter of Transmittal is signed by the registered holder or
holders (which term, for the purposes described herein, shall include the
book-entry transfer facility whose name appears on a security listing as the
owner of the Notes) of Notes listed and tendered hereby, no endorsements of
certificates or separate written instruments of transfer or exchange are
required.
If this Letter of Transmittal is signed by a person other than the
registered holder or holders of the Notes listed, such Notes must be endorsed or
accompanied by separate written instruments of transfer or exchange in form
satisfactory to Keebler and duly executed by the registered holder, in either
case signed exactly as the name or names of the registered holder or holders
appear(s) on the Notes.
If this Letter of Transmittal, any certificates or separate written
instruments of transfer or exchange are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons should so
indicate when signing, and, unless waived by Keebler, proper evidence
satisfactory to Keebler of their authority so to act must be submitted.
Endorsements on certificates or signatures on separate written instruments
of transfer or exchange required by this Instruction 3 must be guaranteed by an
Eligible Institution.
Signatures on this Letter of Transmittal need not be guaranteed by an
Eligible Institution, provided the Notes are tendered: (i) by a registered
holder of such Notes, for the holder of such Notes; or (ii) for the account of
an Eligible Institution.
4. Transfer Taxes.
Keebler shall pay all transfer taxes, if any, applicable to the transfer
and exchange of Notes to it or its order pursuant to the Exchange Offer. If a
transfer tax is imposed for any reason other than the transfer and exchange of
Notes to Keebler or its order pursuant to the Exchange Offer, the amount of any
such transfer taxes (whether imposed on the registered holder or any other
person) will be payable by the tendering holder. If satisfactory evidence of
payment of such taxes or exception therefrom is not submitted herewith the
amount of such transfer taxes will be billed directly to such tendering holder.
Except as provided in this Instruction 4, it will not be necessary for
transfer tax stamps to be affixed to the Notes listed in this Letter of
Transmittal.
5. Waiver of Conditions.
Keebler reserves the right to waive in its reasonable judgment, in whole
or in part, any of the conditions to the Exchange Offer set forth in the
Prospectus.
6. Mutilated, Lost, Stolen or Destroyed Notes.
Any holder whose Notes have been mutilated, lost, stolen or destroyed,
should contact the Exchange Agent at the address indicated below for further
instructions.
7. Requests for Assistance or Additional Copies.
<PAGE>
Questions relating to the procedure for tendering, as well as requests for
additional copies of the Prospectus and this Letter of Transmittal, may be
directed to the Exchange Agent at the address and telephone number set forth
above. In addition, all questions relating to the Exchange Offer, as well as
requests for assistance or additional copies of the Prospectus and this Letter
of Transmittal, may be directed to Simpson Thacher & Bartlett, 425 Lexington
Avenue, New York, NY 10017, Attention: James T. Duncan Jr. (telephone
212-455-3103).
IMPORTANT: This Letter of Transmittal or a facsimile thereof (together
with certificates of Notes or confirmation of book-entry transfer and all other
required documents) or a Notice of Guaranteed Delivery must be received by the
Exchange Agent on or prior to the Expiration Date.
Exhibit 99.3
NOTICE OF GUARANTEED DELIVERY
for
Tender of all Outstanding
10 3/4% Senior Subordinated Notes
due 2006
in Exchange for New
10 3/4% Senior Subordinated Notes due 2006
of
KEEBLER CORPORATION
Unconditionally Guaranteed on a Senior Subordinated Basis
by KEEBLER BISCUIT COMPANY, SHAFFER, CLARKE & CO., INC.,
JOHNSTON'S READY-CRUST COMPANY, EMERALD INDUSTRIES, INC.,
ATHENS PACKAGING, INC., KEEBLER LEASING CORP., BAKE-LINE
PRODUCTS, INC., SUNSHINE BISCUITS, INC., STEAMBOAT CORPORATION,
ILLINOIS BAKING CORPORATION, KEEBLER COOKIE AND CRACKER
COMPANY, HOLLOW TREE COMPANY, KEEBLER COMPANY/PUERTO RICO,
INC., KEEBLER H.C., INC., KEEBLER-GEORGIA, INC.
Registered holders of outstanding 10 3/4% Senior Subordinated Notes due
2006 (the "Notes") who wish to tender their Notes in exchange for a like
principal amount of new 10 3/4% Senior Subordinated Notes due 2006 (the
"Exchange Notes") and whose Notes are not immediately available or who cannot
deliver their Notes and Letter of Transmittal (and any other documents required
by the Letter of Transmittal) to United States Trust Company of New York (the
"Exchange Agent") prior to the Expiration Date, may use this Notice of
Guaranteed Delivery or one substantially equivalent hereto. This Notice of
Guaranteed Delivery may be delivered by hand or sent by facsimile transmission
(receipt confirmed by telephone and an original delivered by guaranteed
overnight delivery) or mail to the Exchange Agent. See "The Exchange
Offer--Tender Procedure" in the Prospectus.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
UNITED STATES TRUST COMPANY OF NEW YORK
By Hand: By Mail:
United States Trust Company of New York (insured or registered recommended)
20 Exchange Place--Ground Level United States Trust Company of New York
New York, New York 10005 P.O. Box 843
Attention: Corporate Trust Peter Cooper Station
New York, New York 10276
Attention: Corporate Trust
By Overnight Express:
United States Trust Company of New York
770 Broadway, 7th Floor
New York, New York 10003
Attention: Corporate Trust Services Window
<PAGE>
By Facsimile:
(212) 420-6152
(For Eligible Institutions Only)
By Telephone:
(800) 548-6565
Delivery of this Notice of Guaranteed Delivery to an address other than
as set forth above or transmission of instructions via a facsimile transmission
to a number other than as set forth above will not constitute a valid delivery.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an Eligible Institution (as defined in the Prospectus), such
signature guarantee must appear in the applicable space provided on the Letter
of Transmittal for Guarantee of Signatures.
Ladies and Gentlemen:
The undersigned hereby tenders the principal amount of Notes indicated
below, upon the terms and subject to the conditions contained in the Prospectus
dated _________ __, 1996 of Keebler Corporation (the "Prospectus"), receipt of
which is hereby acknowledged.
DESCRIPTION OF SECURITIES TENDERED
Name and address of registered
holder as it appears on the 10 3/4%
Senior Subordinated Notes Certificate Number(s) Principal Amount
due 2006 ("Notes") of Notes of Notes
(Please Print) Tendered Tendered
__________________________ ___________________ ____________________
__________________________ ___________________ ____________________
__________________________ ___________________ ____________________
__________________________ ___________________ ____________________
__________________________ ___________________ ____________________
-2-
<PAGE>
THE FOLLOWING GUARANTEE MUST BE COMPLETED
GUARANTEE OF DELIVERY
(not to be used for signature guarantee)
The undersigned, a firm that is a member of a registered national
securities exchange or a member of the National Association of Securities
Dealers, Inc. or a commercial bank or trust company having an office, branch,
agency or correspondent in the United States, hereby guarantees to deliver to
the Exchange Agent at one of its addresses set forth above, the certificates
representing the Notes, together with a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), with any required signature
guarantees, and any other documents required by the Letter of Transmittal within
three New York Stock Exchange, Inc. trading days after the date of execution of
this Notice of Guaranteed Delivery.
Name of Firm:____________________________ ___________________________
(Authorized Signature)
Address:_________________________________ Title:_____________________
_________________________________________ Name:______________________
(Zip Code) (Please type or print)
Area Code and Telephone Number: Date:______________________
_________________________________________
NOTE: DO NOT SEND NOTES WITH THIS NOTICE OF GUARANTEED DELIVERY. NOTES
SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
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