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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 27, 1996
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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INTERNATIONAL HOME FOODS, INC.
and Certain Subsidiaries identified in footnote (1) below
(Exact name of registrant as specified in its charter)
DELAWARE 2032 13-3377322
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
FIVE GIRALDA FARMS
MADISON, NEW JERSEY 07940
(201) 660-5000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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C. DEAN METROPOULOS
INTERNATIONAL HOME FOODS, INC.
FIVE GIRALDA FARMS
MADISON, NEW JERSEY 07940
(201) 660-5000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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COPIES TO:
JEFFREY A. CHAPMAN
JAMES A. KRAUSE
VINSON & ELKINS L.L.P.
3700 TRAMMELL CROW CENTER
2001 ROSS AVENUE
DALLAS, TEXAS 75201-2975
(214) 220-7797
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement
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If 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 G, check the following box. o
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER NOTE (2) OFFERING PRICE (2) REGISTRATION FEE
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<S> <C> <C> <C> <C>
103/8% Senior Subordinated
Notes due 2006......................... $400,000,000 100% $400,000,000 $121,212.13
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Senior Subordinated Guarantees (3)..... -- -- -- --
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(1) The following direct and indirect subsidiaries of International Home
Foods, Inc. are Co-Registrants, each of which is incorporated in the
jurisdiction and has the I.R.S. Employer Identification Number indicated:
American Home Foods, Inc., a Delaware corporation (22-1577909); Luck's,
Incorporated, a Delaware corporation (56-0893581); M. Polaner, Inc., a
Delaware corporation (13-3711581); Heritage Brands Holdings, Inc., a
Delaware corporation (75-2555212); Heritage Brands, Inc., a Delaware
corporation (75-2555211); and Campfire Inc., a Delaware corporation
(31-1416330). Canadian Home Products Limited, a Canadian corporation and
direct subsidiary of International Home Foods, Inc., is also a
Co-Registrant.
(2) Estimated solely for the purpose of calculating the registration fee.
(3) The 103/8% Senior Subordinated Notes Due 2006 are guaranteed by the
Co-Registrants on a senior subordinated basis. No separate consideration
will be paid in respect of these guarantees.
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, AS AMENDED, 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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PROSPECTUS
OFFER FOR ALL OUTSTANDING
103/8% SENIOR SUBORDINATED NOTES DUE 2006
IN EXCHANGE FOR
103/8% SENIOR SUBORDINATED NOTES DUE 2006
OF
INTERNATIONAL HOME FOODS, INC.
------------------------------------
Interest Payable May 1 and November 1
------------------------------------
International Home Foods, Inc. (the "Company") is offering upon the
terms and subject to the conditions set forth in this Prospectus and the
accompanying letter of transmittal (the "Letter of Transmittal") (which
together constitute the "Exchange Offer") to exchange $1,000 principal amount
of its registered 103/8% Senior Subordinated Notes due 2006 (the "New Notes")
for each $1,000 principal amount of its unregistered 103/8% Senior Subordinated
Notes due 2006 (the "Old Notes") of which an aggregate principal amount of
$400,000,000 is outstanding. The form and terms of the New Notes are identical
to the form and terms of the Old Notes except that the New Notes have been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
and will not bear any legends restricting their transfer. The New Notes will
evidence the same debt as the Old Notes and will be issued pursuant to, and
entitled to the benefits of, the Indenture (as herein defined) governing the
Old Notes. The Exchange Offer is being made in order to satisfy certain
contractual obligations of the Company. See "The Exchange Offer" and
"Description of New Notes." The New Notes and the Old Notes are sometimes
collectively referred to herein as the "Notes."
Interest on the New Notes will be payable semiannually on May 1 and
November 1 of each year, commencing on May 1, 1997. The New Notes will mature
on November 1, 2006. Except as described below, the Company may not redeem the
New Notes prior to November 1, 2001. On or after such date, the Company may
redeem the New Notes, in whole or in part, at the redemption prices set forth
herein, together with accrued and unpaid interest, if any, to the date of
redemption. In addition, at any time and from time to time on or prior to
November 1, 2000, the Company may, subject to certain requirements, redeem up
to $160 million of the aggregate principal amount of the Notes with the net
cash proceeds from one or more Equity Offerings (as defined) by the Company at
a price equal to 110.375% of the principal amount to be redeemed, together with
accrued and unpaid interest, if any, to the date of redemption, provided that
at least $200 million of the aggregate principal amount of the Notes remains
outstanding after each such redemption. The New Notes will not be subject to
any sinking fund requirement. Upon the occurrence of a Change of Control (as
defined), (i) the Company will have the option, at any time on or prior to
November 1, 2001, to redeem the Notes, in whole but not in part, at a
redemption price equal to 100% of the principal amount thereof plus the
Applicable Premium (as defined), together with accrued and unpaid interest, if
any, to the date of redemption, and (ii) if the Company does not so redeem the
New Notes or if such Change of Control occurs after November 1, 2001, the
Company will be required to make an offer to repurchase the New Notes at a
price equal to 101% of the principal amount thereof, together with accrued and
unpaid interest, if any, to the date of repurchase. See "Description of New
Notes."
The New Notes will be unsecured and will be subordinated to all
existing and future Senior Indebtedness (as defined) of the Company. The New
Notes will rank pari passu with any future Senior Subordinated Indebtedness (as
defined) of the Company and will rank senior to all other subordinated
indebtedness of the Company. The New Notes will be unconditionally guaranteed
on an unsecured, senior subordinated basis by the Subsidiary Guarantors (as
defined). The Indenture permits the Company to incur additional indebtedness,
including Senior Indebtedness, subject to certain limitations. See "Description
of New Notes." As of September 30, 1996, on a pro forma basis after giving
effect to the Transaction (as herein defined) and the Financing (as herein
defined), the aggregate principal amount of the Company's outstanding Senior
Indebtedness would have been approximately $683 million (excluding unused
commitments) and the Company would have had no Senior Subordinated Indebtedness
outstanding other than the New Notes. See "Description of New Notes --
Ranking."
(Cover page continued on next page)
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The Exchange Offer will expire at 5:00 p.m., New York City time,
_______________, 1997, or such later date and time to which it is extended (the
"Expiration Date").
Each broker-dealer that receives New Notes for its own account
pursuant to this exchange offer in exchange for Old Notes must acknowledge that
it will deliver a prospectus in connection with any resale of such New Notes.
The Letter of Transmittal 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 New Notes received in exchange for
Old Notes where such Old Notes were acquired as a result of market-making
activities or other trading activities. Each of the Company and the Subsidiary
Guarantors has agreed that, for a period of 90 days after the Expiration Date
(as defined herein), it will make this Prospectus available to any
broker-dealer for use in connection with any such resale. See "The Exchange
Offer" and "Plan of Distribution."
The Old Notes are designated for trading in the Private Offerings,
Resales and Trading through Automated Linkages ("PORTAL") market. To the extent
Old Notes are tendered and accepted in the Exchange Offer, the principal amount
of outstanding Old Notes will decrease with a resulting decrease in the
liquidity in the market therefor. Following the consummation of the Exchange
Offer, holders of Old Notes who were eligible to participate in the Exchange
Offer but who did not tender their Old Notes will not be entitled to certain
rights under the Registration Rights Agreement (as herein defined) and such Old
Notes will continue to be subject to certain restrictions on transfer.
Accordingly, the liquidity in the market for the Old Notes could be adversely
affected. No assurance can be given as to the liquidity of the trading market
for either the Old Notes or the New Notes.
------------------------------------
FOR A DISCUSSION OF CERTAIN FACTORS TO BE CONSIDERED IN CONNECTION
WITH AN INVESTMENT IN THE NEW NOTES, SEE "RISK FACTORS" ON PAGE 16.
------------------------------------
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.
___________ __, 1997
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"Chef Boyardee," "PAM," "Polaner," "Franklin Crunch 'n Munch"
(hereinafter "Crunch 'n Munch"), "Gulden's," "Campfire," "Marshmallow Munchie,"
"Ranch Style," "Luck's," "Dennison's," "Ro*Tel," "Jiffy Pop" and "G.
Washington's" are registered trademarks of the Company. "Wheatena," "Maypo" and
"Maltex" are registered trademarks licensed to the Company. This Prospectus
also includes trademarks of companies other than the Company.
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SUMMARY
The following summary is qualified in its entirety by, and should be
read in conjunction with, the more detailed information and financial
statements, including the notes thereto, appearing elsewhere in this
Prospectus. As used in this Prospectus, unless the context requires otherwise,
(i) all references to "AHFP" mean American Home Food Products, Inc. and
affiliates, the branded food products business of American Home Products before
completion of the Transaction, and exclude Heritage Brands Holding, Inc.
("Heritage") and (ii) all references herein to the "Company" mean International
Home Foods, Inc. and its consolidated subsidiaries upon completion of the
Transaction, which include the business conducted by AHFP prior to the
Transaction and Heritage. For the fiscal year ended December 31, 1995, AHFP's
and Heritage's sales represented 94% and 6%, respectively, of the Company's
sales. Except as otherwise indicated, (i) all references to market, category
and segment sales reflect the 52-week period ended August 31, 1996, and all
references to market share percentages and market positions reflect the 26-week
period ended August 31, 1996, in each case as gathered by A.C. Nielsen for
United States markets, (ii) all market, category and segment data for national
grocery and snack food products reflect U.S. grocery and mass merchandiser
sales, and all market, category and segment data for southwestern cuisine
reflect regional grocery sales, in each case as gathered by A.C. Nielsen for
the United States markets, and (iii) all references to the Company's sales
refer to sales as reported in the historical financial statements of AHFP and
Heritage. Certain of the statements contained in this summary and elsewhere in
this Prospectus, including, but not limited to, information with respect to the
Company's business and liquidity and capital resources, are forward-looking
statements.
THE COMPANY
The Company is a leading North American manufacturer and marketer of a
diversified, well-established portfolio of shelf-stable food products with
popular brand names. In the United States, nine of the Company's eleven
principal brands command the number one position in their defined markets and
have a long history of stable revenue and cash flow. In the twelve month period
ended September 30, 1996, these nine brands accounted for 64% of the Company's
sales. In addition, many of the Company's largest brands also command leading
market positions in Canada and Puerto Rico. The Company's strong portfolio of
leading brands enables it to realize synergies in manufacturing, marketing,
distribution and raw material sourcing and provides the Company with a strong
presence in the United States as well as an attractive platform for
international expansion, particularly in Latin America. The Company's brand
name business is complemented by growing food service and private label
businesses and sales to the U.S. military. For the fiscal year ended December
31, 1995 and the twelve months ended September 30, 1996, the Company's sales
were $872 million and $970 million, respectively, and the Company's pro forma
EBITDA (as defined in "Summary Historical Financial Data") was $127 million and
$189 million, respectively.
The Company groups its brands into three general categories consisting
of national grocery, southwestern cuisine and snack foods. The Company's
national grocery group is anchored by its largest brand, the nationally
distributed family of Chef Boyardee prepared foods, which represented 41% of
the Company's sales in 1995. Chef Boyardee is one of the nation's most widely
recognized brands and is found in over half of American homes with children.
The Company's strong Chef Boyardee brand is complemented by other market
leading grocery products, including PAM cooking spray, Polaner fruit spreads
and spices and Gulden's mustard, as well as Maypo, Wheatena and Maltex hot
cereals and G. Washington's dry seasonings and broths. In the growing market
for southwestern cuisine, the Company's products include strong regional brands
such as Ranch Style and Luck's canned beans, Ro*Tel canned tomatoes with green
chilies and Dennison's chili, and in the snack foods category, the Company's
brands include Crunch 'n Munch glazed popcorn, Campfire marshmallows and
marshmallow crisp rice bars and Jiffy Pop unpopped popcorn.
COMPETITIVE STRENGTHS
Management believes that the following characteristics contribute to
the Company's position as a leading manufacturer and marketer of popular
branded food products and serve as a foundation for the Company's business
strategy.
O LEADING MARKET POSITIONS AND BRAND NAME RECOGNITION. In the United
States, nine of the Company's eleven principal brands have the number
one position in their defined markets. The Company's portfolio of
national grocery brands includes five national market leaders: Chef
Boyardee canned pasta; PAM
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cooking spray; Polaner fruit-juice-sweetened spreads; Chef Boyardee
pizza mix; and Gulden's mustard. In addition, three of the Company's
southwestern cuisine brands command leading positions in their
regional markets: Ro*Tel is the leading brand of canned tomatoes with
green chilies in the Southwest; and Ranch Style and Luck's are the
leading brands of canned beans in the Southwest and Southeast,
respectively. In the snack food category, the Company's brands
include market leader Crunch 'n Munch glazed popcorn. In today's
competitive food environment, the Company's recognizable portfolio of
leading brands provides a critical mass of brand name sales that (i)
allows the Company to realize synergies in manufacturing, marketing,
distribution and raw material sourcing, (ii) creates a position of
strength with retailers that is critical in maintaining and securing
valuable retail shelf space for existing and new brands and (iii)
provides a strong platform for introducing product line extensions
and new products. Collectively, U.S. sales of these nine market
leading brands accounted for $618 million, or 64% of the Company's
total sales, in the twelve month period ended September 30, 1996.
MARKET POSITION OF LEADING MAJOR BRANDS
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MARKET SHARE NUMBER TWO
---------------------------- COMPETITOR'S
BRAND CATEGORY/SEGMENT POSITION PERCENTAGE PERCENTAGE
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LEADING NATIONAL GROCERY BRANDS
Chef Boyardee............ Canned Pasta........................... #1 58% 35%
PAM...................... Cooking Spray.......................... #1 53% 12%
Polaner.................. Fruit-Juice-Sweetened Spreads.......... #1 45% 29%
Chef Boyardee............ Pizza Mixes............................ #1 69%(1) 11%
Gulden's................. Brown Mustard.......................... #1 48% 28%
LEADING SOUTHWESTERN CUISINE BRANDS
Ranch Style.............. Canned Beans(2)........................ #1 in Southwest 26% 16%
Luck's................... Canned Beans(2)........................ #1 in Southwest 34% 21%
Ro*Tel................... Canned Tomatoes with Green Chiles...... #1 in Southwest 80% 13%
Dennison's............... Canned Chili........................... #3 in West(3) 19% NA
LEADING SNACK FOODS BRANDS
Crunch 'n Munch.......... Glazed Popcorn......................... #1 34% 26%
Campfire................. Marshmallow Crisp Rice Bars............ #1 12% NA
</TABLE>
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(1) Percentage is based on the 52 week period ended March 9, 1996.
(2) The canned beans category includes both the pork and beans and
miscellaneous beans categories. In their respective regions, Ranch Style
leads both categories with a total market share of 26%, and Luck's leads
the miscellaneous beans category with a market share of 34%.
(3) Dennison's has the #1 market share in California, which represents
approximately 65% of Dennison's sales.
O STABLE REVENUE AND CASH FLOW. The Company's portfolio of
established, leading branded products enables it to generate
stable revenue and cash flow. Through internal growth and
selective acquisitions, AHFP's sales and operating profit from
1987 to 1996 (based on the annualized nine months ended
September 30, 1996) increased at compound annual rates of 4.3%
and 3.5%, respectively. During this same period, sales of AHFP's
largest brand--Chef Boyardee--increased at a compound annual
rate of 3.2%. Consistently stable revenue and cash flow provide
resources that can be used to fund the Company's growth
strategy. See "Business-- Business Strategy" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations."
O STRONG OPERATING MARGINS. Management believes that the Company
benefits from one of the highest operating profit margins in the
branded food products industry. From 1991 to 1995, AHFP achieved
an average operating profit margin of 14.8%, and through the
first nine months of 1996 AHFP realized a 17.0% operating profit
margin. Management believes that its relatively high operating
profit margins result from the Company's leading market position
in high margin food categories as well as the cost efficiencies
gained from significant investment in the Company's
manufacturing and distribution network. Strong
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operating profit margins provide the Company with financial
resources to support its marketing, sales and distribution
efforts and give the Company flexibility in implementing
competitive pricing strategies for its products.
O WELL-DEVELOPED INFRASTRUCTURE. The Company's manufacturing plants
and distribution network reflect significant historical capital
investment. Due to this investment, management believes that the
Company's capital expenditures for the foreseeable future will be
limited primarily to maintenance levels.
Well-Maintained Manufacturing Facilities. The Company
produces its products primarily in two well-maintained
manufacturing facilities that are strategically located on
the East Coast (Milton, Pennsylvania) and West Coast
(Vacaville, California). Both plants have significant excess
capacity, with the Milton and Vacaville facilities operating
at only 55% and 28% of their respective capacities (based on
a five-day, two-shift work schedule). In addition, the
Company operates five smaller regional plants that are
capable of producing significant additional volume. This
excess capacity can be utilized to support the (i) growth of
the Company's existing branded and non-branded businesses,
(ii) introduction of new products and entry into new markets
and (iii) integration of strategic acquisitions.
Comprehensive Sales and Distribution Network. The Company has
a comprehensive U.S. direct sales force of approximately 110
people in nine regional offices, a national network of
approximately 90 food brokers, and 12 distribution points
throughout the United States. Management believes this
comprehensive sales and distribution network enables the
Company to deliver 85% of its sales volume to customers
within 24 hours and 100% within 48 hours. Management believes
that the Company's sales and distribution network has the
capacity to support substantial increases in volume.
O WELL-POSITIONED PRODUCTS IN GROWING MARKETS. The Company's
diversified portfolio of branded products are well-positioned to
meet the growing demand for convenient and healthy food products.
Many of the Company's products--such as Chef Boyardee canned
pasta--are quick and easy to prepare and nutritionally sound. As
such, management believes they are particularly appealing to
families with children. Several of the Company's other brands
also benefit from trends toward healthier eating, including PAM,
Polaner and Ranch Style. Furthermore, the Company's strong
regional presence in the market for southwestern cuisine provides
a platform to capitalize on this cuisine's growing national
popularity.
BUSINESS STRATEGY
The Company's strategy is to enhance its operating margins and
strengthen its position as a leading manufacturer and marketer of popular
branded food products. The Company plans to improve its profitability by
rationalizing its cost structure and consolidating suppliers. Furthermore, the
Company has identified several opportunities for revenue growth, including line
extending existing brands, expanding into attractive new markets and completing
strategic acquisitions. The Company intends to implement its strategy through
the following measures:
O ACHIEVE COST SAVINGS. Management believes that it can achieve
annual cost savings of approximately $21 million by
consolidating purchases of raw materials, rationalizing
duplicative distribution routes, eliminating less profitable
stock keeping units ("SKUs"), managing trade promotion programs
more efficiently and streamlining general and administrative
functions. In addition, management believes that it can further
reduce unit manufacturing costs by increasing the capacity
utilization rate of its facilities through the implementation of
its revenue enhancing initiatives. Furthermore, as the Company
implements further cost saving measures and strategic
acquisitions, management believes that the Company's excess
production capacity will enable it to eliminate production
facilities and thereby generate incremental profits.
O LEVERAGE LEADING BRANDS. The Company intends to expand its
product offerings by leveraging its existing portfolio of
leading brands. Management believes that Chef Boyardee can serve
as a strong platform to expand the Company's canned pasta
product line into other quick meal products, that Crunch 'n
Munch, Campfire and Jiffy Pop can be the cornerstone of a
diversified snack foods business, and that Dennison's, Ranch
Style, Luck's and Ro*Tel can be utilized to develop a broader
southwestern cuisine business.
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Management also believes that many of these recognized brand
names can serve as a platform for expanding into new product
categories.
O PROMOTE CONSUMER-BASED MARKETING STRATEGY. The Company intends
to continue to refocus its marketing efforts towards building
brand equity through consumer advertising, primarily utilizing
television (a "pull" strategy), rather than focusing promotion
efforts on trade spending and discounting (a "push" strategy).
Advertising as a percentage of AHFP's total marketing expenses
increased from 16.3% in 1994 to 30.7% in the first nine months
of 1996. In addition, the Company intends to utilize its
advertising and marketing campaigns to increase brand usage,
including promoting Chef Boyardee canned pasta as an ideal
"fourth meal" product to be served after school and PAM cooking
spray as a healthier alternative to cooking oils, butter and
margarine.
O EXPAND INTO ATTRACTIVE NEW MARKETS. Management believes that
attractive opportunities exist to expand the Company's sales in
international markets with growing economies and attractive
demographics. In particular, management believes that the
Company's southwestern cuisine products (principally Dennison's,
Ranch Style and Ro*Tel) and its Chef Boyardee canned pasta
products can be efficiently and successfully expanded into the
growing Latin American markets. In addition, management believes
that it can utilize the Company's excess plant capacity to
facilitate further development of the Company's food service and
private label businesses.
O COMPLETE STRATEGIC ACQUISITIONS. The Company will pursue
opportunities to make acquisitions that complement and expand
its core businesses or that enable the Company to enter new
markets for its products. Since 1983, the Company has
successfully integrated six businesses into its existing
operations. The acquired businesses have enabled the Company to
enter or increase its presence in a number of key markets.
Management believes that additional strategic acquisition
opportunities exist and that incremental revenue and cash flow
can be generated by leveraging the Company's production,
distribution and administrative capabilities.
RECENT OPERATING PERFORMANCE
From 1987 to 1994, AHFP's sales and operating profit increased at
compound annual rates of 6.4% and 4.4%, respectively. In 1995, however, AHFP
experienced a substantial decline in sales and operating profit. AHFP's sales
and operating profit decreased from $997 million and $159 million,
respectively, in 1994 to $819 million and $69 million, respectively, in 1995.
The specific causes of these declines, however, have been subsequently
addressed by AHFP, as evidenced by the fact that during the first nine months
of 1996 versus the same period in 1995, sales increased to $704 million from
$609 million and operating profit increased to $120 million from $46 million.
The decline in sales and profitability in 1995 stemmed largely from a
prior "push" marketing strategy that relied heavily on trade promotions and
sales discounting. In the fourth quarter of 1994, AHFP offered significant
trade incentives to its customers, a practice similarly pursued in the fourth
quarter of 1993. These trade incentives resulted in forward buying by customers
in advance of consumer purchases, thereby significantly increasing customer
inventories of AHFP's products by the end of 1994. The reliance on trade
incentives as well as consumer promotions reduced marketing funds available to
support advertising, which builds brand equity and consumer loyalty, for AHFP's
core brands. Advertising funds available for AHFP's core products were further
diminished by the introduction in 1994 of Chef Boyardee Sesame Street canned
pasta. AHFP directed approximately $3 million, or 10% of its total advertising
expense in 1994, to the launch and support of this product.
During the first quarter of 1995, AHFP's sales were significantly
reduced as retailers sold the excess inventory of AHFP products that they held
at the end of 1994. This reduction was compounded by the effects of an
industry-wide reduction in inventory levels by the supermarket trade. In
addition, the Chef Boyardee Sesame Street product line proved unsuccessful and
was discontinued in 1995. To reduce costs and maintain profitability in the
face of declining sales, AHFP significantly reduced advertising spending during
the first half of 1995. This action, coupled with lower advertising spending
for AHFP's core brands in 1994, resulted in market share losses which further
depressed sales.
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In response to the sharp declines in sales and profitability in the
first half of 1995, AHFP undertook a number of initiatives, including
installing a new management team in July of 1995. In addition, advertising
spending was substantially increased beginning in the fourth quarter of 1995 to
strengthen consumer brand support. Advertising expense in the fourth quarter of
1995 was approximately $14 million, which represented approximately one-third
of total advertising expense for all of 1995. The significant increase in
advertising spending in the fourth quarter of 1995 further depressed
profitability in that year, but provided the foundation for AHFP's growth in
sales and profitability in 1996. Management believes that the marked
improvement in sales and operating profit for the nine months ended September
30, 1996 over the same period in 1995 reflects the early success of these
initiatives. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
OWNERSHIP AND MANAGEMENT
Hicks, Muse, Tate & Furst Incorporated ("Hicks Muse") is a private
investment firm based in Dallas, New York, St. Louis and Mexico City that
specializes in acquisitions, recapitalizations and other principal investing
activities. Since the firm's inception in 1989, Hicks Muse has completed
approximately 50 transactions having a combined transaction value exceeding $6
billion. Hicks Muse is combining its financial expertise with the operating
management experience of C. Dean Metropoulos & Co. ("Metropoulos & Co.").
Organized in 1993 by C. Dean Metropoulos, Metropoulos & Co. consists of a group
of senior operating executives who manage a portfolio of companies in the
branded food products business. Between 1983 and 1993, Mr. Metropoulos built
Stella Foods, Inc. ("Stella") into the nation's largest specialty cheese
manufacturer and marketer by growing Stella's revenues from $20 million to $800
million during the period. Hicks Muse and Metropoulos & Co. have established an
exclusive relationship to pursue acquisitions of food companies that
Metropoulos & Co. will manage. Hicks Muse is the controlling stockholder of,
and Metropoulos & Co. manages, the Company, Ghirardelli Chocolate Company and
Productos Del Monte S.A. de C.V. See "Management."
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THE TRANSACTION
The Old Notes were offered in connection with the purchase of an 80%
beneficial interest in American Home Food Products, Inc., based on a total
enterprise value of approximately $1.28 billion, and the purchase of Heritage
for $70 million.
In connection with the offering of Old Notes, AHFP Acquisition
Corporation (the "Merger Sub"), an indirect subsidiary of Hicks, Muse, Tate &
Furst Equity Fund III, L.P. ("Hicks Muse Fund III"), was merged (the "Merger")
with and into AHFP. As the surviving corporation in the Merger, AHFP redeemed
(the "Redemption") certain shares of its common stock held by a subsidiary of
American Home Products Corporation ("American Home Products") and changed its
name to International Home Foods, Inc. (which has been defined herein as the
"Company"). Immediately following the Merger, International Home Foods, Inc.
purchased Heritage (the acquisition of Heritage, collectively with the Merger
and the Redemption, is referred to herein as the "Transaction"). On the closing
date of the Transaction (the "Closing Date"), Hicks Muse Fund III, together
with certain other investors, and American Home Products owned 80% and 20%,
respectively, of the Company's common stock. See "The Transaction" and "Stock
Ownership and Certain Transactions."
The Company required approximately $1,347 million (assuming a Net
Asset Adjustment (as herein defined) of $13 million) to consummate the
Transaction, consisting of $1,222 million paid to American Home Products in the
Merger and Redemption, $70 million used in connection with the Company's
acquisition of Heritage and $55 million in fees and expenses. The funds
required to consummate the Transaction were provided by (i) the $400 million in
gross proceeds from the offering of Old Notes, (ii) the borrowing by the
Company of $670 million in connection with a new term loan facility with The
Chase Manhattan Bank, Bankers Trust Company and Morgan Stanley Senior Funding,
Inc., each as agent-lender (the "Term Loan Facilities"), (iii) the borrowing by
the Company of $13 million in connection with a new $100 million revolving
credit facility with The Chase Manhattan Bank, Bankers Trust Company and Morgan
Stanley Senior Funding, Inc., each as agent-lender (the "Revolving Credit
Facility" and, together with the Term Loan Facility, the "Senior Bank
Facilities") and (iv) the proceeds of $264 million of equity financing (the
"Equity Proceeds") to be paid to a subsidiary of American Home Products by an
affiliate of Hicks Muse in the Merger (items (i), (ii), (iii) and (iv) being
referred to herein as the "Financing"). See "Description of Senior Bank
Facilities" and "The Transaction."
The following table sets forth the sources and uses of funds in
connection with the Transaction, assuming a Net Asset Adjustment of $13
million:
<TABLE>
<CAPTION>
AMOUNT
---------------------
(DOLLARS IN MILLIONS)
<S> <C>
SOURCES:
Senior Bank Facilities:
Revolving Credit Facility.................................. $ 13
Term Loan Facilities:
Tranche A.............................................. 300
Tranche B.............................................. 200
Tranche C.............................................. 170
The Notes............................................................... 400
Equity Proceeds (1)..................................................... 264
------
Total sources...................................... $1,347
======
USES:
Payments to American Home Products...................................... $1,222
Purchase of Heritage (2)................................................ 70
Fees and expenses (3)................................................... 55
------
Total uses......................................... $1,347
======
</TABLE>
- -------------
(1) Amount used by Hicks Muse Holding to acquire 80% of the equity interest of
the Company, which implies a total equity value of $330 million.
(2) Includes approximately $40 million to repay existing debt of Heritage and
approximately $30 million to acquire the equity of Heritage.
(3) Includes the discount to the Initial Purchasers, expenses in connection
with the offering of Old Notes, fees and expenses in connection with the
Senior Bank Facilities, and other legal and accounting fees and expenses
incurred in connection with the Transaction.
8
<PAGE> 11
THE EXCHANGE OFFER
The Exchange Offer applies to $400 million aggregate principal amount of
the Old Notes. The form and terms of the New Notes are the same as the form and
terms of the Old Notes except that the New Notes have been registered under the
Securities Act and, therefore, will not bear legends restricting their
transfer. The New Notes will evidence the same debt as the Old Notes and will
be entitled to the benefits of the Indenture pursuant to which the Old Notes
were issued. See "Description of New Notes."
The Exchange Offer.................. $1,000 principal amount of New Notes in
exchange for each $1,000 principal
amount of Old Notes. As of the date
hereof, Old Notes representing $400
million aggregate principal amount were
outstanding. The terms of the New Notes
and the Old Notes are substantially
identical.
Based on an interpretation by the
Commission's staff set forth in
no-action letters issued to third
parties unrelated to the Company, the
Company believes that, with the
exceptions discussed herein, New Notes
issued pursuant to the Exchange Offer
in exchange for Old Notes may be
offered for resale, resold and
otherwise transferred by any person
receiving the New Notes, whether or not
that person is the holder (other than
any such holder or such other person
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 (i) the New Notes
are acquired in the ordinary course of
business of that holder or such other
person, (ii) neither the holder nor
such other person is engaging in or
intends to engage in a distribution of
the New Notes, and (iii) neither the
holder nor such other person has an
arrangement or understanding with any
person to participate in the
distribution of the New 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 Commission's staff would make
a similar determination with respect to
the Exchange Offer. See "The Exchange
Offer -- Purpose and Effect." Each
broker-dealer that receives New Notes
for its own account in exchange for Old
Notes, where those Old Notes were
acquired by the broker-dealer as a
result of its market-making activities
or other trading activities, must
acknowledge that it will deliver a
prospectus in connection with any
resale of those New Notes. See "Plan of
Distribution."
Exchange and Registration Rights
Agreement........................... The Old Notes were sold by the Company
on November 1, 1996 in a private
placement. In connection with the sale,
the Company entered into an Exchange
and Registration Rights Agreement with
the initial purchasers of the Old Notes
(the "Registration Rights Agreement")
providing for the Exchange Offer. See
"The Exchange Offer -- Purpose and
Effect."
Expiration Date....................... The Exchange Offer will expire at 5:00
P.M., New York City time,
_____________, 1997, or such later date
and time to which it is extended.
Withdrawal Rights..................... The tender of Old Notes pursuant to the
Exchange Offer may be withdrawn at any
time prior to 5:00 p.m., New York City
time, on the Expiration Date. Any Old
Notes 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.
9
<PAGE> 12
Interest on the New Notes
and Old Notes...................... Interest on each New Note will accrue
from November 1, 1996, the date of
issuance of the Old Notes. No interest
will be paid on the Old Notes accepted
for exchange.
Conditions to the Exchange
Offer.............................. The Exchange Offer is subject to
certain customary conditions, certain
of which may be waived by the Company.
See "The Exchange Offer -- Conditions."
Procedures for Tendering
Old Notes.......................... Each holder of Old Notes wishing to
accept the Exchange Offer must
complete, sign and date the Letter of
Transmittal, or a copy thereof, in
accordance with the instructions
contained herein and therein, and mail
or otherwise deliver the Letter of
Transmittal, or the copy, together with
the Old Notes and any other required
documentation, to the Exchange Agent at
the address set forth herein. Persons
holding Old Notes through the
Depository Trust Company (the "DTC")
and wishing to accept the Exchange
Offer must do so pursuant to the DTC's
Automated Tender Offer Program, by
which each tendering Participant (as
defined) will agree to be bound by the
Letter of Transmittal. By executing or
agreeing to be bound by the Letter of
Transmittal, each holder will represent
to the Company that, among other
things, (i) any Exchange Notes to be
received by it will be acquired in the
ordinary course of its business, (ii)
it has no arrangement with any person
to participate in the distribution of
the Exchange Notes and (iii) it is not
an "affiliate," as defined in Rule 405
of the Securities Act, of the Company
or any of the Subsidiary Guarantors, or
if it is an affiliate, it will comply
with the registration and prospectus
delivery requirements of the Securities
Act to the extent applicable. If the
holder is not a broker-dealer, it 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 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.
Pursuant to the Registration Rights
Agreement, the Company is required to
file a registration statement for a
continuous offering pursuant to Rule
415 under the Securities Act in respect
of the Old Notes if existing Commission
interpretations are changed such that
the New Notes received by holders in
the Exchange Offer are not or would not
be, upon receipt, transferable by each
such holder (other than an affiliate of
the Company or any of the Subsidiary
Guarantors) without restriction under
the Securities Act. See "The Exchange
Offer -- Purpose and Effect."
Acceptance of Old Notes and
Delivery of New Notes.............. The Company will accept for exchange
any and all Old Notes which are
properly tendered in the Exchange Offer
prior to 5:00 p.m., New York City time,
on the Expiration Date. The New Notes
issued pursuant to the Exchange Offer
will be delivered promptly following
the Expiration Date. See "The Exchange
Offer -- Terms on the Exchange Offer."
Exchange Agent....................... United States Trust Company of New York
is serving as Exchange Agent in
connection with the Exchange Offer.
10
<PAGE> 13
Federal Income Tax
Considerations..................... The exchange pursuant to the Exchange
Offer will not be a taxable event for
federal income tax purposes. See
"Certain United States Federal Income
Tax Considerations."
Effect of Not Tendering.............. Old Notes that are not tendered or that
are tendered but not accepted will,
following the completion of the
Exchange Offer, continue to be subject
to the existing restrictions upon
transfer thereof. The Company will have
no further obligation to provide for
the registration under the Securities
Act of such Old Notes.
11
<PAGE> 14
TERMS OF NEW NOTES
Issuer............................... International Home Foods, Inc.
Securities Offered................... $400 million aggregate principal amount
of 10 3/8% Senior Subordinated Notes
due 2006 (the "New Notes").
Maturity............................. November 1, 2006.
Interest Payment Dates............... May 1 and November 1 of each year,
commencing on May 1, 1997.
Sinking Fund......................... None.
Optional Redemption.................. Except as described below, the Company
may not redeem the New Notes prior to
November 1, 2001. On or after such
date, the Company may redeem the New
Notes, in whole or in part, at the
redemption prices set forth herein,
together with accrued and unpaid
interest, if any, to the date of
redemption. In addition, at any time
and from time to time on or prior to
November 1, 2000, the Company may
redeem up to $160 million of the
aggregate principal amount of the Notes
with the net cash proceeds of one or
more Equity Offerings by the Company,
so long as there is a Public Market (as
defined) at the time of redemption, at
a redemption price equal to 110.375% of
the principal amount to be redeemed,
together with accrued and unpaid
interest, if any, to the date of
redemption, provided that at least $200
million of the aggregate principal
amount of the Notes remains outstanding
after each such redemption. See
"Description of New Notes -- Optional
Redemption."
Change of Control.................... Upon the occurrence of a Change of
Control, (i) the Company will have the
option, at any time on or prior to
November 1, 2001, to redeem the New
Notes in whole but not in part at a
redemption price equal to 100% of the
principal amount thereof plus the
Applicable Premium set forth herein,
plus accrued and unpaid interest, if
any, to the date of redemption, and
(ii) if the Company does not so redeem
the New Notes or if such Change of
Control occurs after November 1, 2001,
the Company will be required to make an
offer to repurchase the New Notes at a
price equal to 101% of the principal
amount thereof, together with accrued
and unpaid interest, if any, to the
date of purchase. See "Description of
New Notes -- Change of Control."
Subsidiary Guarantees................ The New Notes will be unconditionally
guaranteed (the "Subsidiary
Guarantees") on an unsecured, senior
subordinated basis by each of the
Company's Subsidiaries existing on the
issue date of the Old Notes and by each
Subsidiary of the Company (other than
foreign Subsidiaries and Unrestricted
Subsidiaries) created or acquired
thereafter (collectively, the
"Subsidiary Guarantors"). See
"Description of New Notes -- Subsidiary
Guarantees."
Ranking.............................. The New Notes will be unsecured and
will be subordinated in right of
payment to all existing and future
Senior Indebtedness of
12
<PAGE> 15
the Company. The New Notes will rank
pari passu with any future Senior
Subordinated Indebtedness of the
Company and will rank senior to all
other subordinated indebtedness of the
Company. The Subsidiary Guarantees will
be general, unsecured obligations of
the Subsidiary Guarantors, subordinated
in right of payment to all existing and
future Guarantor Senior Indebtedness
(as defined) of the Subsidiary
Guarantors. As of September 30, 1996,
on a pro forma basis after giving
effect to the Transaction and the
Financing, the aggregate principal
amount of the Company's outstanding
Senior Indebtedness would have been
$683 million (excluding unused
commitments) and the Company would have
had no Senior Subordinated Indebtedness
outstanding other than the Notes. As of
the same date, the aggregate principal
amount of Guarantor Senior Indebtedness
of the Subsidiary Guarantors
outstanding would have been $683
million (all of which would have
represented guarantees under the Senior
Bank Facilities). See "Description of
New Notes -- Ranking and Subordination."
Restrictive Covenants................ The indenture under which the New Notes
will be issued (the "Indenture") limits
(i) the incurrence of additional
indebtedness by the Company and its
Restricted Subsidiaries, (ii) the
payment of dividends on, and redemption
of, capital stock of the Company and
its Restricted Subsidiaries and the
redemption of certain subordinated
obligations of the Company and its
Restricted Subsidiaries, (iii)
investments, (iv) sales of assets and
Restricted Subsidiary stock, (v)
transactions with affiliates and (vi)
consolidations, mergers and transfers
of all or substantially all of the
Company's assets. The Indenture also
prohibits certain restrictions on
distributions from Restricted
Subsidiaries. However, all of these
limitations and prohibitions are
subject to a number of important
qualifications and exceptions. See
"Description of New Notes -- Certain
Covenants."
RISK FACTORS
Holders of Old Notes should carefully consider all of the information
set forth in this Prospectus and, in particular, should evaluate the specific
factors set forth under "Risk Factors" for risks involved with an investment in
the New Notes.
13
<PAGE> 16
SUMMARY PRO FORMA COMBINED FINANCIAL DATA
The following table sets forth certain unaudited summary pro forma
combined financial data of the Company for the periods ended and as of the
dates indicated. The unaudited summary pro forma combined statement of
operations data give effect to the Transaction and Financing as if they had
occurred on January 1, 1995. The unaudited summary pro forma combined balance
sheet data give effect to the Transaction and Financing as if they had occurred
on September 30, 1996. The unaudited summary pro forma combined financial data
do not purport to represent what the Company's results of operations or
financial condition would have actually been had the Transaction and Financing
been consummated as of such date or to project the Company's results of
operations or financial condition for any future period. The unaudited summary
pro forma combined financial data should be read in conjunction with the
Unaudited Pro Forma Combined Financial Statements and the notes thereto. See
"Unaudited Pro Forma Combined Financial Statements" and the separate historical
financial statements of AHFP and the notes thereto appearing elsewhere in this
Prospectus and "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
<TABLE>
<CAPTION>
TWELVE
YEAR ENDED NINE MONTHS ENDED MONTHS ENDED
DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
1995 1995 1996 1996
---------- ---------- ---------- ----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales $ 871.8 $ 647.1 $ 745.5 $ 970.2
Cost of goods sold 425.9 318.5 354.0 461.4
---------- ---------- ---------- ----------
Gross profit 445.9 328.6 391.5 508.8
Total marketing expenses 188.5 141.9 145.1 191.7
Total other operating expenses 172.6 129.3 118.9 162.2
---------- ---------- ---------- ----------
Operating profit $ 84.8 $ 57.4 $ 127.5 $ 154.9
OTHER FINANCIAL DATA:
EBITDA(1) $ 127.0 $ 84.8 $ 146.5 $ 188.7
Depreciation and amortization 32.8 24.7 15.9 24.0
Capital expenditures 30.1 27.7 12.9 15.3
Cash interest expense(2) 100.0 75.0 73.4 98.4
Ratio of EBITDA to cash interest expense 1.9x
Ratio of EBITDA less capital expenditures
to cash interest expense 1.8x
BALANCE SHEET DATA (END OF PERIOD):
Total assets $ 930.9
Long-term debt (including current portion) 1,082.7
</TABLE>
- ------------
(1) EBITDA represents operating profit before income taxes, interest,
depreciation, amortization, and certain other charges related to (i) the
discontinuation of the Chef Boyardee Sesame Street canned pasta product
line in the fourth quarter of 1995, (ii) post-retirement medical benefits
and (iii) disposal of assets. While EBITDA is not intended to represent
cash flow from operations as defined by GAAP and should not be considered
as an indicator of operating performance or an alternative to cash flow
(as measured by GAAP) as a measure of liquidity, it is included herein to
provide additional information with respect to the ability of the Company
to meet its future debt service, capital expenditures and working capital
requirements. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
(2) Excludes non-cash amortization of debt issuance cost. See note (c) to the
Unaudited Pro Forma Combined Statements of Operations.
14
<PAGE> 17
SUMMARY HISTORICAL FINANCIAL DATA
The following table sets forth summary historical financial data of
AHFP for the periods ended and as of the dates indicated. The summary
historical statement of operations data for the years ended December 31, 1993,
1994 and 1995 and the summary historical balance sheet data as of December 31,
1994 and 1995 are derived from the audited financial statements of AHFP
included elsewhere in this Prospectus. The summary historical statement of
operations data for the nine month periods ended September 30, 1995 and
September 30, 1996 and the summary historical balance sheet data as of
September 30, 1996 are derived from the unaudited financial statements of AHFP
included elsewhere in this Prospectus and which, in the opinion of management,
include all adjustments necessary for a fair presentation. The summary
historical statement of operations data for the years ended December 31, 1991
and 1992 and the summary historical balance sheet data as of September 30, 1995
and December 31, 1991, 1992 and 1993 are derived from the unaudited financial
statements of AHFP which are not included in this Prospectus and which, in the
opinion of management, include all adjustments necessary for a fair
presentation. This information should be read in conjunction with AHFP's
historical combined financial statements and related notes thereto appearing
elsewhere in this Prospectus and with "Management's Discussion and Analysis of
Financial Condition and Results of Operations." See also "Selected Historical
Financial and Operating Information."
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------------------- -----------------
1991 1992 1993 1994 1995 1995 1996
--------- --------- --------- --------- --------- --------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales $ 859.1 $ 865.8 $ 935.7 $ 997.3 $ 818.9 $ 609.1 $ 704.1
Cost of goods sold 411.9 402.6 432.0 463.1 398.2 297.0 333.9
--------- --------- --------- --------- --------- --------- ---------
Gross profit 447.2 463.2 503.7 534.2 420.7 312.1 370.2
Marketing expenses:
Advertising 39.8 36.8 33.2 32.8 42.4 28.6 43.0
Consumer promotion 22.7 26.2 21.5 25.5 23.5 20.3 13.3
Trade promotion 105.2 101.0 118.7 127.6 102.0 76.3 74.6
Other 15.2 15.2 16.5 14.9 18.5 14.7 9.3
--------- --------- --------- --------- --------- --------- ---------
Total marketing expenses 182.9 179.2 189.9 200.8 186.4 139.9 140.2
Other operating expenses:
Selling 39.7 43.3 47.2 52.3 45.9 36.9 33.6
Storage, packing and shipping 52.6 51.0 57.6 63.4 55.3 41.4 41.2
Administrative 14.3 17.0 20.5 23.2 23.6 18.4 14.2
General and other 27.9 16.4 35.2 35.3 40.9 29.3 21.3
--------- --------- --------- --------- --------- --------- ---------
Total other operating expenses 134.5 127.7 160.5 174.2 165.7 126.0 110.3
Operating profit $ 129.8 $ 156.3 $ 153.3 $ 159.2 $ 68.6 $ 46.2 $ 119.7
OTHER FINANCIAL DATA:
EBITDA(1) $ 150.8 $ 165.0 $ 182.0 $ 188.9 $ 108.0 $ 71.4 $ 136.4
Depreciation and amortization 19.2 11.8 25.0 26.4 30.1 22.6 13.7
Capital expenditures 14.6 18.6 22.0 31.1 24.2 22.4 8.5
BALANCE SHEET DATA (END OF PERIOD):
Inventories $ 117.6 $ 108.7 $ 134.2 $ 148.0 $ 139.9 $ 146.8 $ 130.5
Property, plant and equipment, net 132.5 140.5 152.0 169.7 176.8 179.3 173.5
Total assets 326.8 387.3 496.0 540.5 463.6 493.0 457.2
</TABLE>
- ---------------
(1) EBITDA represents operating profit before depreciation, amortization and
certain other charges related to (i) the discontinuation of the Chef
Boyardee Sesame Street canned pasta product line in the fourth quarter of
1995, (ii) post-retirement medical benefits and (iii) disposal of assets.
While EBITDA is not intended to represent cash flow from operations as
defined by GAAP and should not be considered as an indicator of operating
performance or an alternative to cash flow (as measured by GAAP) as a
measure of liquidity, it is included herein to provide additional
information with respect to the ability of the Company to meet its future
debt service, capital expenditures and working capital requirements. See
"Management's Discussion and Analysis of Financial Condition and Results
of Operations."
15
<PAGE> 18
RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the New
Notes offered by this Prospectus.
SUBSTANTIAL LEVERAGE
The Company is highly leveraged. As of September 30, 1996, on a pro
forma basis after giving effect to the Transaction and the Financing as if they
had occurred on such date, the Company and its consolidated subsidiaries would
have had an aggregate of $1,083 million of outstanding indebtedness and a
stockholder's deficit of $251 million. The Indenture permits the Company to
incur additional indebtedness, including Senior Indebtedness, subject to
certain limitations. See "Capitalization" and "Description of New Notes."
The Company's high degree of leverage could have important
consequences to the holders of the New Notes, including but not limited to the
following: (i) the Company's ability to obtain additional financing for working
capital, capital expenditures, acquisitions, general corporate purposes or
other purposes may be impaired in the future; (ii) a substantial portion of the
Company's cash flow from operations must be dedicated to the payment of
principal and interest on its indebtedness, thereby reducing the funds
available to the Company for other purposes; (iii) certain of the Company's
borrowings are at variable rates of interest (including borrowings under the
Senior Bank Facilities), which expose the Company to the risk of increased
interest rates; (iv) the indebtedness outstanding under the Senior Bank
Facilities is secured and matures prior to the maturity of the Notes; (v) the
Company may be substantially more leveraged than certain of its competitors,
which may place the Company at a competitive disadvantage; and (vi) the
Company's substantial degree of leverage may limit its flexibility to adjust to
changing market conditions, reduce its ability to withstand competitive
pressures and make it more vulnerable to a downturn in general economic
conditions or its business. See "Description of Senior Bank Facilities" and
"Description of New Notes."
ABILITY TO SERVICE DEBT
The Company's ability to make scheduled payments or to refinance its
obligations with respect to its indebtedness will depend on its financial and
operating performance, which in turn will be subject to prevailing economic
conditions and to certain financial, business and other factors beyond its
control. If the Company's cash flow and capital resources are insufficient to
fund its debt service obligations, the Company may be forced to reduce or delay
planned expansion and capital expenditures, sell assets, obtain additional
equity capital or restructure its debt. There can be no assurance that the
Company's operating results, cash flow and capital resources will be sufficient
for payment of its indebtedness in the future. In the absence of such operating
results and resources, the Company could face substantial liquidity problems
and might be required to dispose of material assets or operations to meet its
debt service and other obligations, and there can be no assurance as to the
timing of such sales or the proceeds that the Company could realize therefrom.
In addition, because the Company's obligations under the Senior Bank Facilities
bear interest at floating rates, an increase in interest rates could adversely
affect, among other things, the Company's ability to meet its debt service
obligations. The Company will be required to make scheduled principal payments
under the Senior Bank Facilities commencing in May 1997. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources" and "Description of Senior Bank Facilities."
SUBORDINATION
The payment of principal of and interest on, and any premium or other
amounts owing in respect of, the Notes will be subordinated to the prior
payment in full of all existing and future Senior Indebtedness of the Company,
including all amounts owing under the Senior Bank Facilities. As of September
30, 1996, on a pro forma basis after giving effect to the Transaction and
Financing, the aggregate amount of such Senior Indebtedness of the Company
would have been approximately $683 million. Consequently, in the event of a
bankruptcy, liquidation, dissolution, reorganization or similar proceeding with
respect to the Company, assets of the Company will be available to pay
obligations on the Notes only after all Senior Indebtedness has been paid in
full, and there can be no assurance that there will be sufficient assets to pay
amounts due on all or any of the Notes. Similarly, the Indebtedness evidenced
by the Subsidiary Guarantees of the Notes by the Subsidiary Guarantors will be
subordinated to the prior payment in full of all existing and future Guarantor
Senior Indebtedness (as defined under "Description of New Notes"), including
all amounts owing pursuant to the Subsidiary Guarantors' guarantees of the
Senior Bank Facilities. As of September 30, 1996, on a pro forma basis
16
<PAGE> 19
after giving effect to the Transaction and the Financing, there would have been
approximately $683 million of Guarantor Senior Indebtedness outstanding (all of
which would have represented guarantees under the Senior Bank Facilities). See
"Description of New Notes -- Ranking and Subordination" and "-- Subsidiary
Guarantees."
FRAUDULENT CONVEYANCE
As part of the Transaction, American Home Products received $264
million in cash in the Merger and $945 million (not including an estimated Net
Asset Adjustment of $13 million) in cash in the Redemption, and American Home
Products' beneficial ownership in the Company was reduced to 20% of the
outstanding shares of common stock.
See "The Transaction."
The incurrence of indebtedness (such as the Notes) in connection with
the Transaction and payments to consummate the Transaction with the proceeds
thereof are subject to review under relevant federal and state fraudulent
conveyance statutes in a bankruptcy or reorganization case or a lawsuit by or
on behalf of creditors of the Company. Under these statutes, if a court were to
find that obligations (such as the Notes) were incurred with the intent of
hindering, delaying or defrauding present or future creditors or that the
Company received less than a reasonably equivalent value or fair consideration
for those obligations and, at the time of the occurrence of the obligations,
the obligor either (i) was insolvent or rendered insolvent by reason thereof,
(ii) was engaged or was about to engage in a business or transaction for which
its remaining unencumbered assets constituted unreasonably small capital or
(iii) intended to or believed that it would incur debts beyond its ability to
pay such debts as they matured or became due, such court could void the
Company's obligations under the Notes, subordinate the Notes to other
indebtedness of the Company or take other action detrimental to the holders of
the Notes. Some courts have held that an obligor's purchase of its own capital
stock does not constitute reasonably equivalent value or fair consideration for
indebtedness incurred to finance that purchase.
The measure of insolvency for purposes of a fraudulent conveyance
claim will vary depending upon the law of the jurisdiction being applied.
Generally, however, a company will be considered insolvent at a particular time
if the sum of its debts at that time is greater than the then fair value of its
assets or if the fair saleable value of its assets at that time is less than
the amount that would be required to pay its probable liability on its existing
debts as they become absolute and mature. The Company believes that, after
giving effect to the Transaction and the Financing, the Company was (i) neither
insolvent nor rendered insolvent by the incurrence of indebtedness in
connection with the Transaction and the Financing, (ii) in possession of
sufficient capital to run its business effectively and (iii) incurring debts
within its ability to pay as the same mature or become due.
There can be no assurance, however, as to what standard a court would
apply to evaluate the parties' intent or to determine whether the Company was
insolvent at the time of, or rendered insolvent upon consummation of, the
Transaction and Financing or that, regardless of the standard, a court would
not determine that the Company was insolvent at the time of, or rendered
insolvent upon consummation of, the Transaction and Financing.
In addition, the Subsidiary Guarantees may be subject to review under
relevant federal and state fraudulent conveyance and similar statutes in a
bankruptcy or reorganization case or a lawsuit by or on behalf of creditors of
any of the Subsidiary Guarantors. In such a case, the analysis set forth above
would generally apply, except that the Subsidiary Guarantees could also be
subject to the claim that, since the Subsidiary Guarantees were incurred for
the benefit of the Company (and only indirectly for the benefit of the
Subsidiary Guarantors), the obligations of the Subsidiary Guarantors thereunder
were incurred for less than reasonably equivalent value or fair consideration.
A court could avoid a Subsidiary Guarantor's obligation under its Subsidiary
Guarantee, subordinate the Subsidiary Guarantee to other indebtedness of a
Subsidiary Guarantor or take other action detrimental to the holders of the
Notes.
RESTRICTIVE DEBT COVENANTS
The Senior Bank Facilities contain a number of significant covenants
that, among other things, restrict the ability of the Company and its
subsidiaries to dispose of assets, incur additional indebtedness, incur
guarantee obligations, repay other indebtedness or amend other debt
instruments, pay dividends, create liens on assets, enter into leases, make
investments, loans or advances, make acquisitions, engage in mergers or
consolidations, make capital expenditures, engage in certain transactions with
subsidiaries and affiliates and otherwise restrict corporate activities. In
addition, under the Senior Bank Facilities, the Company is required to comply
with specified financial ratios and tests, including
17
<PAGE> 20
minimum interest coverage, minimum fixed charge coverage and maximum leverage
ratios. See "Description of Senior Bank Facilities."
Since consummation of the Transaction and the Financing, the Company
has been in compliance with the covenants and restrictions contained in the
Senior Bank Facilities and in the Indenture. However, its ability to continue
to comply with such agreements may be affected by events beyond its control,
including prevailing economic, financial and industry conditions. The breach of
any of such covenants or restrictions could result in a default under the
Senior Bank Facilities and/or the Indenture, which would permit the senior
lenders or the holders of the Notes, as the case may be, to declare all amounts
borrowed thereunder to be due and payable, together with accrued and unpaid
interest, and the commitments of the senior lenders to make further extensions
of credit under the Senior Bank Facilities could be terminated. If the Company
were unable to repay its indebtedness to its senior lenders, such lenders could
proceed against the collateral securing such indebtedness as described under
"Description of Senior Bank Facilities."
LIMITATION ON CHANGE OF CONTROL
Upon a Change of Control (as defined under "Description of New
Notes"), the Company will be required to offer to purchase all of the
outstanding Notes at a price equal to 101% of the principal amount thereof to
the date of repurchase plus accrued and unpaid interest, if any, to the date of
repurchase. The Change of Control purchase feature of the Notes may in certain
circumstances discourage or make more difficult a sale or takeover of the
Company. In particular, a Change of Control may cause an acceleration of, or
require an offer to repurchase under, the Senior Bank Facilities and certain
other indebtedness, if any, of the Company and its subsidiaries, in which case
such indebtedness would be required to be repaid in full before repurchase of
the Notes. See "Description of Senior Bank Facilities" and "Description of New
Notes -- Change of Control." The inability to repay such indebtedness, if
accelerated, and to purchase all of the tendered Notes would constitute an
event of default under the Indenture. There can be no assurance that the
Company will have funds available to repurchase the Notes upon the occurrence
of a Change of Control.
GENERAL RISKS OF FOOD INDUSTRY
The food products manufacturing industry is subject to the risk of
adverse changes in general economic conditions; adverse changes in local
markets resulting in greater risks inherent in the limited shelf life of food
products in case of oversupply; lack of attractiveness of a particular food
product line after its novelty has worn off; evolving consumer preferences and
nutritional and health-related concerns; federal, state and local food
processing controls; consumer product liability claims; the risk of product
tampering; and the availability and expense of liability insurance.
See "Business."
DEPENDENCE ON RAW MATERIALS
The primary raw materials used in the Company's operations include tin
cans, flour, meat, tomatoes, fruit and fruit-juice concentrates, beans and
peanuts. The Company purchases its raw materials, all of which are widely
available, from numerous suppliers. The prices of many of these raw materials
are affected by, among other things, agricultural policies of the United States
government and weather conditions. Movement in the price level of these raw
materials can have a corresponding impact on finished product costs, and hence,
gross margins. The ability of the Company to pass through increases in costs of
raw materials to its customers is dependent upon competitive conditions and
pricing methodologies employed in the various markets where the Company
operates. See "Business -- Raw Materials."
RISKS RELATING TO IMPLEMENTATION OF BUSINESS STRATEGY
The Company intends to pursue a business strategy of increasing cash
flow and revenue in its core business through a combination of cost savings,
marketing efforts, expansion of certain markets and lines of business, and
strategic acquisitions. No assurance can be given that the Company will be
successful in implementing this strategy.
See "Business -- Business Strategy."
GOVERNMENTAL REGULATION
The Company's operations are subject to extensive regulation by the
United States Food and Drug Administration, the United States Department of
Agriculture and other state and local authorities regarding the
18
<PAGE> 21
processing, packaging, storage, distribution, advertising and labeling of the
Company's products and environmental compliance. The Company's manufacturing
facilities and products are subject to periodic inspection by federal, state
and local authorities. The Company believes that it is currently in substantial
compliance with all material governmental laws and regulations and maintains
all material permits and licenses relating to its operations. Nevertheless,
there can be no assurance that the Company is in compliance with such laws and
regulations or that it will be able to comply with any future laws and
regulations. Failure by the Company to comply with applicable laws and
regulations could subject the Company to civil remedies, including fines,
injunctions, recalls or seizures, as well as potential criminal sanctions,
which could have a material adverse effect on the Company. See "Business --
Certain Legal and Regulatory Matters."
COMPETITION
The food products business is highly competitive. Numerous brands and
products compete for shelf space and sales, with competition based primarily on
price, quality and convenience. The Company competes with a significant number
of companies of varying sizes, including divisions or subsidiaries of larger
companies. A number of these competitors have broader product lines as well as
substantially greater financial and other resources available to them and lower
fixed costs, and there can be no assurance that the Company can compete
successfully with such other companies. In addition, many of the Company's
competitors may be substantially less leveraged. Competitive pressures or other
factors could cause the Company's products to lose market share or result in
significant price erosion, which could have a material adverse effect on the
Company. See "Business."
CONTROLLING STOCKHOLDER
An affiliate of Hicks Muse owns of record 80% of the common stock of
the Company and is able to direct the election of a majority of the members of
the Board of Directors of the Company and therefore direct the management and
policies of the Company. See "Stock Ownership and Related Transactions."
ENVIRONMENTAL MATTERS
The past and present business operations of the Company and the past
and present ownership and operation of real property by the Company are subject
to extensive and changing federal, state, local and foreign environmental laws
and regulations pertaining to the discharge of materials into the environment
and the handling and disposition of wastes (including solid and hazardous
wastes) or otherwise relating to protection of the environment. Compliance with
such laws and regulations is not expected to have a material impact on the
Company's capital expenditures, earnings or competitive position. No assurance
can be given, however, that additional environmental issues relating to
presently known matters or identified sites or to other matters or sites will
not require additional, currently unanticipated investigation, assessment or
expenditures. See "Business -- Certain Legal and Regulatory Matters."
ABSENCE OF PUBLIC MARKET
The Old Notes are designated for trading in the PORTAL market. There
is no established trading market for the New Notes. Although the initial
purchasers of the Old Notes have advised the Company that they currently intend
to make a market in the New Notes, they are not obligated to do so and they may
discontinue such market-making at any time without notice. The Company does not
currently intend to list the New Notes on any securities exchange or to seek
approval for quotation through any automated quotation system. Accordingly,
there can be no assurance as to the development of any market or the liquidity
of any market that may develop for the New Notes. If such a market were to
exist, no assurance can be given as to the trading prices of the New Notes.
Future trading prices of the New Notes will depend on many factors, including,
among other things, prevailing interest rates, the Company's operating results
and the market for similar securities.
THE TRANSACTION
The Old Notes were offered in connection with the purchase of an 80%
beneficial interest in AHFP, based on a total enterprise value of $1.28
billion, and the purchase of Heritage for $70 million.
Hicks Muse Fund III and certain other investors own all of the capital
stock of AHFP Holding Corporation ("Hicks Muse Holding") and American Home
Products owns all of the capital stock of AHP Subsidiary Holding
19
<PAGE> 22
Corporation ("AHP Subsidiary"). Prior to the Closing, Hicks Muse Holding owned
all of the capital stock of Merger Sub and AHP Subsidiary owned all of the
capital stock of AHFP. Hicks Muse Holding, Merger Sub, American Home Products,
AHP Subsidiary and AHFP entered into an Agreement of Sale and Plan of Merger
(the "Merger Agreement") pursuant to which Hicks Muse Holding acquired an 80%
interest in AHFP. The Merger Agreement contains customary representations,
warranties, covenants, conditions and indemnities by American Home Products,
AHP Subsidiary and Hicks Muse Holding.
Hicks, Muse, Tate & Furst Equity Fund II, L.P. and certain other
investors owned all of the capital stock of Heritage and sold Heritage to
International Home Foods, Inc. on the Closing Date immediately following
completion of the Merger and the Redemption.
On the Closing Date, (i) Merger Sub was merged into AHFP, with AHFP
being the surviving corporation, (ii) AHFP effected the Redemption and changed
its name to International Home Foods, Inc. (which has been defined herein as
the "Company") and (iii) International Home Foods, Inc. acquired Heritage.
Hicks Muse Holding and AHP Subsidiary own 80% and 20%, respectively, of the
Company's common stock.
Hicks Muse Holding and the Company required approximately $1,347
(assumes a Net Asset Adjustment of $13 million) to consummate the Transaction,
consisting of (i) $264 million paid by Hicks Muse Holding to AHP Subsidiary in
the Merger, (ii) $958 million, which includes a Net Asset Adjustment of $13
million, paid by the Company to AHP Subsidiary in the Redemption (the
"Redemption Amount"), (iii) $70 million paid by the Company in connection with
the acquisition of Heritage and (iv) $55 million in fees and expenses. The
funds required to consummate the Transaction were provided by (i) a $264
million equity contribution from Hicks Muse Fund III and certain other
investors to Hicks Muse Holding and (ii) the borrowing by the Company of $1,083
million, consisting of $400 million of gross proceeds from the offering of the
Old Notes, $670 million under the Term Loan Facility and $13 million under the
Revolving Credit Facility. The Redemption Amount is subject to increase or
decrease (the "Net Asset Adjustment"), on a dollar for dollar basis, to the
extent that the value of certain assets less certain liabilities ("Net Assets")
of the Company on the Closing Date were less than or greater than, as the case
may be, the higher of (i) the value of the Net Assets at June 30, 1996, or (ii)
the difference between the average value of the Net Assets over the immediately
preceding twelve months and $13 million.
20
<PAGE> 23
The following charts depict (i) the organizational structure of the
parties immediately prior to the Transaction and (ii) the organizational
structure of the Company upon completion of the Transaction:
[Organizational chart showing the organizational structure
of the parties immediately prior to the Transaction.]
[Organizational chart showing the organizational and ownership
structure of the Company upon completion of the Transaction.]
21
<PAGE> 24
The following table sets forth the sources and uses of funds in
connection with the Transaction.
<TABLE>
<CAPTION>
AMOUNT
---------------------
(DOLLARS IN MILLIONS)
<S> <C>
SOURCES:
Senior Bank Facilities:
Revolving Credit Facility (1) ................................. $ 13
Term Loan Facilities:
Tranche A ................................................. 300
Tranche B ................................................. 200
Tranche C ................................................. 170
The Notes ....................................................... 400
Equity Proceeds (2) ............................................. 264
----------
Total sources ......................................... $ 1,347
==========
USES:
Payments to American Home Products:
Merger consideration .......................................... $ 264
Redemption Amount ............................................. 958
----------
1,222
Purchase of Heritage:
Purchase of equity interests .................................. 30
Repayment of indebtedness ..................................... 40
----------
70
Fees and expenses (3) ........................................... 55
----------
Total uses ............................................ $ 1,347
==========
</TABLE>
- ----------
(1) The Revolving Credit Facility provides for borrowings of up to $100
million. See "Description of Senior Bank Facilities."
(2) Amount used by Hicks Muse Holding to acquire 80% of the equity interest of
the Company, which implies a total equity value of approximately $330
million.
(3) Includes the discounts to the Initial Purchasers, expenses in connection
with the Offering, fees and expenses in connection with the Senior Bank
Facilities, and other legal and accounting fees and expenses incurred in
connection with the Transaction.
22
<PAGE> 25
USE OF PROCEEDS
There will be no cash proceeds to the Company from the Exchange Offer.
The Company used the $400 million of gross proceeds from the Old Note
Offering, together with borrowings of approximately $683 million under the
Senior Bank Facilities, as follows: (i) $958 million to complete the
Redemption; (ii) $40 million to repay existing indebtedness of Heritage; (iii)
$30 million to purchase all of the equity of Heritage; and (iv) approximately
$55 million to pay fees and expenses. In addition, Hicks Muse Holding paid AHP
Subsidiary $264 million in the Merger. See "The Transaction."
CAPITALIZATION
The following table sets forth the unaudited pro forma capitalization
of the Company as of September 30, 1996, after giving effect to the Transaction
and the Financing, assuming the Transaction and the Financing were consummated
on such date. This table should be read in conjunction with "The Transaction"
and "Unaudited Pro Forma Combined Financial Statements" included elsewhere
herein.
<TABLE>
<CAPTION>
PRO FORMA AS OF
SEPTEMBER 30, 1996
------------------
(DOLLARS IN MILLIONS)
<S> <C>
Long-term debt (including current maturities):
Revolving Credit Facility (1)............................... $ 13
Term Loan Facilities:
Tranche A............................................... 300
Tranche B............................................... 200
Tranche C............................................... 170
The Notes................................................... 400
------
Total long-term debt.................................... 1,083
Total stockholder's deficit (2)............................... (251)
------
Total capitalization.......................................... $ 832
======
</TABLE>
- ---------------
(1) The Revolving Credit Facility provides for borrowings of up to $100
million. See "Description of Senior Bank Facilities."
(2) As a result of the Transaction, the Company has a stockholder's deficit
for accounting purposes. However, Hicks Muse Holding paid $264 million for
80% of the common stock of the Company, which implies a total equity value
of $330 million.
23
<PAGE> 26
SELECTED HISTORICAL FINANCIAL AND OPERATING INFORMATION
The following table sets forth selected historical financial and
operating information of AHFP for the periods ended and as of the dates
indicated. The selected historical statement of operations data for the years
ended December 31, 1993, 1994 and 1995 and the historical balance sheet data as
of December 31, 1994 and 1995 are derived from the audited financial statements
of AHFP included elsewhere in this Prospectus. The selected historical
statement of operations data for the nine months ended September 30, 1995 and
1996 and the selected historical balance sheet data as of September 30, 1996
are derived from the unaudited financial statements of AHFP included elsewhere
in this Prospectus and, which in the opinion of management, include all
adjustments necessary for a fair presentation. The selected historical
statement of operations data for the years ended December 31, 1991 and 1992 and
the selected historical balance sheet data as of September 30, 1995 and
December 31, 1991, 1992 and 1993 are derived from the unaudited financial
statements of AHFP which are not included in this Prospectus and which, in the
opinion of management, include all adjustments necessary for a fair
presentation. This table should be read in conjunction with AHFP's historical
combined financial statements and related notes thereto included elsewhere in
this Prospectus and with "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------------------------------------------- -----------------------
1991 1992 1993 1994 1995 1995 1996
---------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales ................................ $ 859.1 $ 865.8 $ 935.7 $ 997.3 $ 818.9 $ 609.1 $ 704.1
Cost of goods sold ....................... 411.9 402.6 432.0 463.1 398.2 297.0 333.9
------------ ---------- ------------ ------------ ------------ ------------ --------
Gross profit ............................. 447.2 463.2 503.7 534.2 420.7 312.1 370.2
Marketing expenses:
Advertising .......................... 39.8 36.8 33.2 32.8 42.4 28.6 43.0
Consumer promotion ................... 22.7 26.2 21.5 25.5 23.5 20.3 13.3
Trade promotion ...................... 105.2 101.0 118.7 127.6 102.0 76.3 74.6
Other ................................ 15.2 15.2 16.5 14.9 18.5 14.7 9.3
------------ ---------- ------------ ------------ ------------ ------------ --------
Total marketing expenses ................. 182.9 179.2 189.9 200.8 186.4 139.9 140.2
Other operating expenses:
Selling .............................. 39.7 43.3 47.2 52.3 45.9 36.9 33.6
Storage, packing and shipping ........ 52.6 51.0 57.6 63.4 55.3 41.4 41.2
Administrative ....................... 14.3 17.0 20.5 23.2 23.6 18.4 14.2
General and other .................... 27.9 16.4 35.2 35.3 40.9 29.3 21.3
------------ ---------- ------------ ------------ ------------ ------------ --------
Total other operating expenses ........... 134.5 127.7 160.5 174.2 165.7 126.0 110.3
Operating profit ......................... $ 129.8 $ 156.3 $ 153.3 $ 159.2 $ 68.6 $ 46.2 $ 119.7
OTHER FINANCIAL DATA:
EBITDA(1) ................................ $ 150.8 $ 165.0 $ 182.0 $ 188.9 $ 108.0 $ 71.4 $ 136.4
Depreciation and amortization ............ 19.2 11.8 25.0 26.4 30.1 22.6 13.7
Capital expenditures ..................... 14.6 18.6 22.0 31.1 24.2 22.4 8.5
Ratio of earnings to fixed charges (2) ... 95.3 102.7 92.0 92.8 35.5 34.6 84.5
BALANCE SHEET DATA (END OF PERIOD):
Inventories .............................. $ 117.6 $ 108.7 $ 134.2 $ 148.0 $ 139.9 $ 146.8 $ 130.5
Property, plant and equipment, net ....... 132.5 140.5 152.0 169.7 176.8 179.3 173.5
Total assets ............................. 326.8 387.3 496.0 540.5 463.6 493.0 457.2
</TABLE>
- ---------------
(1) EBITDA represents operating profit before depreciation, amortization, and
certain other charges related to (i) the discontinuation of the Chef
Boyardee Sesame Street canned pasta product line in the fourth quarter of
1995, (ii) post-retirement medical benefits and (iii) disposal of assets.
While EBITDA is not intended to represent cash flow from operations as
defined by GAAP and should not be considered as an indicator of operating
performance or an alternative to cash flow (as measured by GAAP) as a
measure of liquidity, it is included herein to provide additional
information with respect to the ability of the Company to meet its future
debt service, capital expenditures and working capital requirements. See
"Management's Discussion and Analysis of Financial Condition and Results
of Operations."
(2) For purposes of this calculation, "earnings" consist of income (loss)
before income taxes and fixed charges. "Fixed charges" consist of
interest, amortization of deferred financing costs and the component of
rental expense believed by management to be representative of the interest
factor thereon (deemed to be one-third of rental expense).
24
<PAGE> 27
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma combined financial statements (the
"Unaudited Pro Forma Combined Financial Statements") of the Company are based
on the audited and unaudited financial statements of AHFP which are included
elsewhere in this Prospectus and the financial statements of Heritage, as
adjusted to illustrate the estimated effects of the Transaction and the
Financing. The unaudited pro forma adjustments are based upon available
information and certain assumptions that the Company believes are reasonable.
The Unaudited Pro Forma Combined Financial Statements and accompanying notes
should be read in conjunction with the historical financial statements of AHFP,
and other financial information pertaining to the Company including "The
Transaction," "Capitalization" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included elsewhere herein.
The Unaudited Pro Forma Combined Financial Statements have been
prepared to give effect to the Transaction and the Financing (and the
application of the net proceeds therefrom) as though such transactions had
occurred as of September 30, 1996, for the balance sheet and for the periods
beginning January 1, 1995, for the statements of operations. The Merger and
Redemption were treated as a taxable asset purchase for federal and state
income tax purposes and as a recapitalization for financial accounting
purposes. The subsequent acquisition of Heritage was accounted for using the
purchase method of accounting. The total purchase price of Heritage was
allocated to the tangible and intangible assets and liabilities acquired based
upon their respective fair values. The allocation of the Heritage purchase
price reflected in the Unaudited Pro Forma Combined Financial Statements is
preliminary, but is not expected to differ materially from the purchase price
allocation reflected herein.
The Unaudited Pro Forma Combined Financial Statements do not purport
to be indicative of what the Company's financial position or results of
operation would actually have been had the Transaction and Financing been
completed on such date or at the beginning of the periods indicated or to
project the Company's results of operations for any future date.
25
<PAGE> 28
INTERNATIONAL HOME FOODS, INC.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF SEPTEMBER 30, 1996
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
Historical
------------------------ Pro Forma
AHFP Heritage Adjustments Pro Forma
--------- --------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents.............................. $ -- $ 0.5 $ -- $ 0.5
Accounts receivable, net............................... 55.7 4.6 -- 60.3
Inventories............................................ 130.5 4.3 -- 134.8
Other current assets................................... 1.9 4.4 -- 6.3
------ ------ ------ ------
Total current assets............................. 188.1 13.8 -- 201.9
Property, plant & Equipment, net............................ 173.5 13.1 -- 186.6
Intangible assets, net...................................... 95.6 34.2 50.6 (a) 180.4
Deferred taxes.............................................. 362.0 (b) 362.0
------ ------ ------ ------
Total assets..................................... $457.2 $ 61.1 $412.6 $930.9
====== ====== ====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable....................................... $ 17.0 $ 5.9 $ -- $ 22.9
Accrued liabilities.................................... 61.4 1.6 2.0 (c) 65.0
Current portion of long-term obligations............... 39.6 (13.6) (d) 26.0
------ ------ ----- ------
Total current liabilities........................ 78.4 47.1 (11.6) 113.9
Long-term obligations, less current maturities.............. 1,056.7 (d) 1,056.7
Other long-term liabilities................................. 10.2 0.6 -- 10.8
Stockholders' equity (deficit).............................. 368.6 13.4 (632.5) (e) (250.5)
------ ------ ------ ------
Total liabilities and stockholders' equity....... $457.2 $ 61.1 $412.6 $930.9
====== ====== ====== ======
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Combined Balance Sheet
26
<PAGE> 29
INTERNATIONAL HOME FOODS, INC.
NOTES TO THE UNAUDITED PRO FORMA COMBINED BALANCE SHEET
(DOLLARS IN MILLIONS)
(a) Adjustment reflects the allocation of the purchase price of Heritage to the
fair value of the assets acquired and liabilities assumed resulting in an
increase of $17.0 million in goodwill. Adjustment also reflects the
capitalized portion of deferred financing fees of $33.6 million associated
with the Notes and the Senior Bank Facilities.
(b) Adjustment reflects the increase in the deferred tax assets of the Company
since, for federal and state income tax purposes, the Merger and
Redemption are treated as a taxable business combination. As a result,
there is a step-up in tax basis which will provide future tax deductions
of $952.7 million which are expected to reduce future tax payments by
approximately $362.0 million as shown below:
<TABLE>
<S> <C>
AHFP total enterprise value ................................ $1,275.00
Plus: Net Asset Adjustment ................................ 12.7
Plus: tax deductible transaction fees (1) ................. 33.6
Less: AHFP historical stockholder's equity ................ 368.6
---------
Excess of purchase price over net assets acquired .......... 952.7
Statutory tax rate ......................................... 38.0%
---------
Deferred tax asset ......................................... $ 362.0
=========
</TABLE>
- ---------------
(1) Tax deductible transaction fees which are included in the estimated
$55.0 million of fees and expenses associated with the Transaction.
(c) Adjustment reflects management's estimate of accruals for non-recurring
expenses related to rationalizing general and administrative functions
following the consummation of the Transaction. The item will result in an
expense in the period in which the Transaction is consummated. See note
(a) to the International Home Foods, Inc.
Unaudited Pro Forma Combined Statements of Operations included herein.
(d) Adjustments reflect indebtedness incurred under (i) the Notes of $400.0
million and (ii) the Senior Bank Facilities of $682.7 million, less
repayment of the existing indebtedness of Heritage of $39.6 million.
(e) Adjustments reflect the net effect of the items discussed below:
<TABLE>
<S> <C>
Historical stockholder's equity:
AHFP stockholders' equity as of September 30, 1996 ................ $ 368.6
Heritage stockholders' equity as of September 30, 1996 ............ 13.4
--------
Total historical stockholder's equity ....................... 382.0
Pro forma adjustments to historical stockholders' equity:
Elimination of Heritage historical stockholders' equity (1) ....... (13.4)
Effect of the Merger, Redemption and related fees (2) ............. (1,243.1)
Effect of equity proceeds (3) ..................................... 264.0
Tax effect of business combination (4) ............................ 362.0
Effect of non-recurring expenses (see note (c) above) ............. (2.0)
--------
Net pro forma adjustment to historical stockholder's equity........... (632.5)
--------
Pro forma stockholders' deficit ...................................... $ (250.5)
========
</TABLE>
- ---------------
(1) Adjustment reflects the elimination of the net stockholders' equity of
Heritage based on the purchase method of accounting.
(2) The Merger and Redemption was treated as a recapitalization for financial
accounting purposes. The adjustment reflects (i) $264.0 million paid to
AHP Subsidiary in the Merger, (ii) $957.7 million paid to AHP Subsidiary
in the Redemption and (iii) fees of $21.4 million associated with the
Redemption, which are included in the estimated $55.0 million of fees and
expenses associated with the Transaction and Financing.
(3) Adjustment reflects the equity contribution by Hicks Muse Holding of
$264.0 million in connection with the Merger.
(4) Recording the deferred tax asset described in (b) results in an increase
in paid-in capital.
27
<PAGE> 30
INTERNATIONAL HOME FOODS, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
HISTORICAL
---------------------- PRO FORMA
AHFP HERITAGE ADJUSTMENTS TOTAL
------- --------- ----------- --------
<S> <C> <C> <C> <C>
Net sales.................................................... $ 818.9 $ 52.9 $ -- $ 871.8
Cost of goods sold........................................... 398.2 29.7 (2.0)(a) 425.9
------- -------- --------- --------
Gross profit................................................. 420.7 23.2 2.0 445.9
Marketing expenses........................................... 186.4 2.1 -- 188.5
Selling, general and administrative expenses................. 151.2 12.8 (8.8)(a) 155.2
Other expenses, net.......................................... 14.5 2.5 0.4 (b) 17.4
------- -------- --------- --------
Operating profit............................................. 68.6 5.8 10.4 84.8
Interest expense............................................. 2.8 102.2(c) 105.0
------- -------- --------- --------
Income (loss) before provision for income taxes.............. 68.6 3.0 (91.8) (20.2)
Provision for (benefit from) income taxes.................... 29.4 1.1 (38.6)(d) (8.1)
------- -------- --------- --------
Net income (loss)............................................ $ 39.2 $ 1.9 $ (53.2) $ (12.1)
======= ======== ========= ========
SUPPLEMENTAL INFORMATION:
EBITDA:
Operating profit........................................ $ 68.6 $ 5.8 $ 10.4 $ 84.8
Depreciation and amortization........................... 30.1 2.3 0.4 32.8
Discontinuation of product line (e)..................... 5.0 -- 5.0
Post-retirement medical benefit charges (f)............. 3.5 0.1 3.6
Loss on disposal of assets.............................. 0.8 -- 0.8
------- -------- --------- --------
EBITDA (g)................................................... $ 108.0 $ 8.1 $ 10.9 $ 127.0
======= ======== ========= ========
Capital expenditures......................................... $ 24.2 $ 5.9 $ 30.1
Ratio of earnings to fixed charges (h)....................... --
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Combined Statements of Operations
28
<PAGE> 31
INTERNATIONAL HOME FOODS, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
HISTORICAL
--------------------- PRO FORMA
AHFP HERITAGE ADJUSTMENTS TOTAL
------ -------- ----------- -----
<S> <C> <C> <C> <C>
Net sales.................................................... $ 609.1 $ 38.0 $ -- $ 647.1
Cost of goods sold........................................... 297.0 23.0 (1.5)(a) 318.5
------- -------- ------------- --------
Gross profit................................................. 312.1 15.0 1.5 328.6
Marketing expenses........................................... 139.9 2.0 -- 141.9
Selling, general and administrative expenses................. 115.8 7.8 (6.5)(a) 117.1
Other expenses, net.......................................... 10.2 1.7 0.3 (b) 12.2
------- -------- ------------- --------
Operating profit............................................. 46.2 3.5 7.7 57.4
Interest expense............................................. 2.1 76.6(c) 78.7
------- -------- ------------- --------
Income (loss) before provision for income taxes.............. 46.2 1.4 (68.9) (21.3)
Provision for (benefit from) income taxes.................... 20.4 0.7 (29.6)(d) (8.5)
------- -------- ------------- --------
Net income (loss)............................................ $ 25.8 $ 0.7 $ (39.3) $ (12.8)
======= ======== ============= ========
SUPPLEMENTAL INFORMATION:
EBITDA:
Operating profit........................................ $ 46.2 $ 3.5 $ 7.7 $ 57.4
Depreciation and amortization........................... 22.6 1.8 0.3 24.7
Post-retirement medical benefit charges (f)............. 2.6 0.1 2.7
------- -------- ------------- --------
EBITDA (g)................................................... $ 71.4 $ 5.3 $ 8.1 $ 84.8
======= ======== ============= ========
Capital expenditures......................................... $ 22.4 $ 5.3 $ 27.7
Ratio of earnings to fixed charges (h)....................... --
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Combined Statements of Operations
29
<PAGE> 32
INTERNATIONAL HOME FOODS, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
HISTORICAL
--------------------- PRO FORMA
AHFP HERITAGE ADJUSTMENTS TOTAL
------- -------- ----------- ---------
<S> <C> <C> <C> <C>
Net sales.................................................... $ 704.1 $ 41.4 $ -- $ 745.5
Cost of goods sold........................................... 333.9 21.6 (1.5)(a) 354.0
------- -------- ------------ ---------
Gross profit................................................. 370.2 19.8 1.5 391.5
Marketing expenses........................................... 140.2 4.9 -- 145.1
Selling, general and administrative expenses................. 108.1 12.5 (6.0)(a) 114.6
Other expenses, net.......................................... 2.2 1.8 0.3 (b) 4.3
------- -------- ------------ ---------
Operating profit............................................. 119.7 0.6 7.2 127.5
Interest expense............................................. 2.5 74.5(c) 77.0
------- -------- ------------ ---------
Income (loss) before provision for income taxes.............. 119.7 (1.9) (67.3) 50.5
Provision for (benefit from) income taxes.................... 45.5 (0.7) (24.6)(d) 20.2
------- -------- ----------- ---------
Net income (loss)............................................ $ 74.2 $ (1.2) $ (42.7) $ 30.3
======= ======== =========== =========
SUPPLEMENTAL INFORMATION:
EBITDA:
Operating profit........................................ $ 119.7 $ 0.6 $ 7.2 $ 127.5
Depreciation and amortization........................... 13.7 1.9 0.3 15.9
Post-retirement medical benefit charges (f)............. 2.9 0.1 3.0
Loss on disposal of assets.............................. 0.1 -- 0.1
------- -------- ------------ --------
EBITDA (g)................................................... $ 136.4 $ 2.5 $ 7.6 $ 146.5
======= ======== ============ ========
Capital expenditures......................................... $ 8.5 $ 4.4 $ 12.9
Ratio of earnings to fixed charges (h)....................... 1.6x
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Combined Statement of Operations
30
<PAGE> 33
INTERNATIONAL HOME FOODS, INC.
NOTES TO THE UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
(DOLLARS IN MILLIONS)
(a) Adjustment reflects cost savings net of increases in corporate overhead as
follows:
<TABLE>
<CAPTION> NINE MONTHS
ENDED
YEAR ENDED SEPTEMBER 30,
DECEMBER 31, ----------------------------
1995 1995 1996
------------------- ------------- -------------
<S> <C> <C> <C>
DESCRIPTION OF SAVINGS
Reduction of salaries and benefits (1)............... $ 8.8 $ 6.7 $ 6.2
Purchasing savings (2)............................... 2.0 1.5 1.5
Other savings (3).................................... 0.5 0.4 0.3
Increase in corporate overhead (4)................... (0.5) (0.6) (0.5)
--- ------ ------
Net cost savings.................... $10.8 $ 8.0 $ 7.5
===== ====== ======
FINANCIAL STATEMENT CATEGORY
Cost of goods sold................................... $ 2.0 $ 1.5 $ 1.5
Selling, general and administrative expenses......... 8.8 6.5 6.0
----- ------ ------
Net cost savings................... $10.8 $ 8.0 $ 7.5
===== ====== ======
</TABLE>
- ---------------
(1) The reduction of salaries and benefits relates to certain
general and administrative headcount reductions.
(2) The purchasing savings reflect management's agreement with two
can suppliers to purchase cans at more favorable prices as part
of management's overall strategy of consolidating suppliers.
Historically, the Company has purchased cans from five separate
suppliers.
(3) Other cost savings reflect reductions of management
discretionary expenditures.
(4) Increase in corporate overhead reflects certain stand-alone
costs which are in addition to the corporate overhead actually
included in the historical results of operations of AHFP and
Heritage.
In addition to the cost savings above, management anticipates
achieving additional cost savings of approximately $10 million
annually. However, there can be no assurance that these additional
cost savings will be realized. There can be no assurance that other
costs and expenses of the Company will not increase, thereby lowering
or offsetting management's estimated cost savings. See "Business --
Business Strategy -Achieve Cost Savings."
(b) Adjustment reflects the increase in amortization of goodwill associated
with the acquisition of Heritage. Goodwill is amortized over 40 years.
31
<PAGE> 34
(c) Adjustment reflects interest expense associated with the Notes, the
Senior Bank Facilities and amortization of deferred financing fees,
net of interest related to the existing indebtedness of Heritage.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED SEPTEMBER 30,
DECEMBER 31,----------------
1995 1995 1996
------ ------ ------
<S> <C> <C> <C>
Senior Bank Facilities:
Revolving Credit Facility at 8 1/4 ................ $ 1.0 $ 0.8 $ 0.8
Term Loan Facilities:
Tranche A at 8 1/4% ............................ 24.3 18.2 16.6
Tranche B at 8 3/4% ............................ 17.5 13.1 13.1
Tranche C at 9 1/4% ............................ 15.7 11.8 11.8
The Notes at 103/8% .................................... 41.5 31.1 31.1
------ ------ ------
Cash interest expense .................................. 100.0 75.0 73.4
Amortization of deferred financing fees (1) ............ 5.0 3.7 3.6
------ ------ ------
Pro forma interest expense ............................. 105.0 78.7 77.0
Elimination of historical interest expense ............. (2.8) (2.1) (2.5)
------ ------ ------
Net adjustment ......................................... $102.2 $ 76.6 $ 74.5
</TABLE>
---------------
(1) Adjustment reflects the amortization of deferred financing fees
associated with the Notes and the Senior Bank Facilities. Deferred
financing fees are amortized by the effective interest method over
the term of the related debt.
(d) The tax effect of the pro forma adjustments is based on the estimated
applicable effective tax rate of 40% for the periods presented.
(e) One-time charges related to the discontinuation of the Chef Boyardee
Sesame Street canned pasta product line in the fourth quarter of 1995.
These charges primarily consisted of liquidation discounts, inventory
write-offs and contractual royalty payments.
(f) Post-retirement medical benefit charges historically have been a cash
expense, but management expects that these charges will primarily be a
non-cash expense for the next seven to ten years.
(g) EBITDA represents operating profit before income taxes, interest,
depreciation, amortization and certain other charges related to (i)
discontinuation of the Chef Boyardee Sesame Street canned pasta product
line in the fourth quarter of 1995; (ii) post-retirement medical benefits
and (iii) disposal of assets where applicable. While EBITDA is not
intended to represent cash flow from operations as defined by GAAP and
should not be considered as an indicator of operating performance or an
alternative to cash flow (as measured by GAAP) as a measure of liquidity,
it is included herein to provide additional information with respect to
the ability of the Company to meet its future debt service, capital
expenditures and working capital requirements. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
(h) For purposes of this calculation, "earnings" consist of income (loss)
before income taxes and fixed charges. "Fixed charges" consist of
interest, amortization of deferred financing costs and the component of
rental expense believed by management to be representative of the interest
factor thereon (deemed to be one-third of rental expense). On a pro forma
basis, earnings were insufficient to cover fixed charges by $20.2 million
and $21.3 million for the year ended December 31, 1995 and the nine months
ended September 30, 1995, respectively.
32
<PAGE> 35
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
AHFP is a manufacturer and marketer of branded food products. The
following analysis discusses the results of operations of AHFP for the years
ended December 31, 1993, 1994 and 1995, all derived from the financial
statements of AHFP.
RECENT OPERATING PERFORMANCE
From 1987 to 1994, AHFP's sales and operating profit increased at
compounded annual rates of 6.4% and 4.4%, respectively. In 1995, however, AHFP
experienced a substantial decline in sales and operating profit. AHFP's sales
and operating profit decreased from $997.3 million and $159.2 million,
respectively, in 1994 to $818.9 million and $68.6 million, respectively, in
1995. The specific causes of these declines, however, have been subsequently
addressed by AHFP, as evidenced by the fact that during the first nine months
of 1996, versus the same period in 1995, sales increased to $704.1 million from
$609.1 million and operating profit increased to $119.7 million from $46.2
million.
The decline in sales and profitability in 1995 stemmed largely from a
prior "push" marketing strategy that relied heavily on trade promotions and
sales discounting. In the fourth quarter of 1994, AHFP offered significant
trade incentives to its customers, a practice similarly pursued in the fourth
quarter of 1993. These trade incentives resulted in forward buying by customers
in advance of consumer purchases, thereby significantly increasing customer
inventories of AHFP's products by the end of 1994. The reliance on trade
incentives as well as consumer promotions reduced marketing funds available to
support advertising, which builds brand equity and consumer loyalty, for AHFP's
core brands. Advertising funds available for AHFP's core products were further
diminished by the introduction in 1994 of Chef Boyardee Sesame Street canned
pasta. AHFP directed approximately $3 million, or 10% of its total advertising
expense in 1994, to the launch and support of this product.
During the first quarter of 1995, AHFP's sales were significantly
reduced as retailers sold the excess inventory of AHFP's products that they
held at the end of 1994. This reduction was compounded by the effects of an
industry-wide reduction in inventory levels by the supermarket trade. In
addition, the Chef Boyardee Sesame Street product line proved unsuccessful and
was discontinued in 1995. To reduce costs and maintain profitability in the
face of declining sales, AHFP significantly reduced advertising spending during
the first half of 1995. This action, coupled with lower advertising spending
for AHFP's core brands in 1994, resulted in market share losses which further
depressed sales.
In response to the sharp declines in sales and profitability in the
first half of 1995, AHFP undertook a number of initiatives, including
installing a new management team in July 1995. In addition, advertising
spending was substantially increased beginning in the fourth quarter of 1995 to
strengthen consumer brand support. Advertising expense in the fourth quarter of
1995 was approximately $14 million, which represented approximately one-third
of total advertising expense for all of 1995. The significant increase in
advertising spending in the fourth quarter of 1995 further depressed
profitability in that year, but provided the foundation for AHFP's growth in
sales and profitability in 1996. Management believes that the marked
improvement in sales and operating profit for the nine months ended September
30, 1996 over the same period in 1995 reflects the early success of these
initiatives.
33
<PAGE> 36
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------------------------------------- -----------------------------------
1993 1994 1995 1995 1996
---------------- ---------------- ---------------- --------------- ------------------
AMOUNT % OF TOTAL AMOUNT % OF TOTAL AMOUNT % OF TOTAL AMOUNT % OF TOTAL AMOUNT % OF TOTAL
------ ---------- ------ ---------- ------ ---------- ------ ---------- ------ ----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales............... $935.7 100.l0% $997.3 100.0% $818.9 100.0% $609.1 100.0% $704.1 100.0%
Cost of goods sold...... 432.0 46.2% 463.1 46.4% 398.2 297.0% 297.0 48.8% 333.9 47.4%
------ ------ ------ ----- ------ ----- ------ ----- ------ -----
Gross profit............ 503.7 53.8% 534.2 53.6% 420.7 51.4% 312.1 51.2% 370.2 52.6%
Marketing expenses:
Advertising............. 33.2 3.5% 32.8 3.3% 42.4 5.2% 28.6 4.7% 43.0 6.1%
Consumer promotion...... 21.5 2.3% 25.5 2.5% 23.5 2.9% 20.3 3.3% 13.3 1.9%
Trade promotion......... 118.7 12.7% 127.6 12.8% 120.0 12.4% 76.3 12.5% 74.6 10.6%
Other................... 16.5 1.8% 14.9 1.5% 18.5 2.3% 14.7 2.4% 9.3 1.3%
------ ------ ------ ----- ------ ----- ------ ----- ------ -----
Total marketing
expenses................ 189.9 20.3% 200.8 20.1% 186.4 22.8% 139.9 22.9% 140.2 19.9%
Other operating expense:
Selling................. 47.2 5.0% 52.3 5.3% 45.9 5.6% 36.9 6.1% 33.6 4.8%
Storage, Packing and
shipping.............. 57.6 6.1% 63.4 6.4% 55.3 6.7% 41.4 6.8% 41.2 5.9%
Administrative.......... 20.5 2.2% 23.2 2.3% 23.6 2.9% 18.4 3.0% 14.2 2.0%
General and other....... 35.2 3.8% 35.3 3.5% 40.9 5.0% 29.3 4.8% 21.3 3.0%
------ ------ ------ ----- ------ ----- ------ ----- ------ -----
Total other operating
expenses................ 160.5 17.1% 174.2 17.5% 165.7 20.2% 126.0 20.7% 110.3 15.7%
Operating profit........ $153.3 16.4% $159.2 16.0% $ 68.6 8.4% $ 46.2 7.6% $119.7 17.0%
====== ====== ====== ====== ======
</TABLE>
Nine Months Ended September 30, 1996 Compared to Nine Months Ended
September 30, 1995
Sales. AHFP's sales were $704.1 million for the nine months ended
September 30, 1996, as compared to $609.1 million for the same period in 1995,
an increase of $95.0 million, or 15.6%. In 1995, sales were depressed,
particularly in the first quarter, as retailers sold the excess inventory of
AHFP's products that they held at the end of 1994. The sales weakness in 1995
was compounded by the effects of an industry wide reduction in inventory levels
by the supermarket trade. In contrast, during the 1996 period, AHFP's customers
did not have excess inventory of AHFP's products and the general inventory
reductions pursued by the retail trade in 1996 were not as significant as those
pursued in 1995. As a result, during the 1996 period, AHFP's sales to the
retail trade more closely matched the retail trade's actual sales to consumers.
AHFP's sales in the 1996 period also benefited from new management's emphasis
on improving merchandising and building brand awareness through increased media
advertising. Management believes that these efforts have begun to yield market
share gains across most of AHFP's major product lines, in comparison to market
share losses experienced in 1995, which further depressed sales in that year.
Cost of Goods Sold. Cost of goods sold was $333.9 million for the nine
months ended September 30, 1996, as compared to $297.0 million for the same
period in 1995, an increase of $36.9 million, or 12.4%. Expressed as a
percentage of sales, cost of goods sold decreased to 47.4% in the 1996 period
from 48.8% in the 1995 period. The decrease in cost of goods sold as a
percentage of sales was primarily attributable to a higher absorption of
overhead charges as a result of higher sales volume.
Total Marketing Expenses. Total marketing expenses were $140.2 million
for the nine months ended September 30, 1996, as compared to $139.9 million for
the same period in 1995, an increase of $0.3 million, or 0.2%. Expressed as a
percentage of sales, total marketing expense declined from 22.9% in the 1995
period to 19.9% in the 1996 period, primarily as a result of a reduction in
consumer and trade promotion spending as a percentage of sales. AHFP's total
marketing expenses, excluding media advertising, declined from 18.2% of sales
in the 1995 period to 13.8% of sales in the 1996 period as a result of a
reduction in coupon promotions and improved management of trade spending. Media
advertising during the 1996 period increased by approximately 50%, to $43.0
million, or 6.1% of sales, from $28.6 million, or 4.7% of sales, during the
1995 period as a result of management's renewed emphasis on consumer
advertising to build brand equity and consumer loyalty.
Other Operating Expenses. Other operating expenses were $110.3 million
for the nine months ended September 30, 1996, as compared to $126.0 million for
the same period in 1995, a decrease of $15.7 million, or 12.5%. Expressed as a
percentage of sales, other operating expenses declined to 15.7% in the 1996
period from 20.7% in the 1995 period. This decrease was principally due to (i)
a reduction in the commission percentage paid to brokers, (ii) improved
efficiencies in logistics and (iii) administrative headcount reductions.
34
<PAGE> 37
Year Ended December 31, 1995 Compared to Year Ended December 31, 1994
Sales. AHFP's sales were $818.9 million in 1995, as compared to $997.3
million in 1994, a decrease of $178.4 million, or 17.9%. Of the $178.4 million
decrease, management believes $104 million was attributable to retailers
selling excess inventory of AHFP products during 1995 that they accumulated by
the end of 1994 and to management's strategy of reducing discounts and
incentives which had been offered by AHFP to its retail customers in the fourth
quarters of 1994 and 1993. Of the $104 million decrease, (i) approximately $90
million related to excess sales to grocery retailers in the fourth quarters of
1993 and 1994 and (ii) approximately $14 million was due to unusual discounts
and incentives given to mass merchandisers in 1994 which were not repeated in
1995. In addition, management believes that $56 million of the 1995 sales
decrease was due to (i) market share erosion across many of AHFP's major
product lines caused by a significant reduction in media advertising support
for these brands in 1994 and the first half of 1995 and (ii) the failure of
Chef Boyardee Sesame Street canned pasta. Moreover, management believes $18
million was due to an industry-wide reduction in inventory levels by the
supermarket trade.
Cost of Goods Sold. Cost of goods sold was $398.2 million in 1995, as
compared to $463.1 million in 1994, a decrease of $64.9 million, or 14.0%.
Expressed as a percentage of sales, cost of goods sold increased to 48.6% in
1995 from 46.4% in 1994. The increase in cost of goods sold as a percentage of
sales was primarily attributable to underabsorbed overhead charges as a result
of lower sales. In addition, cost of goods sold includes approximately $5
million related to the discontinuation of Chef Boyardee Sesame Street canned
pasta. These expenses reflect the cost of liquidation discounts, inventory
write-offs and contractual royalty payments.
Total Marketing Expenses. Total marketing expenses were $186.4 million
in 1995, as compared to $200.8 million in 1994, a decrease of $14.4 million, or
7.2%. This decrease was primarily due to a decrease in trade and consumer
promotions of $27.6 million, offset in part by an increase in media advertising
of $9.6 million. Expressed as a percentage of sales, however, total marketing
expenses increased to 22.8% in 1995 from 20.1% in 1994, primarily as a result
of the increase in media advertising expenditures. Management increased media
advertising expenditures by $9.5 million, or 121%, during the last three months
of 1995 over the corresponding 1994 period in an effort to reverse the erosion
in market share of AHFP's major product lines.
Other Operating Expenses. Other operating expenses were $165.7 million
in 1995, as compared to $174.2 million in 1994, a decrease of $8.5 million, or
4.9%. Expressed as a percentage of sales, other operating expenses increased to
20.2% in 1995 from 17.5% in 1994, primarily as a result of lower sales, and an
increase in general and other expenses of $5.6 million principally related to
an increase in post retirement benefits costs and severance for administrative
headcount reductions.
Year Ended December 31, 1994 Compared to Year Ended December 31, 1993
Sales. AHFP's sales were $997.3 million in 1994, as compared to $935.7
million in 1993, an increase of $61.6 million, or 6.6%. This increase was
primarily attributable to the introduction of Chef Boyardee Sesame Street
canned pasta in 1994, which had sales of $19.2 million in 1994, and the
combined growth in PAM and Polaner sales of $45.8 million, which was partially
offset by an $8.2 million decline in Crunch 'n Munch sales caused by fewer
promotions to mass merchandisers. Sales of PAM products increased $14.7 million
to $85.8 million in 1994 from $71.1 million in 1993, an increase of 20.6%,
primarily as the result of certain trade incentives that were offered to the
retail trade in the fourth quarter of 1994. Sales of Polaner products increased
$31.1 million to $72.2 million in 1994 from $41.1 million in 1993, an increase
of 75.7%. Polaner sales in 1994 reflected a full year of sales based on
nationwide distribution, while sales in 1993 included only ten months of sales
(Polaner was acquired by AHFP in February 1993) that were primarily limited to
regional distribution.
Cost of Goods Sold. Cost of goods sold was $463.1 million in 1994, as
compared to $432.0 million in 1993, an increase of $31.1 million, or 7.2%.
Expressed as a percentage of sales, cost of goods sold remained relatively
constant at 46.4% in 1994 compared to 46.2% in 1993.
Total Marketing Expenses. Total marketing expenses were $200.8 million
in 1994, as compared to $189.9 million in 1993, an increase of $10.9 million,
or 5.7%. Expressed as a percentage of sales, marketing expenses were 20.1% in
1994, essentially unchanged from 20.3% in 1993.
35
<PAGE> 38
Other Operating Expenses. Other operating expenses were $174.2 million
in 1994, as compared to $160.5 million in 1993, an increase of $13.7 million,
or 8.5%. Expressed as a percentage of sales, other operating expenses increased
to 17.5% in 1994 from 17.1% in 1993, primarily as a result of modest increases
in selling expenses and storage, packing and shipping costs as a percentage of
sales.
HERITAGE
The following table sets forth certain historical financial
information with respect to Heritage.
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
YEAR ENDED --------------------------------------
DECEMBER 31, 1995 1995 1996
------------------ ------------------ ------------------
AMOUNT PERCENTAGE AMOUNT PERCENTAGE AMOUNT PERCENTAGE
------ ---------- ------ ---------- ------ -----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Net sales ....................................................... $53.0 100.0% $38.1 100.0% $41.4 100.0%
Cost of sales ................................................... 29.7 56.0% 23.0 60.4% 21.6 52.2%
----- ----- ----- ----- ----- -----
Gross Profit .................................................... 23.3 44.0% 15.1 39.6% 19.8 47.8%
Operating expenses:
Selling ..................................................... 2.8 5.3% 2.7 7.1% 2.7 6.5%
Trade promotion ............................................. 4.9 9.2% 1.3 3.4% 5.3 12.8%
Marketing ................................................... 2.1 4.0% 2.0 5.2% 4.9 11.8%
Distribution ................................................ 3.6 6.8% 2.7 7.1% 3.2 7.7%
General and administrative .................................. 2.3 4.3% 1.5 3.9% 1.7 4.1%
Amortization ................................................ 1.8 3.4% 1.4 3.7% 1.4 3.4%
----- ----- ----- ----- ----- -----
Total operating expenses ........................................ 17.5 33.0% 11.6 30.4% 19.2 46.4%
Operating profit ................................................ $ 5.8 10.9% $ 3.5 9.2% $ 0.6 1.4%
===== ===== =====
</TABLE>
Sales of Heritage were $41.4 million for the nine months ended
September 30, 1996, as compared to $38.1 million for the same period in 1995,
an increase of $3.3 million, or 8.7%. This growth was primarily due to the
introduction of Campfire Marshmallow Munchie marshmallow crisp rice bars in
supermarkets in late 1995, which was partially offset by lower sales of this
product to convenience stores and warehouse clubs. Cost of sales was $21.6 for
the nine months ended September 30, 1996, as compared to $23.0 million for the
same period in 1995, a decrease of $1.4 million, or 6.1%. Expressed as a
percentage of sales, cost of sales decreased to 52.2% in the 1996 period from
60.4% in the 1995 period. The decrease in cost of sales as a percentage of
sales was primarily attributable to significant improvements in manufacturing
efficiency as a result of the installation of a new marshmallow crisp rice bar
manufacturing line in mid-1995. Operating expenses were $19.2 million for the
nine months ended September 30, 1996, as compared to $11.6 million for the same
period in 1995, an increase of $7.6 million, or 65.5%. Expressed as a
percentage of sales, operating expenses increased to 46.4% in the 1996 period
from 30.4% in the 1995 period. The increase in operating expenses as a
percentage of sales was primarily due to an increase in trade promotions and
marketing expenses related to the introduction of Campfire Marshmallow Munchie
in supermarkets in late 1995.
SEASONALITY
AHFP's inventory levels are moderately seasonal and affected by the
growing season for commodity products such as tomatoes, fruits, beans and
peanuts. As these products are harvested in August through October, inventory
levels tend to grow during this period.
LIQUIDITY AND CAPITAL RESOURCES
Interest payments on the Notes and interest and principal payments
under the Senior Bank Facilities represent significant cash requirements for
the Company. The Notes will require semiannual interest payments of $20.8
million commencing in May 1997. Borrowings under the Senior Bank Facilities
bear interest at floating rates and require interest payments on varying dates
depending on the interest rate option selected by the Company. Borrowings under
the Senior Bank Facilities consist of $670 million under the Term Loan
Facilities, comprised of a $300 million Tranche A Term Loan Facility maturing
in 2003, a $200 million Tranche B Term Loan Facility maturing in 2004, and a
$170 million Tranche C Term Loan Facility maturing in 2005. In addition, the
Senior Bank Facilities include a $100 million Revolving Credit Facility. The
Term Loan Facilities required periodic principal repayments in increasing
amounts prior to the maturity of each Term Loan Facility. The Revolving Credit
Facility terminates and all amounts outstanding
36
<PAGE> 39
thereunder mature on November 1, 2003 or the date on which the Tranche A Term
Loans are repaid in full. See "Description of Senior Bank Facilities."
The Company's remaining liquidity demands will be for capital
expenditures and for working capital needs. For 1996, the Company is expected
to make capital expenditures of approximately $15 million. The Company expects
to spend approximately $20 million on capital projects in 1997 primarily to
maintain facilities and equipment. For the foreseeable future, the Company
expects that its capital expenditures will be limited primarily to maintenance
levels. The Senior Bank Facilities impose annual limits on the Company's
capital expenditures and investments. In addition, to achieve cost savings in
excess of the $21 million described herein (see "Business -- Business Strategy
- -- Achieve Cost Savings," and "Unaudited Pro Forma Financial Statements"), the
Company expects to incur expenditures related to the restructuring of its
operations in the period in which the Transaction was consummated.
The Company's primary sources of liquidity are cash flows from
operations and borrowings under the Revolving Credit Facility. As of November
30, 1996, the Company had $100 million available for borrowings under the
Revolving Credit Facility. See "Description of Senior Bank Facilities."
37
<PAGE> 40
BUSINESS
OVERVIEW
The Company is a leading North American manufacturer and marketer of a
diversified, well-established portfolio of shelf-stable food products with
popular brand names. In the United States, nine of the Company's eleven
principal brands command the number one position in their defined markets and
have a long history of stable revenue and cash flow. In the twelve month period
ended September 30, 1996, these nine brands accounted for 64% of the Company's
sales. In addition, many of the Company's largest brands also command leading
market positions in Canada and Puerto Rico. The Company's strong portfolio of
leading brands enables it to realize synergies in manufacturing, marketing,
distribution and raw material sourcing and provides the Company with a strong
presence in the United States as well as an attractive platform for
international expansion, particularly in Latin America. The Company's brand
name business is complemented by growing food service and private label
businesses and sales to the U.S. military. For the fiscal year ended December
31, 1995 and the twelve months ended September 30, 1996, the Company's sales
were $872 million and $970 million, respectively, and the Company's pro forma
EBITDA was $127 million and $189 million, respectively.
The Company groups its brands into three general categories consisting
of national grocery, southwestern cuisine and snack foods. The Company's
national grocery group is anchored by its largest brand, the nationally
distributed family of Chef Boyardee prepared foods, which represented 41% of
the Company's sales in 1995. Chef Boyardee is one of the nation's most widely
recognized brands and is found in over half of American homes with children.
The Company's strong Chef Boyardee brand is complemented by other market
leading grocery products, including PAM cooking spray, Polaner fruit spreads
and spices and Gulden's mustard, as well as Maypo, Wheatena and Maltex hot
cereals and G. Washington's dry seasonings and broths. In the growing market
for southwestern cuisine, the Company's products include strong regional brands
such as Ranch Style and Luck's canned beans, Ro*Tel canned tomatoes with green
chilies and Dennison's chili, and in the snack foods category, the Company's
brands include Crunch 'n Munch glazed popcorn, Campfire marshmallows and
marshmallow crisp rice bars and Jiffy Pop unpopped popcorn.
COMPETITIVE STRENGTHS
Management believes that the following characteristics contribute to
the Company's position as a leading manufacturer and marketer of popular
branded food products and serve as a foundation for the Company's business
strategy.
O LEADING MARKET POSITIONS AND BRAND NAME RECOGNITION. In the
United States, nine of the Company's eleven principal brands
command the number one position in their defined markets. The
Company's portfolio of national grocery brands includes five
national market leaders: Chef Boyardee canned pasta; PAM cooking
spray; Polaner fruit-juice-sweetened spreads; Chef Boyardee
pizza mix; and Gulden's mustard. In addition, three of the
Company's southwestern cuisine brands command leading positions
in their regional markets: Ro*Tel is the leading brand of canned
tomatoes with green chilies in the Southwest; and Ranch Style
and Luck's are the leading brands of canned beans in the
Southwest and Southeast, respectively. In the snack food
category, the Company's brands include market leader Crunch 'n
Munch glazed popcorn. In today's competitive food environment,
the Company's recognizable portfolio of leading brands provides
a critical mass of brand name sales that (i) allows the Company
to realize synergies in manufacturing, marketing, distribution
and raw material sourcing, (ii) creates a position of strength
with retailers that is critical in maintaining and securing
valuable retail shelf space for existing and new brands and
(iii) provides a strong platform for introducing product line
extensions and new products. Collectively, U.S. sales of these
nine market leading brands accounted for $618 million, or 64%,
of the Company's total sales in the twelve month period ended
September 30, 1996.
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<PAGE> 41
MARKET POSITION OF LEADING MAJOR BRANDS
<TABLE>
<CAPTION>
MARKET SHARE NUMBER TWO
--------------------------- COMPETITOR'S
BRAND CATEGORY/SEGMENT POSITION PERCENTAGE PERCENTAGE
- ----- ---------------- -------- ---------- ------------
<S> <C> <C> <C> <C>
LEADING NATIONAL GROCERY BRANDS
Chef Boyardee............ Canned Pasta........................... #1 58% 35%
PAM...................... Cooking Spray.......................... #1 53% 12%
Polaner.................. Fruit-Juice-Sweetened Spreads.......... #1 45% 29%
Chef Boyardee............ Pizza Mixes............................ #1 69%(1) 11%
Gulden's................. Brown Mustard.......................... #1 48% 28%
LEADING SOUTHWESTERN CUISINE BRANDS
Ranch Style.............. Canned Beans(2)........................ #1 in Southwest 26% 16%
Luck's................... Canned Beans(2)........................ #1 in Southwest 34% 21%
Ro*Tel................... Canned Tomatoes with Green Chiles...... #1 in Southwest 80% 13%
Dennison's............... Canned Chili........................... #3 in West(3) 19% NA
LEADING SNACK FOODS BRANDS
Crunch 'n Munch.......... Glazed Popcorn......................... #1 34% 26%
Campfire................. Marshmallow Crisp Rice Bars............ #1 12% NA
</TABLE>
- ------------
(1) Percentage is based on the 52 week period ended March 9, 1996.
(2) The canned beans category includes both the pork and beans and
miscellaneous beans categories. In their respective regions, Ranch Style
leads both categories with a total market share of 26%, and Luck's leads
the miscellaneous beans category with a market share of 34%.
(3) Dennison's has the #1 market share in California, which represents
approximately 65% of Dennison's sales.
O STABLE REVENUE AND CASH FLOW. The Company's portfolio of established,
leading branded products enables it to generate stable revenue and
cash flow. Through internal growth and selective acquisitions, AHFP's
sales and operating profit from 1987 to 1996 (based on the annualized
nine months ended September 30, 1996) increased at compound annual
rates of 4.3% and 3.5%, respectively. During this same period, sales
of AHFP's largest brand -- Chef Boyardee -- increased at a compound
annual rate of 3.2%. Consistently stable revenue and cash flow
provide resources that can be used to fund the Company's growth
strategy. See "Business Strategy."
O STRONG OPERATING MARGINS. Management believes that the Company
benefits from one of the highest operating profit margins in the
branded food products industry. From 1991 to 1995, AHFP achieved an
average operating profit margin of 14.8% and through the first nine
months of 1996 AHFP realized a 17.0% operating profit margin.
Management believes that its relatively high operating profit margins
result from the Company's leading market position in high margin food
categories as well as the cost efficiencies gained from significant
investment in the Company's manufacturing and distribution network.
Strong operating profit margins provide the Company with financial
resources to support its marketing, sales and distribution efforts
and give the Company flexibility in implementing competitive pricing
strategies for its products.
O WELL-DEVELOPED INFRASTRUCTURE. The Company's manufacturing plants and
distribution network reflect significant historical capital
investment. Due to this investment, management believes that the
Company's capital expenditures for the foreseeable future will be
limited primarily to maintenance levels.
Well-Maintained Manufacturing Facilities. The Company produces
its products primarily in two well-maintained manufacturing
facilities that are strategically located on the East Coast
(Milton, Pennsylvania) and West Coast (Vacaville, California).
Both plants have significant excess capacity, with the Milton and
Vacaville facilities operating at only 55% and 28% of their
respective capacities (based on a five-day, two-shift work
schedule). In addition, the Company operates five smaller
regional plants that are capable of producing significant
additional volume. This excess capacity can be utilized to
support the (i) growth of the Company's existing branded and
nonbranded businesses, (ii) introduction of new products and
entry into new markets and (iii) integration of strategic
acquisitions.
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<PAGE> 42
Comprehensive Sales and Distribution Network. The Company has a
comprehensive U.S. direct sales force of approximately 110 people
in nine regional offices and a national network of approximately
90 food brokers, and 12 distribution points located throughout
the United States. Management believes this comprehensive sales
and distribution network enables the Company to deliver 85% of
its sales volume to customers within 24 hours and 100% within 48
hours. Management believes that the Company's sales and
distribution network has the capacity to support substantial
increases in volume.
O WELL-POSITIONED PRODUCTS IN GROWING MARKETS. The Company's diversified
portfolio of branded products are well-positioned to meet the growing
demand for convenient and healthy food products. Many of the Company's
products--such as Chef Boyardee canned pasta--are quick and easy to
prepare and nutritionally sound. As such, management believes they are
particularly appealing to families with children. Several of the
Company's other brands also benefit from trends toward healthier
eating, including PAM, Polaner and Ranch Style. Furthermore, the
Company's strong regional presence in the market for southwestern
cuisine provides a platform to capitalize on this cuisine's growing
national popularity.
BUSINESS STRATEGY
The Company's strategy is to enhance its operating margins and
strengthen its position as a leading manufacturer and marketer of popular
branded food products. The Company plans to improve its profitability by
rationalizing its cost structure and consolidating suppliers. Furthermore, the
Company has identified several opportunities for revenue growth, including line
extending existing brands, expanding into attractive new markets and completing
strategic acquisitions. The Company intends to implement its strategy through
the following measures:
O ACHIEVE COST SAVINGS. Management believes that it can achieve annual
cost savings of approximately $21 million by consolidating purchases
of raw materials, rationalizing duplicative distribution routes,
eliminating less profitable SKUs, managing trade promotion programs
more efficiently and streamlining general and administrative
functions. In addition, management believes that it can further
reduce unit manufacturing costs by increasing the capacity
utilization rate of its facilities through the implementation of its
revenue enhancing initiatives. Furthermore, as the Company implements
further cost saving measures and strategic acquisitions, management
believes that the Company's excess production capacity will enable it
to eliminate production facilities and thereby generate incremental
profits.
O LEVERAGE LEADING BRANDS. The Company intends to expand its product
offerings by leveraging its existing portfolio of leading brands.
Management believes that Chef Boyardee can serve as a strong platform
to expand the Company's canned pasta product line into other quick
meal products, that Crunch 'n Munch, Campfire and Jiffy Pop can be
the cornerstone of a diversified snack foods business, and that
Dennison's, Ranch Style, Luck's and Ro*Tel can be utilized to develop
a broader southwestern cuisine business. Management also believes
that many of these recognized brand names can serve as a platform for
expanding into new product categories.
O PROMOTE CONSUMER-BASED MARKETING STRATEGY. The Company intends to
continue to refocus its marketing efforts towards building brand
equity through consumer advertising, primarily utilizing television
(a "pull" strategy), rather than focusing promotion efforts on trade
spending and discounting (a "push" strategy). Advertising as a
percentage of AHFP's total marketing expenses increased from 16.3% in
1994 to 30.7% in the first nine months of 1996. In addition, the
Company intends to utilize its advertising and marketing campaigns to
increase brand usage, including promoting Chef Boyardee canned pasta
as an ideal "fourth meal" product to be served after school and PAM
cooking spray as a healthier alternative to cooking oils, butter and
margarine.
O EXPAND INTO ATTRACTIVE NEW MARKETS. Management believes that
attractive opportunities exist to expand the Company's sales in
international markets with growing economies and attractive
demographics. In particular, management believes that the Company's
southwestern cuisine (particularly Dennison's, Ranch Style and
Ro*Tel) and its Chef Boyardee canned pasta products can be
efficiently and successfully expanded into the growing Latin American
markets. In addition, management believes that it can utilize the
Company's excess plant capacity to facilitate further development of
the Company's food service and private label businesses.
O COMPLETE STRATEGIC ACQUISITIONS. The Company will pursue opportunities
to make acquisitions that complement and expand its core businesses or
that enable the Company to enter new markets for its products.
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<PAGE> 43
Since 1983, the Company has successfully integrated six businesses
into its existing operations. The acquired businesses have enabled the
Company to enter or increase its presence in a number of key markets.
Management believes that additional strategic acquisition
opportunities exist and that incremental revenue and cash flow can be
generated by leveraging the Company's production, distribution and
administrative capabilities.
INDUSTRY
The U.S. food industry is characterized by relatively stable growth
based on modest price and population increases. Over the last ten years, the
industry has experienced consolidation as competitors have shed non-core
business lines and made strategic acquisitions to complement category
positions, maximize economies of scale in raw material sourcing and production
and expand retail distribution. The importance of sustaining strong
relationships with retailers has become a critical success factor for food
companies and is driving many initiatives such as category management. Food
companies with category leadership positions and strong retail relationships
have increasingly benefited from these initiatives as a way to maintain shelf
space and maximize distribution efficiencies.
Consumer demand for food products in the United States is being
strongly influenced by the growth of the "baby boomer" population. The changing
lifestyles and needs of these individuals--now between the ages of 31 and
50--have driven the introduction of nutritious foods that are convenient to
prepare and provide quick family meal alternatives. The primary target market
for convenience foods includes baby boomer parents and approximately 42 million
children between the ages of 3 and 12.
In addition to the U.S. market, certain international markets with
above-average population growth and expanding economies (such as Latin America)
offer substantial growth potential for the industry, especially for companies
with existing international sales of popular U.S. brands. Moreover, the food
service and private label markets provide alternative opportunities for growth
by branded food companies.
PRODUCTS AND MARKETS
In the United States, the Company manufactures and markets popular
branded food products that are leaders within their respective markets. The
Company's domestic branded food business is complemented by a strong presence
in Canada and Puerto Rico, growing food service and private label businesses
and sales to the U.S. military.
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<PAGE> 44
The Company groups its brands into three general categories consisting
of national grocery, southwestern cuisine and snack foods. The following table
sets forth sales for each of the Company's brands for the periods indicated.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, Nine Months Ended September 30,
-------------------------------------------------------------------------------------------------------
1993 1994 1995 1995 1996
------------------ ------------------- ------------------- ------------------- -------------------
Amount % of Total Amount % of Total Amount % of Total Amount % of Total Amount % of Total
------ ---------- ------ ---------- ------ ---------- ------ ---------- ------ ----------
(Dollars in Millions)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NATIONAL GROCERY GRANDS
Chef Boyardee........... $ 437 45.0% $ 452 43.6% 354 40.6% $ 265 40.9% $ 306 41.0%
PAM..................... 71 7.3% 86 8.3% 67 7.7% 46 7.1% 62 8.3%
Polaner................. 41 4.2% 72 6.9% 60 6.9% 46 7.1% 46 6.2%
Gulden's................ 17 1.8% 18 1.7% 17 1.9% 14 2.2% 13 1.7%
All Other (1)........... 8 0.8% 5 0.5% 4 0.5% 0.4% 3 0.4%
------ ---- ------- ---- ------ ---- ------ ---- ------ ----
Total Grocery........... 574 59.1% 633 61.0% 502 57.6% 374 57.7% 430 57.6%
SOUTHWESTERN CUISINE BRANDS
Ranch Style............. 44 4.5% 47 4.5% 41 4.7% 32 4.9% 34 4.6%
Luck's.................. 28 2.9% 28 2.7% 27 3.1% 19 2.9% 21 2.8%
Dennison's.............. 29 3.0% 27 2.6% 19 2.2% 14 2.2% 16 2.1%
Ro*Tel.................. 22 2.3% 26 2.5% 19 2.2% 12 1.9% 18 2.4%
------ ---- ------- ---- ------ ---- ------ ---- ------ ----
Total Southwestern...... 123 12.7% 128 12.3% 106 12.2% 77 11.9% 89 11.9%
SNACK FOODS BRANDS
Crunch 'n Munch......... 62 6.4% 53 5.1% 40 4.6% 31 4.8% 36 4.8%
Campfire................ 36 3.7% 40 3.9% 53 6.0% 39 6.0% 41 5.6%
Jiffy Pop............... 8 8.0% 6 0.6% 5 0.6% 3 0.5% 4 0.5%
------ ---- ------- ---- ------ ---- ------ ---- ------ ----
Total Snack............. 106 10.9% 99 9.6% 98 11.2% 73 11.3% 81 10.9%
OTHER MARKETS
Canada.................. 57 5.8% 55 5.3% 53 6.1% 41 6.3% 38 5.1%
Food service............ 34 3.5% 40 3.9% 37 4.2% 27 4.2% 34 4.6%
Private label........... 30 3.1% 31 3.0% 32 3.7% 24 3.7% 29 3.9%
Puerto Rico and 25
International........... 2.6% 30 2.9% 24 2.7% 17 2.6% 29 3.9%
Military................ 22 2.3% 21 2.0% 20 2.3% 15 2.3% 146 19.6%
------ ---- ------- ---- ------ ---- ------ ---- ------ ----
TOTAL SALES............. $ 971 $ 1,037 $ 872 $ 648 $ 746
====== ======= ====== ====== ======
</TABLE>
- ---------------
(1) Includes Wheatena, Maypo and Maltex.
NATIONAL GROCERY BRANDS (57.6% of 1995 Sales). The Company's portfolio of
national grocery brands consists primarily of Chef Boyardee, PAM, Polaner and
Gulden's, each of which commands leading national positions in their defined
markets. These brands have broad consumer recognition that has been developed
through strong marketing and advertising support.
Chef Boyardee. Created by Hector Boiardi in 1929 and acquired by the
Company in 1946, Chef Boyardee is one of the nation's most recognizable brand
names. The Chef Boyardee product line consists of canned pasta, microwave
pasta, pizza kits, dry dinners and pizza and spaghetti sauces. Chef Boyardee
products are found in over half of all American homes with children. Management
believes that Chef Boyardee products appeal to families with children because
they are generally convenient, easy to prepare and inexpensive relative to
other quick meal and snacking alternatives. Canned pasta is purchased most
frequently by women with children between the ages of 3 and 12.
Chef Boyardee has consistently held the number one share in the $520
million canned pasta market. The Company separates the canned pasta category
into two segments: "All Family" and "Kids." The "All Family" segment represents
canned pasta products primarily consumed by children over the age of six as
well as adults. The "Kids" segment represents canned pasta products typically
in the shapes of popular cartoon and comic book characters that are primarily
consumed by children age six and under. The Company's "All Family" canned pasta
line consists primarily of Beef Ravioli, Mini-Ravioli, Spaghetti & Meatballs
and Beefaroni, and accounts for approximately 80% of the Company's canned pasta
sales. The Company's "Kids" canned pasta line features Spiderman, X-Men,
Teenage Mutant Ninja Turtles, the ABC's and dinosaurs and accounts for
approximately 20% of the Company's canned pasta sales.
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<PAGE> 45
As the table below indicates, Chef Boyardee is the leading brand in
the canned pasta category with a 58% market share, followed by the Campbell
Soup Company's Franco American brand at 35%. The remaining seven percent of
this category is fragmented, with private label accounting for approximately
five percent.
<TABLE>
<CAPTION>
MARKET SHARE
---------------------------------
CHEF FRANCO
SEGMENT SIZE BOYARDEE AMERICAN OTHER
------- --------------------- -------- -------- ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
"All Family" .................................................... $ 297 83% 9% 8%
"Kids" .......................................................... 223 24% 71% 5%
-----
Total Canned Pasta ............................... $ 520 58% 35% 7%
</TABLE>
As indicated in the table above, Chef Boyardee holds a dominant
position in its core "All Family" category while Franco American products have
the number one position in the "Kids" category. Management believes that its
"All Family" products compete primarily within the broader category of prepared
or quick meals.
Management intends to continue to build Chef Boyardee's brand equity
through strong advertising support and packaging that aggressively promotes the
Chef Boyardee brand name. In addition, management believes that sales of Chef
Boyardee products can be enhanced by (i) leveraging the Company's dominant
position in the "All Family" category by targeting advertising campaigns toward
children ages 9 to 13, the older segment of the brand's traditional consumer
base, (ii) encouraging greater use of Chef Boyardee products, particularly as
an after school snack, and (iii) promoting the nutritional benefits of Chef
Boyardee versus other quick meal alternatives.
PAM. PAM established the market for non-stick cooking spray with its
introduction in the 1960's. The Company's PAM products include Original, Butter
and Olive Oil flavored non-stick cooking sprays. The Company's advertising and
marketing strategy for PAM emphasizes PAM's image as a superior product in
comparison to other cooking sprays. Management believes that consumers perceive
PAM to be a pure, high quality, non-stick spray that does not interfere with
the taste of food. As a result of PAM's image and performance, the brand enjoys
a loyal customer base and a premium price.
In grocery outlets, the non-stick cooking spray category has grown at
a compound annual rate of approximately 13% from 1993 to 1995. Management
believes that this rapid sales growth has been driven by a trend toward
healthier eating and cooking. Several well-known chefs and numerous cookbooks
and magazine recipes have advocated cooking sprays in lieu of fattier oils and
spreads. PAM is the market leader in the $161 million non-stick cooking spray
category with 53% of the market, while CPC International, Inc.'s Mazola,
Procter & Gamble Co.'s Crisco and ConAgra, Inc.'s Wesson have market shares of
12%, 5% and 4%, respectively. Private label accounts for most of the remaining
market share with approximately 18%.
Management intends to capitalize on PAM's premium image and the trend
toward healthier eating by identifying and promoting new usage occasions
through advertising campaigns and on-package and in-store recipe suggestions.
Polaner. The Polaner brand is comprised of a broad array of products
competing within the general fruit spread (including jams, jellies, preserves
and fruit-juice-sweetened spreads) and wet spices markets. The focal point of
the Company's Polaner marketing efforts are the "All-Fruit"
fruit-juice-sweetened line of spreads that accounted for approximately 74% of
all Polaner brand sales in 1995. The Company emphasizes Polaner's premium image
and quality in order to differentiate the brand from its competitors.
Fruit spreads are a $705 million category, with the
fruit-juice-sweetened segment representing $110 million of the category. The
fruit-juice-sweetened segment consists of premium products that contain less
sugar than other spreads such as jams and preserves. The primary consumers of
fruit-juice-sweetened spreads are women over the age of 35 with higher incomes.
Since the Polaner brand was acquired by the Company and expanded to national
distribution less than three years ago, its market share in the
fruit-juice-sweetened segment has increased from 32% in 1993 to 45% currently
(grocery only). Polaner's nearest competitor in this segment is J.M. Smucker
Co.'s Simply Fruit at 29%. Management believes that Polaner's market share will
continue to grow as a result of the Company's successful advertising campaign.
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<PAGE> 46
Gulden's. Charles Gulden created Gulden's mustard in New York City in
1862 and received a number of awards in international food competitions. The
Company acquired the brand in 1962. Gulden's mustard is the leader in the brown
mustard segment with a 48% market share, followed by French's Deli Style with a
28% market share. Brown mustard is a $39 million segment of the $271 million
mustard category. The brown mustard grocery segment grew at a compound annual
rate of 8.5% between 1993 and 1995.
Other Grocery Brands. A number of smaller brands complete the
Company's national grocery brand portfolio, including Maypo, Wheatena and
Maltex hot cereals and G. Washington's dry seasonings and broths.
SOUTHWESTERN CUISINE BRANDS (12.2% of 1995 Sales). On a regional basis, the
Company offers products in the growing southwestern cuisine market for beans,
chili and tomato-based items. Canned beans and canned chili are $970 million
and $300 million categories, respectively, in grocery outlets, with the West
and Southwest representing approximately two-thirds of total U.S. canned chili
volume. Tomatoes with green chilies is a $35 million category, with the
Southwest representing approximately two-thirds of total U.S. volume.
A number of the Company's products in the southwestern cuisine
categories, including Dennison's black bean chili with chorizo sausage and beef
and Ro*Tel diced tomatoes with green chilies, are targeted at the U.S. Hispanic
population which is expected to increase 30% between 1995 and 2005 according to
the most recent Bureau of Census report. In addition, management believes that
the growing national market for beans, which is being driven by trends toward
healthier eating, will benefit the Company's Ranch Style brand. In general,
southwestern cuisine products have enjoyed above average growth over the past
five years.
Ranch Style. Ranch Style beans were created in the early 1930's and
soon became known for their authentic western-style flavor. The Company
purchased the brand in 1983. The Ranch Style line consists of barbecue beans,
refried beans, other beans and chili. The brand is marketed primarily in the
southwestern United States where it led the region with a 24% share of the
miscellaneous canned bean market and 35% share of the pork and beans market.
With ingredients that are low in fat and high in protein, Ranch Style products
are positioned to satisfy the growing trend toward healthy eating. While Ranch
Style has a strong brand loyalty in the Southwest, management believes the
brand can be expanded into adjacent markets, including Mexico, and into other
Latin American markets. On a combined basis, Ranch Style leads the canned beans
category in the Southwest with a 26% market share.
Luck's. Luck's was created in the early 1950's in Seagrove, North
Carolina. The Company acquired the product line in 1967. Luck's is the leader
in the $62 million miscellaneous bean market in the Southeast with a 34% market
share. The Luck's product family primarily includes bean products known for
their traditional southern-style flavor.
Dennison's. The Company's Dennison's product line was originated by
Mrs. May Belle Dennison in 1915 and was purchased by the Company in 1954. The
Dennison's line consists primarily of chili with beans, chili without beans,
extra hot chili and recently introduced black bean and vegetarian chili. These
products are marketed as the "Stand Up" chili with a distinctly extra thick and
hearty profile. The brand has traditionally been marketed in the West where it
has a 19% share of the region's $106 million canned chili market.
Ro*Tel. The Company's Ro*Tel brand, which consists of diced tomatoes
with green chilies and whole tomatoes with green chilies, has an 80% market
share in the Southwest. The Company acquired Ro*Tel in 1992. The brand is known
as a zesty, robust and flavorful tomato ingredient used primarily in
combination with processed cheese as a dip for tortilla chips. The Company's
marketing strategy for Ro*Tel has primarily consisted of print advertising
campaigns and on-package recipes which feature Ro*Tel as the secret ingredient
that can be used to enhance traditional dishes. The Company recently introduced
two product extensions, "mild" and "extra hot." In addition, management has
initiated a program to expand Ro*Tel sales outside the Southwest and is
planning to market Ro*Tel in Mexico.
SNACK FOODS BRANDS (11.2% of 1995 Sales). In the snack food category, the
Company's brands include Crunch 'n Munch glazed popcorn, Campfire marshmallows
and marshmallow crisp rice bars and Jiffy Pop unpopped popcorn.
Crunch 'n Munch. Crunch 'n Munch, a combination of popcorn and fresh
dry roasted peanuts coated with a butter toffee glaze, was created in 1966.
Crunch 'n Munch, which holds the number one position in the glazed popcorn
segment, is now offered in three flavors (Buttery Toffee, Caramel and Fat Free
Buttery Toffee) with a fourth flavor (Almond Supreme) currently being test
marketed. Crunch 'n Munch is positioned as a snack to satisfy the salty and
sweet
44
<PAGE> 47
cravings of consumers. The Company believes that the brand's new package
design, which emphasizes the Crunch 'n Munch brand name, and its new fat free
product, as well as further product extensions, will allow it to increase its
consumer base. Moreover, management believes that the brand can achieve
significantly higher levels of sales with greater marketing support.
Glazed popcorn is an $82 million segment within the $5 billion snack
category, a category which grew at an annual rate of five percent from 1992 to
1995. Glazed popcorn products are purchased by consumers of all ages. Younger
households are more likely to purchase Borden, Inc.'s Cracker Jack due to its
appeal to kids, while older households are more likely to purchase Crunch 'n
Munch due to its appeal to adults. Crunch 'n Munch commands a 34% market share,
followed by Cracker Jack at 26%. No other competitor accounts for more than 10%
of the market.
Campfire. The Company's Campfire product line consists of marshmallows
and marshmallow crisp rice bars. The Campfire brand name enjoys broad consumer
recognition, as it is the oldest brand name in the marshmallow category.
Campfire Marshmallow Munchie is the second leading marshmallow crisp rice bar
with a 12% market share of this $127 million market, behind Kellogg Company's
Rice Krispies brand with an 85% market share. Campfire marshmallow is the
second leading brand in the $105 million grocery marshmallow market with a 8.0%
market share for the twelve weeks ended August 11, 1996. Favorite Brands,
Inc.'s Kraft Jet Puff brand is the market leader with a 41.0% market share for
the same period, with private label accounting for the balance of the market.
Management believes that Campfire sales will continue to grow over the
next several years due to (i) growth in the marshmallow crisp rice bar
category, and (ii) gaining a larger share of the retail marshmallow and
marshmallow crisp rice bar markets through enhanced distribution.
OTHER MARKETS (19.0% of 1995 Sales). The Company's branded business in the
United States is complemented by a strong presence in Canada and Puerto Rico,
growing food service and private label businesses, and sales to the U.S.
military.
Canada. The Company markets Chef Boyardee canned pasta, PAM cooking
spray, Crunch 'n Munch glazed popcorn and certain other products in Canada. The
Company commands the number one market share position in canned pasta, cooking
spray and glazed popcorn sales in Canada, with Chef Boyardee canned pasta, PAM
and Crunch 'n Munch having 56%, 68% and 53% shares of their respective markets.
Food Service. The Company supplies many of its products to
restaurants, institutions, schools, ballparks, the vending trade, distributors
and chain accounts. Management believes that opportunities exist to utilize the
Company's excess plant capacity to facilitate expansion of this line of
business.
Private Label. The primary products manufactured by the Company under
private labels are prepared pasta and jams and jellies. Private label
represents an additional opportunity for growth and the utilization of excess
plant capacity.
Puerto Rico and International. The Company markets Chef Boyardee
canned pasta, Jiffy Pop and Crunch 'n Munch in Puerto Rico. Chef Boyardee, with
over 25 years of sales in Puerto Rico, commands 98% of the Puerto Rican canned
pasta market. In addition, the Company's products are exported to over 35
countries.
Military. The Company sells many of its products to U.S. military
bases both domestically and abroad. Products sold to the military include Chef
Boyardee canned pasta, PAM cooking spray, Crunch 'n Munch glazed popcorn,
Polaner fruit spreads and Ranch Style beans.
MARKETING, SALES AND DISTRIBUTION
The Company's marketing programs consist of advertising, consumer
promotions and trade promotions. The Company's advertising program is comprised
of television, newspaper and magazine advertising aimed at increasing consumer
awareness of the Company's brands and building customer loyalty. Consumer
promotions include targeted coupons and on-package offers designed to generate
trial usage and increase purchase frequency. The Company's trade promotions
focus on obtaining retail display support and achieving key price points. For
1996, the Company's budgeted marketing expenditures are $170 million, which
consists of $100 million for trade promotions, $58 million for advertising
45
<PAGE> 48
and $12 million for consumer marketing. The Company intends to continue to
refocus its marketing efforts towards building brand equity through consumer
advertising rather than trade spending and discounting. See "Business
Strategy."
The Company sells its products in the United States through its direct
sales force and a network of food brokers. The Company maintains regional sales
offices in New Jersey, North Carolina, Georgia, Illinois, Texas, California,
Utah, Ohio and Florida. The Company's products reach all major classes of
trade, including grocery wholesalers and distributors, grocery stores and
supermarkets, convenience stores, drug and mass merchants and warehouse clubs.
The Company distributes its products in the United States through 12
distribution points, four of which are owned by the Company and eight of which
are leased. The Company operates three full-service distribution centers, two
of which are owned by the Company, that distribute substantially all of the
Company's product lines. The Company's distribution system uses a combination
of common carrier trucking, Company trucks and inter-modal rail transport. In
Canada, the Company operates six distribution points, one of which is
Company-owned. Management believes that the Company's comprehensive U.S. sales
and distribution network enable the Company to deliver 85% of its sales volume
to customers with 24 hours and 100% within 48 hours. Management believes that
the Company's sales and distribution network has the capacity to support
substantial increases in volume.
None of the Company's customers represent more than ten percent of the
Company's sales.
COMPETITION
The food products business is highly competitive. Numerous brands and
products compete for shelf space and sales, with competition based primarily on
price, quality and convenience. The Company competes with a significant number
of companies of varying sizes, including divisions or subsidiaries of larger
companies. A number of these competitors have broader product lines as well as
substantially greater financial and other resources available to them.
RAW MATERIALS
The primary raw materials used in the Company's operations include tin
cans, flour, meat, tomatoes, fruit and fruit-juice concentrates, beans and
peanuts. The Company purchases its raw materials, all of which are widely
available, from numerous suppliers.
PRODUCTION AND FACILITIES
The Company operates the manufacturing plants described in the
following table. All of these plants are owned by the Company, other than the
Utah facility, which the Company leases. Management believes that the Company's
manufacturing plants have sufficient capacity to accommodate the Company's
planned growth over the next five years.
46
<PAGE> 49
<TABLE>
<CAPTION>
LOCATION SQUARE FEET PRODUCTS MANUFACTURED
- -------- ----------- ---------------------
<S> <C> <C>
Milton, Pennsylvania................. 895,000 Canned pasta, microwave products,
mustard, glazed popcorn, pizza kits, dinner
kits and sauces
Vacaville, California................ 354,800 Canned pasta, microwave products,
tomatoes with green chilies, chili and
tomato paste
Fort Worth, Texas.................... 204,800 Beans and chili
Seagrove, North Carolina............. 198,000 Beans, vegetables, fruit and popcorn
Niagara Falls, Canada................ 165,500 Canned pasta, pizza kits, dinner kits, sauces
and glazed popcorn
Highspire, Pennsylvania.............. 29,000 Cereals
Clearfield, Utah..................... 210,000 Marshmallows and marshmallow crisp rice
bars
</TABLE>
The Company has also entered into co-packing (third party
manufacturing) agreements with several manufacturers for Polaner fruit spreads
and spices, PAM cooking spray and G. Washington's dry seasonings and broths. In
1995, these plants produced approximately eight million cases of finished
product for the Company, as compared to approximately 50 million cases of
products produced by the Company. All of these co-packing plants produce for
other companies except for a co-packer in Roseland, New Jersey that exclusively
produces Polaner fruit spreads for the Company.
In addition to the manufacturing facilities described above, the
Company owns or leases 12 distribution points throughout North America. See
"Marketing, Sales and Distribution."
TRADEMARKS
The Company owns a number of registered trademarks, including Chef
Boyardee, PAM, Franklin Crunch 'n Munch, Polaner, Gulden's, Jiffy Pop,
Dennison's, Luck's, Ranch Style, Ro*Tel, Campfire, Marshmallow Munchie and G.
Washington's. Wheatena, Maypo and Maltex are registered trademarks licensed to
the Company. Management is not aware of any fact that would have a materially
adverse impact on the continuing use of these trademarks.
EMPLOYEES
As of September 30, 1996, the Company employed approximately 3,000
people. Approximately 68% of the Company's employees are unionized. Of the
unionized employees, approximately 81% are represented by the United Food &
Commercial Workers International Union (part of the AFL-CIO-CLC) and have
collective bargaining agreements which extend into the year 2001. Approximately
18% of such unionized employees were covered by an agreement which expires or
is subject to renegotiation during the next 12 months.
CERTAIN LEGAL AND REGULATORY MATTERS
Public Health. The Company is subject to the Food, Drug and Cosmetic
Act and regulations promulgated thereunder by the Food and Drug Administration
(the "FDA"). This comprehensive regulatory program governs, among other things,
the manufacturing, composition and ingredients, labeling, packaging and safety
of food. For example, the FDA regulates manufacturing practices for foods
through its current "good manufacturing practices" regulations and specifies
the recipes for certain foods. In addition, the Nutrition Labeling and
Education Act of 1990 prescribes the format and content of certain information
required to appear on the labels of food products. The Company is subject to
regulation by certain other governmental agencies, including the U.S.
Department of Agriculture. Although the Company has voluntarily recalled
products from time to time in the past, no such recall has had a material
effect on the Company's results of operations.
47
<PAGE> 50
The operations and products of the Company are also subject to state
and local regulation through such measures as licensing of plants, enforcement
by state health agencies of various state standards and inspection of
facilities. Enforcement actions for violations of federal, state and local
regulations may include seizure and condemnation of products, cease and desist
orders, injunctions or monetary penalties. Management believes that the
Company's facilities and practices are sufficient to maintain compliance with
applicable government regulations, although there can be no assurances in this
regard.
Federal Trade Commission. The Company is subject to certain
regulations by the Federal Trade Commission ("FTC"). Advertising of the
Company's products is subject to regulation by the FTC pursuant to the Federal
Trade Commission Act and the regulations promulgated thereunder.
Employee Safety Regulations. The Company is subject to certain health
and safety regulations, including regulations issued pursuant to the
Occupational Safety and Health Act. These regulations require the Company to
comply with certain manufacturing, health and safety standards to protect its
employees from accidents.
Environmental. The Company's operations and properties are subject to
a wide variety of increasingly complex and stringent federal, state and local
laws and regulations governing the use, storage, handling, generation,
treatment, emission, release, discharge and disposal of certain materials,
substances and wastes, the remediation of contaminated soil and groundwater,
and the health and safety of employees. As such, the nature of the Company's
operations exposes it to the risk of claims with respect to environmental
matters. Based upon its experience to date, the Company believes that the
future cost of compliance with existing environmental laws and regulations, and
liability for known environmental claims, will not have a material adverse
effect on the Company's business or financial position. However, future events,
such as changes in existing laws and regulations or their interpretation, and
more vigorous enforcement policies of regulatory agencies, may give rise to
additional expenditures or liabilities that could be material.
Insurance. The Company maintains general liability, product liability,
property, workers' compensation and other insurance in amounts and on terms
that it believes are customary for companies similarly situated.
Litigation. The Company, in the ordinary course of business, is
involved in various legal proceedings in which its exposure is not considered
material to the Company.
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<PAGE> 51
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table provides information concerning the directors and
executive officers of the Company. All directors hold office until the next
annual meeting of stockholders of the Company and until their successors have
been duly elected and qualified. All officers serve at the discretion of the
Board of Directors.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C>
C. Dean Metropoulos................. 49 Chairman of the Board and Chief Executive Officer
Kenneth J. Martin................... 42 President and Chief Operating Officer and Director
William J. Feeney................... 44 Senior Vice President of Sales
Scott D. Foos....................... 34 Senior Vice President of Operations
Albert J. Soricelli, Jr............. 43 Senior Vice President of International, New Ventures,
Canada and Food Service
Stephen Van Tassell................. 41 Senior Vice President of New Product Development
Thomas O. Hicks..................... 50 Director
Charles W. Tate..................... 51 Director
Alan B. Menkes...................... 37 Director
Michael J. Levitt................... 37 Director
M. L. Lowenkron..................... 65 Director
Roger T. Staubach................... 54 Director
</TABLE>
A brief biography of each director and executive officer follows:
C. Dean Metropoulos has served as Chairman of the Board of Directors
and Chief Executive Officer of the Company since the closing of the
Transaction. Mr. Metropoulos is the Chief Executive Officer of C. Dean
Metropoulos & Co., a management services company. From 1983 through 1993, Mr.
Metropoulos served as President and Chief Executive Officer of Stella Foods,
Inc. Before then, Mr. Metropoulos served in a variety of U.S. and international
executive positions with GTE Corporation, including Vice President and General
Manager-Europe and Vice President and Controller, GTE International. Mr.
Metropoulos also serves as a director of The Morningstar Group Inc. and
Ghiradelli Chocolate Company.
Kenneth J. Martin has been President of the Company since July 1995.
From April 1994 until he became President in July 1995, Mr. Martin was an
Executive Vice President of Whitehall/Robins, a subsidiary of American Home
Products. From February 1992 through March 1994, Mr. Martin served as an
Executive Vice President of the Company. In 1989, he became Vice President and
Controller of American Home Products. Mr. Martin joined the Company in October
1984 as assistant to the Director of Corporate Compliance and served in a
variety of positions in the finance group of American Home Products.
William J. Feeney has been the Company's Senior Vice President of
Sales since 1995. He has a total of 24 years of experience with the Company,
primarily in sales management, as well as senior positions in marketing. Mr.
Feeney received his B.S. from the State University of New York.
Scott D. Foos has served as the Senior Vice President of Operations of
the Company since 1994. He joined the Company in 1992 and, before becoming
Senior Vice President, was Vice President and Chief Information Officer. Before
joining the Company, Mr. Foos was a Consulting Senior Manager with Andersen
Consulting. Mr. Foos received a B.S. from the State University of New York at
Albany.
Albert J. Soricelli joined the Company in 1979 and was promoted to
Senior Vice President of International, New Ventures, Canada and Food Service
in 1989. Before joining the Company, Mr. Soricelli held positions with
International Playtex, P.R. Mallory and International PepsiCo. Mr. Soricelli
received his M.B.A. and his B.B.A. from Iona College.
Stephen Van Tassel has been the Company's Senior Vice President of New
Product Development since August 1, 1995. He joined the Company in 1992, and
before becoming Senior Vice President, held various positions with the
49
<PAGE> 52
Company, primarily in product management. Before joining the Company,
Mr. Van Tassel held positions with General Mills and ConAgra. Mr. Van Tassel
received his B.A. from Bowdoin College and his M.B.A. from Dartmouth College.
Thomas O. Hicks has been a director of the Company since the closing
of the Transaction. Mr. Hicks has been Chairman and Chief Executive Officer of
Hicks Muse since co-founding the firm in 1989. Prior to forming Hicks Muse, Mr.
Hicks co-founded Hicks & Haas Incorporated in 1983 and served as its
Co-Chairman and Co-Chief Executive Officer through 1989. Mr. Hicks also serves
as a director of Chancellor Broadcasting Company, Berg Electronics Corp.,
Sybron International Corporation and Neodata Corporation.
Charles W. Tate has been a director of the Company since the closing
of the Transaction. Mr. Tate is a Managing Director and Principal of Hicks
Muse. Before joining Hicks Muse in 1991, Mr. Tate had been at Morgan Stanley &
Co. since 1972, most recently as a Managing Director in the merchant banking
division and prior thereto in the mergers and acquisitions department. Mr. Tate
also serves as a director of The Morningstar Group Inc., International Wire
Group, Inc., Berg Electronics Corp., DESA Holdings Corporation, Hat Brands
Holding Corporation and Heritage Brands Holdings, Inc.
Alan B. Menkes has been a director of the Company since the closing of
the Transaction. Mr. Menkes is a Managing Director and Principal of Hicks Muse.
Before joining Hicks Muse in 1992, Mr. Menkes was employed by The Carlyle
Group, a Washington D.C.-based private investment firm, most recently as a
Senior Vice President. Mr. Menkes also serves as a director of Hedstrom
Holdings, Inc.
Michael J. Levitt has been a director of the Company since the closing
of the Transaction. Mr. Levitt is a Managing Director and Principal of Hicks
Muse. Before joining Hicks Muse, Mr. Levitt was a Managing Director and Deputy
Head of Investment Banking with Smith Barney Inc. from 1993 through 1995. From
1986 through 1993, Mr. Levitt was with Morgan Stanley & Co. Incorporated, most
recently as a Managing Director responsible for the New York based Financial
Entrepreneurs Group. Mr. Levitt also serves as a director of Ghirardelli
Chocolate Company.
M. L. Lowenkron has been a director of the Company since November
1996. From January 1995 through May 1996, Mr. Lowenkron served as President and
Chief Executive Officer of G. Heileman Brewing Co. Mr. Lowenkron served as
Chairman of the Board and Chief Executive Officer of A&W Brands, Inc. ("A&W")
from December 1991 to October 1993, had served as President of A&W and its
predecessors from 1980 to October 1993. Mr. Lowenkron serves as a Director of
Hat Brands, Inc., Triarc Companies Inc., Depuy Inc. and 7 Up/RC Bottling
Company of Southern California Inc. Mr. Lowenkron also serves as First Vice
Chairman of the National Easter Seal Society.
Roger T. Staubach has been a director of the Company since November
1996. Since 1983, Mr. Staubach has served as the Chairman and Chief Executive
Officer of The Staubach Company, a diversified real estate company. Mr.
Staubach also serves as a director of Halliburton Company, Brinker
International, Inc., Columbus Realty Trust and First USA, Inc., and as a
trustee of American AAdvantage Funds.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth for 1995 the compensation awarded to or
earned by the President of AHFP and the four other most highly compensated
executive officers of the Company (the "Named Executive Officers").
50
<PAGE> 53
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
-------------
ANNUAL COMPENSATION SECURITIES
------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION SALARY ($) BONUS ($) OPTIONS COMPENSATION ($) (1)
- --------------------------- ------------ ------------ ------------- --------------------
<S> <C> <C> <C> <C>
Kenneth J. Martin........................... 280,000 230,000 (2) 30,000 7,528
President
Stephen Van Tassel.......................... 174,800 -- 7,000 5,240
Senior Vice President of New Products
Development
Albert J. Soricelli, Jr..................... 162,000 -- 10,000 4,868
Senior Vice President of International,
New Ventures, Canada and Food
Service
William J. Feeney........................... 155,000 -- 6,000 4,252
Senior Vice President of Sales
Scott D. Foos............................... 150,000 -- 9,000 4,126
Senior Vice President of Operations
</TABLE>
- ---------------
(1) Amounts represent contributions to retirement plans maintained by
American Home Products.
(2) Includes cash in the amount of $115,000 and stock of American Home
Products in the amount of $115,000.
The following table contains information about stock options granted
by American Home Products to the Named Executive Officers in 1995. Shares
underlying these options are shares of stock of American Home Products.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
Annual Rates of
Number of % of Total Stock Price
Securities Options Appreciation for
Underlying Granted to Option Terms ($) (1)
Option Employees in Exercise Price Expiration ---------------------------
Name Granted 1995 Per Share Date (1) 5% 10%
- ---- --------------- ----------------- ----------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Kenneth J. Martin........... 30,000 .14% $38.125 5-25-05 97,822 199,514
Stephen Van Tassel.......... 7,000 * $38.125 5-25-05 22,825 46,553
Albert J. Soricelli, Jr..... 10,000 * $38.125 5-25-05 32,607 66,505
William J. Feeney........... 6,000 * $38.125 5-25-05 19,564 39,903
Scott D. Foos............... 9,000 * $38.125 5-25-05 29,347 59,854
</TABLE>
- ---------------
* Represents less than one-tenth of 1%.
(1) The initial expiration of these options was May 25, 2005. By their terms,
however, these options will terminate three months following the closing
of the Transaction. Potential realizable value amounts represent
hypothetical gains that could be achieved for the options if they are
exercised at the end of such three month period. These gains are based on
assumed rates of stock price appreciation of 5% and 10% compounded
annually from the date the option was granted through January 31, 1997,
the estimated accelerated expiration date of the options.
The following table provides information about the number of shares of
stock of American Home Products issued upon exercises by the Named Executive
Officers during 1995 and the value realized by the Named Executive Officers.
The table also provides information about the number and value of options
exercisable for shares of stock of American Home Products held by the Named
Executive Officers at December 31, 1995.
51
<PAGE> 54
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
OPTIONS AT DECEMBER 31, MONEY OPTIONS AT
SHARES 1995 DECEMBER 31, 1995 ($) (1)
ACQUIRED ON VALUE -------------------------------- -----------------------------
NAME EXERCISE REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------------- -------------- -------------- ----------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth J. Martin....... 75,000 717,360 25,000 30,000 1,212,500 1,455,000
Stephen Van Tassel...... 24,000 181,666 5,000 7,000 242,500 339,500
Albert J. Soricelli, Jr. 16,600 214,056 37,400 10,000 1,813,900 485,000
William J. Feeney....... 3,600 67,894 53,400 6,000 2,589,900 291,000
Scott D. Foos........... 3,600 40,102 15,400 9,000 746,900 436,500
</TABLE>
- ---------------
(1) Based upon the closing market price of American Home Products common stock
on December 31, 1995 of $48.50.
MANAGEMENT OPTIONS
On November 1, 1996, C. Dean Metropoulos was granted an option to
purchase 18,750,000 shares of common stock of the Company. The exercise price
is $1 per share, as increased by an annual rate of 8% per year from the date of
grant through the date of exercise. The options were fully vested on their date
of grant and expire on the tenth anniversary of their date of grant.
Pursuant to the terms of his employment agreement, Mr. Martin was
granted an option to purchase 7,000,000 shares of the Company's common stock.
The exercise price is $1 per share, as increased by an annual rate of 8% per
year from the date of grant through the date of exercise. The options will vest
and become exercisable in equal increments on each of the first three
anniversaries of the date of grant, and expire on the tenth anniversary of the
date of grant.
The exercise prices of and the number of shares underlying each of the
stock options granted to Mr. Metropoulos and Mr. Martin are subject to
adjustment in the event of certain fundamental changes in the capital structure
of the Company.
BENEFIT PLANS
Stock Option Plan. On November 1, 1996, the Company adopted the
International Home Foods, Inc. 1996 Stock Option Plan (the "Plan") providing
for the grant of options to purchase up to 45,000,000 shares of the Company's
common stock. The terms of the plan are as follows.
The Plan is intended to provide incentives to the key employees of the
Company or its subsidiaries and to non-employees providing bona fide
consulting, advisory or other services to the Company or its subsidiaries to
align their interests with those of the stockholders of the Company through the
awarding of stock options. The Plan may be administered by the Company's full
Board of Directors or a designated committee thereof (the full Board or such
committee hereafter referred to as the "Committee"). The Committee will have
the authority, subject to the terms of the Plan, to determine when and to whom
to make grants under the plan, the number of shares to be covered by the
grants, the types and terms of the grants, and the exercise price of stock
options. Moreover, the Committee will have the authority, subject to the
provisions of the Plan, to establish such rules and regulations as it deems
necessary for the proper administration of the Plan and to make such
determinations and interpretations and to take such action in connection with
the Plan and any grants thereunder as it deems necessary or advisable. The
Committee's determinations and interpretations under the Plan shall be binding
and conclusive on all participants and their legal representatives and need not
be uniform and may be made by the Committee selectively among persons who
receive, or are eligible to receive, grants under the Plan. To date, grants and
awards with respect to 25,950,000 shares of common stock have been made under
the Plan.
The Committee may grant either "incentive stock options" within the
meaning of Section 422 of the Code or "nonqualified options" in respect of
shares of the Company's common stock. The exercise price of a stock option may
52
<PAGE> 55
not be less than 100% of the fair market value of the underlying shares of
common stock on the date of grant. The exercise period for stock options will
be determined by the Committee and may not exceed ten years from the date of
grant (except upon death or disability of an optionee in which case, the
expiration date may be 180 days after death or disability).
The Board of Directors may amend, suspend or terminate the Plan at any
time except that, unless approved by stockholders of the Company, no such
amendment may (i) increase the maximum number of shares to which options may be
granted under the Plan, except for adjustments to reflect stock dividends or
other recapitulations affecting the number or kind of outstanding shares, (ii)
decrease the minimum exercise price of an incentive option, or (iii) change the
requirements as to eligibility for the grant of incentive options. Options
granted under the Plan are subject to adjustment in the event of certain
changes affecting the Company's common stock.
In the event of a Change in Control (as defined in the Plan), all
outstanding stock options may, subject to the sole discretion of the Committee,
become immediately exercisable. The Committee may, upon the occurrence of a
Change in Control of the Company, accelerate the termination of outstanding
options.
Stock options may be transferred by a participant only by will or by
the laws of descent and distribution, and may be exercised only by the
participant during his lifetime. If a participant dies and the applicable award
agreement so provides, options may be exercised by the person or persons to
whom the participant's rights pass within 180 days after the participant's
death. In no case (other than in the event of the participant's death or
disability) may options be exercised later than the expiration date of the
stock options specified in the grant.
Except as expressly provided otherwise in any optionee's agreement
relating to the grant of options under the Plan, in the event an optionee's
employment with the Company or a related entity terminates or a Change in
Control occurs, the Company or its designees shall have the right to purchase
from the optionee (or optionee's representatives) (i) the number of shares of
common stock previously acquired upon exercise of an option and (ii) the
optionee's right to acquire of shares of the Company's common stock pursuant to
options granted under the Plan which an optionee can acquire upon exercise
immediately prior to such purchase. The purchase price to be paid is calculated
on the basis of the fair market value (as defined in the Option Plan) of the
Company's common stock multiplied by the number of shares of common stock to be
acquired (less the aggregate exercise price in the event such purchase option
is exercised with respect to the optionee's right to acquire the Company's
common stock).
The transfer of shares of the Company's common stock issued upon
exercise of options granted under the Plan is subject to the Company's right of
first refusal.
Retirement Plan. It is anticipated that the Company will adopt a
retirement plan for the Company's management and employees.
COMPENSATION OF DIRECTORS
The directors of the Company did not receive compensation from the
Company for services rendered in that capacity during the period prior to the
consummation of the Transaction. Directors who are officers, employees or
otherwise affiliates of the Company do not receive compensation for their
services as directors. Directors of the Company are entitled to reimbursement
of their reasonable out-of-pocket expenses in connection with their travel to
and attendance at meetings of the board of directors or committees thereof. No
determination has yet been made with respect to annual fees or board attendance
fees, if any, to be paid to directors of the Company who are not also officers,
employees, or otherwise affiliates of the Company. In connection with their
appointment as directors, Messrs. Lowenkron and Staubach have each been granted
non-qualified stock options under the Plan to purchase 100,000 shares of the
Company's common stock for $1.00 per share. These options are fully vested and
expire 10 years from their date of grant.
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<PAGE> 56
STOCK OWNERSHIP AND CERTAIN TRANSACTIONS
STOCK OWNERSHIP
The following table sets forth certain information regarding the
beneficial ownership of the shares of the common stock of the Company by each
person who beneficially owns more than five percent of the outstanding shares
of common stock of the Company and by the directors and certain executive
officers of the Company, individually and as a group.
<TABLE>
<CAPTION>
NUMBER PERCENTAGE
OF SHARES OF SHARES
5% STOCKHOLDERS: --------------- --------------
<S> <C> <C>
Hicks Muse Parties (1).................................................. 264,000,000 80.0%
c/o Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
American Home Products Parties (2)...................................... 66,000,000 20.0%
Five Giralda Farms
Madison, New Jersey 07940
OFFICERS AND DIRECTORS:
C. Dean Metropoulos (3)........................................ 18,750,000 5.4%
Thomas O. Hicks (1)............................................ 264,000,000 80.0%
M.L. Lowenkron(4).............................................. 100,000 *
Roger T. Staubach(4)........................................... 100,000 *
All executive officers and directors as a group (10 persons)... 282,950,000 81.1%
</TABLE>
- ---------------
* Less than one-tenth of 1%.
(1) Includes shares owned of record by Hicks Muse Holding, a corporation
controlled by Hicks Muse Fund III. The ultimate general partner of Hicks
Muse Fund III is Hicks, Muse Fund III Incorporated. Thomas O. Hicks is a
controlling stockholder of Hicks, Muse Fund III Incorporated and serves as
its Chairman of the Board, Chief Executive Officer, Chief Operating
Officer, President and Secretary. Accordingly, Mr. Hicks may be deemed to
be the beneficial owner of these shares. Mr. Hicks disclaims beneficial
ownership of these shares.
(2) Includes shares expected to be owned of record by AHP Subsidiary, a
subsidiary of American Home Products.
(3) Includes 18,750,000 shares issuable to Mr. Metropoulos upon the exercise
of stock options that are currently exercisable.
(4) Includes 100,000 shares issuable upon the exercise of stock options that
are currently exercisable.
CERTAIN TRANSACTIONS
The descriptions set forth below do not purport to be complete and are
qualified in their entirety by reference to the applicable agreements,
including the Merger Agreement.
Hicks Muse Holding, American Home Products and the Company have agreed
that, for so long as American Home Products beneficially owns at least five
percent of the common stock of the Company, Hicks Muse Holding and the Company
will, at the request of American Home Products, use all reasonable efforts to
cause there to be nominated and elected to the Board of Directors of the
Company one designee of American Home Products.
American Home Products has agreed, until the earlier of (i) the fifth
anniversary of the Merger and (ii) the date on which a third party acquires
control of the Company without the consent of Hicks Muse Holding, not to sell
or otherwise dispose of any of the common stock it holds in the Company without
first notifying Hicks Muse Holding and affording Hicks Muse Holding an
opportunity to offer to buy the shares on terms proposed by Hicks Muse Holding.
In the event that American Home Products rejects Hicks Muse Holding's offer,
American Home Products will be permitted to sell not less than 90% of the
shares it proposed to sell in its notice to Hicks Muse Holding to a third party
on per share terms no less favorable to American Home Products than those set
forth in Hicks Muse Holding's offer; provided that, before selling such shares
at a price per share less than 110% of the price per share set forth in Hicks
Muse Holding's offer, American Home Products will be required to offer to sell
such shares to Hicks Muse Holding at such higher price
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per share. These restrictions on transfer will not apply to a sale of shares by
American Home Products under a registration statement filed under the
Securities Act or under Rule 144 under the Securities Act.
Hicks Muse Holding has agreed that, if it proposes to sell or dispose
of shares of the common stock it holds in the Company in a single transaction
or series of related transactions, then it will offer to include in the
proposed sale or disposition a designated number of shares held by American
Home Products not to exceed the product of (i) the number of shares to be sold
by Hicks Muse Holding to the proposed transferee multiplied by (ii) a fraction
the numerator of which is the number of shares held by American Home Products
and the denominator of which is the number of shares held by each of Hicks Muse
Holding and American Home Products in the aggregate. If American Home Products
accepts the offer, Hicks Muse Holdings must reduce, to the extent necessary,
the number of shares it otherwise would have sold in the proposed sale so as to
permit American Home Products to sell the number of shares that it is entitled
to sell under the foregoing terms. American Home Products' "co-sale" rights
described above do not apply to (i) a sale pursuant to a public offering
registered under the Securities Act, (ii) a sale in accordance with Rule 144
under the Securities Act, (iii) a sale to an affiliate of Hicks Muse or (iv) a
sale or sales in a single transaction or series of related transactions which,
in the aggregate, do not involve more than ten percent of the shares
outstanding.
At the closing of the Merger, American Home Products, Hicks Muse
Holding and the Company entered into a registration rights agreement under
which each of American Home Products and Hicks Muse Holding is entitled to
exercise three demand and seven "piggy-back" rights to require the Company to
register the common stock of the Company held by them for sale under the
Securities Act. The demand rights may only be exercised commencing six months
after the date on which the Company consummates its initial underwritten public
offering of common stock registered under the Securities Act. In addition, the
demand rights may only be exercised with respect to a number of shares that is
at least equal to the lesser of (i) five percent of the number of shares then
outstanding and (ii) that number of shares having an estimated aggregate
offering price of at least $20 million. The exercise of the demand and
piggy-back rights are subject to such other limitations and conditions as are
customary in registration rights agreements.
At the closing of the Merger, the Company and American Home Products
entered into a transition services agreement under which American Home Products
will, until six months after the Merger, furnish to the Company for a fee
certain facilities and services. In addition, American Home Products will
assist the Company for a period of up to 90 days after the Merger in the
administration of the Company's welfare benefit plans in consideration of the
Company's agreement to pay American Home Products compensation based on past
practices.
On the Closing Date, the Company entered into a ten-year agreement
(the "Monitoring and Oversight Agreement") with an affiliate of Hicks Muse
("Hicks Muse Partners") pursuant to which the Company will pay Hicks Muse
Partners an annual fee of $1 million for oversight and monitoring services to
the Company. The annual fee is adjustable at the end of each fiscal year to an
amount equal to 0.1% of the consolidated net sales of the Company, but in no
event may the fee be less than $1 million. Messrs. Thomas O. Hicks, Charles W.
Tate, Alan B. Menkes and Michael J. Levitt, directors of the Company, are each
principals of Hicks Muse Partners. In addition, the Company agreed to indemnify
Hicks Muse Partners, its affiliates and shareholders, and their respective
directors, officers, agents, employees and affiliates from and against all
claims, actions, proceedings, demands, liabilities, damages, judgments,
assessments, losses and costs, including fees and expenses, arising out of or
in connection with the services rendered by Hicks Muse Partners thereunder. The
Monitoring and Oversight Agreement makes available the resources of Hicks Muse
Partners concerning a variety of financial and operational matters. The
services that have been and will continue to be provided by Hicks Muse Partners
could not otherwise be obtained by the Company without the addition of
personnel or the engagement of outside professional advisors. In management's
opinion, the fees provided for under the Monitoring and Oversight Agreement
reasonably reflect the benefits received and to be received by the Company.
On the Closing Date, the Company also entered into an agreement (the
"Financial Advisory Agreement") pursuant to which Hicks Muse Partners received
a cash financial advisory fee of approximately $19 million upon the closing of
the Transaction as compensation for its services as financial advisor for the
Transaction. Hicks Muse Partners also will be entitled to receive a fee equal
to 1.5% of the "transaction value" (as defined) for each "add-on transaction"
(as defined) in which the Company is involved. The term "transaction value"
means the total value of any add-on transaction, including, without limitation,
the aggregate amount of the funds required to complete the add-on transaction
(excluding any fees payable pursuant to the Financial Advisory Agreement and
any fees, if any, paid to any other person or entity for financial advisory,
investment banking, brokerage or any other similar services rendered in
connection with such add-on transaction) including the amount of any
indebtedness, preferred stock or similar items assumed (or
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remaining outstanding). The term "add-on transaction" means any future proposal
for a tender offer, acquisition, sale, merger, exchange offer,
recapitalization, restructuring or other similar transaction directly or
indirectly involving the Company or any of its subsidiaries and any other
person or entity. The Financial Advisory Agreement makes available the
resources of Hicks Muse Partners concerning a variety of financial and
operational matters. The services that have been and will continue to be
provided by Hicks Muse Partners could not otherwise be obtained by the Company
without the addition of personnel or the engagement of outside professional
advisors. In management's opinion, the fees provided for under the Financial
Advisory Agreement reasonably reflect the benefits received and to be received
by the Company.
Concurrently with the Merger and Redemption, International Home Foods,
Inc. purchased Heritage from an affiliate of Hicks Muse based on a total
enterprise value of $70 million. International Home Foods, Inc. used
approximately $40 million of the proceeds of the Financing to repay existing
debt of Heritage and approximately $30 million to acquire the outstanding
equity of Heritage. The affiliate of Hicks Muse formed Heritage in 1994 to
acquire (i) the Campfire marshmallow business from Borden, Inc. for
approximately $5 million and (ii) Angela Marie's, Inc., a manufacturer of
marshmallow crisp rice bars, for approximately $35 million. See "The
Transaction."
The Company has entered into indemnification agreements with each of
its directors and executive officers under which the Company will indemnify the
director or officer to the fullest extent permitted by law, and to advance
expenses, if the director or officer becomes a party to or witness or other
participant in any threatened, pending or completed action, suit or proceeding
(a "Claim") by reason of any occurrence related to the fact that the person is
or was a director, officer, employee, agent or fiduciary of the Company or a
subsidiary of the Company or another entity at the Company's request (an
"Indemnifiable Event"), unless a reviewing party (either outside counsel or a
committee appointed by the Board of Directors) determines that the person would
not be entitled to indemnification under applicable law. In addition, if a
change in control or a potential change in control of the Company occurs and if
the person indemnified so requests, the Company will establish a trust for the
benefit of the indemnitee and fund the trust in an amount sufficient to satisfy
all expenses reasonably anticipated at the time of the request to be incurred
in connection with any Claim relating to an Indemnifiable Event. The reviewing
party will determine the amount deposited in the trust. An indemnitee's rights
under his indemnification agreement will not be exclusive of any other rights
under the Company's Certificate of Incorporation or By-laws or applicable law.
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DESCRIPTION OF SENIOR BANK FACILITIES
The description set forth below does not purport to be complete and is
qualified in its entirety by reference to the underlying agreements of the
Senior Bank Facilities, which have been filed as exhibits to the registration
statement of which this Prospectus is a part.
The Chase Manhattan Bank ("Chase"), Bankers Trust Company and Morgan
Stanley Senior Funding, Inc. ("Morgan") provided the Company with senior
secured credit facilities (the "Senior Bank Facilities") in an aggregate
principal amount of $770 million, of which (i) $670 million was in the form of
term loans (the "Term Loan Facilities") and (ii) $100 million will be available
on a revolving credit basis for general corporate purposes.
The Senior Bank Facilities consists of (a) a 6 1/2 year Tranche A
Senior Secured Term Loan Facility providing for term loans to the Company in a
principal amount of $300 million (the "Tranche A Term Facility"); (b) an 8 year
Tranche B Senior Secured Term Loan Facility providing for term loans to the
Company in a principal amount of $200 million (the "Tranche B Term Facility");
(c) a 9 year Tranche C Senior Secured Term Loan Facility providing for term
loans to the Company in a principal amount of $170 million (the "Tranche C Term
Facility" and collectively with the Tranche A Term Facility and the Tranche B
Term Facility, the "Term Facilities"); and (d) a Senior Secured Revolving
Credit Facility providing for revolving loans to the Company and the issuance
of letters of credit for the account of the Company in an aggregate principal
and stated amount at any time not to exceed $100 million (of which not more
than $25 million may be represented by Letters of Credit) (the "Revolving
Facility").
The full amount of each Term Facility was required to be drawn in a
single drawing on the Closing Date and amounts repaid or prepaid under any Term
Facility may not be reborrowed. Loans under the Revolving Facility will be
available from the Closing Date until the earlier of (a) the date which is 6
1/2 years after the Closing Date (the "Scheduled Revolving Credit Termination
Date") and (b) the date on which the Tranche A Term Loans mature or are repaid
in full (the "Revolving Credit Termination Date"). Letters of Credit under the
Revolving Facility will be available at any time after the Closing Date. No
Letter of Credit shall have an expiration date after the earlier of (a) one
year from the date of its issuance and (b) five business days before the
Scheduled Revolving Credit Termination Date. Letters of Credit may be renewed
for one-year periods, provided that no Letter of Credit shall extend beyond the
time specified in clause (b) of the previous sentence.
Loans under the Tranche A Term Facility will amortize over six and
one-half years in thirteen semi-annual installments in the following amounts:
(a) $12.5 million for first two installments, (b) $15 million for the third and
fourth installments, (c) $20 million for the fifth and sixth installments, (d)
$25 million for the seventh and eighth installments, (e) $27.5 million for the
ninth installment, (f) $30 million for the tenth and eleventh installments, (g)
$32.5 million for the twelfth installment and (h) $35 million for the
thirteenth installment. Loans made under the Tranche B Term Facility will
amortize over eight years in sixteen semi-annual installments in the following
amounts: (a) $250,000 for the first thirteen installments, (b) $26.75 million
for the fourteenth installment and (c) $85 million for the remaining two
installments. Loans made under the Tranche C Term Facility will amortize over
nine years in eighteen semi-annual installments in the following amounts: (a)
$250,000 for the first fifteen installments, (b) $1.25 million for the
sixteenth installment and (c) $82.5 million for the last two installments.
The Company is required to make mandatory prepayments of loans, and
revolving credit commitments will be mandatorily reduced, in amounts, at times
and subject to certain exceptions, (a) in respect of 75% of consolidated excess
cash flow of the Company starting with fiscal year 1997 (such amount may be
reduced to 50% of excess cash flow for each fiscal year of the Company
(commencing with the 1998 fiscal year) based upon the achievement of certain
performance targets) and (b) in respect of 100% of the net proceeds of certain
dispositions of material assets or the stock of subsidiaries or the issuance of
capital stock or the incurrence of certain indebtedness by the Company or any
of its subsidiaries. At the Company's option, loans may be prepaid, and
revolving credit commitments may be permanently reduced, in whole or in part at
any time in certain minimum amounts. Prepayments of the Term Loans shall be
applied to the Tranche A Term Loans, the Tranche B Term Loans and the Tranche C
Term Loans ratably and to the installments thereof ratably in accordance with
the then remaining number of installments and may not be reborrowed, provided
that the first $40 million of optional prepayments of the Term Loans may be
applied to such installments as the Borrower may elect (other than the first
thirteen installments in respect of the Tranche B Term Loans and the first
sixteen installments in respect of the Tranche C Term Loans).
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The obligations of the Company under the Senior Bank Facilities are
unconditionally and irrevocably guaranteed by each of the Company's direct or
indirect domestic subsidiaries (collectively, the "Guarantors"). In addition,
the Senior Bank Facilities is secured by first priority or equivalent security
interests in (i) all the capital stock of, or other equity interests in, each
direct or indirect domestic subsidiary of the Company and 65% of the capital
stock of, or other equity interests in, each direct foreign subsidiary of the
Company, or any of its domestic subsidiaries and (ii) all tangible and
intangible assets (including, without limitation, intellectual property and
owned real property) of the Company and the Guarantors (subject to certain
exceptions and qualifications).
At the Company's option, the interest rates per annum applicable to
the Senior Bank Facilities will be either Adjusted LIBOR (as defined) plus a
margin ranging from 2.50% to 3.50% or the Alternate Base Rate (as defined) plus
a margin ranging from 1.50% to 2.50%. The Alternate Base Rate is the highest of
(a) Chase's Prime Rate, (b) the secondary market rate for certificates of
deposit (grossed up for maximum statutory reserve requirements) plus 1% and (c)
the Federal Funds Effective Rate plus 0.5%. The margin in respect of the
Tranche A Term Loan Facility and the Revolving Credit Facility will be subject
to reduction after the first anniversary of the Closing Date based on the
achievement of certain performance targets to be determined.
The Company will pay a commission on the face amount of all
outstanding letters of credit at a per annum rate equal to the Applicable
Margin then in effect with respect to LIBOR loans under the Revolving Facility
minus the Fronting Fee (as defined). A fronting fee equal to 1/4% per annum on
the face amount of each Letter of Credit (the "Fronting Fee") shall be payable
quarterly in arrears to the issuing lender for its own account. The Company
will also pay a per annum fee equal to 0.50% on the undrawn portion of the
commitments in respect of the Revolving Facility (the "Commitment Fee"). The
Commitment Fee shall be subject to reduction after the first anniversary of the
Closing Date based on the achievement of certain performance targets to be
determined.
The Senior Bank Facilities also contain a number of significant
covenants that, among other things, restrict the ability of the Company to
dispose of assets, incur additional indebtedness, repay other indebtedness or
amend other debt instruments, pay dividends, create liens on assets, make
investments or acquisitions, engage in mergers or consolidations, make capital
expenditures, or engage in certain transactions with affiliates, amend the
Indenture and otherwise restrict corporate activities. In addition, under the
Senior Bank Facilities the Company is required to comply with specified minimum
interest coverage, maximum leverage and minimum fixed charge coverage ratios.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT
The Old Notes were sold by the Company on November 1, 1996 in a
private placement. In connection with that placement, the Company and the
Subsidiary Guarantors entered into the Registration Rights Agreement which
requires that the Company and the Subsidiary Guarantors file a registration
statement under the Securities Act with respect to the New Notes on or prior to
60 days after the date of issuance of the Old Notes (the "Issue Date") and,
upon the effectiveness of that registration statement, offer to the holders of
the Old Notes the opportunity to exchange their Old Notes for a like principal
amount of New Notes, which will be issued without a restrictive legend and may
be reoffered and resold by the holder without registration under the Securities
Act. The Registration Rights Agreement further provides that the Company and
the Subsidiary Guarantors must use their reasonable best efforts to cause the
registration statement with respect to the Exchange Offer to be declared
effective within 135 days following the Issue Date. A copy of the Registration
Rights Agreement has been filed as an exhibit to the registration statement of
which this Prospectus is a part.
In order to participate in the Exchange Offer, a holder must represent
to the Company, among other things, that (i) any New Notes to be received by it
will be acquired in the ordinary course of its business, (ii) it has no
arrangement with any person to participate in the distribution of the New Notes
and (iii) it is not an "affiliate," as defined in Rule 405 of the Securities
Act, of the Company or any of the Subsidiary Guarantors, or if it is an
affiliate, it will comply with the registration and prospectus delivery
requirements of the Securities Act to the extent applicable.
If the holder is not a broker-dealer, it will be required to represent
that it is not engaged in, and does not intend to engage in, the distribution
of the New Notes. If the holder is a broker-dealer that will receive New Notes
for its own account in exchange for Old 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 New Notes.
The Old Notes are designated for trading in the PORTAL market. To the
extent Old Notes are tendered and accepted in the Exchange Offer, the principal
amount of outstanding Old Notes will decrease with a resulting decrease in the
liquidity in the market therefor. Following the consummation of the Exchange
Offer, holders of Old Notes who were eligible to participate in the Exchange
Offer but who did not tender their Old Notes will not be entitled to certain
rights under the Registration Rights Agreement and such Old Notes will continue
to be subject to certain restrictions on transfer. Accordingly, the liquidity
of the market for the Old Notes could be adversely affected. No assurance can
be given as to the liquidity of the trading market for either the Old Notes or
the New Notes.
Based on an interpretation by the Commission's staff set forth in
no-action letters issued to third parties unrelated to the Company, the Company
believes that, with the exceptions discussed herein, New Notes issued pursuant
to the Exchange Offer in exchange for Old Notes may be offered for resale,
resold and otherwise transferred by any person receiving the New Notes, whether
or not that person is the holder (other than any such holder or such other
person 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 (i) the New
Notes are acquired in the ordinary course of business of that holder or such
other person, (ii) neither the holder nor such other person is engaging in or
intends to engage in a distribution of the New Notes, and (iii) neither the
holder nor such other person has an arrangement or understanding with any
person to participate in the distribution of the New Notes. Each broker-dealer
that receives New Notes for its own account in exchange for Old Notes, where
those Old Notes were acquired by the broker-dealer as a result of its
market-making activities or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of those New Notes. See
"Plan of Distribution."
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend thereon as a
consequence of the offer or sale of the Old Notes pursuant to exemptions from,
or in transactions not subject to, the registration requirements of the
Securities Act and applicable state securities laws. In general, the Old Notes
may not be offered or sold, unless registered under the Securities Act and
applicable state securities laws, 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
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intend to register the Old Notes under the Securities Act and, after
consummation of the Exchange Offer, will not be obligated to do so. 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, except as
set forth in the next sentence, New Notes issued pursuant to the Exchange Offer
in exchange for Old Notes may be offered for resale, resold or 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 Old 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 New
Notes. Each broker-dealer that receives New Notes for its own account in
exchange for Old Notes, where such Old 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 New Notes. See "Plan of Distribution."
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this
Prospectus and in the Letter of Transmittal, the Company will accept any and
all Old Notes validly tendered and not withdrawn prior to 5:00 p.m., New York
City time, on the Expiration Date. The Company will issue $1,000 principal
amount of New Notes in exchange for each $1,000 principal amount of outstanding
Old Notes accepted in the Exchange Offer. Holders may tender some or all of
their Old Notes pursuant to the Exchange Offer. However, Old Notes may be
tendered only in integral multiples of $1,000 in principal amount.
The form and terms of the New Notes are substantially the same as the
form and terms of the Old Notes except that the New Notes have been registered
under the Securities Act and will not bear legends restricting their transfer.
The New Notes will evidence the same debt as the Old Notes and will be issued
pursuant to, and entitled to the benefits of, the Indenture pursuant to which
the Old Notes were, and the New Notes will be, issued.
As of the date of this Prospectus, $400,000,000 aggregate principal
amount of the Old Notes were outstanding. The Company has fixed the close of
business on _______________ as the record date for the Exchange Offer for
purposes of determining the persons to whom this Prospectus, together with the
Letter of Transmittal, will initially be sent. As of such date, there were
_____ registered holders of the Old Notes. Holders of Old Notes do not have any
appraisal or dissenters' rights under the General Corporation Law of the State
of Delaware or the Indenture in connection with the Exchange Offer. The Company
intends to conduct the Exchange Offer in accordance with the applicable
requirements of the Exchange Act and the rules and regulations of the
Commission promulgated thereunder.
The Company shall be deemed to have accepted validly tendered Old
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 for the purpose of receiving the New Notes from the Company. If any
tendered Old Notes are not accepted for exchange because of an invalid tender,
the occurrence of certain other events set forth herein or otherwise,
certificates for any such unaccepted Old Notes will be returned, without
expense, to the tendering holder thereof as promptly as practicable after the
Expiration Date.
Holders who tender Old Notes in the Exchange Offer will 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
Old Notes pursuant to the Exchange Offer. The Company will pay all charges and
expenses, other than certain applicable taxes, in connection with the Exchange
Offer. See "The Exchange Offer -- Solicitation of Tenders; Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time,
on _______________, 1997, unless the Company, in its sole discretion, extends
the Exchange Offer, in which case the term "Expiration Date" shall mean the
latest date and time to which the Exchange Offer is extended. In order to
extend the Exchange Offer, the Company will notify the Exchange Agent of any
extension by oral or written notice prior to 9:00 a.m., New York City time, on
the next business day after the previously scheduled Expiration Date. The
Company reserves the right, in its sole discretion, (i) to delay accepting any
Old Notes, to extend the Exchange Offer or, if any of the conditions set forth
under "The Exchange Offer -- Conditions" shall not have been satisfied, to
terminate the Exchange Offer, by giving oral or written
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notice of such delay, extension or termination to the Exchange Agent, or (ii)
to amend the terms of the Exchange Offer in any manner.
INTEREST ON THE NEW NOTES
The New Notes will bear interest from November 1, 1996, the date of
original issuance of the Old Notes. No interest will be paid on the Old Notes
accepted for exchange.
PROCEDURES FOR TENDERING
Only a holder of Old Notes may tender the Old Notes in the Exchange
Offer. Except as set forth under "The Exchange Offer -- Book Entry Transfer,"
to tender in the Exchange Offer a holder must complete, sign and date the
Letter of Transmittal, or a copy thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal, and mail or otherwise
deliver the Letter of Transmittal or copy to the Exchange Agent prior to the
Expiration Date. In addition, either (i) certificates for such Old Notes must
be received by the Exchange Agent along with the Letter of Transmittal, (ii) a
timely confirmation of a book-entry transfer (a "Book-Entry Confirmation") of
such Old Notes, if that procedure is available, into the Exchange Agent's
account at The Depository Trust Company (the "DTC" or the "Book-Entry Transfer
Facility") pursuant to the procedure for book-entry transfer described below,
must be received by the Exchange Agent prior to the Expiration Date, or (iii)
the holder must comply with the guaranteed delivery procedures described below.
To be tendered effectively, the Old Notes, Letter of Transmittal and other
required documents must be received by the Exchange Agent at the address set
forth under "The Exchange Offer -- Exchange Agent" prior to the Expiration
Date.
The tender by a holder that is not withdrawn before the Expiration
Date will constitute an agreement between that holder and the Company in
accordance with the terms and subject to the conditions set forth herein and in
the Letter of Transmittal.
THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK
OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE
AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE AND
PROPER INSURANCE SHOULD BE OBTAINED. NO LETTER OF TRANSMITTAL OR OLD NOTES
SHOULD BE SENT TO THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS,
DEALERS, COMMERCIAL BANKS, TRUST COMPANIES, OR NOMINEES TO EFFECT THESE
TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose Old Notes are registered in the name of a
broker, dealer, commercial bank, trust company, or other nominee and who wishes
to tender should contact the registered holder promptly and instruct the
registered holder to tender on the beneficial owner's behalf. If the beneficial
owner wishes to tender on the owner's own behalf, the owner must, prior to
completing and executing the Letter of Transmittal and delivering the owner's
Old Notes, either make appropriate arrangements to register ownership of the
Old Notes in the beneficial owner's name or obtain a properly completed bond
power from the registered holder. The transfer of registered ownership may take
considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as
the case may be, must be guaranteed by an Eligible Institution (as defined
herein) unless Old Notes tendered pursuant thereto are tendered (i) by a
registered holder who has not completed the box titled "Special Registration
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal
or (ii) for the account of an Eligible Institution. If signatures on a Letter
of Transmittal or a notice of withdrawal, as the case may be, are required to
be guaranteed, the guarantee must be by any eligible guarantor institution that
is a member of or participant in the Securities Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Program, the Stock
Exchange Medallion Program, or an "eligible guarantor institution" within the
meaning of Rule 17Ad-15 under the Exchange Act (an "Eligible Institution").
If the Letter of Transmittal is signed by a person other than the
registered holder of any Old Notes listed therein, the Old Notes must be
endorsed or accompanied by a properly completed bond power, signed by the
registered holder as that registered holder's name appears on the Old Notes.
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If the Letter of Transmittal or any Old Notes or bond powers 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 evidence
satisfactory to the Company of their authority to so act must be submitted with
the Letter of Transmittal unless waived by the Company.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Old Notes will be determined by
the Company in its sole discretion, which determination will be final and
binding. The Company reserves the absolute right to reject any and all Old
Notes not properly tendered or any Old Notes the Company's acceptance of which
would, in the opinion of counsel for the Company, be unlawful. The Company also
reserves the right to waive any defects, irregularities or conditions of tender
as to particular Old Notes. The Company's interpretation of the terms and
conditions of the Exchange Offer (including the instructions in the Letter of
Transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Old Notes must be cured
within such time as the Company shall determine. Although the Company intends
to notify holders of defects or irregularities with respect to tenders of Old
Notes, neither the Company, the Exchange Agent nor any other person shall incur
any liability for failure to give such notification. Tenders of Old Notes will
not be deemed to have been made until such defects or irregularities have been
cured or waived. Any Old Notes received by the Exchange Agent that the Company
determines are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering holders, unless otherwise provided in the Letter of
Transmittal, as soon as practicable following the Expiration Date.
In addition, the Company reserves the right in its sole discretion to
purchase or make offers for any Old Notes that remain outstanding after the
Expiration Date or, as set forth under "The Exchange Offer -- Conditions," to
terminate the Exchange Offer and, to the extent permitted by applicable law,
purchase Old Notes in the open market, in privately negotiated transactions or
otherwise. The terms of any such purchases or offers could differ from the
terms of the Exchange Offer.
By tendering, each holder will represent to the Company that, among
other things, (i) the New Notes acquired pursuant to the Exchange Offer are
being acquired in the ordinary course of business of the person receiving such
New Notes, whether or not such person is the holder, (ii) if it is not a
broker-dealer, neither the holder nor any such other person is engaging in or
intends to engage in a distribution of such New Notes, (iii) neither the holder
nor any such other person has an arrangement or understanding with any person
to participate in the distribution of such New Notes, and (iv) neither the
holder nor any such other person is an "affiliate" (as defined in Rule 405 of
the Securities Act) of the Company. Each broker-dealer that receives New Notes
for its own account in exchange for Old Notes, where such Old Notes were
acquired by such broker-dealer as a result of market-making activities or other
trading activities (other than Old Notes acquired directly from the Company),
may participate in the Exchange Offer but may be deemed an "underwriter" under
the Securities Act and, therefore, must acknowledge in the Letter of
Transmittal that it will deliver a prospectus in connection with any resale of
such New Notes. The Letter of Transmittal 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. See "Plan of
Distribution."
In all cases, issuance of New Notes for Old Notes that are accepted
for exchange pursuant to the Exchange Offer will be made only after timely
receipt by the Exchange Agent of certificates for such Old Notes or a timely
Book-Entry Confirmation of such Old Notes into the Exchange Agent's account at
the Book-Entry Transfer Facility, a properly completed and duly executed Letter
of Transmittal (or, with respect to the DTC and its participants, electronic
instructions in which the tendering holder acknowledges its receipt of and
agreement to be bound by the Letter of Transmittal), and all other required
documents. If any tendered Old Notes are submitted for a greater principal
amount than the holder desires to exchange, such unaccepted or non-exchanged
Old Notes will be returned without expense to the tendering holder thereof (or,
in the case of Old 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 below, such non-exchanged Old Notes will be
credited to an account maintained with such Book-Entry Transfer Facility) as
promptly as practicable after the expiration or termination of the Exchange
Offer.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with
respect to the Old Notes at the Book-Entry Transfer Facility for purposes of
the Exchange Offer within two business days after the date of this Prospectus,
and any
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financial institution that is a participant in the Book-Entry Transfer Facility
system may make book-entry delivery of Old Notes being tendered by causing the
Book-Entry Transfer Facility to transfer such Old Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility in accordance with such
Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of Old Notes may be effected through book-entry transfer at the
Book-Entry Transfer Facility, the Letter of Transmittal or copy thereof, with
any required signature guarantees and any other required documents, must, in
any case other than as set forth in the following paragraph, be transmitted to
and received by the Exchange Agent at the address set forth under "The Exchange
Offer -- Exchange Agent" on or prior to the Expiration Date or the guaranteed
delivery procedures described below must be complied with.
The DTC's Automated Tender Offer Program ("ATOP") is the only method
of processing exchange offers through the DTC. To accept the Exchange Offer
through ATOP, participants in the DTC must send electronic instructions to the
DTC through the DTC's communication system in place of sending a signed, hard
copy Letter of Transmittal. The DTC is obligated to communicate those
electronic instructions to the Exchange Agent. To tender Old Notes through
ATOP, the electronic instructions sent to the DTC and transmitted by the DTC to
the Exchange Agent must contain the character by which the participant
acknowledges its receipt of and agrees to be bound by the Letter of
Transmittal.
GUARANTEED DELIVERY PROCEDURES
If a registered holder of the Old Notes desires to tender such Old
Notes and the Old Notes are not immediately available, or time will not permit
such holder's Old Notes or other required documents 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 (i) the tender is made
through an Eligible Institution, (ii) prior to the Expiration Date, the
Exchange Agent received from such Eligible Institution a properly completed and
duly executed Letter of Transmittal (or a facsimile thereof) and Notice of
Guaranteed Delivery, substantially in the form provided by the Company (by
telegram, telex, facsimile transmission, mail or hand delivery), setting forth
the name and address of the holder of Old Notes and the amount of Old Notes
tendered, stating that the tender is being made thereby and guaranteeing that
within three New York Stock Exchange ("NYSE") trading days after the date of
execution of the Notice of Guaranteed Delivery, the certificates for all
physically tendered Old Notes, in proper form for transfer, or a Book-Entry
Confirmation, as the case may be, and any other documents required by the
Letter of Transmittal will be deposited by the Eligible Institution with the
Exchange Agent, and (iii) the certificates for all physically tendered Old
Notes, in proper form for transfer, or a Book-Entry Confirmation, as the case
may be, and all other documents required by the Letter of Transmittal, are
received by the Exchange Agent within five NYSE trading days after the date of
execution of the Notice of Guaranteed Delivery.
WITHDRAWAL RIGHTS
Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m.,
New York City time, on the Expiration Date.
For a withdrawal of a tender of Old Notes to be effective, a written
or (for DTC participants) electronic ATOP transmission notice of withdrawal
must be received by the Exchange Agent at its address set forth herein prior to
5:00 p.m., New York City time, on the Expiration Date. Any such notice of
withdrawal must (i) specify the name of the person having deposited the Old
Notes to be withdrawn (the "Depositor"), (ii) identify the Old Notes to be
withdrawn (including the certificate number or numbers and principal amount of
such Old Notes), (iii) be signed by the holder in the same manner as the
original signature on the Letter of Transmittal by which such Old Notes were
tendered (including any required signature guarantees) or be accompanied by
documents of transfer sufficient to have the Trustee with respect to the Old
Notes register the transfer of such Old Notes into the name of the person
withdrawing the tender, and (iv) specify the name in which any such Old Notes
are to be registered, if different from that of the Depositor. All questions as
to the validity, form and eligibility (including time of receipt) of such
notices will be determined by the Company, in its sole discretion, whose
determination shall be final and binding on all parties. Any Old Notes so
withdrawn will be deemed not to have been validly tendered for exchange for
purposes of the Exchange Offer. Any Old 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 as soon as practicable after
withdrawal, rejection of tender or termination of the Exchange Offer. Properly
withdrawn Old Notes may be retendered by following one of the procedures
described under "The Exchange Offer -- Procedures for Tendering" at any time on
or prior to the Expiration Date.
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CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Company
shall not be required to accept for exchange, or exchange New Notes for, any
Old Notes, and may terminate the Exchange Offer as provided herein before the
acceptance of such Old Notes, if:
(a) the Exchange Offer shall violate applicable law or
any applicable interpretation of the staff of the Commission; or
(b) any action or proceeding is instituted or threatened in
any court or by any governmental agency that might materially impair
the ability of the Company to proceed with the Exchange Offer or any
material adverse development has occurred in any existing action or
proceeding with respect to the Company; or
(c) any governmental approval has not been obtained, which
approval the Company shall deem necessary for the consummation of the
Exchange Offer.
If the Company determines in its sole discretion that any of the
conditions are not satisfied, the Company may (i) refuse to accept any Old
Notes and return all tendered Old Notes to the tendering holders (or, in the
case of Old 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 Old Notes will be credited to an account
maintained with such Book-Entry Transfer Facility), (ii) extend the Exchange
Offer and retain all Old Notes tendered prior to the expiration of the Exchange
Offer, subject, however, to the rights of holders to withdraw such Old Notes
(see "-- Withdrawal Rights") or (iii) waive such unsatisfied conditions with
respect to the Exchange Offer and accept all properly tendered Old Notes which
have not been withdrawn. If such waiver constitutes a material change to the
Exchange Offer, the Company will promptly disclose such waiver by means of a
prospectus supplement that will be distributed to the registered holders, and
the Company will extend the Exchange Offer for a period of five to ten business
days, depending upon the significance of the waiver and the manner of
disclosure to the registered holders, if the Exchange Offer would otherwise
expire during such five-to-ten-business-day period.
EXCHANGE AGENT
All executed Letters of Transmittal should be directed to the Exchange
Agent. United States Trust Company of New York has been appointed as Exchange
Agent for the Exchange Offer. Questions, requests for assistance and requests
for additional copies of this Prospectus or of the Letter of Transmittal should
be directed to the Exchange Agent addressed as follows:
By Registered or Certified Mail,
by Overnight Courier or by Hand:
United States Trust Company of New York
P.O. Box 844
Cooper Station
New York, New York 10276-0844
By Hand:
United States Trust Company of New York
111 Broadway
Lower Level
Corporate Trust Window
New York, New York 10006
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By Overnight Courier:
United States Trust Company of New York
770 Broadway
New York, New York 10003
Attn: Corporate Trust
By Facsimile:
(212) 420-6152
Confirm by Telephone:
(800) 548-6565
SOLICITATIONS OF TENDERS; FEES AND EXPENSES
The Company will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The principal solicitation is
being made by mail; however, additional solicitations may be made in person or
by telephone by officers and employees of the Company.
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 soliciting acceptances of the Exchange Offer. The Company,
however, will pay the Exchange Agent reasonable and customary fees for its
services and will reimburse it for its reasonable out-of-pocket expenses in
connection therewith.
The cash expenses to be incurred in connection with the Exchange Offer
will be paid by the Company. Such expenses include fees and expenses of the
Exchange Agent and Trustee, accounting and legal fees and printing costs, among
others.
TRANSFER TAXES
Holders who tender their Old Notes for exchange will not be obligated
to pay any transfer taxes in connection therewith, except that holders who
instruct the Company to register New Notes in the name of, or request that Old
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.
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<PAGE> 68
DESCRIPTION OF NEW NOTES
GENERAL
The Old Notes were and the New Notes will be issued under an
Indenture, dated as of November 1, 1996 (the "Indenture"), among the Company,
the Subsidiary Guarantors and United States Trust Company of New York, as
Trustee (the "Trustee"), a copy of which is available upon request to the
Company. The terms of the New Notes are identical in all material respects to
the Old Notes, except that the New Notes have been registered under the
Securities Act and, therefor, will not bear legends restricting their transfer.
Upon the issuance of the New Notes, the Indenture will be subject to and
governed by the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"). The following summary of certain provisions of the Indenture and the New
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 New Notes. The Old Notes and the New Notes are
sometimes collectively referred to herein as the "Notes."
Principal of, premium, if any, and interest on the New Notes will be
payable, and the New Notes may be exchanged or transferred, at the office or
agency of the Company in the Borough of Manhattan, the City of New York (which
initially shall be the corporate trust office of the Trustee in New York, New
York), except that, at the option of the Company, payment of interest may be
made by check mailed to the address of the holders as such address appears in
the Note Register.
The New Notes will be issued only in fully registered form, without
coupons, in denominations of $1,000 and any integral multiple of $1,000. No
service charge will be made for any registration of transfer or exchange of New
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.
Old Notes that remain outstanding after the consummation of the
Exchange Offer and New Notes issued in connection with the Exchange Offer will
be entitled to vote or consent on all matters as a single class of securities
under the Indenture.
TERMS OF NOTES
The Notes will be unsecured, senior subordinated obligations of the
Company, limited to $400 million aggregate principal amount, and will mature on
November 1, 2006. Each New 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 May 1 and November 1 of each year commencing on May 1, 1997 to
holders of record at the close of business on the April 15 or October 15
immediately preceding the interest payment date.
OPTIONAL REDEMPTION
Except as set forth below, the Notes will not be redeemable at the
option of the Company prior to November 1, 2001. On and after such date, the
Notes will be redeemable, at the Company's option, in whole or in part, at any
time upon not less than 30 nor more than 60 days prior notice mailed by
first-class mail to each holder's registered address, at the following
redemption prices (expressed in percentages of principal amount), plus accrued
and unpaid interest to the redemption date (subject to the right of holders of
record on the relevant record date to receive interest due on the relevant
interest payment date):
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If redeemed during the 12-month period commencing on November 1 of the
years set forth below:
<TABLE>
<CAPTION>
REDEMPTION
PERIOD PRICE
------ -------------
<C> <C>
2001......................................................... 105.188%
2002......................................................... 103.458%
2003......................................................... 101.729%
2004 and thereafter.......................................... 100.000%
</TABLE>
In addition, at any time and from time to time prior to November 1,
2000, the Company may redeem in the aggregate up to $160 million principal
amount of Notes with the proceeds of one or more Equity Offerings by the
Company so long as there is a Public Market at the time of such redemption, at
a redemption price (expressed as a percentage of principal amount) of 110.375%,
plus accrued and unpaid interest, if any, to the redemption date (subject to
the right of holders of record on the relevant record date to receive interest
due on the relevant interest payment date); provided, however, that at least
$200 million aggregate principal amount of the Notes must remain outstanding
after each such redemption.
At any time on or prior to November 1, 2001, the Notes may also be
redeemed as a whole at the option of the Company upon the occurrence of a
Change of Control, upon not less than 30 nor more than 60 days prior notice
(but in no event more than 90 days after the occurrence of such Change of
Control) mailed by first-class mail to each holder's registered address, at a
redemption price equal to 100% of the principal amount thereof plus the
Applicable Premium as of, and accrued and unpaid interest, if any, to, the date
of redemption (the "Redemption Date") (subject to the right of holders of
record on the relevant record date to receive interest due on the relevant
interest payment date).
"Applicable Premium" means, with respect to a Note at any Redemption
Date, the greater of (i) 1.0% of the principal amount of such Note and (ii) the
excess of (A) the present value at such time of (1) the redemption price of
such Note at November 1, 2001 (such redemption price being described under "--
Optional Redemption") plus (2) all required interest payments due on such Note
through November 1, 2001, computed using a discount rate equal to the Treasury
Rate plus 100 basis points, over (B) the principal amount of such Note.
"Treasury Rate" means the yield to maturity at the time of computation
of United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15 (519)
which has become publicly available at least two business days prior to the
Redemption Date (or, if such Statistical Release is no longer published, any
publicly available source or similar market data)) most nearly equal to the
period from the Redemption Date to November 1, 2001; provided, however, that if
the period from the Redemption Date to November 1, 2001 is not equal to the
constant maturity of a United States Treasury security for which a weekly
average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the period from the Redemption Date to November 1, 2001
is less than one year, the weekly average yield on actually traded United
States Treasury securities adjusted to a constant maturity of one year shall be
used.
Selection. In the case of any partial redemption, selection of the
Notes for redemption will be made by the Trustee on a pro rata basis, by lot or
by such other method as the Trustee in its sole discretion shall deem to be
fair and appropriate, although no Note of $1,000 in original principal amount
or less will be redeemed in part. If any Note is to be redeemed in part only,
the notice of redemption relating to such Note shall state the portion of the
principal amount thereof to be redeemed. A new Note in principal amount equal
to the unredeemed portion thereof will be issued in the name of the holder
thereof upon cancellation of the original Note.
RANKING AND SUBORDINATION
The payment of the principal of, premium (if any), and interest on the
Notes is subordinated in right of payment, as set forth in the Indenture, to
the payment when due of all Senior Indebtedness of the Company. However,
payment from the money or the proceeds of U.S. Government Obligations held in
any defeasance trust described under "Defeasance" below is not subordinate to
any Senior Indebtedness or subject to the restrictions described herein. As of
September 30, 1996, on a pro forma basis after giving effect to the Transaction
and the Financing, the outstanding Senior Indebtedness of the Company would
have been $683 million (exclusive of unused commitments). Although the
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<PAGE> 70
Indenture contains limitations on the amount of additional Indebtedness that
the Company may incur, under certain circumstances the amount of such
Indebtedness could be substantial and, in any case, such Indebtedness may be
Senior Indebtedness. See "Certain Covenants -- Limitation on Indebtedness"
below.
"Senior Indebtedness" is defined, whether outstanding on the Issue
Date or thereafter issued, as the Bank Indebtedness and all other Indebtedness
of the Company, including interest and fees thereon, unless, in the instrument
creating or evidencing the same or pursuant to which the same is outstanding,
it is provided that the obligations in respect of such Indebtedness are not
superior in right of payment to the Notes; provided, however, that Senior
Indebtedness will not include (1) any obligation of the Company to any
Subsidiary, (2) any liability for Federal, state, foreign, local or other taxes
owed or owing by the Company, (3) any accounts payable or other liability to
trade creditors arising in the ordinary course of business (including
Guarantees thereof or instruments evidencing such liabilities), or (4) any
Indebtedness, Guarantee or obligation of the Company that is expressly
subordinate or junior in right of payment to any other Indebtedness, Guarantee
or obligation of the Company, including any Senior Subordinated Indebtedness
and any Subordinated Obligations.
Only Indebtedness of the Company that is Senior Indebtedness will rank
senior to the Notes in accordance with the provisions of the Indenture. The
Notes will in all respects rank pari passu with all other Senior Subordinated
Indebtedness of the Company. The Company has agreed in the Indenture that it
will not incur, directly or indirectly, any Indebtedness that is subordinate or
junior in ranking in any respect to Senior Indebtedness unless such
Indebtedness is Senior Subordinated Indebtedness or is contractually
subordinated in right of payment to Senior Subordinated Indebtedness. In
addition, no Subsidiary Guarantor shall incur any Indebtedness if such
Indebtedness is subordinate or junior in ranking in any respect to any
Guarantor Senior Indebtedness of such Subsidiary Guarantor unless such
Indebtedness is Guarantor Senior Subordinated Indebtedness of such Subsidiary
Guarantor or is contractually subordinated in right of payment to Guarantor
Senior Subordinated Indebtedness of such Subsidiary Guarantor. Unsecured
Indebtedness is not deemed to be subordinate or junior to Secured Indebtedness
merely because it is unsecured.
The Company may not pay principal of, premium (if any), or interest
on, the Notes or make any deposit pursuant to the provisions described under
"Defeasance" below and may not otherwise purchase or retire any Notes
(collectively, "pay the Notes") if (i) any Senior Indebtedness is not paid when
due or (ii) any other default on Senior Indebtedness occurs and the maturity of
such 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 Senior Indebtedness has been paid in full. However, the
Company may pay the Notes without regard to the foregoing if the Company and
the Trustee receive written notice approving such payment from the
Representative of the 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, the Company may not pay the 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 the holders of such 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) because such
Designated Senior Indebtedness has been repaid in full). Notwithstanding the
provisions described in the immediately preceding sentence, unless the holders
of such Designated Senior Indebtedness or the Representative of such holders
have accelerated the maturity of such Designated Senior Indebtedness, the
Company may resume payments on the 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 or distribution of the assets of the Company upon a
total or partial liquidation or dissolution or reorganization or bankruptcy of
or similar proceeding relating to the Company or its property, the holders of
Senior Indebtedness will be entitled to receive payment in full of the Senior
Indebtedness before the holders of the Notes are entitled to receive any
payment, and until the Senior Indebtedness is paid in full, any payment or
distribution to which holders of the Notes would be entitled but for the
subordination provisions of the Indenture will be made to holders of the Senior
Indebtedness as their interests may appear. If a distribution is made to
holders of the Notes that, due to the
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<PAGE> 71
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 Notes is accelerated because of an Event of Default,
the Company or the Trustee shall promptly notify the holders of the Designated
Senior Indebtedness or the Representative of such holders of the acceleration.
The Company may not pay the Notes until five Business Days after such holders
or the Representative of the Designated Senior Indebtedness receive notice of
such acceleration and, thereafter, may pay the Notes only if the subordination
provisions of the Indenture otherwise permit payment at that time.
By reason of such subordination provisions contained in the Indenture,
in the event of insolvency, creditors of the Company who are holders of Senior
Indebtedness may recover more, ratably, than the Noteholders, and creditors of
the Company who are not holders of Senior Indebtedness or of Senior
Subordinated Indebtedness (including the Notes) may recover less, ratably, than
holders of Senior Indebtedness and may recover more, ratably, than the holders
of Senior Subordinated Indebtedness.
SUBSIDIARY GUARANTIES
Each Subsidiary Guarantor unconditionally guarantees, jointly and
severally, to each holder and the Trustee, on a senior subordinated basis, the
full and prompt payment of principal of and interest on the Notes, and of all
other obligations of the Company under the Indenture.
The Indebtedness evidenced by each Subsidiary Guaranty (including the
payment of principal of, premium, if any, and interest on the Notes) will be
subordinated to Guarantor Senior Indebtedness on the same basis as the Notes
are subordinated to Senior Indebtedness. As of September 30, 1996, on a pro
forma basis after giving effect to the Transaction and the Financing, there
would have been approximately $683 million of Guarantor Senior Indebtedness
(all of which would have represented guarantees of borrowings under the Credit
Agreement). Although the Indenture contains limitations on the amount of
additional Indebtedness that the Company's Restricted Subsidiaries may incur,
under certain circumstances the amount of such Indebtedness could be
substantial and, in any case, such Indebtedness may be Guarantor Senior
Indebtedness. See "Certain Covenants -- Limitation on Indebtedness" below. See
"-- Ranking and Subordination" above.
The obligations of each Subsidiary Guarantor are limited to the
maximum amount as will, after giving effect to all other contingent and fixed
liabilities of such Subsidiary Guarantor (including, without limitation, any
guarantees under the Credit Agreement) and after giving effect to any
collections from or payments made by or on behalf of any other Subsidiary
Guarantor in respect of the obligations of such other Subsidiary Guarantor
under its Subsidiary Guarantee or pursuant to its contribution obligations
under the Indenture, result in the obligations of such Subsidiary Guarantor
under the Subsidiary Guarantee not constituting a fraudulent conveyance or
fraudulent transfer under federal or state law.
Each Subsidiary Guarantor may consolidate with or merge into or sell
its assets to the Company or another Subsidiary Guarantor without limitation.
Each Subsidiary Guarantor may consolidate with or merge into or sell all or
substantially all its assets to a corporation, partnership or trust other than
the Company or another Subsidiary Guarantor (whether or not affiliated with the
Subsidiary Guarantor). Upon the sale or disposition of a Subsidiary Guarantor
(or all or substantially all of its assets) to a Person (whether or not an
Affiliate of the Subsidiary Guarantor) which is not a Subsidiary of the
Company, which sale or disposition is otherwise in compliance with the
Indenture (including the covenant described under "Certain Covenants --
Limitation on Sales of Assets and Subsidiary Stock"), such Subsidiary Guarantor
shall be deemed released from all its obligations under the Indenture and its
Subsidiary Guarantee and such Subsidiary Guarantee shall terminate; provided,
however, that any such termination shall occur only to the extent that all
obligations of such Subsidiary Guarantor under the Credit Agreement and all of
its guarantees of, and under all of its pledges of assets or other security
interests which secure, any other Indebtedness of the Company shall also
terminate upon such release, sale or transfer.
CHANGE OF CONTROL
Upon the occurrence of any of the following events (each a "Change of
Control"), each holder will have the right to require the Company to repurchase
all or any part of such holder's Notes at a purchase price in cash equal to
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101% of the principal amount thereof plus accrued and unpaid interest, if any,
to the date of purchase (subject to the right of holders of record on the
relevant record date to receive interest due on the relevant interest payment
date):
(i) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or
substantially all of the assets of the Company and its Subsidiaries to
any Person or group of related Persons for purposes of Section 13(d)
of the Exchange Act (a "Group") (whether or not otherwise in
compliance with the provisions of the Indenture), other than to Hicks
Muse, Metropoulos & Co. or any of their Affiliates, officers and
directors (the "Permitted Holders"); or
(ii) a majority of the Board of Directors of the Company
shall consist of Persons who are not Continuing Directors; or
(iii) the acquisition by any Person or Group (other than the
Permitted Holders) of the power, directly or indirectly, to vote or
direct the voting of securities having more than 50% of the ordinary
voting power for the election of directors of the Company.
Within 30 days following any Change of Control, unless the Company has
mailed a redemption notice with respect to all the outstanding Notes in
connection with such Change of Control, the Company shall mail a notice to each
holder with a copy to the Trustee stating: (1) that a Change of Control has
occurred and that such holder has the right to require the Company to purchase
such holder's Notes at a purchase price in cash equal to 101% of the principal
amount thereof plus accrued and unpaid interest, if any, to the date of
purchase (subject to the right of holders of record on a record date to receive
interest on the relevant interest payment date); (2) the repurchase date (which
shall be no earlier than 30 days nor later than 60 days from the date such
notice is mailed); and (3) the procedures determined by the Company, consistent
with the Indenture, that a holder must follow in order to have its Notes
purchased.
The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
covenant. To the extent that the provisions of any securities laws or
regulations conflict with provisions of the Indenture, the Company will comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations described in the Indenture by virtue thereof.
The definition of "Change of Control" includes, among other
transactions, a disposition of all or substantially all of the property and
assets of the Company and its Subsidiaries. With respect to the disposition of
property or assets, the phrase "all or substantially all" as used in the
Indenture varies according to the facts and circumstances of the subject
transaction, has no clearly established meaning under New York law (which is
the choice of law under the Indenture) and is subject to judicial
interpretation. Accordingly, in certain circumstances there may be a degree of
uncertainty in ascertaining whether a particular transaction would involve a
disposition of "all or substantially all" of the property or assets of a
Person, and therefore it may be unclear as to whether a Change of Control has
occurred and whether the Company is required to make an offer to repurchase the
Notes as described above.
The occurrence of certain of the events that would constitute a Change
of Control would constitute a default under the Credit Agreement. Future Senior
Indebtedness of the Company and its Subsidiaries may also contain prohibitions
of certain events that would constitute a Change of Control or require such
Senior Indebtedness to be repurchased upon a Change of Control. Moreover, the
exercise by the holders of their right to require the Company to repurchase the
Notes could cause a default under such Senior Indebtedness, even if the Change
of Control itself does not, due to the financial effect of such repurchase on
the Company. Finally, the Company's ability to pay cash to the holders upon a
repurchase may be limited by the Company's then existing financial resources.
There can be no assurance that sufficient funds will be available when
necessary to make any required repurchases. Even if sufficient funds were
otherwise available, the terms of the Bank Indebtedness will prohibit the
Company's prepayment of Notes prior to their scheduled maturity. Consequently,
if the Company is not able to prepay the Bank Indebtedness and any other Senior
Indebtedness containing similar restrictions or obtain requisite consents, as
described above, the Company will be unable to fulfill its repurchase
obligations if holders of Notes exercise their repurchase rights following a
Change of Control, thereby resulting in a default under the Indenture.
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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 and any of its Restricted Subsidiaries may Incur
Indebtedness if on the date thereof the Consolidated Coverage Ratio
would be greater than 2.00:1.00, if such Indebtedness is Incurred on
or prior to the second anniversary of the Issue Date, and 2.25:1.00,
if such Indebtedness is Incurred thereafter.
(b) Notwithstanding the foregoing paragraph (a), the Company
and its Restricted Subsidiaries may Incur the following Indebtedness:
(i) Indebtedness Incurred pursuant to (A) the Credit Agreement
(including, without limitation, any renewal, extension, refunding,
restructuring, replacement or refinancing thereof referred to in
clause (ii) of the definition thereof) or (B) any other agreements or
indentures governing Senior Indebtedness; provided, however, that the
aggregate principal amount of all Indebtedness Incurred pursuant to
this clause (i) does not exceed $770 million at any time outstanding,
less the aggregate principal amount thereof repaid with the net
proceeds of Asset Dispositions (to the extent, in the case of a
repayment of revolving credit Indebtedness, the commitment to advance
the loans repaid has been terminated); (ii) Indebtedness represented
by Capitalized Lease Obligations, mortgage financings or purchase
money obligations, in each case Incurred for the purpose of financing
all or any part of the purchase price or cost of construction or
improvement of property used in a Related Business or Incurred to
Refinance any such purchase price or cost of construction or
improvement, in each case Incurred no later than 365 days after the
date of such acquisition or the date of completion of such
construction or improvement; provided, however, that the principal
amount of any Indebtedness Incurred pursuant to this clause (ii) shall
not exceed $25 million at any time outstanding; (iii) Permitted
Indebtedness; and (iv) Indebtedness (other than Indebtedness described
in clauses (i) - (iii)) in a principal amount which, when taken
together with the principal amount of all other Indebtedness Incurred
pursuant to this clause (iv) and then outstanding, will not exceed $75
million (it being understood that any Indebtedness Incurred under this
clause (iv) shall cease to be deemed Incurred or outstanding for
purposes of this clause (iv) (but shall be deemed to be Incurred for
purposes of paragraph (a)) from and after the first date on which the
Company or its Restricted Subsidiaries could have Incurred such
Indebtedness under the foregoing paragraph (a) without reliance upon
this clause (iv)).
(c) Neither the Company nor any Restricted Subsidiary shall
Incur any Indebtedness under paragraph (b) above if the proceeds
thereof are used, directly or indirectly, to Refinance any
Subordinated Obligations of the Company unless such Indebtedness shall
be subordinated to the Notes to at least the same extent as such
Subordinated Obligations. No Subsidiary Guarantor shall Incur any
Indebtedness under paragraph (b) above if the proceeds thereof are
used, directly or indirectly, to Refinance any Guarantor Subordinated
Obligation of such Subsidiary Guarantor unless such Indebtedness shall
be subordinated to the obligations of such Subsidiary Guarantor under
the Subsidiary Guaranty to at least the same extent as such Guarantor
Subordinated Obligation.
(d) In addition, the Company shall not Incur any Secured
Indebtedness which is not Senior Indebtedness unless contemporaneously
therewith effective provision is made to secure the Notes equally and
ratably with such Secured Indebtedness for so long as such Secured
Indebtedness is secured by a Lien. No Subsidiary Guarantor shall Incur
any Secured Indebtedness which is not Guarantor Senior Indebtedness
unless contemporaneously therewith effective provision is made to
secure such Subsidiary Guarantor's obligations under the Subsidiary
Guaranty equally and ratably with such Secured Indebtedness for so
long as such Secured Indebtedness is secured by a Lien.
(e) The Company will not permit any Unrestricted Subsidiary
to incur any Indebtedness other than Non-Recourse Debt; provided,
however, if any such Indebtedness ceases to be Non-Recourse Debt, such
event shall be deemed to constitute an incurrence of Indebtedness by
the Company or a Restricted Subsidiary.
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Limitation on Layering. The Company shall not Incur any Indebtedness
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 contractually subordinated in right of payment to Senior
Subordinated Indebtedness. No Subsidiary Guarantor shall Incur any Indebtedness
if such Indebtedness is contractually subordinate or junior in ranking in any
respect to any Guarantor Senior Indebtedness of such Subsidiary Guarantor
unless such Indebtedness is Guarantor Senior Subordinated Indebtedness of such
Subsidiary Guarantor or is contractually subordinated in right of payment to
Guarantor Senior Subordinated Indebtedness of such Subsidiary Guarantor.
Limitation on Restricted Payments. (a) The Company shall not, and
shall not permit any of its Restricted Subsidiaries, directly or indirectly, to
(i) declare or pay any dividend or make any distribution on or in respect of
its Capital Stock (including any payment in connection with any merger or
consolidation involving the Company or any of its Restricted Subsidiaries)
except (A) dividends or distributions payable in its Capital Stock (other than
Disqualified Stock) or in options, warrants or other rights to purchase such
Capital Stock, and (B) dividends or distributions payable to the Company or a
Restricted Subsidiary of the Company (and if such Restricted Subsidiary is not
a Wholly-Owned Subsidiary, to its other holders of Capital Stock on a pro rata
basis), (ii) purchase, redeem, retire or otherwise acquire for value any
Capital Stock of the Company held by Persons other than a Restricted Subsidiary
of the Company or any Capital Stock of a Restricted Subsidiary of the Company
held by any Affiliate of the Company, other than another Restricted Subsidiary
(in either case, other than in exchange for its Capital Stock (other than
Disqualified Stock)), (iii) purchase, repurchase, redeem, defease or otherwise
acquire or retire for value, prior to scheduled maturity, scheduled repayment
or scheduled sinking fund payment, any Subordinated Obligations (other than the
purchase, repurchase or other acquisition of Subordinated Obligations purchased
in anticipation of satisfying a sinking fund obligation, principal installment
or final maturity, in each case due within one year of the date of purchase,
repurchase or acquisition) or (iv) make any Investment (other than a Permitted
Investment) in any Person (any such dividend, distribution, purchase,
redemption, repurchase, defeasance, other acquisition, retirement or Investment
being herein referred to in clauses (i) through (iv) as a "Restricted
Payment"), if at the time the Company or such Restricted Subsidiary makes such
Restricted Payment: (1) a Default shall have occurred and be continuing (or
would result therefrom); or (2) the Company is not able to incur an additional
$1.00 of Indebtedness pursuant to paragraph (a) under "Limitation on
Indebtedness"; or (3) the aggregate amount of such Restricted Payment and all
other Restricted Payments declared or made subsequent to the Issue Date would
exceed the sum of: (A) 50% of the Consolidated Net Income accrued during the
period (treated as one accounting period) from the Issue Date to the end of the
most recent fiscal quarter ending prior to the date of such Restricted Payment
as to which financial results are available (but in no event ending more than
135 days prior to the date of such Restricted Payment) (or, in case such
Consolidated Net Income shall be a deficit, minus 100% of such deficit); (B)
the aggregate net proceeds received by the Company from the issue or sale of
its Capital Stock (other than Disqualified Stock) or other capital
contributions subsequent to the Issue Date (other than net proceeds received
from an issuance or sale of such Capital Stock to a Subsidiary of the Company
or an employee stock ownership plan or similar trust); provided, however, that
the value of any non cash net proceeds shall be as determined by the Board of
Directors in good faith, except that in the event the value of any non cash net
proceeds shall be $25 million or more, the value shall be as determined in
writing by an independent investment banking firm of nationally recognized
standing; (C) the aggregate Net Cash Proceeds received by the Company from the
issue or sale of its Capital Stock (other than Disqualified Stock) to an
employee stock ownership plan or similar trust subsequent to the Issue Date;
provided, however, that if such plan or trust Incurs any Indebtedness to or
Guaranteed by the Company or any of its Restricted Subsidiaries to finance the
acquisition of such Capital Stock, such aggregate amount shall be limited to
such Net Cash Proceeds less such Indebtedness Incurred to or Guaranteed by the
Company or any of its Restricted Subsidiaries and any increase in the
Consolidated Net Worth of the Company resulting from principal repayments made
by such plan or trust with respect to Indebtedness Incurred by it to finance
the purchase of such Capital Stock; (D) the amount by which Indebtedness of the
Company is reduced on the Company's balance sheet upon the conversion or
exchange (other than by a Restricted Subsidiary of the Company) subsequent to
the Issue Date of any Indebtedness of the Company convertible or exchangeable
for Capital Stock of the Company (less the amount of any cash, or other
property, distributed by the Company upon such conversion or exchange); (E) the
amount equal to the net reduction in Investments (other than Permitted
Investments) made by the Company or any of its Restricted Subsidiaries in any
Person resulting from (i) repurchases or redemptions of such Investments by
such Person, proceeds realized upon the sale of such Investment to an
unaffiliated purchaser, and repayments of loans or advances or other transfers
of assets by such Person to the Company or any Restricted Subsidiary of the
Company or (ii) the redesignation of Unrestricted Subsidiaries as Restricted
Subsidiaries (valued in each case as provided in the definition of
"Investment") not to exceed, in the case of any Unrestricted Subsidiary, the
amount of Investments previously made by the Company or any Restricted
Subsidiary in such Unrestricted Subsidiary, which amount was included in the
calculation of the amount of Restricted Payments;
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provided, however, that no amount shall be included under this clause (E) to
the extent it is already included in Consolidated Net Income; and (F) the
aggregate Net Cash Proceeds received by a Person in consideration for the
issuance of such Person's Capital Stock (other than Disqualified Stock) which
are held by such Person at the time such Person is merged with and into the
Company in accordance with the "Merger and Consolidation" covenant subsequent
to the Issue Date; provided, however, that concurrently with or immediately
following such merger the Company uses an amount equal to such Net Cash
Proceeds to redeem or repurchase the Company's Capital Stock.
(b) The provisions of paragraph (a) shall not prohibit: (i) any
purchase or redemption of Capital Stock or Subordinated Obligations of the
Company made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Capital Stock of the Company (other than Disqualified Stock
and other than Capital Stock issued or sold to a Subsidiary or an employee
stock ownership plan or similar trust); provided, however, that (A) such
purchase or redemption shall be excluded in the calculation of the amount of
Restricted Payments and (B) the Net Cash Proceeds from such sale shall be
excluded from clause (3) (B) of paragraph (a); (ii) any purchase or redemption
of Subordinated Obligations of the Company made by exchange for, or out of the
proceeds of the substantially concurrent sale of, Subordinated Obligations of
the Company; provided, however, that such purchase or redemption shall be
excluded in the calculation of the amount of Restricted Payments; (iii) any
purchase or redemption of Subordinated Obligations from Net Available Cash to
the extent permitted under "Limitation on Sales of Assets and Subsidiary Stock"
below; provided, however, that such purchase or redemption shall be excluded in
the calculation of the amount of Restricted Payments; (iv) dividends paid
within 60 days after the date of declaration if at such date of declaration
such dividend would have complied with this provision; provided, however, that
such dividend shall be included in the calculation of the amount of Restricted
Payments; (v) payments of dividends on the Company's common stock after an
initial public offering of common stock of the Company in an annual amount not
to exceed 6% of the gross proceeds (before deducting underwriting discounts and
commissions and other fees and expenses of the offering) received by the
Company from shares of common stock sold for the account of the Company (and
not for the account of any stockholder) in such initial public offering; (vi)
payments by the Company to repurchase Capital Stock or other securities of the
Company from members of management of the Company in an aggregate amount not to
exceed $15 million; (vii) payments to enable the Company to redeem or
repurchase stock purchase or similar rights granted by the Company with respect
to its Capital Stock in an aggregate amount not to exceed $1 million; (viii)
payments, not to exceed $200,000 in the aggregate, to enable the Company to
make cash payments to holders of its Capital Stock in lieu of the issuance of
fractional shares of its Capital Stock; (ix) payments made pursuant to any
merger, consolidation or sale of assets effected in accordance with the "Merger
and Consolidation" covenant; provided, however, that no such payment may be
made pursuant to this clause (ix) unless, after giving effect to such
transaction (and the incurrence of any Indebtedness in connection therewith and
the use of the proceeds thereof), the Company would be able to Incur $1.00 of
additional Indebtedness (other than Permitted Indebtedness) in compliance with
the "Limitation on Indebtedness" covenant such that, after Incurring that $1.00
of additional Indebtedness, the Consolidated Coverage Ratio would be greater
than 3.5:1.00; and (x) the redemption payment to be made by the Company on the
Issue Date pursuant to the Merger Agreement and any amount paid subsequent to
the Issue Date adjusting such redemption payment in accordance with the terms
of the Merger Agreement; provided, however, that in the case of clauses (v),
(vi), (vii), (viii) and (ix) no Default or Event of Default shall have occurred
or be continuing at the time of such payment or as a result thereof.
Limitation on Restrictions on Distributions from Restricted
Subsidiaries. The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, create or permit to exist or become effective any consensual
encumbrance or restriction on the ability of any such Restricted Subsidiary to
(i) pay dividends or make any other distributions on its Capital Stock or pay
any Indebtedness or other obligation owed to the Company, (ii) make any loans
or advances to the Company or (iii) transfer any of its property or assets to
the Company; except: (a) any encumbrance or restriction pursuant to an
agreement in effect at or entered into on the Issue Date, including the Credit
Agreement; (b) any encumbrance or restriction with respect to such a Restricted
Subsidiary pursuant to an agreement relating to any Indebtedness issued by such
Restricted Subsidiary on or prior to the date on which such Restricted
Subsidiary was acquired by the Company and outstanding on such date (other than
Indebtedness issued 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 of the Company or was acquired by the Company); (c) any
encumbrance or restriction with respect to such a Restricted Subsidiary
pursuant to an agreement evidencing Indebtedness Incurred without violation of
the Indenture or effecting a refinancing of Indebtedness issued pursuant to an
agreement referred to in clauses (a) or (b) or this clause (c) or contained in
any amendment to an agreement referred to in clauses (a) or (b) or this clause
(c); provided, however, that the encumbrances and restrictions with respect to
such Restricted Subsidiary contained in any of such agreement, refinancing
agreement or amendment,
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taken as a whole, are no less favorable to the holders in any material respect,
as determined in good faith by the senior management of the Company or Board of
Directors of the Company, than encumbrances and restrictions with respect to
such Restricted Subsidiary contained in agreements in effect at, or entered
into on, the Issue Date; (d) in the case of clause (iii), 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, (B) 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, (C) that is included in a licensing agreement to
the extent such restrictions limit the transfer of the property subject to such
licensing agreement or (D) arising or agreed to in the ordinary course of
business and that does not, individually or in the aggregate, detract from the
value of property or assets of the Company or any of its Subsidiaries in any
manner material to the Company or any such Restricted Subsidiary; (e) in the
case of clause (iii) above, restrictions contained in security agreements,
mortgages or similar documents securing Indebtedness of a Restricted Subsidiary
to the extent such restrictions restrict the transfer of the property subject
to such security agreements; (f) any restriction with respect to such 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; and
(g) encumbrances or restrictions arising or existing by reason of applicable
law.
Limitation on Sales of Assets and Subsidiary Stock. (a) The Company
shall not, and shall not permit any of its Restricted Subsidiaries to, make any
Asset Disposition unless (i) the Company or such Restricted Subsidiary receives
consideration at the time of such Asset Disposition at least equal to the fair
market value, as determined in good faith by the Company's senior management or
the Board of Directors (including as to the value of all non-cash
consideration), of the shares and assets subject to such Asset Disposition,
(ii) at least 75% of the consideration thereof received by the Company or such
Restricted Subsidiary is in the form of cash or cash equivalents 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 or any Restricted Subsidiary elects (or is
required by the terms of any Senior Indebtedness), to prepay, repay or purchase
(x) Senior Indebtedness or (y) Indebtedness (other than Preferred Stock) of a
Wholly-Owned Subsidiary (in each case other than Indebtedness owed to the
Company) within 180 days from the later of the date of such Asset Disposition
or the receipt of such Net Available Cash; (B) second, within one year from the
receipt of such Net Available Cash, to the extent of the balance of such Net
Available Cash after application in accordance with clause (A), at the
Company's election either (x) to the investment in or acquisition of Additional
Assets or (y) to prepay, repay or purchase (1) Senior Indebtedness or (2)
Indebtedness (other than Preferred Stock) of a Wholly-Owned Subsidiary (in each
case other than Indebtedness owed to the Company); (C) third, within 45 days
after the later of the application of Net Available Cash in accordance with
clauses (A) and (B) and the date that is one year from the receipt of such Net
Available Cash, to the extent of the balance of such Net Available Cash after
application in accordance with clauses (A) and (B), to make an offer to
purchase Notes at par plus accrued and unpaid interest, if any, thereon; 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 (w) the investment
in or acquisition of Additional Assets, (x) the making of Temporary Cash
Investments, (y) the prepayment, repayment or purchase of Indebtedness of the
Company or Indebtedness of any Subsidiary (other than Indebtedness owed to the
Company) or (z) any other purpose otherwise permitted under the Indenture, in
each case within the later of 45 days after the application of Net Available
Cash in accordance with clauses (A), (B) and (C) or the date that is one year
from the receipt of such Net Available Cash; provided, however, that, in
connection with any prepayment, repayment or purchase of Indebtedness pursuant
to clause (A), (B), (C) or (D) 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. Notwithstanding the foregoing provisions, the
Company and its Restricted Subsidiaries shall not be required to apply any Net
Available Cash in accordance herewith except to the extent that the aggregate
Net Available Cash from all Asset Dispositions which are not applied in
accordance with this covenant at any time exceed $15 million. The Company shall
not be required to make an offer for Notes pursuant to this covenant if the Net
Available Cash available therefor (after application of the proceeds as
provided in clauses (A) and (B)) is less than $25 million for any particular
Asset Disposition (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 this covenant, the following will be deemed to be
cash: (x) the assumption by the transferee of Senior Indebtedness of the
Company or Indebtedness of any Restricted Subsidiary of the Company and the
release of the Company or such Restricted Subsidiary from all liability on such
Senior Indebtedness or Indebtedness in connection with such Asset Disposition
(in which case the Company shall, without further action, be deemed to have
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applied such assumed Indebtedness in accordance with clause (A) of the
preceding paragraph) 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.
Notwithstanding the foregoing, the Company and its Restricted
Subsidiaries will be permitted to consummate an Asset Swap if (i) at the time
of entering into such Asset Swap or immediately after giving effect to such
Asset Swap, no Default or Event of Default shall have occurred or be continuing
or would occur as a consequence thereof, (ii) in the event such Asset Swap
involves an aggregate amount in excess of $10 million, the terms of such Asset
Swap have been approved by a majority of the members of the Board of Directors
of the Company, and (iii) in the event such Asset Swap involves an aggregate
amount in excess of $50 million, the Company has received a written opinion
from an independent investment banking firm of nationally recognized standing
that such Asset Swap is fair to the Company or such Restricted Subsidiary, as
the case may be, from a financial point of view.
(b) In the event of an Asset Disposition that requires the purchase of
Notes pursuant to clause (a)(iii)(C), the Company will be required to purchase
Notes tendered pursuant to an offer by the Company for the Notes at a purchase
price of 100% of their principal amount plus accrued and unpaid interest, if
any, to the purchase date in accordance with the procedures (including
prorating in the event of oversubscription) set forth in the Indenture. If the
aggregate purchase price of the Notes tendered pursuant to the offer is less
than the Net Available Cash allotted to the purchase of the Notes, the Company
will apply the remaining Net Available Cash in accordance with clause
(a)(iii)(D) above.
(c) The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to the
Indenture. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this covenant, the Company will comply
with the applicable securities laws and regulations and will not be deemed to
have breached its obligations under the Indenture by virtue thereof.
Limitation on Affiliate Transactions. (a) The Company will not, and
will not permit any of its Restricted Subsidiaries 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 other than a Wholly-Owned Subsidiary (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 arm's-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 million, 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); and (iii) in the event such Affiliate Transaction involves an aggregate
amount in excess of $15 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 foregoing paragraph (a) shall not apply to (i) any Restricted
Payment permitted to be made pursuant to the covenant described under
"Limitation on Restricted Payments," (ii) any issuance of securities, or other
payments, awards or grants in cash, securities or otherwise pursuant to, or the
funding of, employment arrangements, stock options and stock ownership plans
approved by the Board of Directors of the Company, (iii) loans or advances to
employees in the ordinary course of business of the Company or any of its
Restricted Subsidiaries, (iv) any transaction between Wholly-Owned
Subsidiaries, (v) indemnification agreements with, and the payment of fees and
indemnities to, directors, officers and employees of the Company and its
Restricted Subsidiaries, in each case in the ordinary course of business, (vi)
transactions pursuant to agreements as in existence on the Issue Date, (vii)
any employment, non-competition or confidentiality agreements entered into by
the Company or any of its Restricted Subsidiaries with its employees in the
ordinary course of business, (viii) payments made in connection with the
Transaction, including fees to Hicks Muse, (ix) the issuance of Capital Stock
of the Company (other than Disqualified Stock) and (x) any obligations of the
Company pursuant to the Monitoring and Oversight Agreement and the Financial
Advisory Agreement.
Limitation on Capital Stock of Restricted Subsidiaries. The Company
will not permit any of its Restricted Subsidiaries to issue any Capital Stock
(other than Preferred Stock) to any Person (other than to the Company or a
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Wholly-Owned Subsidiary of the Company) or permit any Person (other than the
Company or a Wholly-Owned Subsidiary of the Company) to own any Capital Stock
(other than Preferred Stock) of a Restricted Subsidiary of the Company, if in
either case as a result thereof such Restricted Subsidiary would no longer be a
Restricted Subsidiary of the Company; provided, however, that this provision
shall not prohibit (x) the Company or any of its Restricted Subsidiaries from
selling, leasing or otherwise disposing of all of the Capital Stock of any
Restricted Subsidiary or (y) the designation of a Restricted Subsidiary as an
Unrestricted Subsidiary in compliance with the Indenture.
SEC Reports. The Company will file with the Trustee and provide to the
holders of the Notes, within 15 days after it files them with the Commission,
copies of the annual reports and of the information, documents and other
reports (or copies of such portions of any of the foregoing as the Commission
may by rules and regulations prescribe) which the Company files with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act. In the event
that the Company is not required to file such reports with the Commission
pursuant to the Exchange Act, the Company will nevertheless deliver such
Exchange Act information to the holders of the Notes within 15 days after it
would have been required to file it with the Commission.
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 corporation, partnership, trust or
limited liability company 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 supplemental
indenture, executed and delivered to the Trustee, in form satisfactory to the
Trustee, all the obligations of the Company under the Notes and the Indenture;
(ii) immediately after giving effect to such transaction (and treating any
Indebtedness that becomes an obligation of the Successor Company or any
Subsidiary of the Successor Company as a result of such transaction as having
been incurred by the Successor Company or such Restricted Subsidiary at the
time of such transaction), no Default or Event of Default shall have occurred
and be continuing; (iii) immediately after giving effect to such transaction,
the Successor Company would be able to incur at least an additional $1.00 of
Indebtedness pursuant to paragraph (a) of "Limitation on Indebtedness"; and
(iv) 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 the Indenture.
The Successor Company will succeed to, and be substituted for, and may
exercise every right and power of, the Company under the Indenture, but, in the
case of a lease of all or substantially all its assets, the Company will not be
released from the obligation to pay the principal of and interest on the Notes.
Notwithstanding the foregoing clauses (ii) and (iii), (1) any
Restricted Subsidiary of the Company may consolidate with, merge into or
transfer all or part of its properties and assets to the Company and (2) the
Company may merge with an Affiliate incorporated solely for the purpose of
reincorporating the Company in another jurisdiction to realize tax or other
benefits.
EVENTS OF DEFAULT
Each of the following constitutes an Event of Default under the
Indenture: (i) a default in any payment of interest on any Note when due,
continued for 30 days, whether or not such payment is prohibited by the
provisions described under "Ranking and Subordination" above, (ii) a default in
the payment of principal of any Note when due at its Stated Maturity, upon
optional redemption, upon required repurchase, upon declaration or otherwise,
whether or not such payment is prohibited by the provisions described under
"Ranking and Subordination" above, (iii) the failure by the Company to comply
with its obligations under "Certain Covenants -- Merger and Consolidation"
above, (iv) the failure by the Company to comply for 30 days after notice with
any of its obligations under the covenants described under "Change of Control"
above or under covenants described under "Certain Covenants" above (in each
case, other than a failure to purchase 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
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 $20
million and such default shall not have been cured or such acceleration
rescinded after a 10 day period (the "cross acceleration provision"), (vii)
certain events of bankruptcy, insolvency or reorganization of the Company or a
Significant Subsidiary (the "bankruptcy provisions"), (viii) any judgment or
decree for the payment of money in excess of $20 million (to the extent not
covered by insurance) is rendered against the
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Company or a Significant Subsidiary and such judgment or decree shall remain
undischarged or unstayed for a period of 60 days after such judgment becomes
final and non-appealable (the "judgment default provision") or (ix) any
Subsidiary Guaranty by a Significant Subsidiary ceases to be in full force and
effect (except as contemplated by the terms of the Indenture) or any Subsidiary
Guarantor that is a Significant Subsidiary denies or disaffirms its obligations
under the Indenture or its Subsidiary Guaranty and such Default continues for
10 days. However, a default under clauses (iv) and (v) will not constitute an
Event of Default until the Trustee or the holders of 25% in principal amount of
the outstanding 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 occurs and is continuing, the Trustee or the
holders of at least 25% in principal amount of the outstanding Notes by notice
to the Company may declare the principal of and accrued and unpaid interest, if
any, on all the Notes to be due and payable. Upon such a declaration, such
principal and accrued and unpaid interest shall be due and payable immediately.
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 Notes will 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 Notes may rescind any such acceleration
with respect to the Notes and its consequences.
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 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 principal amount of the outstanding 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 Notes have not
given the Trustee a direction that, in the opinion of the Trustee, 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
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 Note, the Trustee
may withhold notice if and so long as its board of directors, a committee of
its board of directors or a committee of its Trust officers in good faith
determines that withholding notice is in the interests of the Noteholders. 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.
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 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
Notes then outstanding. However, without the consent of each holder of an
outstanding New Note affected, no amendment may, among other things, (i) reduce
the amount of Notes whose holders must consent to an amendment, (ii) reduce the
stated rate of or extend the stated time for payment of interest on any New
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 New
Note or change the time at which any New Note may be redeemed as described
under "Optional Redemption" above, (v) make any New Note payable in money other
than that stated in the New Note, (vi) impair the right of any holder to
receive payment of principal of and interest
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on such holder's Notes on or after the due dates therefor or to institute suit
for the enforcement of any payment on or with respect to such holder's 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 corporation, partnership, trust or
limited liability company of the obligations of the Company under the
Indenture, to provide for uncertificated Notes in addition to or in place of
certificated Notes (provided that the uncertificated Notes are issued in
registered form for purposes of Section 163(f) of the Code, or in a manner such
that the uncertificated Notes are described in Section 163(f) (2) (B) of the
Code), to add further Guarantees with respect to the Notes, to secure the
Notes, to add to the covenants of the Company for the benefit of the holders 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.
DEFEASANCE
The Company at any time may terminate all its obligations under the
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 Notes, to replace mutilated, destroyed, lost or
stolen Notes and to maintain a registrar and paying agent in respect of the
Notes. The Company at any time may terminate its obligations under covenants
described under "Certain Covenants" (other than "Merger and Consolidation"),
the operation of the cross acceleration provision, the bankruptcy provisions
with respect to Significant Subsidiaries, the judgment default provision and
the Subsidiary Guaranty provision described under "Events of Default" above and
the limitations contained in clauses (iii) and (iv) under "Certain Covenants --
Merger and Consolidation" above ("covenant defeasance").
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 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 Notes may not be accelerated
because of an Event of Default specified in clause (iv), (vi), (vii) (with
respect only to Significant Subsidiaries), (viii) or (ix) under "Events of
Default" above 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, premium (if any) and
interest on the 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 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
United States 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 Notes.
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GOVERNING LAW
The Indenture provides that it and the 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 conflicts of law to the extent that the
application of the law of another jurisdiction would be required thereby.
CERTAIN DEFINITIONS
"Additional Assets" means (i) any property or assets (other than
Indebtedness and Capital Stock) in a Related Business; (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 a Restricted Subsidiary of the Company;
(iii) Capital Stock constituting a minority interest in any Person that at such
time is a Restricted Subsidiary of the Company; or (iv) Permitted Investments
of the type and in the amounts described in clause (viii) of the definition
thereof; provided, however, that, in the case of clauses (ii) and (iii), such
Restricted Subsidiary is primarily engaged in a Related Business.
"Affiliate" of any specified Person means any other Person, directly
or indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. 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.
"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 Wholly-Owned 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) dispositions of property for net proceeds which, when taken
collectively with the net proceeds of any other such dispositions under this
clause (iv) that were consummated since the beginning of the calendar year in
which such disposition is consummated, do not exceed 1.5% of the consolidated
book value of the Company's assets as of the most recent date prior to such
disposition for which a consolidated balance sheet of the Company has been
regularly prepared, and (v) transactions permitted under "Certain Covenants --
Merger and Consolidation" above.
"Asset Swap" means the execution of a definitive agreement, subject
only to customary closing conditions that the Company in good faith believes
will be satisfied, for a substantially concurrent purchase and sale, or
exchange, of Productive Assets between the Company or any of its Restricted
Subsidiaries and another Person or group of affiliated Persons; provided,
however, that any amendment to or waiver of any closing condition that
individually or in the aggregate is material to the Asset Swap shall be deemed
to be a new Asset Swap.
"Attributable Indebtedness" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate borne by the Notes, compounded annually) of the total obligations
of the lessee for rental payments during the remaining term of the lease
included in such Sale/Leaseback Transaction (including any period for which
such lease has been extended).
"Average Life" means, as of the date of determination, with respect to
any indebtedness, 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
multiplied by the amount of such payment by (ii) the sum of all such payments.
"Bank Indebtedness" means any and all amounts, whether outstanding on
the Issue Date or thereafter incurred, payable by the Company under or in
respect of the Credit Agreement and any related notes, collateral documents,
letters of credit and guarantees, including principal, premium (if any),
interest (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether or not a claim
for post filing interest
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is allowed in such proceedings), fees, charges, expenses, reimbursement
obligations, guarantees and all other amounts payable thereunder or in respect
thereof.
"Capitalized Lease Obligations" means an obligation that is required
to be classified and accounted for as a capitalized lease for financial
reporting purposes in accordance with GAAP, and the amount of Indebtedness
represented by such obligation shall be the capitalized amount of such
obligation 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 such lease may be terminated without
penalty.
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of
or interests in (however designated) equity of such Person, including any
Preferred Stock, but excluding any debt securities convertible into such
equity.
"Consolidated Cash Flow" for any period means the Consolidated Net
Income 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, (v) exchange or translation losses on foreign currencies, and (vi) all
other non-cash items reducing Consolidated Net Income (excluding any non-cash
item to the extent it represents an accrual of or reserve for cash
disbursements for any subsequent period prior to the Stated Maturity of the
Notes) and less, to the extent added in calculating Consolidated Net Income,
(x) exchange or translation gains on foreign currencies and (y) non-cash items
(excluding such non-cash items to the extent they represent an accrual for cash
receipts reasonably expected to be received prior to the Stated Maturity of the
Notes), in each case for such period. Notwithstanding the foregoing, the income
tax expense, depreciation expense and amortization expense of a Subsidiary of
the Company shall be included in Consolidated Cash Flow only to the extent (and
in the same proportion) that the net income of such Subsidiary was included in
calculating Consolidated Net Income.
"Consolidated Coverage Ratio" as of any date of determination means
the ratio of (i) the aggregate amount of Consolidated Cash Flow for the period
of the most recent four consecutive fiscal quarters ending prior to the date of
such determination and as to which financial statements are available to (ii)
Consolidated Interest Expense for such four fiscal quarters: 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 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 (A) such Indebtedness as if such Indebtedness
had been Incurred on the first day of such period (provided that if such
Indebtedness is Incurred under a revolving credit facility (or similar
arrangement or under any predecessor revolving credit or similar arrangement)
only that portion of such Indebtedness that constitutes the one year projected
minimum balance of such Indebtedness (as determined in good faith by senior
management of the Company and assuming a constant level of sales) shall be
deemed outstanding for purposes of this calculation) and (B) 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 any
Indebtedness of the Company or any of its Restricted Subsidiaries has been
repaid, repurchased, defeased or otherwise discharged (other than Indebtedness
under a revolving credit or similar arrangement unless such revolving credit
Indebtedness has been permanently repaid and has not been replaced),
Consolidated Interest Expense for such period shall be calculated after giving
pro forma effect thereto as if such Indebtedness had been repaid, repurchased,
defeased or otherwise discharged on the first day of such period, (3) if since
the beginning of such period the Company or any of its Restricted Subsidiaries
shall have made any Asset Disposition or if the transaction giving rise to the
need to calculate the Consolidated Coverage Ratio is an 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 (i) 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) and (ii) increased by
interest income attributable to the assets which are the subject of such Asset
Disposition for such period, (4) if since the beginning of such period the
Company or any of its Restricted Subsidiaries (by merger or
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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 (5) 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, Investment or acquisition of
assets that would have required an adjustment pursuant to clause (3) or (4)
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 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 capital leases, (ii) amortization of debt discount, (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 payments (whether positive or negative) pursuant to Interest
Rate Agreements, (viii) the cash contributions to any employee stock ownership
plan or similar trust to the extent such contributions are used by such plan or
trust to pay interest or fees to any Person (other than the Company) in
connection with Indebtedness Incurred by such plan or trust and (ix) cash and
Disqualified Stock dividends in respect of all Preferred Stock of Subsidiaries
and Disqualified Stock of the Company held by Persons other than the Company or
a Wholly Owned Subsidiary and less (a) to the extent included in such interest
expense, the amortization of capitalized debt issuance costs and (b) interest
income. Notwithstanding the foregoing, the Consolidated Interest Expense with
respect to any Restricted Subsidiary of the Company, that was not a
Wholly-Owned Subsidiary, shall be included only to the extent (and in the same
proportion) that the net income of such Restricted Subsidiary was included in
calculating Consolidated Net Income.
"Consolidated Net Income" means, for any period, the net income (loss)
of the Company and its consolidated Subsidiaries; provided, however, that there
shall not be included in such Consolidated Net Income: (i) any net income
(loss) of any person acquired by the Company or any of its Restricted
Subsidiaries in a pooling of interests transaction for any period prior to the
date of such acquisition, (ii) any net income of any Restricted Subsidiary of
the Company 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 (other than
restrictions in effect on the Issue Date with respect to a Restricted
Subsidiary of the Company and other than restrictions that are created or exist
in compliance with the "Limitation on Restrictions on Distributions from
Restricted Subsidiaries" covenant), (iii) any gain or loss realized upon the
sale or other disposition of any assets of the Company or its consolidated
Restricted Subsidiaries (including pursuant to any Sale/Leaseback Transaction)
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, (iv) any extraordinary gain or loss, (v) the cumulative
effect of a change in accounting principles, (vi) restructuring charges or
writeoffs recorded within the one year period following the Issue Date in an
aggregate amount not to exceed $25 million,(vii) the net income of any Person,
other than a Restricted Subsidiary, except to the extent of the lesser of (A)
dividends or distributions paid to the Company or any of its Restricted
Subsidiaries by such Person and (B) the net income of such Person (but in no
event less than zero), and the net loss of such Person (other than an
Unrestricted Subsidiary) shall be included only to the extent of the aggregate
Investment of the Company or any of its Restricted Subsidiaries in such Person
and (viii) any non-cash expenses attributable to grants or exercises of
employee stock options. Notwithstanding the foregoing, for the purpose of the
covenant described under "Certain Covenants -Limitation on Restricted Payments"
only, there shall be excluded from Consolidated Net Income any dividends,
repayments of loans or advances or other transfers of assets from Unrestricted
Subsidiaries to the Company or a
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Restricted Subsidiary to the extent such dividends, repayments or transfers
increase the amount of Restricted Payments permitted under such covenant
pursuant to clause (a)(3)(E) thereof.
"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 and for which
financial statements are available (but in no event ending more than 135 days
prior to the taking of such action), 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 Stock.
"Continuing Director" means, as of the date of determination, any
Person who (i) was a member of the Board of Directors of the Company on the
date of the Indenture, (ii) was nominated for election or elected to the Board
of Directors of the Company with the affirmative vote of a majority of the
Continuing Directors who were members of such Board of Directors at the time of
such nomination or election, or (iii) is a representative of a Permitted
Holder.
"Credit Agreement" means (i) the Credit Agreement to be entered into
among the Company, The Chase Manhattan Bank, as Administrative Agent, Bankers
Trust Company, as Syndication Agent, and the lenders parties thereto from time
to time, as the same may be amended, supplemented or otherwise modified from
time to time and (ii) any renewal, extension, refunding, restructuring,
replacement or refinancing thereof (whether with the original Administrative
Agent and lenders or another administrative agent or agents or other lenders
and whether provided under the original Credit Agreement or any other credit or
other agreement or 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 which is, or after notice or passage of time
or both would be, an Event of Default.
"Designated Senior Indebtedness" means (i) the Bank Indebtedness in
the case of the Company, (ii) any Guarantee by a Subsidiary Guarantor of the
Bank Indebtedness in the case of such Subsidiary Guarantor and (iii) any other
Senior Indebtedness in the case of the Company or Guarantor Senior Indebtedness
in the case of such Subsidiary Guarantor 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
million and is specifically designated by the Company or such Subsidiary
Guarantor in the instrument evidencing or governing such Senior Indebtedness or
Guarantor Senior Indebtedness as "Designated Senior Indebtedness" for purposes
of the Indenture.
"Disqualified 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 Stock (excluding capital stock which is
convertible or exchangeable solely at the option of the Company or a Restricted
Subsidiary) or (iii) is redeemable at the option of the holder thereof, in
whole or in part, in each case on or prior to the Stated Maturity of the Notes,
provided, that only the portion of Capital Stock which so matures or is
mandatorily redeemable, is so convertible or exchangeable or is so redeemable
at the option of the holder thereof prior to such Stated Maturity shall be
deemed to be Disqualified Stock.
"Equity Offering" means an offering for cash by the Company of its
common stock, or options, warrants or rights with respect to its common stock.
"Financial Advisory Agreement" means the Financial Advisory Agreement
between Hicks Muse Partners and the Company as in effect on the Issue Date.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the date of the Indenture, 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
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the accounting profession. All ratios and computations based on GAAP contained
in the Indenture shall be computed in conformity with GAAP.
"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 of such 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 Senior Indebtedness" means, with respect to a Subsidiary
Guarantor, whether outstanding on the Issue Date or thereafter issued, any
Guarantee of the Bank Indebtedness by such Subsidiary Guarantor, all other
Guarantees by such Subsidiary Guarantor of Senior Indebtedness of the Company
and all Indebtedness of such Subsidiary Guarantor, including interest and fees
thereon, unless, in the instrument creating or evidencing the same or pursuant
to which the same is outstanding, it is provided that the obligations of such
Subsidiary Guarantor in respect of such Indebtedness are not superior in right
of payment to the obligations of such Subsidiary Guarantor under the Subsidiary
Guaranty; provided, however, that Guarantor Senior Indebtedness shall not
include (1) any obligations of such Subsidiary Guarantor to the Company or any
other Subsidiary of the Company, (2) any liability for Federal, state, local or
other taxes owed or owing by such Subsidiary Guarantor, (3) any accounts
payable or other liability to trade creditors arising in the ordinary course of
business (including Guarantees thereof or instruments evidencing such
liabilities) or (4) any Indebtedness, Guarantee or obligation of such
Subsidiary Guarantor that is expressly subordinate or junior in right of
payment to any other Indebtedness, Guarantee or obligation of such Subsidiary
Guarantor, including any Guarantor Senior Subordinated Indebtedness and
Guarantor Subordinated Obligations of such Subsidiary Guarantor.
"Guarantor Senior Subordinated Indebtedness" means, with respect to a
Subsidiary Guarantor, the obligations of such Subsidiary Guarantor under the
Subsidiary Guaranty and any other Indebtedness of such Subsidiary Guarantor
that specifically provides that such Indebtedness is to rank pari passu in
right of payment with the obligations of such Subsidiary Guarantor under the
Subsidiary Guaranty and is not subordinated by its terms in right of payment to
any Indebtedness or other obligation of such Subsidiary Guarantor which is not
Guarantor Senior Indebtedness of such Subsidiary Guarantor.
"Guarantor Subordinated Obligation" means, with respect to a
Subsidiary Guarantor, any Indebtedness of such Subsidiary Guarantor (whether
outstanding on the Issue Date or thereafter Incurred) which is subordinate or
junior in right of payment to the obligations of such Subsidiary Guarantor
under the Subsidiary Guaranty pursuant to a written agreement.
"Incur" means issue, assume, Guarantee, incur or otherwise become
liable for; provided, however, that any Indebtedness or Capital Stock of a
Person existing at the time such person becomes a Restricted Subsidiary
(whether by merger, consolidation, acquisition or otherwise) shall be deemed to
be incurred by such Restricted Subsidiary at the time it becomes a Restricted
Subsidiary.
"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 (except trade payables and accrued
expenses incurred 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 and all
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Attributable Indebtedness 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, (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 Stock or, with respect to any Restricted Subsidiary of the
Company, any Preferred Stock of such Restricted Subsidiary to the extent such
obligation arises on or before the Stated Maturity of the Notes (but excluding,
in each case, any accrued dividends) and (ix) to the extent not otherwise
included in this definition, obligations under Currency Agreements and Interest
Rate Agreements. The amount of Indebtedness of any Person at any date shall be
the outstanding principal amount of all unconditional obligations as described
above, as such amount would be reflected on a balance sheet prepared in
accordance with GAAP, and the maximum liability of such Person, upon the
occurrence of the contingency giving rise to the obligation, of any contingent
obligations described above at such date.
"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 payable 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. For purposes
of the "Limitation on Restricted Payments" covenant, (i) "Investment" shall
include the portion (proportionate to the Company's equity interest in a
Restricted Subsidiary to be designated as an Unrestricted Subsidiary) of the
fair market value of the net assets of such Restricted Subsidiary of the
Company at the time that such Restricted Subsidiary is designated an
Unrestricted Subsidiary; provided, however, that upon a redesignation of such
Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue
to have a permanent "Investment" in an Unrestricted Subsidiary in an amount (if
positive) equal to (x) the Company's "Investment" in such Subsidiary at the
time of such redesignation less (y) the portion (proportionate to the Company's
equity interest in such Subsidiary) of the fair market value of the net assets
of such Subsidiary at the time that such Subsidiary is so re-designated a
Restricted Subsidiary; and (ii) any property transferred to or from an
Unrestricted Subsidiary shall be valued at its fair market value at the time of
such transfer, in each case as determined in good faith by the Board of
Directors and evidenced by a resolution of such Board of Directors certified in
an Officers' Certificate to the Trustee.
"Issue Date" means the date on which the Notes are originally issued.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any conditional sale or other title
retention agreement or lease in the nature thereof).
"Monitoring and Oversight and Agreement" means the Monitoring and
Oversight Agreement between Hicks Muse Partners and the Company as in effect on
the Issue Date.
"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 subject to such Asset Disposition)
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, (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 and (v) any portion of the purchase price from an
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Asset Disposition placed in escrow (whether as a reserve for adjustment of the
purchase price, for satisfaction of indemnities in respect of such Asset
Disposition or otherwise in connection with such Asset Disposition); provided,
however, that upon the termination of such escrow, Net Available Cash shall be
increased by any portion of funds therein released to the Company or any
Restricted Subsidiary.
"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-Recourse Debt" means Indebtedness (i) as to which neither the
Company nor any Restricted Subsidiary (a) provides any guarantee or credit
support of any kind (including any undertaking, guarantee, indemnity, agreement
or instrument that would constitute Indebtedness) or (b) is directly or
indirectly liable (as a guarantor or otherwise) and (ii) no default with
respect to which (including any rights that the holders thereof may have to
take enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any Restricted Subsidiary to declare a default under such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity.
"Permitted Indebtedness" means (i) Indebtedness of the Company owing
to and held by any Wholly-Owned Subsidiary or Indebtedness of a Restricted
Subsidiary owing to and held by the Company or any Wholly-Owned Subsidiary;
provided, however, that any subsequent issuance or transfer of any Capital
Stock or any other event which results in any such Wholly-Owned Subsidiary
ceasing to be a Wholly-Owned Subsidiary or any subsequent transfer of any such
Indebtedness (except to the Company or a Wholly-Owned Subsidiary) shall be
deemed, in each case, to constitute the Incurrence of such Indebtedness by the
issuer thereof; (ii) Indebtedness represented by (x) the Notes, (y) any
Indebtedness (other than the Indebtedness described in clauses (i), (ii) and
(iv) of paragraph (b) of the covenant described under "Limitation on
Indebtedness" and other than Indebtedness Incurred pursuant to clause (i) above
or clauses (iv), (v) or (vi) below) outstanding on the Issue Date and (z) any
Refinancing Indebtedness Incurred in respect of any Indebtedness described in
this clause (ii) or Incurred pursuant to paragraph (a) of the covenant
described under "Limitation on Indebtedness"; (iii) (A) Indebtedness of a
Restricted Subsidiary Incurred and outstanding on 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 Subsidiary
or was otherwise acquired by the Company); provided, however, that at the time
such Restricted Subsidiary is acquired by the Company, the Company would have
been able to Incur $1.00 of additional Indebtedness pursuant to paragraph (a)
of the covenant described under "Limitation on Indebtedness" above after giving
effect to the Incurrence of such Indebtedness pursuant to this clause (iii) and
(B) Refinancing Indebtedness Incurred by a Restricted Subsidiary in respect of
Indebtedness Incurred by such Restricted Subsidiary pursuant to this clause
(iii); (iv) Indebtedness (A) in respect of performance bonds, bankers'
acceptances and surety or appeal bonds provided by the Company or any of its
Restricted Subsidiaries to their customers in the ordinary course of their
business, (B) in respect of performance bonds or similar obligations of the
Company or any of its Restricted Subsidiaries for or in connection with
pledges, deposits or payments made or given in the ordinary course of business
in connection with or to secure statutory, regulatory or similar obligations,
including obligations under health, safety or environmental obligations, (C)
arising from Guarantees to suppliers, lessors, licensees, contractors,
franchises or customers of obligations (other than Indebtedness) incurred in
the ordinary course of business and (D) under Currency Agreements and Interest
Rate Agreements; provided, however, that in the case of Currency Agreements and
Interest Rate Agreements, such Currency Agreements and Interest Rate Agreements
are entered into for bona fide hedging purposes of the Company or its
Restricted Subsidiaries (as determined in good faith by the Board of Directors
or senior management of the Company) and correspond in terms of notional
amount, duration, currencies and interest rates, as applicable, to Indebtedness
of the Company or its Restricted Subsidiaries Incurred without violation of the
Indenture or to business transactions of the Company or its Restricted
Subsidiaries on customary terms entered into in the ordinary course of
business; (v) Indebtedness arising from agreements providing for
indemnification, adjustment of purchase price or similar obligations, or from
Guarantees or letters of credit, surety bonds or performance bonds securing any
obligations of the Company or any of its Restricted Subsidiaries pursuant to
such agreements, in each case Incurred in connection with the disposition of
any business assets or Restricted Subsidiary of the Company (other than
Guarantees of Indebtedness or other obligations Incurred by any Person
acquiring all or any portion of such business assets or Restricted Subsidiary
of the Company for the purpose of financing such acquisition) in a principal
amount not to exceed the gross proceeds actually received by the Company or any
of its Restricted Subsidiaries in connection with
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such disposition; provided, however, that the principal amount of any
Indebtedness Incurred pursuant to this clause (v), when taken together with all
Indebtedness Incurred pursuant to this clause (v) and then outstanding, shall
not exceed $20 million; (vi) Indebtedness consisting of (A) Guarantees by the
Company or a Restricted Subsidiary of Indebtedness Incurred by a Wholly-Owned
Subsidiary without violation of the Indenture and (B) Guarantees by a
Restricted Subsidiary of Senior Indebtedness Incurred by the Company without
violation of the Indenture (so long as such Restricted Subsidiary could have
Incurred such Indebtedness directly without violation of the Indenture); and
(vii) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument drawn against insufficient
funds in the ordinary course of business, provided that such Indebtedness is
extinguished within two business days of its incurrence.
"Permitted Investment" means an Investment by the Company or any of
its Restricted Subsidiaries in (i) a Wholly-Owned Subsidiary of the Company;
provided, however, that the primary business of such Wholly-Owned Subsidiary is
a Related Business; (ii) another Person if as a result of such Investment such
other Person becomes a Wholly-Owned Subsidiary of the Company or is merged or
consolidated with or into, or transfers or conveys all or substantially all its
assets to, the Company or a Wholly-Owned Subsidiary of the Company; provided,
however, that in each case such Person's primary business is a Related
Business; (iii) Temporary Cash Investments; (iv) receivables owing to the
Company or any of its Restricted 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 for purposes of purchasing the
Company's common stock in an aggregate amount outstanding at any one time not
to exceed $10 million and other loans and advances to employees made in the
ordinary course of business consistent with past practices of the Company or
such Restricted Subsidiary; (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 Restricted Subsidiaries or in satisfaction of judgments
or claims; (viii) a Person engaged in a Related Business or a loan or advance
to the Company the proceeds of which are used solely to make an Investment in a
Person engaged in a Related Business or a Guarantee by the Company of
Indebtedness of any Person in which such Investment has been made; provided,
however, that no Permitted Investments may be made pursuant to this clause
(viii) to the extent the amount thereof would, when taken together with all
other Permitted Investments made pursuant to this clause (viii), exceed $50
million in the aggregate (plus, to the extent not previously reinvested, any
return of capital realized on Permitted Investments made pursuant to this
clause (viii), or any release or other cancellation of any Guarantee
constituting such Permitted Investment); (ix) Persons to the extent such
Investment is received by the Company or any Restricted Subsidiary as
consideration for asset dispositions effected in compliance with the covenant
described under "Limitations on Sales of Assets and Subsidiary Stock"; (x)
prepayments and other credits to suppliers made in the ordinary course of
business consistent with the past practices of the Company and its Restricted
Subsidiaries; and (xi) Investments in connection with pledges, deposits,
payments or performance bonds made or given in the ordinary course of business
in connection with or to secure statutory, regulatory or similar obligations,
including obligations under health, safety or environmental obligations.
"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.
"Productive Assets" means assets of a kind used or usable by the
Company and its Restricted Subsidiaries in the Company's business or any
Related Business.
A "Public Market" exists at any time with respect to the common stock
of the Company if (a) the common stock of the Company is then registered with
the Securities and Exchange Commission pursuant to Section 12(b) or 12(g) of
Exchange Act and traded either on a national securities exchange or in the
National Association of Securities Dealers Automated Quotation System and (b)
at least 15% of the total issued and outstanding common stock of the Company
has been distributed prior to such time by means of an effective registration
statement under the Securities Act 1933.
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"Refinancing Indebtedness" means Indebtedness that refunds,
refinances, replaces, renews, repays or extends (including pursuant to any
defeasance or discharge mechanism) (collectively, "refinances," and
"refinanced" shall have a correlative meaning) any Indebtedness existing on the
date of the Indenture or Incurred in compliance with the Indenture (including
Indebtedness of the Company that refinances Indebtedness of any Restricted
Subsidiary and Indebtedness of any Restricted Subsidiary that refinances
Indebtedness of another Restricted Subsidiary) including Indebtedness that
refinances Refinancing Indebtedness, provided, however, that (i) the
Refinancing Indebtedness has a Stated Maturity no earlier than the earlier of
(A) the first anniversary of the Stated Maturity of the Notes and (B) Stated
Maturity of the Indebtedness being refinanced, (ii) the Refinancing
Indebtedness has an Average Life at the time such Refinancing Indebtedness is
Incurred that is equal to or greater than the lesser of (A) the Average Life of
the Notes and (B) the Average Life of the Indebtedness being refinanced, and
(iii) such Refinancing Indebtedness is Incurred in an aggregate principal
amount (or if issued with original issue discount, an aggregate issue price)
that is equal to (or 101% of, in the case of a refinancing of the Notes in
connection with a Change of Control) or less than the sum of the aggregate
principal amount (or if issued with original issue discount, the aggregate
accreted value) then outstanding of the Indebtedness being refinanced.
"Related Business" means any business which is the same as or related,
ancillary or complementary to any of the businesses of the Company and its
Restricted Subsidiaries on the date of the Indenture, as reasonably determined
by the Company's Board of Directors.
"Representative" means any trustee, agent or representative (if any)
of an issue of Senior Indebtedness.
"Restricted Subsidiary" means any Subsidiary of the Company other than
an Unrestricted Subsidiary.
"Sale/Leaseback Transaction" means an arrangement relating to property
now owned or hereafter acquired whereby the Company or a Restricted Subsidiary
transfers such property to a Person and the Company or a Subsidiary leases it
from such Person.
"Secured Indebtedness" means any Indebtedness of the Company or a
Subsidiary Guarantor secured by a Lien.
"Senior Subordinated Indebtedness" means the Notes and any other
Indebtedness of the Company that specifically provides that such Indebtedness
is to rank pari passu with the 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 which is not Senior Indebtedness.
"Significant Subsidiary" means any Restricted Subsidiary that would be
a "Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.
"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 Obligation" means any Indebtedness of the Company
(whether outstanding on the Issue Date or thereafter Incurred) which is
subordinate or junior in right of payment to the 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.
"Subsidiary Guarantor" means each Subsidiary of the Company in
existence on the Issue Date and each Subsidiary (other than foreign
subsidiaries and Unrestricted Subsidiaries) created or acquired by the Company
after the Issue Date.
"Subsidiary Guaranty" means the Guarantee of the Notes by a Subsidiary
Guarantor.
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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 $250 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 30 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, (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, (v) Investments in securities with maturities of six months or
less from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States of America, or by any political
subdivision or taxing authority thereof, and rated at least "A" by Standard &
Poor's Ratings Group or "A" by Moody's Investors Service, Inc. and (vi)
Investments in mutual funds whose investment guidelines restrict such funds'
investments to those satisfying the provisions of clauses (i) through (v)
above.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that
at the time of determination shall be designated an Unrestricted Subsidiary by
the Board of Directors in the manner provided below and (ii) any Subsidiary of
an Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary
of the Company (including any newly acquired or newly formed Subsidiary of the
Company) to be an Unrestricted Subsidiary unless such Subsidiary or any of its
Subsidiaries owns any Capital Stock or Indebtedness of, or owns or holds any
Lien on any property of, the Company or any Restricted Subsidiary of the
Company that is not a Subsidiary of the Subsidiary to be so designated;
provided, however, that either (A) the Subsidiary to be so designated has total
consolidated assets of $10,000 or less or (B) if such Subsidiary has
consolidated assets greater than $10,000, then such designation would be
permitted under "Limitation on Restricted Payments." The Board of Directors may
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided,
however, that immediately after giving effect to such designation (x) the
Company could Incur $1.00 of additional Indebtedness under clause (a) of
"Limitation on Indebtedness" and (y) no Default shall have occurred and be
continuing. Any such designation by the Board of Directors shall be evidenced
to the Trustee by promptly filing with the Trustee a copy of the Board
Resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing provisions.
"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.
"Voting Stock" of a corporation means all classes of Capital Stock of
such corporation then outstanding and normally entitled to vote in the election
of directors.
"Wholly-Owned Subsidiary" means a Restricted Subsidiary of the
Company, at least 99% of the Capital Stock of which (other than directors'
qualifying shares) is owned by the Company or another Wholly-Owned Subsidiary.
BOOK-ENTRY; DELIVERY AND FORM
The certificates representing the Old Notes were issued, and the
certificates representing the New Notes will be issued, in fully registered
form, without coupons. The Old Notes are represented by two permanent global
certificates in definitive, fully registered form without interest coupons in
the aggregate amount of $398,500,000 (the "Initial Global Notes") and by three
Certificated Securities (as defined below) in the amount of $500,000 each.
Except as described in the next paragraph, the New Notes initially will be
represented by one or more permanent global certificates in definitive, fully
registered form (the "Global Notes") and will be deposited with, or on behalf
of, the DTC (the "Depositary"), and registered in the name of Cede & Co., as
the DTC's nominee or will remain in the custody of the Trustee pursuant to a
FAST Balance Certificate Agreement between the DTC and the Trustee. If any
holder of Old
88
<PAGE> 91
Notes whose interest in such Old Notes is represented by an Initial Global Note
fails to tender in the Exchange Offer, the Company may issue and deliver to
such holder a separate certificate representing such holder's Old Notes in
registered form without interest coupons.
New Notes exchanged for Old Notes originally purchased by or
transferred to (i) institutional "accredited investors" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) who are not "qualified
institutional buyers" (as defined in Rule 144A under the Securities Act)
("QIBs") or (ii) QIBs who elect to take physical delivery of their certificates
(collectively, "Non-Global Purchasers") will be issued in registered form
without interest coupons (the "Certificated Securities"). Upon the transfer to
a QIB of Certificated Securities initially issued to a Non-Global Purchaser,
such Certificated Securities will, unless the transferee requests otherwise or
the Global Note has previously been exchanged in whole for Certificated
Securities, be exchanged for an interest in the Global 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 Depository's Participants include
securities brokers and dealers (including the initial purchasers of the Old
Notes), 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 New 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. Persons that are
not QIBs may not hold New Notes through the Depository.
The Company has been advised by the Depository that upon deposit of
the Global Notes, (i) the Depository will credit the accounts of Participants
with portions of the principal amount of the Global Notes and (ii) ownership of
the New Notes evidenced by the Global Notes will be shown on, and the transfer
of ownership thereof will be effected only through, records maintained by the
Depository (with respect to the interests of the Depository's Participants),
the Depository's Participants and the Depository's Indirect Participants. The
laws of some states require that certain persons take physical delivery in
definitive form of securities that they own and that security interests in
negotiable instruments can only be perfected by delivery of certificates
representing the instruments. Consequently, the ability to transfer New Notes
or to pledge the New Notes as collateral will be limited to such extent.
So long as the Depository or its nominee is the registered owner of
the Global Notes, the Depository or such nominee, as the case may be, will be
considered the sole owner or holder of the New Notes represented by the Global
Notes for all purposes under the Indenture. Except as provided below, owners of
beneficial interests in a Global Note will not be entitled to have New Notes
represented by such Global Note registered in their names and will not be
considered the owners or holders thereof under the Indenture for any purpose,
including with respect to giving of any directions, instruction or approval to
the Trustee thereunder. As a result, the ability of a person having a
beneficial interest in New Notes represented by a Global Note to pledge such
interest to persons or entities that do not participate in the Depository's
system or to otherwise take action with respect to such interest, may be
affected by the lack of a physical certificate evidencing such interest.
Payments with respect to the principal of, premium, if any, and
interest on any New Notes represented by a Global Note registered in the name
of the Depository or its nominee on the applicable record date will be payable
by the Trustee to or at the direction of the Depository or its nominee in its
capacity as the registered Holder of the Global Note representing such New
Notes under the Indenture. Under the terms of the Indenture, the Company and
the Trustee may treat the persons in whose names the New Notes, including the
Global Notes, are registered as the owners thereof for the purpose of receiving
such payment and for any and all other purposes whatsoever. Consequently,
neither the Company nor the Trustee has or will have any responsibility or
liability for the payment of such amounts to beneficial owners of New Notes
(including principal, premium, if any, and interest), or to immediately credit
the accounts of the relevant Participants with such payment, in amounts
proportionate to their respective holdings in principal amount of beneficial
interest in the Global Note as shown on the records of the Depository. Payments
by the Participants and the
89
<PAGE> 92
Indirect Participants to the beneficial owners of New Notes will be governed by
standing instructions and customary practice and will be the responsibility of
the Participants or the Indirect Participants.
CERTIFICATED SECURITIES
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 within 90 days, (ii) the Company, at its
option, notifies the Trustee in writing that it elects to cause the issuance of
New Notes in definitive form under the Indenture, or (iii) upon the occurrence
of certain other events, then, upon surrender by the Depository of its Global
Notes, Certificated Securities will be issued to each person that the
Depository identifies as the beneficial owner of the New Notes represented by
the Global Notes. In addition, subject to certain conditions, any person having
a beneficial interest in a Global Note may, upon request to the Trustee,
exchange such beneficial interest for Certificated Securities. Upon any such
issuance, the Trustee is required to register such Certificated Securities in
the name of such person or persons (or the nominee of any thereof) and cause
the same to be delivered thereto.
Neither the Company nor the Trustee shall be liable for any delay by
the Depository or any Participant or Indirect Participant in identifying the
beneficial owners of the related New Notes and each such person may
conclusively rely on, and shall be protected in relying on, instructions from
the Depository for all purposes (including with respect to the registration and
delivery, and the respective principal amounts, of the New Notes to be issued).
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a summary of certain federal income tax
considerations relevant to the exchange of Old Notes for New Notes, but does
not purport to be a complete analysis of all potential tax effects. The
discussion is based upon the Internal Revenue Code of 1986, as amended,
Treasury regulations, Internal Revenue Service rulings and pronouncements and
judicial decisions now in effect, all of which are subject to change at any
time by legislative, judicial or administrative action. Any such changes may be
applied retroactively in a manner that could adversely affect a holder of the
New Notes. The description does not consider the effect of any applicable
foreign, state, local or other tax laws or estate or gift tax considerations.
EACH HOLDER SHOULD CONSULT HIS OR HER OWN TAX ADVISOR AS TO THE
PARTICULAR TAX CONSEQUENCES TO IT OF EXCHANGING OLD NOTES FOR NEW NOTES,
INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
The exchange of Old Notes for New Notes should not be an exchange or
otherwise a taxable event to a holder for federal income tax purposes.
Accordingly, a holder should have the same adjusted issue price, adjusted basis
and holding period in the New Notes as it had in the Old Notes immediately
before the exchange.
90
<PAGE> 93
PLAN OF DISTRIBUTION
Each broker-dealer that receives New 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 New 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 New Notes received in exchange for
Old Notes where such Old Notes were acquired as a result of market-making
activities or other trading activities. Each of the Company and the Subsidiary
Guarantors has agreed that, for a period of 90 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
________________, 199__, all dealers effecting transactions in the New Notes
may be required to deliver a prospectus.
Neither the Company nor the Subsidiary Guarantors will receive any
proceeds from any sale of New Notes by broker-dealers. New 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 New 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 at
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 New Notes. Any broker-dealer that resells New 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 New Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of New Notes and any commission or concessions received by any such
persons may be deemed to be underwriting compensation under 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.
For a period of 90 days after the Expiration Date the Company will
promptly send additional copies of this Prospectus for any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company and the Subsidiary Guarantors have
jointly and severally agreed to pay all expenses incident to the Exchange Offer
(including the expenses of one counsel for the Holders of the Old Notes) other
than commissions or concessions of any broker-dealers and will indemnify the
Holders of the Old Notes (including any broker-dealers) against certain
liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
The validity of the New Notes offered hereby will be passed upon for
the Company by Vinson & Elkins L.L.P., Dallas, Texas.
91
<PAGE> 94
EXPERTS
The consolidated balance sheets of American Home Food Products as of
December 31, 1995 and 1994 and the consolidated statements of income, Parent
Company's Investment and Advances, and cash flows of American Home Food
Products for each of the three years in the period ended December 31, 1995,
included in this prospectus, have been included herein in reliance on the
report of Arthur Andersen LLP, independent accountants, given on the authority
of that firm as experts in accounting and auditing.
Subject to the approval of the Company's Board of Directors, the
Company, will change its independent accountants. Commencing with the
examination of the Company's books and accounts for the fiscal year ended
December 31, 1996, Coopers & Lybrand L.L.P. will serve as the Company's
independent accountants. The reports of Arthur Andersen LLP ("Arthur Andersen")
on the financial statements of the Company for fiscal years 1995 and 1994 are
unqualified and do not contain an adverse opinion or disclaimer of opinion.
This change in accountants has not been preceded by a disagreement with Arthur
Andersen on any matter of accounting principles or practices, financial
statement disclosure or auditing scope of procedure which if not resolved to
Arthur Andersen's satisfaction would have caused Arthur Andersen to make
reference to the subject matter of the disagreement in connection with Arthur
Andersen's reports on the Company's financial statements.
AVAILABLE INFORMATION
The Company has filed with the Commission a registration statement
(the "Registration Statement") under the Securities Act with respect to the New
Notes offered hereby. As permitted by the rules and regulations of the
Commission, this Prospectus does not contain all of the information set forth
in the Registration Statement. For further information with respect to the
Company and the New Notes offered hereby, reference is made to the Registration
Statement, including the exhibits and schedules filed therewith. Statements
contained in this Prospectus concerning the provisions of any contract,
agreement or other document referred to herein or therein are not necessarily
complete, but contain a summary of the material terms of such contracts,
agreements or other documents. With respect to each contract, agreement or
other document filed as an exhibit to the Registration Statement, reference is
made to the exhibit for the complete contents of the exhibit, and each
statement concerning its provisions is qualified in its entirety by such
reference. The Registration Statement may be inspected, without charge, at the
offices of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and
at its regional offices at 7 World Trade Center, New York, New York, 10048 and
Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661-2551. Copies
of such materials may also be obtained by mail at prescribed rates from the
Public Reference Section of the Commission at its principal office at 450 Fifth
Street, N.W., Washington, D.C. 20549. Copies of such materials may also be
obtained from the web site that the Commission maintains at www.sec.gov.
92
<PAGE> 95
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AMERICAN HOME FOOD PRODUCTS
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS.............................................. F-2
COMBINED FINANCIAL STATEMENTS:
Combined Balance Sheets as of December 31, 1994, 1995 and (unaudited) as of
September 30, 1996............................................................... F-3
Combined Statements of Operations and Parent Company's Investment and Advances for
the years ended December 31, 1993, 1994 and 1995 and (unaudited) for the nine
months ended September 30, 1995 and 1996......................................... F-4
Combined Statements of Cash Flows for the years ended December 31, 1993, 1994 and
1995 and (unaudited) for the nine months ended September 30, 1995 and 1996....... F-5
Notes to Combined Financial Statements.............................................. F-6
</TABLE>
All schedules are omitted because the required information is not
applicable or because the required information is included in the combined
financial statements or related notes.
F-1
<PAGE> 96
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To American Home Products Corporation:
We have audited the accompanying combined balance sheets of American Home
Food Products identified in Note 1, as of December 31, 1995 and 1994, and the
related combined statements of operations and parent company's investment and
advances, and cash flows for each of the three years in the period ended
December 31, 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 statements referred to above present fairly, in all
material respects, the financial position of American Home Food Products as of
December 31, 1995 and 1994, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
New York, New York
October 11, 1996
F-2
<PAGE> 97
AMERICAN HOME FOOD PRODUCTS
COMBINED BALANCE SHEETS
(IN THOUSANDS OF U. S. DOLLARS)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31
--------------------- SEPTEMBER 30,
1994 1995 1996
-------- -------- -------------
(UNAUDITED)
<S> <C> <C> <C>
CURRENT ASSETS:
Accounts receivable, net of allowance for doubtful
accounts of $1,474, $1,663 and $1,782 at December
31, 1994, 1995 and September 30, 1996,
respectively..................................... $107,384 $ 45,674 $ 55,733
Inventories......................................... 147,953 139,850 130,466
Prepaid expenses and other current assets........... 4,883 3,832 1,939
-------- -------- --------
Total current assets........................ 260,220 189,356 188,138
PROPERTY, PLANT AND EQUIPMENT, net.................... 169,698 176,755 173,520
INTANGIBLE ASSETS, net (primarily goodwill)........... 110,453 97,443 95,436
OTHER................................................. 106 93 75
-------- -------- --------
Total assets................................ $540,477 $463,647 $ 457,169
======== ======== ========
LIABILITIES AND PARENT COMPANY'S
INVESTMENT AND ADVANCES
CURRENT LIABILITIES:
Accounts payable.................................... $ 15,670 $ 13,092 $ 16,977
Accrued salaries, wages and benefits................ 9,075 9,272 10,581
Accrued advertising and promotion................... 24,518 27,465 32,884
Other accrued liabilities........................... 13,800 18,902 17,905
-------- -------- --------
Total current liabilities................... 63,063 68,731 78,347
OTHER NONCURRENT LIABILITIES, primarily accrued
royalties........................................... 10,275 9,919 10,189
COMMITMENTS AND CONTINGENCIES
PARENT COMPANY'S INVESTMENT AND ADVANCES.............. 467,139 384,997 368,633
-------- -------- --------
Total liabilities and parent company's
investment and advances................... $540,477 $463,647 $ 457,169
======== ======== ========
</TABLE>
The accompanying notes to combined financial statements
are an integral part of these balance sheets.
F-3
<PAGE> 98
AMERICAN HOME FOOD PRODUCTS
COMBINED STATEMENTS OF OPERATIONS AND
PARENT COMPANY'S INVESTMENT AND ADVANCES
(IN THOUSANDS OF U. S. DOLLARS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31 SEPTEMBER 30,
----------------------------------- ---------------------
1993 1994 1995 1995 1996
-------- -------- --------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET SALES...................... $935,715 $997,321 $ 818,861 $609,139 $704,103
COST OF SALES.................. 432,031 463,137 398,122 296,979 333,880
-------- -------- --------- -------- --------
Gross profit......... 503,684 534,184 420,739 312,160 370,223
MARKETING EXPENSES............. 189,850 200,757 186,396 139,876 140,168
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES...... 146,906 160,996 151,257 115,776 108,215
OTHER EXPENSE, net............. 13,624 13,215 14,479 10,266 2,096
-------- -------- --------- -------- --------
Income before
provision for
income taxes....... 153,304 159,216 68,607 46,242 119,744
PROVISION FOR INCOME
TAXES........................ 60,946 63,296 29,414 20,422 45,576
-------- -------- --------- -------- --------
Net income........... 92,358 95,920 39,193 25,820 74,168
PARENT COMPANY'S INVESTMENT AND
ADVANCES, beginning of
period....................... 330,106 423,551 467,139 467,139 384,997
ADVANCES WITHDRAWALS AND
DIVIDENDS, net............... 1,087 (52,332) (121,335) (79,724) (90,532)
-------- -------- --------- -------- --------
PARENT COMPANY'S INVESTMENT AND
ADVANCES, end of period...... $423,551 $467,139 $ 384,997 $413,235 $368,633
======== ======== ========= ======== ========
</TABLE>
The accompanying notes to combined financial statements
are an integral part of these statements.
F-4
<PAGE> 99
AMERICAN HOME FOOD PRODUCTS
COMBINED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF U. S. DOLLARS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31 SEPTEMBER 30,
------------------------------- -------------------
1993 1994 1995 1995 1996
-------- -------- --------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income........................... $ 92,358 $ 95,920 $ 39,193 $ 25,820 $ 74,168
Adjustments to reconcile net income
to net cash provided from
operating activities --
Depreciation and amortization..... 24,991 26,389 30,154 22,569 13,717
Changes in working capital --
Accounts receivable............... (15,584) (24,711) 61,710 44,740 (10,059)
Inventories....................... (19,094) (13,802) 8,103 1,107 9,384
Prepaid expenses and other current
assets.......................... 1,260 (1,259) 1,051 1,440 1,894
Other noncurrent assets........... 30 (19) 13 29 16
Accounts payable.................. 363 (2,728) (2,578) (1,889) 3,885
Accrued salaries, wages and
benefits........................ 1,191 (369) 197 (5) 1,310
Accrued advertising and
promotion....................... 1,945 8,073 2,947 4,247 5,419
Other accrued liabilities......... 1,360 (4,424) 5,102 4,405 (998)
Other............................. (320) 379 (356) (368) 270
-------- -------- --------- -------- --------
Net cash provided from
operating activities....... 88,500 83,449 145,536 102,095 99,006
-------- -------- --------- -------- --------
INVESTING ACTIVITIES:
Purchases of plant and equipment,
net............................... 22,030 31,117 24,201 22,372 8,475
Purchase of business................. 67,557 0 0 0 0
-------- -------- --------- -------- --------
Net cash used in investing
activities................. (89,587) (31,117) (24,201) (22,372) (8,475)
-------- -------- --------- -------- --------
FINANCING ACTIVITIES:
Dividends paid to parent company..... (85,012) (93,761) (5,818) (1,924) (1,461)
Change in parent company's investment
and advances, net................. 86,598 42,134 (115,793) (78,369) (89,171)
-------- -------- --------- -------- --------
Net cash provided from (used
in) financing activities... 1,586 (51,627) (121,611) (80,293) (90,632)
-------- -------- --------- -------- --------
EFFECT OF EXCHANGE RATES............... (499) (705) 276 570 101
-------- -------- --------- -------- --------
INCREASE (DECREASE) IN CASH............ $ 0 $ 0 $ 0 $ 0 $ 0
========= ========= ========== ========= =========
</TABLE>
The accompanying notes to combined financial statements
are an integral part of these statements.
F-5
<PAGE> 100
AMERICAN HOME FOOD PRODUCTS
NOTES TO COMBINED FINANCIAL STATEMENTS
(IN THOUSANDS OF U. S. DOLLARS)
(DATA WITH REGARD TO SEPTEMBER 30, 1996 AND 1995
AND FOR THE NINE MONTHS THEN ENDED ARE UNAUDITED)
(1) DESCRIPTION OF BUSINESS:
The accompanying financial statements include the operations of the
following indirect wholly-owned subsidiaries of American Home Products
Corporation ("AHPC" or the "Parent"): American Home Food Products, Inc. and its
subsidiary ("AHFP, Inc."), American Home Foods, Inc., Luck's Incorporated, all
of which are Delaware corporations, Canadian Home Products Limited (a Canadian
corporation), and certain related assets owned by AHPC and its subsidiaries.
On September 5, 1996, AHPC, AHP Subsidiary Holding Corporation and other
parties entered into an agreement (the "Agreement") pursuant to which an
affiliate of Hicks Muse Equity Fund III, L.P. will acquire an 80% interest in
AHFP, Inc. for approximately $1,222,000. All of the other entities and
operations of the food products business of AHPC will be contributed into AHFP,
Inc., all of which will constitute the Company. In connection with the
Agreement, AHFP Inc. will receive approximately $264,000 of equity financing and
will incur indebtedness of approximately $1,083,000, approximately $958,000 of
which will be used to redeem shares of common stock of AHFP Inc. held by a
subsidiary of AHPC. As a result, AHPC will continue to beneficially own
approximately 20% of AHFP, Inc. Immediately after, the Company will purchase
Heritage Brands Holdings, Inc. and subsidiaries for approximately $70,000 in an
acquisition which will be accounted for using the purchase method of accounting.
The Company is in a single industry which manufactures and markets a
diversified portfolio of shelf-stable food products. These products include
entrees, side dishes, spreadable fruit products, snacks and other food products.
The Company sells its products primarily in the United States and Canada. The
Company is not dependent on any single or major group of customers for its
sales.
The accompanying combined financial statements have been prepared in
accordance with generally accepted accounting principles and necessarily include
amounts based on judgments and estimates made by management. Actual results
could differ from these estimates. All significant intercompany accounts and
transactions have been eliminated in preparing the combined statements.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Inventories --
Inventories are valued at the lower of cost or market, with cost determined
on a first-in, first-out basis. Inventories are as follows --
<TABLE>
<CAPTION>
DECEMBER 31
--------------------- SEPTEMBER 30,
1994 1995 1996
-------- -------- -------------
<S> <C> <C> <C>
Raw materials................................. $ 53,635 $ 53,523 $ 30,295
Work in progress.............................. 5,569 3,769 23,911
Finished goods................................ 88,749 82,558 76,260
-------- -------- -------------
Total............................... $147,953 $139,850 $ 130,466
========= ========= ===========
</TABLE>
F-6
<PAGE> 101
AMERICAN HOME FOOD PRODUCTS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
Property, Plant and Equipment --
Property, plant and equipment is stated at cost. Normal maintenance and
repairs are expensed. Additions and improvements either to provide necessary
capacity, improve the efficiency of production or to modernize the facilities
are capitalized. Depreciation is calculated using the straight-line method over
the estimated useful lives; generally 40 years for building and leasehold
improvements, 15 years for machinery and equipment and 5 years for furniture and
fixtures. Property, plant and equipment consisted of --
<TABLE>
<CAPTION>
DECEMBER 31
--------------------- SEPTEMBER 30,
1994 1995 1996
-------- -------- -------------
<S> <C> <C> <C>
Land.......................................... $ 4,494 $ 4,494 $ 4,589
Buildings and leasehold improvements.......... 93,641 101,622 106,600
Machinery and equipment....................... 160,878 172,093 170,375
Furniture and fixtures........................ 15,154 18,893 19,388
-------- -------- -------------
274,167 297,102 300,952
Less -- accumulated depreciation and
amortization................................ 104,469 120,347 127,432
-------- -------- -------------
Total............................... $169,698 $176,755 $ 173,520
========= ========= ===========
</TABLE>
Intangible Assets --
Early in 1993, the Company acquired a manufacturer and distributor of shelf
stable fruit-juice-sweetened spreads for approximately $67,500. This acquisition
was accounted for as a purchase, and accordingly, the net assets acquired were
recorded at their approximate fair value as of the acquisition date. The pro
forma effect on the Company's results of operations as if the acquisition had
occurred at the beginning of 1993 was not significant. Goodwill represents the
excess of cost over the fair value of net assets acquired and is being amortized
on the straight-line method primarily over 40 years. In connection with the
acquisition, the Company also acquired certain other intangible assets including
a noncompete agreement which was amortized over approximately three years.
<TABLE>
<CAPTION>
DECEMBER 31
------------------- SEPTEMBER 30,
1994 1995 1996
-------- -------- -------------
<S> <C> <C> <C>
Goodwill (amortization -- primarily 40 years)... $110,579 $110,579 $ 110,579
Other intangible assets (amortization -- 3
years)........................................ 31,000 0 0
-------- -------- -------------
141,579 110,579 110,579
Accumulated amortization........................ 31,126 13,136 15,143
-------- -------- -------------
Net intangible assets...................... $110,453 $ 97,443 $ 95,436
========= ========= ===========
</TABLE>
Amortization of intangibles included in other expense, net in the combined
statements of operations totaled $13,045, $13,010 and $13,010 for the years
ended December 31, 1993, 1994 and 1995 and $9,757 and $2,007 for the nine months
ended September 30, 1995 and 1996. All fully amortized intangibles have been
retired.
The Company continually reviews goodwill to evaluate whether changes have
occurred that would suggest goodwill may be impaired based on the estimated cash
flows of the entity acquired over the remaining amortization period. If this
review indicates that the remaining estimated useful life of goodwill requires
revision or that the goodwill is not recoverable, the carrying amount of the
goodwill is reduced by the estimated shortfall of cash flows on a discounted
basis.
F-7
<PAGE> 102
AMERICAN HOME FOOD PRODUCTS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
During 1995, Statement of Financial Accounting Standards (SFAS) No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," was issued. SFAS No. 121 is effective for fiscal years
beginning after December 15, 1995. The effect of adopting this pronouncement in
1996 was not significant.
Research and Development --
Research and development costs are charged to expense as incurred and
amounted to $6,538, $6,782 and $6,447 for the years ended December 31, 1993,
1994 and 1995 and $5,093 and $7,415 for the nine months ended September 30, 1995
and 1996.
Allowance for Doubtful Accounts and Sales Returns --
The following summarizes the allowance for doubtful accounts and sales
returns and their related activity --
<TABLE>
<CAPTION>
WRITE-OFFS AND
BEGINNING CHARGED REDUCTIONS, NET ENDING
DESCRIPTION BALANCE TO EXPENSE OF RECOVERIES BALANCE
- ------------------------------------------- --------- ---------- --------------- -------
<S> <C> <C> <C> <C>
Allowance for doubtful accounts and sales
returns and allowances --
Year ended December 31, 1993............. $ 3,189 $ 444 $ 507 $ 3,126
Year ended December 31, 1994............. 3,126 588 240 3,474
Year ended December 31, 1995............. 3,474 1,103 513 4,064
</TABLE>
Parent Company Investment and Advances --
Parent company's investment and advances includes the stockholder's equity
of the individual AHPC subsidiaries described in Note 1. The equity of the
individual subsidiaries represents the original investment by the Parent, plus
accumulated net income and net advances, withdrawals and dividends. Cash
receipts are transferred to AHPC by daily cash sweeps, and AHPC makes funds
available for operating expenses.
Interim Financial Information --
The unaudited combined financial statements presented herein have been
prepared by the Company without audit and, in the opinion of management, contain
all adjustments necessary to present fairly and on a basis consistent with the
combined financial statements for the year ended December 31, 1995, the
Company's combined financial position as of September 30, 1996, and the results
of their operations and cash flows for the nine months ended September 30, 1995
and 1996.
The results of operations for the nine months ended September 30, 1996 are
not necessarily indicative of the results to be expected for the entire year.
Currency Translation --
The assets and liabilities of Canadian Home Products Limited are translated
into United States dollars at period end exchange rates. Profit and loss account
items are translated using monthly average exchange rates. Translation
adjustments are accumulated in parent company investment and advances and are
not significant.
F-8
<PAGE> 103
AMERICAN HOME FOOD PRODUCTS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(3) INCOME TAXES:
The operations of the Company are included in the consolidated tax returns
of AHPC. The Company is charged by AHPC based on the statutory tax rates without
any regard for temporary differences. Accordingly, the Company has no deferred
tax assets or liabilities since those amounts are being paid or received by the
parent. Deferred tax assets and liabilities would reflect temporary differences
between assets and liabilities for financial reporting purposes and Federal
income tax purposes. Such temporary differences are primarily attributable to
depreciation, allowances for doubtful accounts, trade promotion accruals and
other accruals and have not been significant.
The provision for income taxes consisted of:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
--------------------------- -----------------
1993 1994 1995 1995 1996
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Domestic............................. $51,796 $54,558 $24,126 $16,032 $38,754
Foreign.............................. 3,278 2,567 2,411 1,979 994
State................................ 5,872 6,171 2,877 2,411 5,828
------- ------- ------- ------- -------
$60,946 $63,296 $29,414 $20,422 $45,576
======== ======== ======== ======== ========
</TABLE>
A reconciliation between the Company's effective tax rate and U.S.
statutory rate is as follows:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
---------------------- -------------
1993 1994 1995 1995 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
U.S. statutory rate............................. 35% 35% 35% 35% 35%
State tax, net of Federal benefit............... 3 3 3 3 3
Amortization of other intangibles and purchase
price over fair value......................... 2 2 5 6 --
---- ---- ---- ---- ----
Effective tax rate.............................. 40% 40% 43% 44% 38%
==== ==== ==== ==== ====
</TABLE>
(4) RELATED PARTY TRANSACTIONS:
The combined statements of operations include the costs of certain
administrative and other services provided by AHPC. These services include
treasury, tax, personnel, legal, environmental, safety, public relations, audit
and other related costs. The charges to the Company for corporate administration
on an annualized basis approximated $2,500 for each period presented. The costs
have been allocated on a basis which management believes is reasonable.
AHPC also charges the Company for its share of group insurance costs
(medical, dental, basic life, etc.), based on AHPC's historical claims
experience and current claim trends and the ratio of the Company's employees to
total AHPC domestic employees. The charges, which are reflected in the statement
of operations amounted to $11,416, $11,733 and $11,941 for the years ended
December 31, 1993, 1994 and 1995, and $8,985 and $8,598 for the nine months
ended September 30, 1995 and 1996.
The combined statements of operations include rent for 35,000 square feet
of space in AHPC's corporate headquarters. The rent expense related to this
space amounted to $817, $965 and $905 for the years ended December 31, 1993,
1994 and 1995, and $679 and $651 for the nine months ended September 30, 1995
and 1996.
Various self-insurance coverages are provided to the Company through AHPC
consolidated programs. Auto, property, product liability and other insurance
coverages provided by AHPC are allocated to the Company based on past claim
history, exposure, trends and judgment. The charges, which are reflected in the
statements of operations, amounted to $411, $426 and $421 for the years ended
F-9
<PAGE> 104
AMERICAN HOME FOOD PRODUCTS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
December 31, 1993, 1994 and 1995, and $314 and $321 for the nine months ended
September 30, 1995 and 1996.
The Company buys advertising through a wholly-owned subsidiary of AHPC. The
rates at which it buys advertising reflect the rates obtained by the
consolidated purchasing of AHPC. The charges, which are reflected in the
statements of operations, amounted to $33,235, $32,839 and $42,386 for the years
ended December 31, 1993, 1994 and 1995, and $28,609 and $42,974 for the nine
months ended September 30, 1995 and 1996.
(5) EMPLOYEE BENEFIT PLANS:
The Company participates in certain AHPC defined benefit plans, which
provide retirement benefits to substantially all nonunion and certain union
employees, as well as union sponsored multiemployer plans. The amount charged
and contributed to these AHPC and union sponsored plans totaled $2,236, $2,651
and $2,762 for the years ended December 31, 1993, 1994 and 1995, and $2,059 and
$2,848 for the nine months ended September 30, 1995 and 1996.
The Company provides postretirement health care and life insurance benefits
for retired employees. Employees become eligible for these benefits after
attaining specified age and service requirements. The Company is charged for
actual retiree benefit costs based on the ratio of the Company's participants to
total AHPC participants. The postretirement health care costs included in the
statement of operations amounted to $2,996, $3,334 and $3,494 for the years
ended December 31, 1993, 1994 and 1995, and $2,611 and $2,933 for the nine
months ended September 30, 1995 and 1996.
The Company also participates in certain defined contribution plans
sponsored by AHPC. Contributions to these plans are based on a percentage of the
employee's compensation. Expense recognized for these plans totaled $958, $1,082
and $1,027 for the years ended December 31, 1993, 1994 and 1995, and $808 and
$849 for the nine months ended September 30, 1995 and 1996.
(6) COMMITMENTS AND CONTINGENCIES:
The Company has ongoing royalty arrangements with several parties,
primarily representing licensing agreements for the use of characters in the
Company's canned pasta and wet spices businesses. The combined statements of
operations include royalty costs amounting to $1,943, $2,065 and $3,136 for the
years ended December 31, 1993, 1994 and 1995, and $2,477 and $1,632 for the nine
months ended September 30, 1995 and 1996.
There is also a royalty obligation in connection with the Company's
acquisition of the cereals business in 1988. The agreement includes a minimum
annual royalty as well as a $10,250 balloon payment due on December 31, 1997. As
of December 31, 1995 and September 30, 1996, $9,873 and $10,085, respectively,
have been accrued towards these obligations. An ongoing royalty continues after
December 1997.
In the ordinary course of business, the Company enters into contracts for
the purchase of certain of its raw materials.
In the ordinary course of business, the Company is involved in various
pending or threatened litigation claims. The Company has responsibility for
environmental, safety and cleanup obligations under various local, state and
Federal laws, including the Comprehensive Environmental Response, Compensation
and Liability Act, commonly known as Superfund. The Company has been identified
as a potentially responsible party at two Superfund sites. Although the outcome
of any legal proceeding cannot be predicted with certainty, management believes
that any ultimate liability arising from such matters in the aggregate will not
have a material adverse effect on the combined statements of operations.
F-10
<PAGE> 105
AMERICAN HOME FOOD PRODUCTS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(7) GUARANTOR FINANCIAL DATA:
As described in Note 1, AHFP, Inc. expects to issue unsecured senior
subordinated notes which will mature in 2006. The notes will be subordinated to
all future senior indebtedness and senior to all other subordinated
indebtedness. The notes will be redeemable on or after 2001 at specified
declining percentages of the principal amount thereof. In addition, prior to
2000, the Company will be able to redeem up to $160 million of the principal
amount of the Notes, subject to certain requirements. American Home Foods, Inc.,
Luck's Incorporated, Canadian Home Products Limited and M. Polaner, Inc. will
unconditionally, on a joint and several basis, guarantee the notes. Accordingly,
the following financial information presents the combined financial statements
of the Company, accounting for American Home Foods, Inc., Luck's Incorporated,
Canadian Home Products Limited and M. Polaner, Inc. on an equity basis.
Statement of Income --
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------------- --------------------
1993 1994 1995 1995 1996
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales........................... $818,691 $849,840 $686,911 $508,067 $605,666
Costs and expenses:
Cost of sales..................... 372,815 385,410 331,238 244,940 279,670
Selling, general and
administrative................. 287,539 295,741 277,184 208,187 206,463
Other expense, net................ 3,712 4,190 4,777 2,948 2,631
-------- -------- -------- -------- --------
Income before provision for
income taxes and equity in
undistributed earnings of
affiliates................... 154,625 164,499 73,712 51,992 116,902
Provision for income taxes.......... 57,279 60,972 26,867 19,043 44,199
-------- -------- -------- -------- --------
Income before equity in
undistributed earnings of
affiliates................... 97,346 103,527 46,845 32,949 72,703
Equity in undistributed earnings of
affiliates........................ (4,988) (7,607) (7,652) (7,129) 1,465
-------- -------- -------- -------- --------
Net income..................... $ 92,358 $ 95,920 $ 39,193 $ 25,820 $ 74,168
======== ======== ======== ======== ========
</TABLE>
F-11
<PAGE> 106
AMERICAN HOME FOOD PRODUCTS
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
Balance Sheets
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------- SEPTEMBER 30,
1994 1995 1996
-------- --------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Assets:
Accounts receivable, net............................. $ 91,685 $ 35,926 $ 45,736
Inventories.......................................... 60,860 62,180 60,870
Other current assets................................. 3,229 2,378 1,104
Property, plant and equipment, net................... 45,957 52,677 50,882
Intangible and other assets.......................... 67,230 65,419 64,062
Investments in affiliates not consolidated........... 243,376 220,436 203,166
-------- --------- ---------
Total assets................................. $512,337 $ 439,016 $ 425,820
======== ========= =========
Liabilities and Parent Company's investment and
advances:
Liabilities:
Current liabilities............................... $ 35,040 $ 44,208 $ 47,119
Other noncurrent liabilities...................... 10,158 9,811 10,068
-------- --------- ---------
Total liabilities............................ 45,198 54,019 57,187
-------- --------- ---------
Parent Company's investment and advances............... 467,139 384,997 368,633
-------- --------- ---------
Total liabilities and parent company's
investment and advances.................... $512,337 $ 439,016 $ 425,820
======== ========= =========
</TABLE>
Condensed Statement of Cash Flows (in thousands)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------- -------------------
1993 1994 1995 1995 1996
-------- -------- --------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Operating activities:
Net income........................... $ 92,358 $ 95,920 $ 39,193 $ 25,820 $ 74,168
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization..... 4,800 5,320 6,825 4,781 4,747
Changes in working capital:
Accounts receivable............. (14,988) (20,135) 55,759 43,033 (9,810)
Inventories..................... (184) (8,477) (1,320) (7,121) 1,310
Other current assets............ 660 (890) 851 1,360 1,274
Current and noncurrent
liabilities.................. 5,176 301 8,821 8,468 3,169
-------- --------- -------- --------
Net cash provided by
operating activities....... 87,822 72,039 110,129 76,341 74,858
Cash used in investing activities:
Purchase of plant and equipment,
net............................. 6,666 12,655 11,734 10,268 1,596
Purchase of Business.............. 67,557 -- -- -- --
Cash used in financing activities:
Change in investment and
advances........................ (13,599) (59,384) (98,395) (66,073) (73,262)
-------- --------- -------- --------
Net increase (decrease) in
cash....................... $ 0 $ 0 $ 0 $ 0 $ 0
======== ========= ======== ========
</TABLE>
F-12
<PAGE> 107
================================================================================
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE
BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY
INITIAL PURCHASER OF THE OLD NOTES. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION
WHERE SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES
CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF.
TABLE OF CONTENTS
PAGE
Summary...................................... 3
Risk Factors................................. 16
The Transaction.............................. 19
Use of Proceeds.............................. 23
Capitalization............................... 23
Selected Historical Financial and
Operating Information...................... 24
Unaudited Pro Forma Combined
Financial Statements....................... 25
Management's Discussion and Analysis
of Financial Condition and Results
of Operations.............................. 33
Business..................................... 38
Management................................... 49
Stock Ownership and Certain Transactions..... 54
Description of Senior Bank Facilities........ 57
The Exchange Offer........................... 59
Description of New Notes..................... 66
Certain United States Federal Income
Tax Considerations......................... 90
Plan of Distribution......................... 91
Legal Matters................................ 91
Experts...................................... 92
Available Information........................ 92
UNTIL , 1996 (25 DAYS AFTER THE DATE OF
THIS PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN
THE NOTES OFFERED HEREBY, 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.
================================================================================
================================================================================
$400,000,000
INTERNATIONAL HOME
FOODS, INC.
10 3/8% SENIOR SUBORDINATED
NOTES DUE 2006
PROSPECTUS
___________ ___, 1997
================================================================================
<PAGE> 108
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article Ten of the Certificate of Incorporation of the Registrant
provides that the Registrant shall indemnify its officers and directors to the
maximum extent allowed by the Delaware General Corporation Law. Pursuant to
Section 145 of the Delaware General Corporation Law, the Registrant generally
has the power to indemnify its current and former directors against expenses
and liabilities incurred by them in connection with any suit to which they are,
or are threatened to be made, a party by reason of their serving in those
positions so long as they acted in good faith and in a manner they reasonably
believed to be in, or not opposed to, the best interests of the Registrant, and
with respect to any criminal action, so long as they had no reasonable cause to
believe their conduct was unlawful. With respect to suits by or in the right of
the Registrant, however, indemnification is generally limited to attorneys'
fees and other expenses and is not available if the person is adjudged to be
liable to the Registrant, unless the court determines that indemnification is
appropriate. The statute expressly provides that the power to indemnify
authorized thereby is not exclusive of any rights granted under any bylaw,
agreement, vote of stockholders or disinterested directors, or otherwise. The
Registrant also has the power to purchase and maintain insurance for its
directors and officers and has purchased a policy providing such insurance.
The preceding discussion of the Registrant's Certificate of
Incorporation and Section 145 of the Delaware General Corporation Law is not
intended to be exhaustive and is qualified in its entirety by the Certificate
of Incorporation and Section 145 of the Delaware General Corporation Law.
The Registrant has entered into indemnification agreements with the
Registrant's directors and officers. Pursuant to such agreements, the
Registrant will, to the extent permitted by applicable law, indemnify such
persons against all expenses, judgments, fines and penalties incurred in
connection with the defense or settlement of any actions brought against them
by reason of the fact that they were directors or officers of the Registrant or
assumed certain responsibilities at the direction of the Registrant.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibits
- ------- -----------------------
<S> <C>
2.1* -- Agreement of Sale and Plan of Merger (the "Merger Agreement")
entered into among AHP subsidiary Holding Corporation, American
Home Food Products, Inc., AHFP Holding Corporation and AHFP
Acquisition Corporation dated as of September 5, 1996+
2.2* -- First Amendment to Agreement of Sale and Plan of Merger dated
as of October 31, 1996+
3.1* -- Certificate of Incorporation; Certificate of Amendment to
Certificate of Incorporation of International Home Foods, Inc.
filed with the Delaware Secretary of State on October 30, 1996
3.2* -- Bylaws of International Home Foods, Inc.
3.3* -- Certificate of Incorporation of American Home Foods, Inc.
3.4* -- Bylaws of American Home Foods, Inc.
3.5* -- Certificate of Incorporation of Luck's, Incorporated
3.6* -- Bylaws of Luck's, Incorporated
3.7* -- Certificate of Incorporation of M. Polaner, Inc.
3.8* -- Bylaws of M. Polaner, Inc.
3.9* -- Certificate of Continuance of Canadian Home Products Limited
3.10*-- By-Laws of Canadian Home Products Limited
3.11*-- Certificate of Incorporation of Heritage Brands Holdings, Inc.
3.12*-- Bylaws of Heritage Brands Holdings, Inc.
3.13*-- Certificate of Incorporation of Heritage Brands, Inc.
3.14*-- Bylaws of Heritage Brands, Inc.
3.15*-- Certificate of Incorporation of Campfire, Inc.
</TABLE>
II-1
<PAGE> 109
<TABLE>
<S> <C>
3.16* -- Bylaws of Campfire, Inc.
4.1* -- Registration Rights Agreement made as of November 1, 1996 by and among International Home Foods,
Inc. (formerly American Home Food Products, Inc.), AHP Subsidiary Holding Corporation and AHFP
Holding Corporation
4.2* -- Indenture dated as of November 1, 1996 between the Company and United States Trust Company of
New York
5.1** -- Opinion of Vinson & Elkins L.L.P.
10.1* -- Transitional Services Agreement dated as of November 1, 1996 between American Home Products
Corporation and International Home Foods, Inc.
10.2* -- Financial Advisory Agreement dated as of November 1, 1996 by and between International Home Foods,
Inc. and Hicks, Muse & Company Partners, L.P. ("HMCo")
10.3* -- International Home Foods, Inc. 1996 Stock Option Plan
10.4** -- Nonqualified Stock Option Agreement dated November 1, 1996 by and between International Home
Foods, Inc. and C. Dean Metropoulos
10.5** -- Nonqualified Stock Option Agreement dated November 1, 1996 by and between International Home
Foods, Inc. and Kenneth J. Martin
10.6** -- Nonqualified Stock Option Agreement dated November 12, 1996 by and between International Home
Foods, Inc. and M.L. Lowenkron
10.7** -- Nonqualified Stock Option Agreement dated November 12, 1996 by and between International Home
Foods, Inc. and Roger T. Staubach
10.8* -- Indemnification Agreement dated November 1, 1996 between International Home Foods, Inc. and C.
Dean Metropoulos, together with a schedule identifying substantially identical documents and setting
forth the material details in which those documents differ from the foregoing documents
10.9* -- Credit Agreement among International Home Foods, Inc., as
Borrower, the Several Lenders, Morgan Stanley Senior Funding,
Inc., as Document Agent, Bankers Trust Company, as Syndication
Agent, and The Chase Manhattan Bank as Administrative Agent
dated as of November 1, 1996
10.10* -- Monitoring and Oversight Agreement dated as of November 1, 1996 by and between International Home
Foods, Inc. and HMCo.
12.1* -- Ratio of Earnings to Fixed Charges
12.2* -- Pro Forma Ratio of Earnings to Fixed Charges
16.1* -- Letter regarding change to certifying accountants
21.1* -- Subsidiaries of the Company
23.1* -- Consent of Arthur Andersen LLP, Independent Public Accountants
23.2** -- Consent of Vinson & Elkins L.L.P. (included in their opinion
filed as Exhibit 5.1 hereto)
24.1* -- Powers of Attorney (set forth on signature page)
25.1* -- Form T-1 of United States Trust Company of New York
27.1* -- Financial Data Schedule
99.1** -- Form of Letter of Transmittal
99.2** -- Form of Notice of Guaranteed Delivery
</TABLE>
- -----------------
* Filed herewith
** To be filed by amendment
+ The Company will furnish upon request of the Commission any omitted schedule.
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(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");
(ii) to reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment hereof) which, individually or in the aggregate,
represent a
II-2
<PAGE> 110
fundamental change in the information set forth in this Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Securities and Exchange Commission pursuant to rule 424(b) if,
in the aggregate, the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in this Registration Statement when it becomes
effective;
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this 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.
The undersigned Registrant hereby undertakes 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 this 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.
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 foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling 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 is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes to file an application
for the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with the
rules and regulations prescribed by the Commission under Section 305(b)(2) of
the Trust Indenture Act.
The undersigned Registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Items 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 this Registration Statement through
the date of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in this Registration Statement when it became effective.
II-3
<PAGE> 111
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Company has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Madison, State of New Jersey, on the 19th day of December, 1996.
INTERNATIONAL HOME FOODS, INC.
By: /s/ C. Dean Metropoulos
--------------------------------------------
C. Dean Metropoulos, Chief Executive Officer
Each person whose signature appears below authorizes C. Dean
Metropoulos and Kenneth J. Martin, and each of them, each of whom may act
without joinder of the other, to execute in the name of each such person who is
then an officer or director of the Company and to file any amendments to this
Registration Statement necessary or advisable to enable the Company to comply
with the Securities Act of 1933, as amended, and any rules, regulations and
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the registration of the securities which are the subject of
this Registration Statement, which amendments may make such changes in the
Registration Statement as such attorney may deem appropriate. Pursuant to the
requirements of the Securities Act of 1933, this registration statement has
been signed by the following person in the capacities and on the date
indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
--------- -------- ----
<S> <C> <C>
/s/ C. Dean Metropoulos Chairman of the Board and Chief Executive December 19, 1996
- ---------------------------------- Officer (Principal Executive Officer)
C. Dean Metropoulos
/s/ N. Michael Dion Chief Financial Officer December 19, 1996
- ---------------------------------- (Principal Financial and Accounting Officer)
N. Michael Dion
/s/ Kenneth J. Martin President and Director December 19, 1996
- ----------------------------------
Kenneth J. Martin
/s/ Thomas O. Hicks Director December 19, 1996
- ----------------------------------
Thomas O. Hicks
/s/ Charles W. Tate Director December 19, 1996
- ----------------------------------
Charles W. Tate
/s/ Alan B. Menkes Director December 19, 1996
- ----------------------------------
Alan B. Menkes
/s/ Michael J. Levitt Director December 19, 1996
- ----------------------------------
Michael J. Levitt
Director December ____, 1996
- ----------------------------------
M.L. Lowenkron
/s/ Roger T. Staubach Director December 16, 1996
- ----------------------------------
Roger T. Staubach
</TABLE>
II-4
<PAGE> 112
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Company has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Madison, State of New Jersey, on the 19th day of December, 1996.
AMERICAN HOME FOODS, INC.
By: /s/ Kenneth J. Martin
-----------------------------
Kenneth J. Martin, President
Each person whose signature appears below authorizes C. Dean
Metropoulos and Kenneth J. Martin, and each of them, each of whom may act
without joinder of the other, to execute in the name of each such person who is
then an officer or director of the Company and to file any amendments to this
Registration Statement necessary or advisable to enable the Company to comply
with the Securities Act of 1933, as amended, and any rules, regulations and
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the registration of the securities which are the subject of
this Registration Statement, which amendments may make such changes in the
Registration Statement as such attorney may deem appropriate. Pursuant to the
requirements of the Securities Act of 1933, this registration statement has
been signed by the following person in the capacities and on the date
indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
--------- -------- ----
<S> <C> <C>
/s/ Kenneth J. Martin President and Director (Principal Executive December 19, 1996
- --------------------------------- Officer)
Kenneth J. Martin
/s/ N. Michael Dion Chief Financial Officer December 19, 1996
- --------------------------------- (Principal Financial and Accounting Officer)
N. Michael Dion
/s/ Thomas O. Hicks Director December 19, 1996
- ---------------------------------
Thomas O. Hicks
/s/ Charles W. Tate Director December 19, 1996
- ---------------------------------
Charles W. Tate
/s/ Alan B. Menkes Director December 19, 1996
- ---------------------------------
Alan B. Menkes
/s/ Michael J. Levitt Director December 19, 1996
- ---------------------------------
Michael J. Levitt
/s/ C. Dean Metropoulos Director December 19, 1996
- ---------------------------------
C. Dean Metropoulos
</TABLE>
II-5
<PAGE> 113
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Company has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Madison, State of New Jersey, on the 19th day of December, 1996.
LUCK'S, INC.
By: /s/ Kenneth J. Martin
----------------------------
Kenneth J. Martin, President
Each person whose signature appears below authorizes C. Dean
Metropoulos and Kenneth J. Martin, and each of them, each of whom may act
without joinder of the other, to execute in the name of each such person who is
then an officer or director of the Company and to file any amendments to this
Registration Statement necessary or advisable to enable the Company to comply
with the Securities Act of 1933, as amended, and any rules, regulations and
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the registration of the securities which are the subject of
this Registration Statement, which amendments may make such changes in the
Registration Statement as such attorney may deem appropriate. Pursuant to the
requirements of the Securities Act of 1933, this registration statement has
been signed by the following person in the capacities and on the date
indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
--------- -------- ----
<S> <C> <C>
/s/ Kenneth J. Martin President and Director (Principal Executive December 19, 1996
- ---------------------------------- Officer)
Kenneth J. Martin
/s/ N. Michael Dion Chief Financial Officer December 19, 1996
- ---------------------------------- (Principal Financial and Accounting Officer)
N. Michael Dion
/s/ Charles W. Tate Director December 19, 1996
- ----------------------------------
Charles W. Tate
/s/ Alan B. Menkes Director December 19, 1996
- ----------------------------------
Alan B. Menkes
/s/ Michael J. Levitt Director December 19, 1996
- ----------------------------------
Michael J. Levitt
/s/ C. Dean Metropoulos Director December 19, 1996
- ----------------------------------
C. Dean Metropoulos
</TABLE>
II-6
<PAGE> 114
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Company has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Madison, State of New Jersey, on the 19th day of December, 1996.
M. POLANER, INC.
By: /s/ Kenneth J. Martin
----------------------------
Kenneth J. Martin, President
Each person whose signature appears below authorizes C. Dean
Metropoulos and Kenneth J. Martin, and each of them, each of whom may act
without joinder of the other, to execute in the name of each such person who is
then an officer or director of the Company and to file any amendments to this
Registration Statement necessary or advisable to enable the Company to comply
with the Securities Act of 1933, as amended, and any rules, regulations and
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the registration of the securities which are the subject of
this Registration Statement, which amendments may make such changes in the
Registration Statement as such attorney may deem appropriate. Pursuant to the
requirements of the Securities Act of 1933, this registration statement has
been signed by the following person in the capacities and on the date
indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
--------- -------- ----
<S> <C> <C>
/s/ Kenneth J. Martin President and Director (Principal Executive December 19, 1996
- --------------------------------- Officer)
Kenneth J. Martin
/s/ N. Michael Dion Chief Financial Officer December 19, 1996
- --------------------------------- (Principal Financial and Accounting Officer)
N. Michael Dion
/s/ Thomas O. Hicks Director December 19, 1996
- ---------------------------------
Thomas O. Hicks
/s/ Charles W. Tate Director December 19, 1996
- ---------------------------------
Charles W. Tate
/s/ Alan B. Menkes Director December 19, 1996
- ---------------------------------
Alan B. Menkes
/s/ Michael J. Levitt Director December 19, 1996
- ---------------------------------
Michael J. Levitt
/s/ C. Dean Metropoulos Director December 19, 1996
- ---------------------------------
C. Dean Metropoulos
</TABLE>
II-7
<PAGE> 115
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Company has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Madison, State of New Jersey, on the 19th day of December, 1996.
CANADIAN HOME PRODUCTS LIMITED
By: /s/ Kenneth J. Martin
-----------------------------
Kenneth J. Martin, President
Each person whose signature appears below authorizes C. Dean
Metropoulos and Kenneth J. Martin, and each of them, each of whom may act
without joinder of the other, to execute in the name of each such person who is
then an officer or director of the Company and to file any amendments to this
Registration Statement necessary or advisable to enable the Company to comply
with the Securities Act of 1933, as amended, and any rules, regulations and
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the registration of the securities which are the subject of
this Registration Statement, which amendments may make such changes in the
Registration Statement as such attorney may deem appropriate. Pursuant to the
requirements of the Securities Act of 1933, this registration statement has
been signed by the following person in the capacities and on the date
indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
--------- -------- ----
<S> <C> <C>
/s/ Kenneth J. Martin President and Director (Principal Executive December 19, 1996
- ---------------------------------- Officer)
Kenneth J. Martin
/s/ N. Michael Dion Chief Financial Officer December 19, 1996
- ---------------------------------- (Principal Financial and Accounting Officer)
N. Michael Dion
/s/ Thomas O. Hicks Director December 19, 1996
- ----------------------------------
Thomas O. Hicks
/s/ Charles W. Tate Director December 19, 1996
- ----------------------------------
Charles W. Tate
/s/ Alan B. Menkes Director December 19, 1996
- ----------------------------------
Alan B. Menkes
/s/ Michael J. Levitt Director December 19, 1996
- ----------------------------------
Michael J. Levitt
/s/ C. Dean Metropoulos Director December 19, 1996
- ----------------------------------
C. Dean Metropoulos
</TABLE>
II-8
<PAGE> 116
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Company has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Madison, State of New Jersey, on the 19th day of December, 1996.
HERITAGE BRANDS HOLDINGS, INC.
By: /s/ C. Dean Metropoulos
------------------------------
C. Dean Metropoulos, President
Each person whose signature appears below authorizes C. Dean
Metropoulos and Kenneth J. Martin, and each of them, each of whom may act
without joinder of the other, to execute in the name of each such person who is
then an officer or director of the Company and to file any amendments to this
Registration Statement necessary or advisable to enable the Company to comply
with the Securities Act of 1933, as amended, and any rules, regulations and
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the registration of the securities which are the subject of
this Registration Statement, which amendments may make such changes in the
Registration Statement as such attorney may deem appropriate. Pursuant to the
requirements of the Securities Act of 1933, this registration statement has
been signed by the following person in the capacities and on the date
indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
--------- -------- ----
<S> <C> <C>
/s/ C. Dean Metropoulos President and Director (Principal Executive December 19, 1996
- ---------------------------------- Officer)
C. Dean Metropoulos
/s/ N. Michael Dian Chief Financial Officer December 19, 1996
- ---------------------------------- (Principal Financial and Accounting Officer)
N. Michael Dian
/s/ Thomas O. Hicks Director December 19, 1996
- ----------------------------------
Thomas O. Hicks
/s/ Charles W. Tate Director December 19, 1996
- ----------------------------------
Charles W. Tate
/s/ Alan B. Menkes Director December 19, 1996
- ----------------------------------
Alan B. Menkes
/s/ Michael J. Levitt Director December 19, 1996
- ----------------------------------
Michael J. Levitt
/s/ Kenneth J. Martin Director December 19, 1996
- ----------------------------------
Kenneth J. Martin
</TABLE>
II-9
<PAGE> 117
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Company has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Madison, State of New Jersey, on the 19th day of December, 1996.
HERITAGE BRANDS, INC.
By: /s/ C. Dean Metropoulos
------------------------------
C. Dean Metropoulos, President
Each person whose signature appears below authorizes C. Dean
Metropoulos and Kenneth J. Martin, and each of them, each of whom may act
without joinder of the other, to execute in the name of each such person who is
then an officer or director of the Company and to file any amendments to this
Registration Statement necessary or advisable to enable the Company to comply
with the Securities Act of 1933, as amended, and any rules, regulations and
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the registration of the securities which are the subject of
this Registration Statement, which amendments may make such changes in the
Registration Statement as such attorney may deem appropriate. Pursuant to the
requirements of the Securities Act of 1933, this registration statement has
been signed by the following person in the capacities and on the date
indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
--------- -------- ----
<S> <C> <C>
/s/ C. Dean Metropoulos President and Director (Principal Executive December 19, 1996
- ----------------------------------- Officer)
C. Dean Metropoulos
/s/ N. Michael Dion Chief Financial Officer December 19, 1996
- ----------------------------------- (Principal Financial and Accounting Officer)
N. Michael Dion
/s/ Thomas O. Hicks Director December 19, 1996
- -----------------------------------
Thomas O. Hicks
/s/ Charles W. Tate Director December 19, 1996
- -----------------------------------
Charles W. Tate
/s/ Alan B. Menkes Director December 19, 1996
- -----------------------------------
Alan B. Menkes
/s/ Michael J. Levitt Director December 19, 1996
- -----------------------------------
Michael J. Levitt
/s/ Kenneth J. Martin Director December 19, 1996
- -----------------------------------
Kenneth J. Martin
</TABLE>
II-10
<PAGE> 118
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Company has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Madison, State of New Jersey, on the 19th day of December, 1996.
CAMPFIRE, INC.
By: /s/ C. Dean Metropoulos
------------------------------
C. Dean Metropoulos, President
Each person whose signature appears below authorizes C. Dean
Metropoulos and Kenneth J. Martin, and each of them, each of whom may act
without joinder of the other, to execute in the name of each such person who is
then an officer or director of the Company and to file any amendments to this
Registration Statement necessary or advisable to enable the Company to comply
with the Securities Act of 1933, as amended, and any rules, regulations and
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the registration of the securities which are the subject of
this Registration Statement, which amendments may make such changes in the
Registration Statement as such attorney may deem appropriate. Pursuant to the
requirements of the Securities Act of 1933, this registration statement has
been signed by the following person in the capacities and on the date
indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
--------- --------- ----
<S> <C> <C>
/s/ C. Dean Metropoulos President and Director (Principal Executive December 19, 1996
- ----------------------------------------- Officer)
C. Dean Metropoulos
/s/ N. Michael Dion Chief Financial Officer December 19, 1996
- ----------------------------------------- (Principal Financial and Accounting Officer)
N. Michael Dion
/s/ Thomas O. Hicks Director December 19, 1996
- -----------------------------------------
Thomas O. Hicks
/s/ Charles W. Tate Director December 19, 1996
- -----------------------------------------
Charles W. Tate
/s/ Alan B. Menkes Director December 19, 1996
- -----------------------------------------
Alan B. Menkes
/s/ Michael J. Levitt Director December 19, 1996
- -----------------------------------------
Michael J. Levitt
/s/ Kenneth J. Martin Director December 19, 1996
- -----------------------------------------
Kenneth J. Martin
</TABLE>
II-11
<PAGE> 119
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
2.1* -- Agreement of Sale and Plan of Merger (the "Merger Agreement")
entered into among AHP subsidiary Holding Corporation, American
Home Food Products, Inc., AHFP Holding Corporation and AHFP
Acquisition Corporation dated as of September 5, 1996+
2.2* -- First Amendment to Agreement of Sale and Plan of Merger dated
as of October 31, 1996+
3.1* -- Certificate of Incorporation; Certificate of Amendment to
Certificate of Incorporation of International Home Foods, Inc.
filed with the Delaware Secretary of State on October 30, 1996
3.2* -- Bylaws of International Home Foods, Inc.
3.3* -- Certificate of Incorporation of American Home Foods, Inc.
3.4* -- Bylaws of American Home Foods, Inc.
3.5* -- Certificate of Incorporation of Luck's Inc.
3.6* -- Bylaws of Luck's Inc.
3.7* -- Certificate of Incorporation of M. Polaner, Inc.
3.8* -- Bylaws of M. Polaner, Inc.
3.9* -- Certificate of Continuance of Canadian Home Products Limited
3.10*-- By-Laws of Canadian Home Products Limited
3.11*-- Certificate of Incorporation of Heritage Brands Holdings, Inc.
3.12*-- Bylaws of Heritage Brands Holdings, Inc.
3.13*-- Certificate of Incorporation of Heritage Brands, Inc.
3.14*-- Bylaws of Heritage Brands, Inc.
3.15*-- Certificate of Incorporation of Campfire, Inc.
</TABLE>
<PAGE> 120
<TABLE>
<S> <C>
3.16* -- Bylaws of Campfire, Inc.
4.1* -- Registration Rights Agreement made as of November 1, 1996 by and among International Home Foods,
Inc. (formerly American Home Food Products, Inc.), AHP Subsidiary Holding Corporation and AHFP
Holding Corporation
4.2* -- Indenture dated as of November 1, 1996 between the Company and United States Trust Company of
New York
5.1** -- Opinion of Vinson & Elkins L.L.P.
10.1* -- Transitional Services Agreement dated as of November 1, 1996 between American Home Products
Corporation and International Home Foods, Inc.
10.2* -- Financial Advisory Agreement dated as of November 1, 1996 by and between International Home Foods,
Inc. and Hicks, Muse & Company Partners, L.P. ("HMCo")
10.3* -- International Home Foods, Inc. 1996 Stock Option Plan
10.4** -- Nonqualified Stock Option Agreement dated November 1, 1996 by and between International Home
Foods, Inc. and C. Dean Metropoulos
10.5** -- Nonqualified Stock Option Agreement dated November 1, 1996 by and between International Home
Foods, Inc. and Kenneth J. Martin
10.6** -- Nonqualified Stock Option Agreement dated November 12, 1996 by and between International Home
Foods, Inc. and M.L. Lowenkron
10.7** -- Nonqualified Stock Option Agreement dated November 12, 1996 by and between International Home
Foods, Inc. and Roger T. Staubach
10.8* -- Indemnification Agreement dated November 1, 1996 between International Home Foods, Inc. and C.
Dean Metropoulos, together with a schedule identifying substantially identical documents and setting
forth the material details in which those documents differ from the foregoing documents
10.9* -- Credit Agreement among International Home Foods, Inc., as
Borrower, the Several Lenders, Morgan Stanley Senior Funding,
Inc., as Document Agent, Bankers Trust Company, as Syndication
Agent, and The Chase Manhattan Bank as Administrative Agent
dated as of November 1, 1996
10.10* -- Monitoring and Oversight Agreement dated as of November 1, 1996 by and between International Home
Foods, Inc. and HMCo.
12.1* -- Ratio of Earnings to Fixed Charges
12.2* -- Pro Forma Ratio of Earnings to Fixed Charges
16.1* -- Letter regarding change to certifying accountants
21.1* -- Subsidiaries of the Company
23.1* -- Consent of Arthur Andersen LLP, Independent Public Accountants
23.2** -- Consent of Vinson & Elkins L.L.P. (included in their opinion
filed as Exhibit 5.1 hereto)
24.1* -- Powers of Attorney (set forth on signature page)
25.1* -- Form T-1 of United States Trust Company of New York
27.1* -- Financial Data Schedule
99.1** -- Form of Letter of Transmittal
99.2** -- Form of Notice of Guaranteed Delivery
</TABLE>
- -----------------
* Filed herewith
** To be filed by amendment
+ The Company will furnish upon request of the Commission any omitted schedule.
<PAGE> 1
EXHIBIT 2.1
AGREEMENT OF SALE AND PLAN OF MERGER
BY AND AMONG
AHP SUBSIDIARY HOLDING CORPORATION
AMERICAN HOME PRODUCTS CORPORATION
AMERICAN HOME FOOD PRODUCTS, INC.
AND
AHFP HOLDING CORPORATION
AND
AHFP ACQUISITION CORPORATION
DATED AS OF SEPTEMBER 5, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE 1
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
ARTICLE 2
THE ACQUISITION AND MERGER . . . . . . . . . . . . . . . . . . . . . . . . -11-
2.1 PRECLOSING ACTIONS . . . . . . . . . . . . . . . . . . . . . -11-
2.2 THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . -12-
2.3 EFFECTIVE TIME . . . . . . . . . . . . . . . . . . . . . . . -12-
2.4 EFFECT OF THE MERGER . . . . . . . . . . . . . . . . . . . . -12-
2.5 CERTIFICATE OF INCORPORATION; BY-LAWS . . . . . . . . . . . -12-
2.6 DIRECTORS AND OFFICERS . . . . . . . . . . . . . . . . . . . -12-
2.7 MERGER CONSIDERATION; CONVERSION AND CANCELLATION
OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . -13-
2.8 REDEMPTION OF OLD AHFP SHARES . . . . . . . . . . . . . . . -13-
ARTICLE 3
CLOSING; PURCHASE PRICE ADJUSTMENT . . . . . . . . . . . . . . . . . . . . -14-
3.1 THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . -14-
3.2 CLOSING ACTIONS BY BUYER . . . . . . . . . . . . . . . . . . -14-
3.3 CLOSING ACTIONS BY SELLERS . . . . . . . . . . . . . . . . . -15-
3.4 CONTEMPORANEOUS EFFECT . . . . . . . . . . . . . . . . . . . -16-
3.5 FURTHER ASSURANCES . . . . . . . . . . . . . . . . . . . . . -17-
3.6 CLOSING STATEMENT . . . . . . . . . . . . . . . . . . . . . -17-
3.7 ADJUSTMENT OF PURCHASE PRICE . . . . . . . . . . . . . . . . -19-
3.8 ALLOCATION . . . . . . . . . . . . . . . . . . . . . . . . . -20-
ARTICLE 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -20-
REPRESENTATIONS AND WARRANTIES
OF SELLERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -20-
4.1 ORGANIZATION, GOOD STANDING, POWER, ETC. . . . . . . . . . . -20-
4.2 CAPITALIZATION OF THE COMPANIES . . . . . . . . . . . . . . -22-
4.3 SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . -23-
4.4 EFFECT OF AGREEMENT . . . . . . . . . . . . . . . . . . . . -23-
4.5 FINANCIAL DATA AND NET ASSET VALUE . . . . . . . . . . . . . -23-
4.6 ABSENCE OF CERTAIN CHANGES OR EVENTS . . . . . . . . . . . . -24-
4.7 TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . -25-
4.8 REAL PROPERTY . . . . . . . . . . . . . . . . . . . . . . . -26-
4.9 GOOD TITLE TO AND CONDITION OF ASSETS; CONDUCT OF
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . -26-
4.10 CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . -27-
4.11 INTELLECTUAL PROPERTY RIGHTS . . . . . . . . . . . . . . . . -28-
4.12 LITIGATION AND CLAIMS . . . . . . . . . . . . . . . . . . . -30-
4.13 COMPLIANCE WITH LAW; APPLICABLE PERMITS . . . . . . . . . . -31-
4.14 ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . . . -31-
4.15 AGREEMENTS REGARDING EMPLOYEES . . . . . . . . . . . . . . . -32-
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
4.16 BENEFIT PLANS . . . . . . . . . . . . . . . . . . . . . . . -33-
4.17 INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . -35-
4.18 INTERCOMPANY TRANSACTIONS . . . . . . . . . . . . . . . . . -35-
4.19 LABOR MATTERS . . . . . . . . . . . . . . . . . . . . . . . -35-
4.20 BROKER'S FEES . . . . . . . . . . . . . . . . . . . . . . . -37-
4.21 NO OTHER REPRESENTATIONS OR WARRANTIES . . . . . . . . . . . -37-
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER AND MERGER SUB . . . . . . . . . . -37-
5.1 CORPORATE ORGANIZATION . . . . . . . . . . . . . . . . . . . -37-
5.2 AUTHORITY RELATIVE TO THIS AGREEMENT . . . . . . . . . . . . -38-
5.3 BROKER'S FEES . . . . . . . . . . . . . . . . . . . . . . . -38-
5.4 CONSENTS AND APPROVALS; NO VIOLATIONS . . . . . . . . . . . -38-
5.5 FINANCIAL CAPABILITY . . . . . . . . . . . . . . . . . . . . -39-
5.6 SECURITIES ACT . . . . . . . . . . . . . . . . . . . . . . . -39-
5.7 CAPITALIZATION AND ORGANIZATION OF . . . . . . . . . . . . -39-
5.8 NO OTHER REPRESENTATIONS OR WARRANTIES . . . . . . . . . . . -39-
ARTICLE 6
CONDUCT OF BUSINESS PENDING THE CLOSING . . . . . . . . . . . . . . . . . . -40-
6.1 CONDUCT OF BUSINESS PENDING THE CLOSING . . . . . . . . . . -40-
6.2 PERMITTED ACTIONS . . . . . . . . . . . . . . . . . . . . . -42-
6.3 CHANGE OF CORPORATE NAMES . . . . . . . . . . . . . . . . . -42-
ARTICLE 7
ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . -43-
7.1 NO TRANSFER OF SHARES . . . . . . . . . . . . . . . . . . . -43-
7.2 EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . -43-
7.3 ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . -43-
7.4 ACCESS TO INFORMATION . . . . . . . . . . . . . . . . . . . -44-
7.5 FILINGS AND AUTHORIZATIONS . . . . . . . . . . . . . . . . . -44-
7.6 TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . -45-
7.7 INTERCOMPANY AND OTHER ARRANGEMENTS . . . . . . . . . . . . -50-
7.8 BULK SALES LAWS . . . . . . . . . . . . . . . . . . . . . . -50-
7.9 USE OF NAME . . . . . . . . . . . . . . . . . . . . . . . . -50-
7.10 NO SOLICITATION . . . . . . . . . . . . . . . . . . . . . . -50-
7.11 CERTAIN PROHIBITED ACTIONS . . . . . . . . . . . . . . . . . -50-
7.12 INDEBTEDNESS; CHANGE IN CONTROL PAYMENTS. . . . . . . . . . -51-
7.13 ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . -51-
7.14 SALES OF OLD AHFP SHARES AND TAG ALONG. . . . . . . . . . . -51-
7.15 CERTAIN RIGHTS OF SELLERS. . . . . . . . . . . . . . . . . -53-
7.16 TRANSACTIONS WITH AFFILIATES . . . . . . . . . . . . . . . . -54-
ARTICLE 8
CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -54-
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
8.1 CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT . . . . . . . . . -54-
8.2 CONDITIONS TO THE OBLIGATION OF SELLERS . . . . . . . . . . -54-
8.3 CONDITIONS TO THE OBLIGATION OF BUYER . . . . . . . . . . . -55-
ARTICLE 9
AGREEMENTS WITH RESPECT TO EMPLOYEES
AND EMPLOYEE BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . -56-
9.1 POST-CLOSING OBLIGATIONS TO EMPLOYEES . . . . . . . . . . . . -56-
9.2 SEVERANCE WITH RESPECT TO EMPLOYEES IN THE UNITED STATES . . -57-
9.3 SEVERANCE WITH RESPECT TO EMPLOYEES IN CANADA. . . . . . . . -58-
9.4 BENEFIT PLANS WITH RESPECT TO EMPLOYEES . . . . . . . . . . -59-
9.5 WARN ACT . . . . . . . . . . . . . . . . . . . . . . . . . . -63-
9.6 NO THIRD PARTY BENEFICIARIES. . . . . . . . . . . . . . . . -64-
ARTICLE 10
TERMINATION, AMENDMENT AND WAIVER . . . . . . . . . . . . . . . . . . . . . -64-
10.1 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . -64-
10.2 EFFECT OF TERMINATION . . . . . . . . . . . . . . . . . . . -65-
ARTICLE 11
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -65-
11.1 INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . -65-
11.2 PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . -67-
11.3 LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . -68-
11.4 INDEMNIFICATION AS SOLE REMEDY . . . . . . . . . . . . . . . -69-
ARTICLE 12
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . -69-
12.1 PUBLIC STATEMENTS . . . . . . . . . . . . . . . . . . . . . -69-
12.2 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . -69-
12.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
AND INDEMNITIES . . . . . . . . . . . . . . . . . . . . . . . -70-
12.4 AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . -71-
12.5 WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . -71-
12.6 PARTIES IN INTEREST . . . . . . . . . . . . . . . . . . . . -71-
12.7 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . -71-
12.8 ACCESS TO RECORDS AFTER EFFECTIVE TIME . . . . . . . . . . . -72-
12.9 MITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . -73-
12.10 RETURN OF INFORMATION . . . . . . . . . . . . . . . . . . . -73-
12.11 DIRECTORS, OFFICERS AND STOCKHOLDER LIABILITY . . . . . . . -73-
</TABLE>
iii
<PAGE> 5
AGREEMENT OF SALE AND PLAN OF MERGER
This AGREEMENT OF SALE AND PLAN OF MERGER dated as of September
5, 1996 (this "Agreement"), by and among AHP SUBSIDIARY HOLDING CORPORATION, a
Delaware corporation ("Holding"), AMERICAN HOME PRODUCTS CORPORATION, a
Delaware corporation ("AHP" and, together with Holding, each a "Seller" and
collectively, "Sellers"), American Home Food Products, Inc., a Delaware
corporation ("AHFP"), and AHFP Holding Corporation, a Delaware corporation
("Buyer"), and AHFP Acquisition Corporation, a Delaware corporation ("Merger
Sub").
W I T N E S S E T H:
WHEREAS, Sellers, Whitehall (as defined herein) and the Companies
(as defined herein) conduct a business which manufactures, markets and sells
specialty food products;
WHEREAS, (x) Holding owns and has the legal right and authority
to sell, transfer, assign and deliver (i) 1000 shares (the "AHFP Shares") of
common stock, no par value, of AHFP, (ii) 100 shares (the "Luck's Shares") of
common stock, no par value, of LUCK'S, INCORPORATED, a Delaware corporation
("Luck's"), and (iii) 25,000 shares (the "AHF Shares") of common stock, $1.00
par value per share, of American Home Foods, Inc., a Delaware corporation
("AHF"), and (y) AHP owns and has the legal right and authority to sell,
transfer, assign and deliver 98,895 common shares and 12,261,650 Class A shares
(collectively, the "CHP Shares") of Canadian Home Products Limited, a Canadian
corporation ("CHP");
WHEREAS, the CHP Shares, the AHFP Shares, the Luck's Shares
and the AHF Shares (collectively, the "Shares") constitute all of the issued
and outstanding shares of capital stock of CHP, AHFP, Luck's and AHF;
WHEREAS, certain Assets (as defined herein) relating to the
Business are held by AHP and its Affiliates (as defined herein);
WHEREAS, upon the terms and subject to the conditions of this
Agreement and in accordance with the General Corporation Law of the State of
Delaware ("Delaware Law"), Merger Sub will merge with and into AHFP (the
"Merger");
<PAGE> 6
WHEREAS, it is contemplated that prior to the Closing (as defined
herein) either (X) Sellers shall transfer, or shall cause, the Assets, the
Luck's Shares, the AHF Shares and the CHP Shares to be transferred to AHFP or
(Y) Sellers shall transfer, or shall cause, the Assets (other than PAM Assets
(as defined herein)), the Luck's Shares and the CHP Shares to be transferred to
AHFP and in such case at the Closing the Surviving Corporation (as defined
herein) shall purchase the PAM Assets and AHF Shares as applicable;
WHEREAS, at the Closing it is contemplated that AHFP shall redeem
a portion of the AHFP Shares;
NOW, THEREFOR, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements herein contained, the
parties hereto, intending to be legally bound, agree as follows:
ARTICLE 1
DEFINITIONS
Whenever used in this Agreement, unless otherwise clearly
indicated by the context, the terms defined below shall have the indicated
meanings:
1.1 "Accountant" shall have the meaning set forth in Section 3.6(c).
1.2 "Affiliate" shall mean, with respect to any Person, any Person
which directly or indirectly through stock ownership or through other
arrangements either controls, is controlled by or is under common control with
such Person; provided, however, that for purposes of this Agreement the term
"Affiliate" shall not include subsidiaries or other entities in which a Person
owns a majority of the ordinary voting power to elect a majority of the board
of directors or other governing board but is restricted from electing such
majority by contract or otherwise, until such time as such restrictions are no
longer in effect.
1.3 "Aggrieved Party" shall have the meaning set forth in Section
11.2(a)(i).
1.4 "Agreement" shall mean this Agreement and any supplements,
amendments, exhibits and schedules hereto.
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<PAGE> 7
1.5 "AHF" shall have the meaning set forth in the second WHEREAS
clause of this Agreement.
1.6 "AHF Shares" shall have the meaning set forth in the second
WHEREAS clause of this Agreement.
1.7 (a) "AHF Share Purchase Price" shall mean such amount as may be
determined by the Buyer.
1.8 "AHFP" shall have the meaning set forth in the preamble clause of
this Agreement. After the merger, the term AHFP shall also include the
Surviving Corporation.
1.9 "AHFP Shares" shall have the meaning set forth in the second
WHEREAS clause of this Agreement.
1.10 "AHP" shall have the meaning set forth in the preamble of this
Agreement.
1.11 "AHP Assets" shall mean those assets set forth in Section 1.11 of
the Disclosure Schedule, which are owned by AHP and relate primarily to the
Business.
1.12 "Allocation Schedule" shall have the meaning set forth in Section
3.8.
1.13 "Andersen" shall mean Arthur Andersen LLP.
1.14 "Applicable Laws" shall mean all statutes, regulations,
judgments, injunctions and writs of any Governmental Authority having
jurisdiction over the Companies, the Assets or the Assumed Liabilities, as may
be in effect on or prior to the Closing.
1.15 "Applicable Permits" shall mean any waiver, exemption, variance,
permit, authorization, license or similar approval required to be obtained or
maintained under Applicable Laws in connection with the Companies or the
Assets.
1.16 "Assets" shall mean, collectively, the AHP Assets, the Holding
Assets and the Whitehall Assets.
1.17 "Assumed Contracts" shall mean the leases, rental agreements,
insurance policies, sales orders, collective bargaining agreements, union
agreements, licenses, agreements, employee plans, distribution agreements,
broker or similar agreements, purchase orders, instruments of indebtedness,
-3-
<PAGE> 8
guarantees and any and all other contracts or other binding arrangements, in
each case included in the Assets.
1.18 "Assumed Liabilities" shall mean the liabilities relating to the
Assets including, but not limited to, the Assumed Contracts.
1.19 "Audited Financial Statements" shall have the meaning set forth
in Section 4.5(a).
1.20 "Base Net Asset Value" shall have the meaning set forth in
Section 3.7(a).
1.21 "Benefit Plans" shall have the meaning set forth in Section
4.16(a).
1.22 "Books and Records" shall mean the books and records of the
Companies (or the Sellers and Whitehall to the extent those portions of such
books and records relate primarily to the Assets).
1.23 "Business" shall refer collectively to the business of the
Companies (including their business utilization of the Assets), which
manufactures, markets and sells specialty food products, it being understood
that Sellers and their Affiliates manufacture and/or sell other food and food-
related products (including, but not limited to, an infant nutritional business
and no stick cooking spray business operated in Argentina) not included in the
Business.
1.24 "CHP" shall have the meaning set forth in the second WHEREAS
clause of this Agreement.
1.25 "CHP Shares" shall have the meaning set forth in the second
WHEREAS clause of this Agreement.
1.26 "Closing" shall have the meaning set forth in Section 3.1.
1.27 "Closing Date" shall have the meaning set forth in Section 3.1.
1.28 "Closing Net Asset Value" shall have the meaning set forth in
Section 3.6(a).
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<PAGE> 9
1.29 "Closing Statement" shall have the meaning set forth in Section
3.6(a).
1.30 "Code" shall mean the United States Internal Revenue Code of
1986, as amended. All references to the Code, U.S. Treasury regulations or
other governmental pronouncements shall be deemed to include reference to any
applicable successor regulations or amending pronouncement.
1.31 "Commonly Controlled Entity" shall have the meaning set forth in
Section 4.16(k).
1.32 "Companies" shall mean, collectively, AHFP, AHF, Luck's, Polaner
and CHP.
1.33 "Company" shall mean, individually, AHFP, AHF, Luck's, Polaner or
CHP.
1.34 "Company Group" shall mean any "affiliated group" (as defined in
Section 1504(a)(1) and (a)(2) of the Code without regard to the limitations
contained in Section 1504(b) of the Code) that, at any time on or before the
Closing Date, includes or has included the subject entity or any predecessor of
or successor to the subject entity.
1.35 "Competition Laws" shall mean all Applicable Laws that are
designed or intended to prohibit, restrict or regulate actions having the
purpose or effect of monopolization or restraint of trade.
1.36 "Contracts" shall mean the Assumed Contracts and all leases,
rental agreements, insurance policies, sales orders, collective bargaining
agreements, union contracts, licenses, agreements, employee plans, distribution
agreements, broker or similar agreements, purchase orders, instruments of
indebtedness, guarantees and any and all other contracts or other binding
arrangements of any of the Companies.
1.37 "Costs" shall have the meanings set forth in Section 11.1(a).
1.38 "Delaware Law" shall have the meaning set forth in the fifth
WHEREAS clause of this Agreement.
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<PAGE> 10
1.39 "Disclosure Schedule" shall mean that certain schedule identified
as such and delivered by Sellers to Buyer pursuant to the Agreement.
1.40 "Effective Time" shall have the meaning set forth in Section 2.3.
1.41 "Employees" shall mean (i) all individuals who, on the Closing
Date, are actively employed by one of the Companies and (ii) all individuals
who are absent from active employment on the Closing Date because of short-term
disability leave, authorized leave of absence from any such Company, military
service or lay-off with recall rights as of such date and who offer to return
to work pursuant to such leave, military service or recall rights.
1.42 "Encumbrances" shall mean all claims, security interests, liens,
pledges, charges, escrows, options, proxies, rights of first refusal,
preemptive rights, mortgages, hypothecation, prior assignments, title retention
agreements, indentures, security agreements or any other encumbrances of any
kind.
1.43 "Environmental Laws" shall mean all Applicable Laws relating to
the protection or pollution of the environment, including the Comprehensive
Environmental Response Compensation and Liability Act, as amended (42 U.S.C.
Section 9601 et seq.) ("CERCLA"), the Emergency Planning and Community Right
to Know Act of 1986, the Federal Solid Waste Disposal Act, as amended by the
Resource Conservation and Recovery Act and the Hazardous and Solid Waste
Amendments thereto, the Clean Air Act, the Clean Water Act, the Toxic
Substances Control Act, the Safe Drinking Water Act, and any similar or
analogous statutes, regulations and decisional law of any Governmental
Authority, as each of the foregoing exist on the date hereof.
1.44 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
1.45 "Final Net Asset Value" shall have the meaning set forth in
Section 3.6(c).
1.46 "Forward Split" shall have the meaning set forth in Section
2.1(a).
1.47 "GAAP" shall mean United States generally accepted accounting
principles.
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<PAGE> 11
1.48 "Governmental Authority" shall mean any governmental department,
commission, board, bureau, agency, court or other instrumentality of the United
States or any other country or any jurisdiction, municipality or other
political subdivision thereof where a Company is now operating or has operated.
1.49 "HSR Act" shall have the meaning set forth in Section 7.5.
1.50 "Hazardous Substance" shall mean (i) any hazardous substance as
that term is defined in CERCLA and its implementing regulations and (ii)
petroleum, including crude oil or any fraction thereof, and natural gas in its
various forms, including natural gas liquids, liquefied natural gas, synthetic
gas usable for fuel, and mixtures of natural gas and such synthetic gas, and
(iii) any pollutant or contaminant whose storage, handling, or disposal is
regulated under Environmental Law.
1.51 "Holding" shall have the meaning set forth in the preamble clause
of this Agreement.
1.52 "Holding Assets" shall mean those assets set forth in Section
1.52 of the Disclosure Schedule, which are owned by Holding and relate
primarily to the Business.
1.53 "Indemnifying Party" shall have the meaning set forth in Section
11.2(a)(i).
1.54 "Intellectual Property" shall mean all (i) Patents, (ii) Know-
how, (iii) Trademarks and (iv) copyrights, copyright registrations and
applications for registration, inventions, designs, industrial and utility
models (including registrations and applications for registration thereof),
trade secrets and all other intellectual property rights, whether registered or
not, licensed to or owned by any of the Companies (or the Sellers to the extent
included in the Assets).
1.55 "Know-how" shall mean all product formulas, specifications,
processes, product designs, plans, ideas, concepts, manufacturing, engineering
and other manuals and drawings, technical information, data, research records,
all promotional literature, customer and supplier lists and similar data and
information and all other confidential or proprietary technical and business
information.
-7-
<PAGE> 12
1.56 "Leased Real Property" shall mean all real property relating to
the Business leased by any of the Companies, including any buildings,
structures, fixtures and improvements thereon or appurtenances thereto.
1.57 "Luck's" shall have the meaning set forth in the second WHEREAS
clause of this Agreement.
1.58 "Luck's Shares" shall have the meaning set forth in the second
WHEREAS clause of this Agreement.
1.59 "Material Adverse Change" shall mean a change that has had a
Material Adverse Effect.
1.60 "Material Adverse Effect" shall mean an effect that (x) is
materially adverse to the financial condition, operations or properties of the
Business taken as a whole, or (y) materially adversely impairs the ability of
Sellers or AHFP to perform their respective obligations under this Agreement or
the agreements contemplated hereby, taken as a whole.
1.61 "Material Contract" shall have the meaning set forth in Section
4.10.
1.62 "Merger" shall have the meaning set forth in the fifth WHEREAS
clause of this Agreement.
1.63 "Merger Sub Common Stock" shall have the meaning set forth in
Section 2.7(a).
1.64 "Merger Equity" shall have the meaning set forth in Section
3.2(a).
1.65 "Minimum Loss" shall have the meaning set forth in Section
11.3(a).
1.66 "Net Assets" shall mean the Assets and the combined net assets of
the Companies excluding intangible assets, cash, intercompany assets and
liabilities, Tax Assets and Tax Liabilities, reserves for litigation, workers'
compensation and self-insurance and Sellers' medical and pension programs, and
certain financial assets and liabilities unrelated to the operation of the
Companies consisting of commercial paper issued by AHFP and preferred stock of
an Affiliate of Sellers held by AHFP.
-8-
<PAGE> 13
1.67 "New AHFP Shares" shall have the meaning set forth in Section
2.7(a).
1.68 "Old AHFP Shares" shall have the meaning set for the in Section
2.7(b).
1.69 "Operating Profits" shall mean, with respect to the Companies
(and Sellers and Whitehall to the extent related to the Assets), net sales less
cost of goods sold, marketing, selling, storage, packing and shipping expenses,
administrative and general expenses and other miscellaneous expenses, excluding
charges for corporate overhead and other corporate expenses, amortization of
goodwill arising from acquisitions, all costs associated with current retiree
benefits and certain income and finance charges unrelated to the Business or
the operation of the Companies.
1.70 "Owned Real Property" shall mean the real property included in
the Assets or owned by any of the Companies, including any buildings,
structures, fixtures and improvements thereon or appurtenances thereto.
1.71 "PAM Assets" shall mean all Assets or other assets of the
Business owned by Sellers, Whitehall or any Company (other than AHFP) related
primarily to the manufacture and distribution of Pam, including real and
personal property (both tangible and intangible).
1.72 "PAM Asset Purchase Price" shall mean such amount as may be
determined by the Buyer.
1.73 "Patents" shall mean all patents and patent applications
(including, without limitation, all reissues, divisions, continuations,
continuations-in-part, renewals and extensions of the foregoing) owned by the
Companies (or the Sellers or Whitehall to the extent included in the Assets).
1.74 "Permitted Encumbrances" shall have the meaning set forth in
Section 4.9(b).
1.75 "Person" shall mean an individual, a corporation, a partnership,
an association, a trust or other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
-9-
<PAGE> 14
1.76 "PBGC" shall have the meaning set forth in Section 4.16(d).
1.77 "Polaner" shall mean M. Polaner, Inc., a Delaware corporation,
and a wholly-owned subsidiary of AHFP.
1.78 "Purchase Price" shall have the meaning set forth in Section 2.8.
1.79 "Real Property" shall mean the Owned Real Property and the Leased
Real Property.
1.80 "Redemption Price" shall have the meaning set forth in Section
2.8.
1.81 "Registration Rights Agreement" shall mean the registration
rights agreement between the Surviving Corporation, Sellers or their Affiliates
and Buyer to be entered into at Closing based on the terms contained in the
term sheet set forth on Exhibit A hereto.
1.82 "Release" shall mean any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal or leaching of a
Hazardous Substance into the environment.
1.83 "Section 338(h)(10) Elections" shall have the meaning set forth
in Section 7.6(e).
1.84 "Section 338(h)(10) Taxes" shall mean any income taxes that would
not have been imposed but for the Section 338(h)(10) Elections or any elections
under state, local or other Tax law that are required to be made or deemed to
have been made as a result of any Section 338(h)(10) Election.
1.85 "Securities Act" shall mean the Securities Act of 1933, as
amended.
1.86 "Shares" shall have the meaning set forth in the third WHEREAS
clause of this Agreement.
1.87 "Straddle Period" shall mean any taxable year or period beginning
before and ending after the Closing Date.
1.88 "Surviving Corporation" shall have the meaning set forth in
Section 2.2.
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<PAGE> 15
1.89 "Tax Assets" shall mean all assets comprising receivables or
deferred assets or prepayments for Taxes, including, without limitation, that
portion of receivables representing goods and services taxes, value added taxes
and similar taxes.
1.90 "Taxes" (and with correlative meanings, "Tax," "Taxes" and
"Taxable") shall mean all taxes with respect to the Companies of any kind
imposed by a federal, territorial, state, local or foreign Governmental
Authority, and any payments made to another party pursuant to a Tax Sharing
Arrangement, indemnity or other similar arrangement, including but not limited
to those on, or measured by or referred to, as income, gross receipts,
financial operation, sales, use, ad valorem, goods and services, value added,
franchise, profits, license, withholding, payroll (including all contributions
or premiums pursuant to industry or governmental social security laws or
pursuant to other tax laws and regulations), employment, excise, severance,
stamp, occupation, premium, property, environmental, transfer or windfall
profits taxes, customs, duties or similar fees, assessments or charges of any
kind whatsoever, together with any interest and any penalties, additions to tax
or additional amounts imposed by such Governmental Authority with respect to
such amounts.
1.91 "Tax Liabilities" shall mean all liabilities for Taxes imposed on
the Companies or otherwise with respect to the Business.
1.92 "Tax Returns" shall mean all reports, returns, schedules and any
other documents required to be filed with respect to Taxes and all claims for
refunds of Taxes.
1.93 "Tax Sharing Arrangement" shall mean any written or unwritten
agreement or arrangement for the allocation or payment of Tax Liabilities or
payment for Tax benefits with respect to a consolidated, combined or unitary
Tax Return which Tax Return includes a Company.
1.94 "Third Party Claim" shall have the meaning set forth in Section
11.2(a)(i).
1.95 "Trademarks" shall mean (i) trademarks, service marks, trade
names, trade dress, labels, logos and all other names and slogans associated
with any products or embodying the goodwill of the Business, whether or not
registered, and any applications or
-11-
<PAGE> 16
registrations therefor and (ii) any associated goodwill incident thereto owned
by the Companies (or the Sellers to the extent included in the Assets).
1.96 "Transitional Services Agreement" shall mean the agreement
related to certain administrative, technical and other similar services, and
the lease of office space, to be provided by Sellers or their Affiliates to the
Surviving Corporation or its Affiliates, to be entered into at the Closing
based on the terms contained in the term sheet set forth on Exhibit B hereto.
1.97 "Whitehall" shall mean Whitehall, a French corporation, and a
wholly-owned subsidiary of AHP.
1.98 "Whitehall Assets" shall mean those assets set forth on Section
1.98 of the Disclosure Schedule, which are owned by Whitehall and relate
primarily to the Business.
ARTICLE 2
THE ACQUISITION AND MERGER
2.1 PRECLOSING ACTIONS. Prior to the Closing Date, the Sellers shall
cause the following to occur:
(a) As may be requested by Buyer, the Certificate of
Incorporation of AHFP shall be amended, in a form and substance reasonably
acceptable to Buyer, so as to (i) increase the amount of AHFP's authorized
common stock, no par value, by such amount as Buyer may request, (ii) effect a
subdivision of the existing outstanding AHFP Shares into such greater number of
shares as Buyer may request (the "Forward Split") or (iii) provide for the
exculpation from liability of the directors of AHFP to the full extent
permissible under Delaware Law;
(b) The Assets, the Luck's Shares, the AHF Shares and the CHP
Shares shall be transferred to AHFP by means of such instruments of assignment
and transfer, in form and substance reasonably acceptable to Buyer, as may be
necessary to effect such transfer; provided that Buyer shall have the right to
request that the PAM Assets and the AHF Shares, as applicable, not be so
transferred to AHFP and in such case the Surviving Corporation shall purchase
the PAM Assets and the AHF Shares, as applicable, at Closing as provided for in
Section 3.2(c); and
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<PAGE> 17
(c) AHFP shall assume all of the Assumed Liabilities
attributable to the Assets transferred and contributed to AHFP pursuant to
Section 2.1(b) pursuant to such instruments of assumption, in form and
substance reasonably acceptable to Buyer, as may be necessary to effect such
assumption.
2.2 THE MERGER. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with Delaware Law, at the Effective Time,
Merger Sub shall be merged with and into AHFP. As a result of the Merger, the
separate corporate existence of Merger Sub shall cease and AHFP shall continue
as the surviving corporation of the Merger (the "Surviving Corporation"). The
name of the Surviving Corporation shall be "American International Foods, Inc."
or subject to Section 6.3, such other name as may be designated by Buyer. By
their execution and delivery of this Agreement, Holdings hereby consents as the
sole stockholder of AHFP Shares in favor of the Merger and Buyer hereby
consents as the sole stockholder of Merger Sub Common Stock in favor of the
Merger.
2.3 EFFECTIVE TIME. At the Closing, the Merger shall be consummated by
filing a Certificate of Merger with the Secretary of State of Delaware, in such
form as is required by, and executed in accordance with the relevant provisions
of, Delaware Law (the date and time of the completion of such filing being the
"Effective Time").
2.4 EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of Delaware Law.
Without limiting the foregoing, subject to the applicable provisions of
Delaware Law, at the Effective Time, all property, rights, privileges, powers
and franchises of Merger Sub and AHFP shall vest in the Surviving Corporation.
2.5 CERTIFICATE OF INCORPORATION; BY-LAWS. At the Effective Time, the
Certificate of Incorporation and by-laws of AHFP, as in effect immediately
prior to the Effective Time, shall be the Certificate of Incorporation and by-
laws of the Surviving Corporation; provided that the Certificate of
Incorporation shall be amended so as to provide that the name of the Surviving
Corporation shall be "American International Foods, Inc." or subject to Section
6.3, such other name as may be designated by Buyer.
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<PAGE> 18
2.6 DIRECTORS AND OFFICERS. The directors of Merger Sub immediately
prior to the Effective Time shall be the directors of the Surviving Corporation
at the Effective Time, each to hold office in accordance with the Certificate
of Incorporation and by-laws of the Surviving Corporation, and the officers of
Merger Sub immediately prior to the Effective Time shall be the officers of the
Surviving Corporation at the Effective Time, in each case until their
respective successors are duly elected or appointed and qualified.
2.7 MERGER CONSIDERATION; CONVERSION AND CANCELLATION OF SECURITIES.
At the Effective Time, by virtue of the Merger and without any action on the
part of AHFP, Merger Sub or any other party, the following shall occur;
(a) Subject to the provisions of Section 2.7(c), each share of
common stock, par value $0.01 per share of Merger Sub (the "Merger Sub Common
Stock") issued and outstanding immediately prior to the Effective Time shall by
virtue of the Merger and without any action on the part of the holder thereof,
be converted into .232 of a share of common stock, no par value, of the
Surviving Corporation (the "New AHFP Shares");
(b) With respect to all AHFP Shares issued and outstanding
immediately prior to the Effective Time, .232 of each such shares shall, by
virtue of the Merger and without any action on the part of the holder thereof,
be converted into the right to receive in cash from Buyer at the Effective Time
its pro rata share of the Merger Equity (based upon the number of such issued
and outstanding shares held by Sellers; and it is acknowledged that such
converted shares shall be converted in the aggregate into the right to receive
an amount in cash equal to 100% of the Merger Equity) and to the extent not so
converted pursuant to the foregoing each share of the AHFP Shares issued and
outstanding immediately prior to the Effective Time shall remain outstanding
after the Merger (the "Old AHFP Shares"); and
(c) Notwithstanding the foregoing, if as contemplated by Section
2.1(a), subsequent to the date of this Agreement and prior to the Effective
Time the outstanding AHFP Shares shall have been subdivided pursuant to a
Forward Split into a greater number of shares, then the number of New AHFP
Shares to be issued pursuant to the Merger in respect of a share of the Merger
Sub Common Stock pursuant to Section 2.7(a) and the number of Old AHFP Shares
to be redeemed pursuant to Section 2.8 shall be correspondingly adjusted to
reflect such subdivisions.
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2.8 REDEMPTION OF OLD AHFP SHARES. At the Closing, the Surviving
Corporation shall cause the financing contemplated herein to be funded by the
lenders thereof in such amount as may be necessary, when added to the amount of
the Merger Equity, to equal the amount of $1,275,000,000 minus the product of
25% times the Merger Equity (the "Purchase Price"). It is acknowledged that
the total amount to be received in cash by Sellers at Closing in respect of the
transactions contemplated herein shall in no event be less than $1,202,000,000.
Subject to the provisions of Section 2.7(c), at the Closing the Surviving
Corporation shall redeem 710 shares of the Old AHFP Shares at an aggregate
redemption amount equal to the Purchase Price minus the sum of the amount of
the Merger Equity and the amount, if any, of the PAM Asset Purchase Price and
the AHF Share Purchase Price paid at the Closing pursuant to Section 3.2(c)
(the "Redemption Price").
ARTICLE 3
CLOSING; PURCHASE PRICE ADJUSTMENT
3.1 THE CLOSING. Unless this Agreement shall have been terminated,
on the terms and subject to the conditions of this Agreement, the consummation
of the transactions contemplated by Article 2 (other than Section 2.1) and this
Article 3 (the "Closing") shall take place at the offices of American Home
Products Corporation, Five Giralda Farms, Madison, New Jersey 07940 on the
second succeeding business day on which the last to be fulfilled or waived of
the conditions set forth in Article 8 shall be fulfilled or waived in
accordance with this Agreement or at such other time, date or place as the
parties may mutually agree upon in writing (the "Closing Date").
3.2 CLOSING ACTIONS BY BUYER. At the Closing, Buyer shall perform
the following:
(a) Pursuant to the Merger, Buyer shall pay to Sellers
$292,000,000 or such lesser amount as Buyer may determine (the "Merger
Equity");
(b) Buyer shall cause Merger Sub to take all action necessary
for it to effect the Merger;
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(c) If pursuant to Buyer's request the PAM Assets or the AHF
Shares have not been transferred to AHFP pursuant to Section 2.1(b), then Buyer
shall cause the Surviving Corporation to purchase the PAM Assets and the AHF
Shares, as applicable, and, as may be applicable, to pay to the Sellers in
respect of the PAM Assets if so purchased the PAM Asset Purchase Price or in
respect of the AHF Shares if so purchased the AHF Share Purchase Price;
(d) Buyer shall cause the Surviving Corporation to effect the
redemption contemplated by Section 2.8;
(e) Buyer shall cause the Surviving Corporation to pay the
Redemption Price and, if applicable, the PAM Asset Purchase Price and the AHF
Share Purchase Price to the Sellers in cash payable by wire transfer in
immediately available funds to a bank account of Sellers (which account shall
be designated by Sellers no fewer than two business days prior to the Closing
Date);
(f) Buyer shall cause the Surviving Corporation to execute and
deliver to Sellers a Registration Rights Agreement and a Transitional Services
Agreement;
(g) Buyer shall deliver to Sellers and the Surviving
Corporation a Registration Rights Agreement executed by Buyer;
(h) Buyer shall deliver to the Sellers a certificate signed by
an authorized officer of Buyer as required to be delivered pursuant to Section
8.2(c);
(i) Buyer shall deliver to the Sellers a certificate, signed
by an authorized officer of Buyer and Merger Sub, certifying to (i) the due
organization and good standing of Buyer and Merger Sub, (ii) the corporate
resolutions of Buyer and Merger Sub authorizing the transactions contemplated
by this Agreement and (iii) the incumbency of officers of Buyer and Merger Sub
executing this Agreement and the other agreements, instruments or certificates
delivered at the Closing; and
(j) Buyer shall execute and deliver such other instruments and
documents, in form and substance reasonably acceptable to Sellers, as may be
necessary to effect the Closing.
3.3 CLOSING ACTIONS BY SELLERS. At the Closing, Sellers shall
perform the following:
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(a) Sellers shall cause AHFP to take all action necessary for it
to effect the Merger;
(b) If pursuant to Buyer's request the AHF Shares have not been
transferred to AHFP pursuant to Section 2.1(b), then Sellers shall cause to be
delivered to the Surviving Corporation certificates representing the AHF Shares
duly endorsed for transfer to the Surviving Corporation or accompanied by stock
powers duly executed in blank;
(c) If pursuant to Buyer's request the PAM Assets have not been
transferred to AHFP pursuant to Section 2.1(b), then Sellers shall cause to be
delivered to the Surviving Corporation such assignments, deeds, bills of sale
and any other appropriate instruments of sale and conveyance, in form and
substance reasonably acceptable to Buyer, transferring under Applicable Laws
all real property, personal property and Intellectual Property included in the
PAM Assets to the Surviving Corporation. The Surviving Corporation shall
prepare any and all individual assignment documents required in the respective
countries and record them in the national patent and trademark and other
government offices, as applicable;
(d) The Sellers shall deliver or shall cause to be delivered to
the Surviving Corporation for cancellation the certificates representing the
Old AHFP Shares converted pursuant to the Merger or redeemed pursuant to
Section 2.8;
(e) Sellers shall deliver to Buyer a certificate signed by an
authorized officer of each of the Sellers as required to be delivered pursuant
to Section 8.3(c);
(f) Sellers shall deliver to Buyer, a certificate, signed by
an authorized officer of each of the Sellers and AHFP, certifying to (i) the
due organization and good standing of Sellers and AHFP, (ii) the corporate
resolutions of each of Sellers and AHFP authorizing the transactions
contemplated by this Agreement and (iii) the incumbency of officers of the
Sellers and AHFP executing this Agreement and the other agreements, instruments
or certificates delivered at the Closing;
(g) Sellers shall deliver to the Surviving Corporation the
stock books, stock ledgers, minute books, corporate seals and financial records
and statements of the Companies;
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(h) Sellers shall deliver to Buyer all documents and
instruments evidencing the transfers, contributions and assumptions made
pursuant to Sections 2.1(b) and (c);
(i) Sellers shall deliver or shall cause to be delivered to
Buyer, such other instruments and documents, in form and substance reasonably
acceptable to Buyer, as may be necessary to effect the Closing;
(j) Sellers shall deliver to the Surviving Corporation a
Transitional Services Agreement executed by Sellers or their Affiliates;
(k) Sellers shall deliver to Buyer and the Surviving
Corporation a Registration Rights Agreement executed by Sellers or their
Affiliates.
3.4 CONTEMPORANEOUS EFFECT. For purposes of this Agreement, each and
every event referred to in Article 2 (other than Section 2.1) and this Article
3 that is to occur on the Closing Date shall be deemed to have occurred
contemporaneously.
3.5 FURTHER ASSURANCES. (a) From time to time, at Buyer's or
Sellers' request, whether at or after the Closing Date, Buyer or Sellers, as
the case may be, shall, and shall cause their respective Affiliates to, execute
and deliver such further instruments of conveyance, transfer and assignment,
cooperate and assist in providing information for making and completing
regulatory filings, and take such other actions as Buyer or Sellers, as the
case may be, may reasonably require of the other party to more effectively
effect the transactions contemplated by this Agreement.
(b) To the extent that the assignment of any Assumed Contract
to AHFP (or the Surviving Corporation) hereunder shall require the consent of
the other party thereto, this Agreement shall not constitute an agreement to
assign the same if an attempted assignment would constitute a breach thereof.
Sellers will use their diligent efforts to obtain the consent of the other
parties to such Assumed Contracts for the assignment thereof to AHFP (or the
Surviving Corporation); provided, however, that Sellers shall not be obligated
to make any payment, make any commitments, incur any liabilities or take any
other detrimental action to obtain any such consent. If any such consent is
not obtained, Sellers shall cooperate with Buyer in any arrangement reasonably
requested by Buyer to provide for AHFP
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(or the Surviving Corporation) the benefits under any such Assumed Contract,
including the enforcement at the cost of and for the benefit of AHFP (or the
Surviving Corporation) of any and all rights thereunder of Sellers or the
respective Affiliate against the other party thereto.
3.6 CLOSING STATEMENT. (a) As promptly as practicable, but no later
than 90 days after the Closing Date, Sellers will cause to be prepared and
delivered to Buyer two statements (the "Closing Statements"), one such
statement (the "Closing Date Statement") setting forth the value of the Net
Assets as of the close of business on the Closing Date (the "Closing Net Asset
Value") and the other such statement (the "Average Value Statement") setting
forth the average month end value of the Net Assets for the 12 months ended
immediately prior to the Closing Date (the "Average Net Asset Value"). The
Closing Statement shall include line items and notes substantially consistent
with those of the 1995 audited combined statement of adjusted Net Assets
included in the Audited Financial Statements and the June 30, 1996 combined
statement of adjusted Net Assets included in the Audited Financial Statements;
provided however, that the amount of cash or cash equivalents remaining in the
Company as of the close of business on the Closing Date that is in excess of
the amount required to cover checks of the Company outstanding as of the close
of business on the Closing Date, shall be reflected on the Closing Statements.
Buyer shall cause the Companies and their respective employees to assist
Sellers in the preparation of the Closing Statements, including the taking of a
physical inventory, and shall provide Sellers and their independent auditors,
Andersen, access at all reasonable times to the personnel, properties, books
and records of the Companies for such purpose and, insofar as such books and
records pertain to the Business, any of Buyer's Affiliates for such purpose.
The Closing Date Statement shall be accompanied by an audit report from
Andersen stating that in its opinion such statement presents fairly, in all
material respects, the combined Net Assets as of the Closing Date, in
conformity with GAAP (except as set forth in the notes thereto) applied
consistently with the accounting principles applied in the Audited Financial
Statements and the Average Value Statement shall be accompanied by a review
report from Andersen stating that in its opinion nothing has come to its
attention which would cause them to believe such statement was not prepared on
a consistent basis with those of December 31, 1995 and June 30, 1996.
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<PAGE> 24
(b) If Buyer believes that either of the Closing Statements
does not present fairly in all material respects the Closing Net Asset Value or
the Average Net Asset Value, as the case may be, Buyer may, within 30 days
after delivery of the Closing Statements, deliver a notice to Sellers
specifying those items or amounts as to which Buyer disagrees, and the basis
therefor. Buyer shall be deemed to have agreed with all other items and
amounts contained in the Closing Statements and the calculation of Closing Net
Asset Value and Average Net Asset Value delivered pursuant to Section 3.6(a).
(c) If a notice of disagreement shall be duly delivered
pursuant to Section 3.6(b), the parties shall, during the 15 days following
such delivery, use their diligent efforts to reach agreement on the disputed
items or amounts in order to determine, as may be required, the amount of
Closing Net Asset Value or Average Net Asset Value, as the case may be, which
amount in either case shall not be more than the amount thereof shown in
Sellers' calculation delivered pursuant to Section 3.6(a) nor less than the
amount thereof shown in Buyer's calculation delivered pursuant to Section
3.6(b). If, during such period, the parties are unable to reach agreement,
they shall promptly thereafter select a firm of independent nationally
recognized public accountants chosen and mutually accepted by both parties (the
"Accountant") promptly to review this Agreement, the appropriate books and
records of the Companies and the disputed items or amounts for the purpose of
calculating Closing Net Asset Value and Average Net Asset Value. In making
such calculation, the Accountant shall consider only those items or amounts in
the Closing Statements or Sellers' calculation of Closing Net Asset Value or
Average Net Asset Value as the case may be, as to which Buyer has disagreed and
other adjustments directly related thereto. The Accountant shall deliver to
Sellers and Buyer, as promptly as practicable, a report setting forth such
calculation. Such report shall be final and binding upon the parties hereto.
The cost of such review and report shall, in the case of each report, be borne
(i) by the party whose calculation or calculations, taken together, were
furthest from that of the Accountants, and (ii) otherwise equally by Sellers
and Buyer if the calculations, taken together, are equally apart. "Final Net
Asset Value" means (A) Closing Net Asset Value as shown in Sellers' calculation
delivered pursuant to Section 3.6(a) if no notice of disagreement with respect
thereto is delivered, (B) the amount agreed upon by the parties pursuant to
this Section 3.6(c) or (C) in the absence of such agreement, the amount as
shown in the Accountant's calculation
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delivered pursuant to this Section 3.6(c); provided that Final Net Asset Value
shall not in any event be more than Sellers' calculation of Closing Net Asset
Value delivered pursuant to Section 3.6(a) nor less than Buyer's calculation of
Closing Net Asset Value delivered pursuant to Section 3.6(b). "Final Average
Net Asset Value" means the definitive Average Net Asset Value determined in a
manner similar to the manner for determining Final Net Asset Value in the
preceding sentence (which shall be applicable mutatis mutandis).
3.7 ADJUSTMENT OF PURCHASE PRICE.
(a) For purposes of this paragraph, "Base Net Asset Value" means the the
higher of (i) $256,530,000 or (ii) an amount equal to the Final Average Net
Asset Value minus $13 million. If the Base Net Asset Value exceeds Final Net
Asset Value, Sellers shall pay to Buyer, in the manner and with interest as
provided in Section 3.7(b), the amount of such excess. If Final Net Asset
Value exceeds the Base Net Asset Value, Buyer shall pay to Sellers, in the
manner and with interest as provided in Section 3.7(b), the amount of such
excess. Any such payment pursuant to this Section 3.7(a) shall be made at a
mutually convenient time and place (i) within 30 days after Sellers' delivery
of the documents referred to in Section 3.6(a) if no notice of disagreement is
duly delivered pursuant to Section 3.6(b), or (ii) if a notice of disagreement
is duly delivered pursuant to Section 3.6(b), then within 10 days after the
earlier of (A) agreement between the parties pursuant to Section 3.6(c) or (B)
delivery of the calculation of Final Net Asset Value and Final Average Net
Asset Value referred to in Section 3.6(c).
(b) Any payment made pursuant to this Section 3.7 shall be
made by wire transfer or by delivery to the payee of the required amount in
immediately available funds to such account as the payee designates for such
purpose at least two (2) days prior to the date of the required payment (or, if
not so designated, by certified or official bank check payable in immediately
available funds to the order of the payee in such amount). The amount to be
paid under this section shall bear interest from and including the Closing Date
to the date immediately preceding the date of payment at a rate per annum equal
to the rate publicly announced by Chase Manhattan Bank NA in New York, New York
as its prime rate in effect on the Closing Date. Interest shall be calculated
daily on the basis of a year of 365 days and the actual number of days for
which interest is due.
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3.8 ALLOCATION. Buyer and Sellers shall agree to a reasonable
allocation of the price at which each asset of AHFP is deemed to have been sold
within 30 days following the date of payment of the adjustment payment
specified in Section 3.7(b). The allocation shall be made as of the Closing
Date. A schedule (the "Allocation Schedule") shall be prepared by Sellers
conforming to the allocation as agreed to by Buyer and Sellers. Each of
Sellers and Buyer shall be bound by the Allocation Schedule for purposes of
determining any Taxes, shall prepare and file, and cause its Affiliates to
prepare and file, its Tax Returns on a basis consistent with the Allocation
Schedule, and shall take no position, and cause its Affiliates to take no
position, inconsistent with the Allocation Schedule on any applicable Tax
Return or in any proceeding before any Governmental Authority. In the event
that the Allocation Schedule is disputed by any Governmental Authority, the
party receiving notice of the dispute shall promptly notify the other party
hereto concerning resolution of the dispute. Sellers and Buyer acknowledge
that the Allocation Schedule will be set on an arm's length basis upon a good
faith determination of the fair market value of the Assets and the assets of
the Companies.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF SELLERS
Sellers hereby jointly and severally represent and warrant to
Buyer the following:
4.1 ORGANIZATION, GOOD STANDING, POWER, ETC. (a) Each Company is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization. Each Company has the requisite
corporate power and authority to own, operate or lease the properties that it
purports to own, operate or lease and to carry on its business as it is now
being conducted and is duly licensed or qualified as a foreign corporation in
each domestic or foreign jurisdiction in which the nature of the business
conducted by it or the character or location of the properties owned or leased
by it makes such licensing or qualification necessary, except where the failure
to be so licensed or qualified, individually or in the aggregate, would not be
reasonably expected to have a Material Adverse Effect. Copies of the
Certificate of Incorporation (or other similar charter document) and by-laws of
the Companies, including
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all amendments thereto, heretofore delivered to Buyer or its representatives by
Sellers, are true and complete as of the date hereof, and copies of the minute
books of the Companies, heretofore delivered to Buyer or its representatives by
Sellers, are true and complete as of the date hereof in all material respects.
On or prior to the Closing Date, Sellers shall deliver to Buyer a true and
complete copy of each Company's stock transfer books. Each of such Certificate
of Incorporation (or other similar charter document) and by-laws is in full
force and effect, and each Company is not in violation or breach of any of the
provisions of its Certificate of Incorporation (or other similar charter
document) or by-laws.
(b) Each of the Sellers is a corporation duly organized,
validly existing and in good standing under the laws of Delaware. Each of the
Sellers and AHFP has the requisite corporate power and authority to execute and
deliver this Agreement and the other agreements contemplated hereby, and the
Sellers, Whitehall and AHFP have all requisite corporate power to consummate
the transactions contemplated hereby and thereby. The execution and delivery
of this Agreement by Sellers and AHFP, the execution and delivery by Sellers,
Whitehall and AHFP of the other agreements contemplated hereby, and the
consummation by Sellers and AHFP of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Sellers
and AHFP and no other or further corporate proceedings will be necessary for
the execution and delivery of such agreements by Sellers and AHFP, the
performance by Sellers, Whitehall and AHFP of their respective obligations
hereunder and the consummation by Sellers, Whitehall and AHFP of the
transactions contemplated hereby. This Agreement and the other agreements
contemplated hereby have been duly executed and delivered by each of the
Sellers and AHFP that is a party hereto and thereto and constitutes a legal,
valid and binding obligation of each of the Sellers and AHFP enforceable
against Sellers and AHFP in accordance with their respective terms, except as
the same may be limited by bankruptcy, insolvency, moratorium, reorganization
or other laws of general applicability relating to or affecting the enforcement
of creditors' rights and general principles of equity.
4.2 CAPITALIZATION OF THE COMPANIES. (a) The authorized capital
stock of (i) CHP consists of an unlimited number of Common Shares, an unlimited
number of Class A Shares, and an unlimited number of Class B shares; (ii)
subject to any amendment
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contemplated by Section 2.1(a), AHFP consists of 1,000 shares of Common Stock,
no par value; (iii) Luck's consists of 500 shares of Common Stock, no par
value; (iv) AHF consists of 25,000 shares of Common Stock, $1.00 par value; and
(v) Polaner consists of 1,000 shares of Common Stock, no par value. 98,895 CHP
Common Shares and 12,261,650 CHP Class A Shares, 1,000 shares of AHFP Common
Stock, 100 shares of Luck's Common Stock, 25,000 shares of AHF Common Stock,
and 1,000 shares of Polaner Common Stock are issued and outstanding, all of
which are validly issued, fully paid and non-assessable. Except as may be
contemplated by this Agreement, there are no options, warrants or other rights,
agreements, arrangements or commitments of any character obligating any of the
Companies to issue or sell any shares of capital stock of or other equity
interests in any of the Companies, or any securities or obligations convertible
into or exchangeable or exercisable for any shares of capital stock of any of
the Companies or other equity interests in any of the Companies obligating any
of the Companies to grant, extend or enter into any such right, agreement,
arrangement or commitment.
(b) Except as contemplated by this Agreement, there are no
outstanding agreements, arrangements or commitments of any character whatsoever
of any of the Companies to repurchase, redeem or otherwise acquire any
outstanding shares of capital stock of, or other ownership interests in, any of
the Companies, or to provide funds to or make any investment (in the form of a
loan, capital contribution or otherwise) in any other entity.
(c) The Shares constitute all of the issued and outstanding
shares of capital stock of CHP, AHFP, Luck's and AHF. AHP, either directly or
indirectly through Holding, has good, valid and marketable title to all of the
Shares, free and clear of any Encumbrances and any preemptive or subscription
rights of any Person. There are no restrictions on the transferability of the
Shares except as provided by Applicable Law, and there are no agreements,
arrangements or commitments of any character whatsoever relating to the voting
rights associated with any of the Shares.
(d) AHFP has good, valid and marketable title to all of the
issued and outstanding shares of common stock of Polaner, free and clear of any
Encumbrances and any preemptive or subscription rights of any Person. There
are no restrictions on the transferability of the shares of common stock of
Polaner except as provided by Applicable Law, and there are no
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agreements, arrangements or commitments of any character whatsoever relating to
the voting rights associated with the common stock of Polaner.
(e) The New AHFP Shares issued pursuant to the Merger will be
duly authorized, validly issued and nonassessable shares, free and clear of any
Encumbrances and any preemptive or subscription rights of a Person.
4.3 SUBSIDIARIES. Except as set forth in Section 4.3 of the
Disclosure Schedule, and except with respect to Polaner, which is a wholly-
owned subsidiary of AHFP, none of the Companies owns any equity interest in any
entity and none of the Companies is a partner, trustee or other participant in
any partnership, joint venture, trust or other entity with any third party,
including any Affiliate of Sellers.
4.4 EFFECT OF AGREEMENT. The execution, delivery and performance by
Sellers and AHFP of this Agreement and the other agreements contemplated hereby
and the consummation by Sellers, Whitehall and AHFP of the transactions
contemplated hereby and thereby will not require any notice to, filing with, or
the consent, approval or authorization of any Person or Governmental Authority,
except as contemplated in Section 7.5 hereof or as set forth in Section 4.4 of
the Disclosure Schedule, except for such consents, approvals or authorizations
the failure of which to obtain or make, individually or in the aggregate, would
not be reasonably expected to have a Material Adverse Effect. Except as
contemplated in Section 7.5 hereof or as set forth in Section 4.4 of the
Disclosure Schedule, neither the execution and delivery of this Agreement or of
the other agreements contemplated hereby nor the consummation of the
transactions contemplated hereby or thereby will (i) violate, conflict with or
result in a breach or result in the acceleration or termination of, or the
creation in any third party of the right to accelerate, terminate, modify or
cancel, any material indenture, contract, lease, sublease, loan agreement, note
or other material obligation or liability to which any of the Companies is a
party or is bound or to which any of the Companies' assets or the Assets are
subject, (ii) conflict with, violate or result in a breach of any provision of
the corporate charter documents or by-laws of the Sellers or any of the
Companies, or (iii) conflict with or violate any Applicable Laws or court
orders in any material respect.
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4.5 FINANCIAL DATA AND NET ASSET VALUE. (a) Sellers have delivered
to Buyer or its representatives (i) audited combined statements of adjusted
Operating Profit for the two years ended December 31, 1995 and the six months
ended June 30, 1996 (including notes thereto) and combined statements of
adjusted Net Assets as of December 31, 1994, December 31, 1995 and June 30,
1996, which combined adjusted financial statements contain a report from
Andersen reporting thereon (collectively, the "Audited Financial Statements").
(b) Each of the audited combined statements of adjusted Net
Assets included in the Audited Financial Statements fairly presents, in all
material respects, the combined Net Assets of the Companies (and of the Sellers
and Whitehall to the extent related to the Assets) as of its date and each of
the audited combined statements of adjusted Operating Profit included in the
Audited Financial Statements fairly presents, in all material respects, the
combined Operating Profit of the Companies (and the Sellers and Whitehall to
the extent related to the Assets) for the periods set forth therein, in each
case in accordance with GAAP, except in each case as set forth in the Notes
therein.
(c) There exist no liabilities or obligations of the
Companies, and Sellers to the extent of the Assumed Liabilities, that are
material to the Business, whether accrued, absolute, contingent or threatened,
which are required to be reflected, reserved for or disclosed under GAAP in
financial statements of the Business as of and for the period ended on the date
of this representation and warranty, other than (i) liabilities or obligations
which are adequately reflected, reserved for or disclosed in the Audited
Financial Statements or (ii) liabilities or obligations incurred in the
ordinary course of business of the Business since June 30, 1996.
4.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except (x) with respect to
the transactions provided for in this Agreement, (y) for the Contracts entered
into since June 30, 1996 that are required to be listed in Section 4.10 of the
Disclosure Schedule, or (z) for matters listed in Section 4.6 of the Disclosure
Schedule, since June 30, 1996, (i) the Companies have operated in the ordinary
course in a manner consistent with past practice and (ii) there has not been
(A) any Material Adverse Change or the occurrence of any event that would be
reasonably expected to cause a Material Adverse Change or (B) any damage,
destruction,
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loss or claim, whether or not covered by insurance, or condemnation or other
taking adversely affecting in any material respect the Companies' assets and
the Assets taken as a whole or the Business taken as a whole, and (iii) except
as set forth in Section 4.6 of the Disclosure Schedule, the Sellers, Whitehall
and the Companies have not (A) engaged in any conduct that is proscribed during
the period from the execution of this Agreement by the Sellers, the Companies
and Polaner to the Closing by Section 6.1 or (B) agreed in writing or otherwise
during such period prior to the execution of this Agreement by the Sellers to
engage in any such conduct.
4.7 TAXES. Except as disclosed in Section 4.7 of the Disclosure
Schedule (i) except where failure to file would not have a Material Adverse
Effect, the Companies have filed on or before the date hereof (or will timely
file) all Tax Returns due to be filed on or before the date hereof (or the
Closing Date); (ii) except where failure to pay would not have a Material
Adverse Effect, all such Tax Returns are (or will be) complete and accurate and
disclose all Taxes required to be paid by the Companies for the periods covered
thereby and all Taxes shown to be due on such Tax Returns have been or will be
timely paid; (iii) except for failures to pay as would not reasonably be
expected to have a Material Adverse Effect, all Taxes (whether or not shown on
any Tax Return) owed by the Companies and required to be paid on or before the
Closing Date have been (or will be) timely paid or are being contested in good
faith; (iv) the Tax Returns referred to in clause (i) have been examined by the
Internal Revenue Service or the appropriate state, local, territorial or
foreign taxing authority or the period for assessment of the Taxes in respect
of which such Tax Returns were required to be filed has expired; (v) there is
no action, suit, investigation, audit, claim or assessment or competent
authority proceeding pending or proposed or to the knowledge of Sellers
threatened with respect to Taxes of any of the Companies; (vi) all
deficiencies asserted or assessments made as a result of any examination of the
Tax Returns referred to in clause (i) have been paid in full or are being
contested in good faith; (vii) all Tax Sharing Arrangements and tax indemnity
arrangements will terminate prior to the Closing Date and the Companies will
have no liability thereunder on or after the Closing Date; (viii) there are no
liens for Taxes upon the assets of the Companies or the Assets except liens
relating to current Taxes not yet due or being contested in good faith through
appropriate proceedings; (ix) except where failure would not be reasonably
expected to
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have a Material Adverse Effect, all Taxes which the Companies or any of its Tax
Affiliates is required by law to withhold or to collect for payment have been
duly withheld and collected and have been paid or accrued, reserved against and
entered on the appropriate Books and Records; (x) all outstanding intercompany
obligations (as described in Treas. Reg. Section 1.1502-13(g)) of the
Companies and any other member of any Company Group will be settled prior to
Closing; and (xi) none of the Companies has made any payments or is obligated
to make any payments under any agreement that will not be deductible under
Section 280G of the Code.
4.8 REAL PROPERTY.
(a) Owned Real Property. Section 4.8(a) of the Disclosure
Schedule sets forth a list of all Owned Real Property. Except as set forth in
Section 4.8(a)(i) of the Disclosure Schedule and except for Permitted
Encumbrances, (i) one of the Companies (or Sellers or Whitehall to the extent
related to the Assets) has good, valid and marketable fee simple title to each
parcel of Owned Real Property, (ii) none of the Owned Real Property is subject
to any lease, and (iii) at the Closing the Surviving Corporation will receive
or will have good, valid and marketable fee simple title to each parcel of
Owned Real Property included in the Assets.
(b) Section 4.8(b) of the Disclosure Schedule lists all Leased
Real Property material to the Business. Sellers have made available to Buyer
or its representatives copies of all leases thereto. One of the Companies (or
Sellers to the extent related to the Assets) has a valid leasehold interest in
each parcel of Leased Real Property set forth in Section 4.8(b) of the
Disclosure Schedule and each of such leases is in full force and effect in
accordance with its terms in all material respects.
4.9 GOOD TITLE TO AND CONDITION OF ASSETS; CONDUCT OF BUSINESS. (a)
Except as set forth in Section 4.9(a) of the Disclosure Schedule, and except
for the services to be provided pursuant to the Transitional Services
Agreement, and the assets relating to the services provided by Sellers or their
Affiliates not primarily relating to the Business and not included in the
purchase and sale herein generally described in Section 4.9(a) of the
Disclosure Schedule, the assets of the Companies, together with the Assets,
constitute all the assets currently used (or held for use) to conduct the
Business in all material respects as
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currently conducted and all such Assets and assets, taken as a whole, are in
good operating condition and repair and are suitable for their current uses.
(b) The Companies have good title to, or a valid and binding
leasehold interest in, the assets of the Companies and the Sellers or Whitehall
have good title to the Assets, in each case, free and clear of all
Encumbrances, except (i) as set forth in Section 4.9(b) of the Disclosure
Schedule, (ii) any Encumbrances specifically disclosed in the Financial
Statements or Section 4.9(b) of the Disclosure Schedule, (iii) liens for Taxes,
assessments and other governmental charges not yet due and payable, (iv)
mechanics', workmen's, repairmen's, warehousemen's, carriers' or other like
liens arising or incurred in the ordinary course of business, and equipment
leases with third parties entered into in the ordinary course of business, (v)
with respect to Real Property (A) easements, quasi-easements, licenses,
covenants, rights-of-way, and other similar restrictions, including without
limitation, any other agreements, conditions or restrictions, in each case
which are a matter of public record, (B) any conditions that are shown by any
survey which has been made available for Buyer's review prior to the date
hereof or physical inspection and (C) zoning, building or similar restrictions
pursuant to Applicable Laws, (vi) other Encumbrances arising from obligations
which, individually, or in the aggregate, are not material and would not be
required to be disclosed or reflected in a combined balance sheet of the
Companies or the notes thereto prepared in accordance with GAAP and the Assets,
and (vii) other Encumbrances which, individually and in the aggregate, are not
material in amount, do not interfere with, and are not violated by, the
consummation of the transactions contemplated by this Agreement and do not
materially impair the existing use of or the property affected by such
Encumbrances (all items included in (i) through (vii) are referred to
collectively herein as the "Permitted Encumbrances").
4.10 CONTRACTS. Section 4.10(i) of the Disclosure Schedule sets forth
a list, as of the date hereof, of each of the following Contracts relating to
the Business other than purchase orders entered into in the ordinary course of
business ("Material Contracts"): (i) each Contract for the purchase of
inventories or for the furnishing of services to the Business extending beyond
one year or requiring financial commitments in excess of $250,000; (ii) each
Contract for the sale of inventories or for the furnishing of services by the
Business with firm commitments
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involving revenues in excess of $250,000 other than the sale of inventories or
the furnishing of services in the ordinary course of business; (iii) each
exclusive distributor or agency Contract extending by its terms beyond one year
or requiring financial commitments in excess of $250,000; (iv) each Contract
relating to the acquisition or disposition of any assets having an aggregate
value in excess of $250,000 in each case other than the sale or purchase of
inventories in the ordinary course of business; (v) any agency, representation
or broker agreement with any Person which is not terminable without penalty
upon not more than ninety (90) days' notice; (vi) any agreement, contract or
commitment with any Person containing any covenant limiting the freedom of any
Company to engage in any line of business or to compete with any Person; (vii)
any partnership, joint venture or profit sharing agreement with any Person;
(viii) any agreement, contract, commitment, indenture or other instrument
relating to the borrowing of money in a principal amount of $250,000 or more or
any direct or indirect guarantee of any obligation of any other Person for, or
agreement to service the repayment of, borrowed money in a principal amount of
$250,000 or more; (ix) any lease (A) with annual rental payments aggregating
$250,000 or more that is not terminable without premium or penalty on ninety
(90) days or less notice or (B) of assets exceeding $250,000 fair market value;
or (x) any agreement, contract or commitment relating to the disposition or
acquisition of any investment in any Person if such investment has a book value
of, or the disposition or acquisition price of such investment or interest is,
$250,000 or more.
Except as set forth in Section 4.10(ii) of the Disclosure Schedule, each
Material Contract is a valid and binding agreement and is in full force and
effect. Except as otherwise provided in Section 4.10(iii) of the Disclosure
Schedule, (a) there has been no material default by Sellers or any Company, and
(b) Sellers have no knowledge of any material default by any other party, in
each case under any Material Contract which default has not been cured or
waived, except for such defaults as would not be reasonably expected to have a
Material Adverse Effect. To Sellers' knowledge, there is no assertion by any
third party of any claim of material default or breach under any Material
Contract except for such claim as would not be reasonably expected to have a
Material Adverse Effect.
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4.11 INTELLECTUAL PROPERTY RIGHTS. Except to the extent that the
failure of the following would not be reasonably expected to, individually or
in the aggregate, have a Material Adverse Effect:
(a) Section 4.11(a) of the Disclosure Schedule sets forth a listing of
(i) all Patents, registered Trademarks and applications therefor, registered
copyrights and applications for copyright registration, industrial and utility
model registrations and applications therefor, and design registrations and
applications therefor, included in the Intellectual Property that are owned by
the Companies or owned by Sellers or Whitehall and included in the Assets, (ii)
(x) all Contracts under which any of the Companies is licensed or otherwise
permitted to use Intellectual Property relating to the Business and (y) all
Contracts under which any of Sellers or Whitehall is licensed or otherwise
permitted to use Intellectual Property comprising a portion of the Assets, and
(iii) all Contracts under which a Company or a Seller licenses or otherwise
permits any party (other than a Company) to use Intellectual Property;
provided, however, that the right to use the name "American Home Food
Products", "Canadian Home Products" or any derivatives or anything imitative of
or which resembles or is confusingly similar thereof, or any rights to use
"American Home" or "Canadian Home" or any derivative or anything imitative of
or which resembles or is confusingly similar thereof, are prohibited and such
assets are expressly excluded from the purchase and sale hereunder;
(b) Each Company, Whitehall or a Seller has good title, free and
clear of all Encumbrances, to each item of Intellectual Property owned by one
of the Companies (or by Whitehall or a Seller to the extent included in the
Assets);
(c) As of the date hereof, for each issued Patent or application
for Patent owned by one of the Companies (or by a Seller or Whitehall to the
extent included in the Assets), all maintenance fees and renewal fees required
to be paid to avoid abandonment have been timely paid, and any applicable
working requirements have been timely met as to any Patent or application for
Patent, to the best of Sellers' knowledge, as of the Closing Date;
(d) For each registered Trademark owned by one of the Companies
as of the date hereof (or by a Seller or Whitehall to the extent included in
the Assets), all appropriate affidavits
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necessary to show continued use of a registered Trademark, and all renewals of
a registered Trademark, have been timely filed and appropriate fees paid with
the appropriate administrative or governmental office subject to the rules and
regulations governing filing of affidavits of continuous use and renewal of a
registered trademark;
(e) As of the date hereof, each pending application for Patent,
each pending application for registration of Trademark, and each application
for registration of copyright, owned by one of the Companies (or by a Seller or
Whitehall to the extent included in the Assets), remains pending and has not
been abandoned;
(f) Each Contract, under which any of the Companies is licensed
or otherwise permitted to use Intellectual Property relating to the Business,
to the best of Sellers' knowledge, remains in full force and effect, and for
each such Contract, the applicable Company has a paid-up, royalty-free,
perpetual license, except for any royalty obligations, other payment
obligations, or terminable license disclosed in Section 4.11(a) of the
Disclosure Schedule and for each such Contract, no restrictions exist that
would impair the ability of Sellers or Whitehall to transfer to Buyer any
Intellectual Property rights or other rights granted to a Company under a
Contract, except as set forth in Section 4.11(f) of the Disclosure Schedule;
(g) Each Contract, under which a Company, a Seller or Whitehall
licenses or otherwise currently permits any party (other than a Company) to use
Intellectual Property owned or used by the Company and used primarily in the
Business, to the best of Sellers' knowledge, is in full force and effect;
(h) Except as set forth in Section 4.11(h) of the Disclosure
Schedule, no current product used, sold or manufactured by any of the Companies
(or the Sellers or Whitehall to the extent related to the Assets), nor the
conduct of the Business as it is currently conducted is known by Sellers to
infringe on or otherwise known to violate the patent, design patent, trademark,
copyright, industrial model, utility model, trade secret, or other intellectual
property rights of any other Person;
(i) Except as set forth in Section 4.11(i) of the Disclosure
Schedule, no Person is challenging or, to the best of Sellers' knowledge,
infringing or otherwise violating the
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Intellectual Property owned by one of the Companies (or by a Seller or
Whitehall to the extent included in the Assets);
(j) Except as set forth in Section 4.11(j) of the Disclosure
Schedule, no Person, to the best of Sellers' knowledge, is challenging or
infringing or otherwise violating the Intellectual Property under which any of
the Companies (or Sellers or Whitehall) is licensed or otherwise permitted to
use; and
(k) Except as set forth in Schedule 4.11(k) of the Disclosure
Schedule, there are no restrictions that would materially impair the use of the
Trademarks by Buyer or the transfer of the Trademarks to Buyer.
4.12 LITIGATION AND CLAIMS. (a) Except as set forth in
Section 4.12(a) of the Disclosure Schedule, and except for matters under
Environmental Laws or relating to the environmental condition of the Real
Property (as to which no representation or warranty is being made except as set
forth in Section 4.14), there is no material civil, criminal, arbitral,
administrative or other action, suit, hearing, proceeding or investigation
(including product liability claims) pending or, to the knowledge of Sellers,
threatened (other than any such matters that are not material to the Business)
against the Companies (or the Sellers or Whitehall to the extent involving the
Assets).
(b) Except as set forth in Section 4.12 of the Disclosure
Schedule, and except for matters under Environmental Laws or relating to the
environmental conditions of the Real Property (as to which no representation or
warranty is being made except as set forth in Section 4.14), none of the
Companies (nor the Sellers or Whitehall to the extent related to the Assets) is
subject to any material order, writ, judgment, award, injunction, or decree of
any court or Governmental Authority or any arbitrator or arbitrators.
4.13 COMPLIANCE WITH LAW; APPLICABLE PERMITS. Except as set forth in
Sections 4.12 or 4.13 of the Disclosure Schedule, and except for matters
relating to Taxes which are addressed in Section 4.7, and except for matters
under Environmental Laws or relating to the environmental condition of the Real
Property (as to which no representation or warranty is being made except as set
forth in Section 4.14), the Business is being and since January 1, 1994 has
been conducted in compliance with all Applicable Laws, except for failures so
to comply that,
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individually or in the aggregate, would not be reasonably expected to have a
Material Adverse Effect. The Companies (and the Sellers and Whitehall to the
extent relating to the Assets) have all Applicable Permits necessary to conduct
the Business as currently conducted, other than those the absence of which,
individually or in the aggregate, would not be reasonably expected to have a
Material Adverse Effect. There are no proceedings pending or, to the knowledge
of Sellers, threatened which may result in the revocation, cancellation or
suspension of any such Applicable Permits, except those the absence of which,
individually or in the aggregate, would not be reasonably expected to have a
Material Adverse Effect. The Companies have duly and validly filed or caused
to be filed all reports, statements, documents, registrations, filings, or
submissions that were required by Applicable Law to be filed with any
Government Authority, other than those which, if not so filed, would not be
reasonably expected to have a Material Adverse Effect; all such filings
complied in all material respects with Applicable Laws when filed and, to
Sellers' knowledge, no material deficiencies have been asserted by any
Governmental Authority with respect to such filings.
4.14 ENVIRONMENTAL MATTERS. Except as disclosed in Section 4.14 of
the Disclosure Schedule:
(a) the Companies have obtained all environmental Applicable
Permits required under Environmental Laws for the operation of the Business,
other than those the absence of which would not reasonably be expected to have
a Material Adverse Effect, and are in compliance with such permits and other
requirements of applicable Environmental Laws, except where the failure to so
comply would not reasonably be expected to have a Material Adverse Effect;
(b) the Companies have not received any written notice of any
claims by any Governmental Authority alleging a violation of any Environmental
Laws which would reasonably be expected to have a Material Adverse Effect and,
to Sellers' knowledge, no such claims are threatened;
(c) the Real Property does not contain any underground storage
tanks, surface impoundments containing any Hazardous Substance or PCB-
containing materials the presence of which would reasonably be expected to have
a Material Adverse Effect;
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(d) (i) to the knowledge of Sellers as to any Hazardous
Substances that have been delivered by a Company to a non affiliated Person
(who is regularly engaged and who is recognized as competent in the business of
transporting and disposing of Hazardous Substances), and (ii) as to any
Hazardous Substances transported, disposed of or released by a Company, there
is no liability to any third party under any Environmental Law with respect to
the disposal or treatment at any facility or real property of Hazardous
Substances from the Assets or the assets or operations of the Companies that
would be reasonably expected to have a Material Adverse Effect, and no Seller,
Whitehall or Company has received any notice, claim, or request for information
relating to any such alleged disposal or treatment; and
(e) there has been no Release of any Hazardous Substance at or
on Real Property that would reasonably be expected to have a Material Adverse
Effect.
4.15 AGREEMENTS REGARDING EMPLOYEES.
(a) Section 4.15(a) of the Disclosure Schedule contains a
complete list of each management, employment, consulting or other agreement,
contract or commitment between a Company or any of its subsidiaries and any
employee, officer or director thereof (A) providing for the employment or
retention of management, executive or consulting services, (B) providing for an
obligation to pay or accrue compensation of $75,000 or more per annum, or (C)
providing for the payment or accrual of any compensation or severance upon (i)
a change in control of that Company or (ii) any termination of such employment
or consulting relationship.
(b) Except as set forth in Section 4.15(b) of the Disclosure
Schedule, neither Sellers nor the Companies are a party to or bound by any
collective bargaining agreement or any material labor agreement with respect to
the Employees.
4.16 BENEFIT PLANS.
(a) Section 4.16(a) of the Disclosure Schedule lists all
pension plans, practices, policies or arrangements, profit sharing plans,
bonus, deferred compensation, supplemental executive retirement plans, excess
benefit plans, stock options, stock appreciation or other forms of incentive or
other
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compensation plans or arrangements (including, without limitation, all
"employee pension benefit plans" as defined in Section 3(2) of ERISA, and all
welfare, severance, vacation, and other employee fringe benefit plans,
including, without limitation, all "employee welfare benefit plans" as defined
in Section 3(1) of ERISA) maintained, or contributed to, by Sellers or the
Companies for the benefit of the Employees or former employees of any of the
Companies (all the foregoing being herein called "Benefit Plans").
(b) With respect to each Benefit Plan, Sellers have provided
or made available to Buyer a true and complete copy of the applicable plan
document and related trust, summary plan description and the most recent report
on Form 5500.
(c) Except as disclosed on Section 4.16(c) of the Disclosure
Schedule each Benefit Plan has been maintained in substantial compliance with
its terms and Applicable Laws and the Sellers and the Companies have
substantially performed all material obligations required to be performed by
them prior to the Closing Date in connection with the Benefit Plans.
(d) All contributions to the Benefit Plans that have been
required to be made in accordance with Section 302 of ERISA or Section 412 of
the Code or the terms of the Benefit Plans have been made. No Benefit Plan
subject to Section 412 of the Code has applied for or received a waiver of the
minimum funding standards imposed by such Section, and no such Benefit Plan has
an "accumulated funding deficiency" within the meaning of such Section, as of
the most recent plan year, no liability to the Pension Benefit Guaranty
Corporation ("PBGC") has been incurred (other than for routine premiums), and
the assets of the AHF, Inc. Pension Plan (Highspire, PA.) equal or exceed, or
will on the Closing Date, equal or exceed, the actuarial present value of the
benefit liabilities under such plan based upon reasonable actuarial assumptions
and the asset valuation principles established by the PBGC.
(e) No non-exempt "prohibited transaction" (as defined in
Section 4975 of the Code or Section 406 of ERISA) has occurred which could
subject a Company to a material Tax or penalty on prohibited transactions
imposed by Section 4975 of the Code or Section 502(i) of ERISA. None of the
Benefit Plans that are employee pension benefit plans subject to ERISA has been
terminated and no notice to terminate any such Benefit Plan has been given, the
Pension Benefit Guaranty Corporation has not
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instituted proceedings to terminate any such plan, nor, except as disclosed on
Section 4.16(e) of the Disclosure Schedule, has there been any "reportable
event" (as defined in Section 4043 of ERISA and the regulations thereunder)
with respect thereto, other than reportable events for which the requirement to
give notice has been waived.
(f) Except as disclosed in Section 4.16(f) of the Disclosure
Schedule, at no time during the five year period preceding the Closing Date has
a Seller or a Company been required to contribute to any "multiemployer plan"
(as defined in Section 4001(a)(3) of ERISA) for the benefit of Employees or
former employees of any of the Companies. Except as set forth in Section
4.16(f) of the Disclosure Schedule, neither the Seller nor any Company is
subject to withdrawal liability under Title IV of ERISA.
(g) Each of the Benefit Plans which is intended to be
"qualified" within the meaning of Section 401(a) of the Code is the subject of
a favorable determination letter from the Internal Revenue Service stating that
it is so qualified and has not, since receipt of the most recent favorable
determination letter, been amended other than as required by the terms of any
such letter or to comply with Applicable Law. Sellers have furnished or caused
to be furnished to Buyer copies of the most recent Internal Revenue Service
determination letters with respect to each such plan.
(h) Except as disclosed in Section 4.16(h) of the Disclosure
Schedule, or as may be triggered by Buyer's failure to fulfill any of its
obligation to Employees under Article 9, the Companies do not have any
obligations to make payments to any of the Employees pursuant to the terms of
the Benefit Plans by reason of the transactions contemplated hereby, or to make
a larger contribution to, or pay greater benefits under, any Benefit Plan by
reason of the transactions contemplated hereby.
(i) Except as disclosed in Section 4.16(i) of the Disclosure
Schedule, no Benefit Plan provides post-retirement medical or health benefits
to Employees of the Companies other than (i) coverage mandated by Applicable
Laws, (ii) death benefits or retirement benefits under any Benefit Plan
intended to meet the requirements of Section 401(a) of the Code, or (iii)
benefits the full cost of which is borne by the participants.
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(j) Except as disclosed in Section 4.16(j) to the Disclosure
Schedule, there are no actions, suits or claims pending (other than routine
claims for benefits) or, to the knowledge of Sellers, threatened against, or
with respect to, any Benefit Plan or its assets, and there is no matter pending
(other than routine qualification filings) with respect to any Benefit Plan
before the Internal Revenue Service, Department of Labor, or the PBGC.
(k) With respect to any employee benefit plan, within the
meaning of Section 3(3) of ERISA, which is not listed in Section 4.16(a) of the
Disclosure Schedule but which is sponsored, maintained or contributed to, or
has been sponsored, maintained or contributed to within six years prior to the
Closing Date, by any corporation, trade, business or entity under common
control with the Sellers or any Company, within the meaning of Section 414(b),
(c) or (m) of the Code or Section 4001 of ERISA ("Commonly Controlled Entity"),
(A) no withdrawal liability, within the meaning of Section 4201 of ERISA, has
been incurred by a Commonly Controlled Entity, which liability has not been
satisfied, (B) no accumulated funding deficiency, whether or not waived, within
the meaning of Section 302 of ERISA or Section 412 of the Code has been
incurred, and (C) all contributions (including installments) to such plan
required by Section 302 of ERISA and Section 412 of the Code have been timely
made.
4.17 INSURANCE. All of the policies of insurance and bonds presently
in force with respect to the Companies including, without limitation, fire,
liability and other insurance, are listed in Section 4.17 of the Disclosure
Schedule. All such insurance is in full force and effect and is with
financially sound insurers and, in light of the Business, is in amounts and
provides coverage that is reasonable and customary for Persons in similar
businesses.
4.18 INTERCOMPANY TRANSACTIONS. Except as reflected in the Audited
Financial Statements or Section 4.18 of the Disclosure Schedule, no agreement
or arrangements exist between the Companies on the one hand, and Sellers and
their Affiliates (other than the Companies) on the other hand that are related
to the Assets or the assets of the Companies.
4.19 LABOR MATTERS.
(a) Except as set forth in Section 4.19 (a) of the Disclosure
Schedule, no present or former employee of a Company
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or party representing said employees or former employees has claims, charges,
investigations, complaints, proceedings, suits, demands or actions which are
pending or have been asserted or threatened in writing against such Company
for, including without limitation: (i) overtime pay; (ii) wages, salaries or
profit-sharing; (iii) vacations, time off or pay in lieu of vacation or time
off; (iv) any violation of any statute, ordinance, contract regulations
relating to minimum wages or maximum hours of work; (v) discrimination against
employees; (vi) unlawful or wrongful employment or termination practices; (vii)
breach of contract or other claim arising under a collective bargaining or
individual employment agreement or any other employment covenant whether
express or implied; (viii) any violation of occupation safety and health
standards; or (ix) any violation of immigration, workers' compensation,
disability, unemployment compensation, whistle blower laws or other employment
or labor relations law, in each case except for those claims, charges,
investigations, complaints, proceedings, suits, demands or actions which would
not be reasonably expected to have a Material Adverse Effect.
(b) Except as set forth in Section 4.19 (b) of the Disclosure
Schedule, there is no labor strike or labor dispute, slow down or stoppage
actually pending or threatened against or affecting a Company, and each Company
has not experienced any labor strikes or material labor disputes, slowdowns or
stoppages since 1994.
(c) Except as set forth in Section 4.19(c) of the Disclosure
Schedule, no grievance, arbitration or other proceeding material to the
Business arising, or asserted to arise, out of or under a collective bargaining
agreement, relating to employees or former employees of a Company is pending
and to the knowledge of the Seller no basis therefor exists.
(d) Except as set forth in Section 4.19(d) of the Disclosure
Schedule, no collective bargaining agreement or individual agreements relating
to employees of a Company are being negotiated and all collective bargaining
agreements have been duly ratified.
(e) Except as set forth in Section 4.19(e) of the Disclosure
Schedule, no Company is party to any agreements or arrangements or subject to
any requirement that in any manner requires or may restrict a Company from
relocating, consolidating, merging or closing, in whole or in part, any portion
of the Business subject to applicable law.
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(f) Except as set forth in Section 4.19(f) of the Disclosure
Schedule, no Company is subject to any settlement or consent decree with any
present or former employee, employee representative or any governmental body
relating to claims or unfair labor practices, employment discrimination, or
other claims in respect to employment practices and policies and no government
body has issued a judgment, order, decree or finding with respect to the labor
and employment practices of a Company which has had a Material Adverse Effect
(or would be reasonably expected to have a Material Adverse Effect).
(g) Except as set forth in Section 4.19(g) of the Disclosure
Schedule, no Company has been issued any deficiency letters by any Governmental
Authority or entered into any settlement agreements, conciliation agreements or
letters of commitment with any governmental body which have had or would
reasonably be expected to have a Material Adverse Effect.
4.20 BROKER'S FEES. Except for the retention of J.P. Morgan
Securities Inc., the fees and expenses with respect to which will be paid by
Sellers pursuant to Section 7.2, neither the Companies nor Sellers have
employed any broker, finder or investment banker or incurred any liability for
any brokerage, finder's or other similar fee or commission in connection with
the transactions contemplated by this Agreement.
4.21 NO OTHER REPRESENTATIONS OR WARRANTIES. Except for the
representations and warranties of Sellers expressly set forth in this
Agreement, neither Sellers nor any other Person makes any other express or
implied representation or warranty on behalf of Sellers, or otherwise in
respect of the Business.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER AND MERGER SUB
Buyer and Merger Sub jointly and severally represent and warrant
to Sellers the following:
5.1 CORPORATE ORGANIZATION. Buyer and Merger Sub each is a
corporation duly organized, validly existing and in good standing under the
laws of Delaware. Each of Buyer and Merger Sub has the requisite corporate
power and authority to own, operate
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or lease the properties that it purports to own, operate or lease and to carry
on its business as it is now being conducted and is duly licensed or qualified
as a foreign corporation in each domestic or foreign jurisdiction in which the
nature of the business conducted by it or the character or location of the
properties owned or leased by it makes such licensing or qualification
necessary, except where the failure to be so licensed or qualified would not be
reasonably expected to have a material adverse effect on the business,
operations or financial condition of Buyer and its subsidiaries, taken as a
whole.
5.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Buyer and Merger Sub each
has the requisite corporate power and authority to execute and deliver this
Agreement and the other agreements contemplated hereby and to consummate the
transactions contemplated hereby and thereby. The execution and delivery by
Buyer and Merger Sub of this Agreement and the other agreements contemplated
hereby and the consummation by Buyer and Merger Sub of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of Buyer and Merger Sub and no other corporate
proceeding is necessary for the execution and delivery of this Agreement or
such other agreements by Buyer and Merger Sub, the performance by Buyer and
Merger Sub of their respective obligations hereunder or thereunder and the
consummation by Buyer and Merger Sub of the transactions contemplated hereby
and thereby. This Agreement has been duly executed and delivered by Buyer and
Merger Sub and constitutes a legal, valid and binding obligation of each of
them, enforceable against each of them in accordance with its terms, except as
the same may be limited by bankruptcy, insolvency, moratorium, reorganization
or other laws of general applicability relating to or affecting the enforcement
of creditor's rights and general principles of equity.
5.3 BROKER'S FEES. Except for the fees payable under the
Committment Letters or in connection with alternative financing obtained to
finance the transactions contemplated herein and the retention of Hicks, Muse,
Tate & Furst Incorporated and Affiliates thereof, the fees and expenses of
which will be paid by the Surviving Corporation, none of Buyer and Merger Sub
has employed any broker, finder or investment banker or incurred any liability
for any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement.
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5.4 CONSENTS AND APPROVALS; NO VIOLATIONS. Except as contemplated by
Section 7.5 hereof, no filing with, and no permit, authorization, consent or
approval of, any Governmental Authority is necessary for the consummation by
Buyer and Merger Sub of the transactions contemplated by this Agreement or the
other agreements which Buyer and Merger Sub will execute pursuant to the terms
of this Agreement. The execution and delivery of this Agreement and such other
agreements and the consummation of the transactions contemplated hereby and
thereby will not (x) conflict with or result in a breach of any of the
provisions of the respective Certificate of Incorporation or by-laws of Buyer
or Merger Sub, or (y) be subject to the making of the filings and the obtaining
of the governmental and other consents referred to herein, contravene any law,
rule or regulation of any state, the United States or any foreign country or
any order, writ, judgment, injunction, decree, determination or award currently
in effect that is binding upon Buyer, Merger Sub or any of their respective
Affiliates or any of their respective properties.
5.5 FINANCIAL CAPABILITY. Buyer has received the commitment letters,
copies of which have been provided to Sellers, (the "Commitment Letters") to
provide financing of sufficient funds (when added to the funds to be provided
by the Buyer) to fund the Purchase Price on the terms and subject to the
conditions contemplated by this Agreement.
5.6 SECURITIES ACT. Buyer is acquiring the New AHFP Shares solely
for the purpose of investment and not with a view to, or for sale in connection
with, any distribution thereof in violation of the Securities Act, any
applicable state securities laws or applicable foreign securities laws. Buyer
acknowledges that the New AHFP Shares are not registered under the Securities
Act or any applicable state or foreign securities law, and that such New AHFP
Shares may not be transferred or sold except pursuant to the registration
provisions of the Securities Act or applicable foreign securities laws or
pursuant to an applicable exemption therefrom and pursuant to state securities
laws and regulations as applicable.
5.7 CAPITALIZATION AND ORGANIZATION OF MERGER SUB.
(a) The authorized capital stock of Merger Sub consists of 1,000 shares
of Merger Sub Common Stock all of which are issued and outstanding, and all of
such shares are validly issued, fully paid and non-assessable. Except as may
be contemplated by this Agreement or the Commitment Letters, there are no
options,
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warrants or other rights, agreements, arrangements or commitments of any
character obligating Merger Sub to issue or sell any shares of capital stock or
other equity interests or any securities or obligations convertible into or
exchangeable or exercisable for any shares of capital stock of Merger Sub or
other equity interests obligating Merger Sub to grant, extend or enter into any
such right, agreement, arrangement or commitment.
(b) Merger Sub was formed on September 3, 1996 solely for the purpose
of engaging in the transactions contemplated hereby, has engaged in no other
business activities and has conducted its operations only as contemplated
hereby.
5.8 NO OTHER REPRESENTATIONS OR WARRANTIES. Except for the
representations and warranties of Buyer and Merger Sub expressly set forth in
this Agreement, neither Buyer, Merger Sub nor any other Person makes any other
express or implied representation or warranty on behalf of either Buyer or
Merger Sub.
ARTICLE 6
CONDUCT OF BUSINESS PENDING THE CLOSING
6.1 CONDUCT OF BUSINESS PENDING THE CLOSING. Except as disclosed in
Section 6.1 of the Disclosure Schedule and subject to Section 6.2, Sellers and
Buyer agree that, prior to the Closing, unless Buyer shall otherwise consent in
writing (which consent Buyer shall not unreasonably withhold) or as otherwise
expressly contemplated by this Agreement:
(a) The Business shall be conducted in the ordinary course of
business and consistent with past practices;
(b) The Sellers will use, and will cause the Companies and their
subsidiaries to use, all commercially reasonable efforts to preserve intact the
Business, including (i) preserving the organization and reputation of the
Business, (ii) keeping available the services of the present officers and key
employees of the Companies, (iii) maintaining all material licenses,
qualifications, and authorizations to do business in each jurisdiction where
the character of the Business requires such licenses, qualifications and
authorizations, (iv) maintaining in full force and effect all Material
Contracts in accordance with their respective terms, (v) maintaining all assets
of the Business in good working order and condition, ordinary wear and
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tear excepted, and (vi) conducting the Business' marketing programs relating to
the products in the ordinary course.
(c) Sellers shall cause each of the Companies not to: (i)
authorize for issuance, issue, sell, pledge, deliver, or agree or commit to
issue, sell, pledge or deliver (whether through the issuance or grant of
options, warrants, commitments, subscriptions, rights to purchase or otherwise)
any capital stock of the Companies or securities or rights convertible into or
exchangeable or exercisable for, shares of capital stock or securities
convertible into or exchangeable or exercisable for such shares; (ii) pledge or
encumber any of its assets; (iii) except pursuant to Section 2.1(a), amend or
propose to amend its Certification of Incorporation or by-laws; (iv) except
pursuant to Section 2.1(a), split, combine or reclassify any shares of its
capital stock; or (v) except pursuant to Section 2.8, redeem, purchase or
otherwise acquire or offer to redeem, purchase or otherwise acquire any capital
stock; provided, however, that Sellers shall continue to have the right to
withdraw cash and cash equivalents from the Companies as contemplated by
Section 7.7 or otherwise;
(d) Except for the Merger, Sellers shall cause each of the
Companies not to (i) acquire (by merger, consolidation or acquisition of stock
or assets) any corporation, partnership or other business organization or
division thereof or make any investment either by purchase of stock or
securities, contributions to capital, property transfer or purchase of any
amount of property or assets of any other Person; (ii) acquire any assets for a
value in excess of $500,000 other than inventory in the ordinary course of
business; (iii) dispose of any assets with a value in excess of $500,000 other
than inventory in the ordinary course of business; (iv) incur any indebtedness
for borrowed money or issue any debt securities or assume, guarantee, endorse
or otherwise as an accommodation become responsible for, the obligations of any
other Person other than the Companies, make any loans or advances or enter into
any other transaction, except in the ordinary course of business; or (v)
authorize, recommend or propose any change in its capitalization;
(e) Except as otherwise contemplated by this Agreement,
Sellers shall not adopt or amend any Benefit Plan in a manner which affects
Employees, or increase, or pay any benefit to Employees not required by any
existing Benefit Plan or increase any salaries or wages payable to Employees,
other than increases to non-management personnel made in the ordinary course
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of business and consistent with past practices or as may be required by a
Governmental Authority;
(f) The Companies shall not fail to take all action as may be
necessary to be taken pursuant to the terms of Section 6 of that certain
Amended and Restated Jams Manufacturing agreement, dated as of January 21, 1994
by and between AHFP and Roseland Manufacturing, Inc. as may be necessary to
extend the term of such agreement for an additional period of two years;
(g) The Companies (and the Sellers with respect to the Assets)
shall not waive, release, grant or transfer any Intellectual Property or modify
or change in any material respect any existing material license, distribution
agreement, lease, or other document other than in the ordinary course of
business;
(h) The Sellers will cause the books and records of each of the
Companies to be maintained in the usual and customary manner consistent with
past practice and will not permit a material change in any underwriting,
investment, actuarial, financial reporting, or accounting practice or policy or
in any assumption underlying such practice or policy (including any method of
calculating reserves for inventory and accounts receivable);
(i) The Sellers will cause insurance coverage to be maintained in
full force and effect in substantially the same levels set forth in Section
4.17 to the Disclosure Schedule;
(j) The Sellers will cause the Companies to comply, in all
material respects, with all Applicable Laws;
(k) The Sellers will cause the Companies to not amend or enter
into (i) any employment, consulting or other agreement, contract or commitment
with any employee, officer or director thereof or (ii) any agreement, contract
or commitment providing for the payment or accrual of any additional
compensation upon a change in control of that Company or upon any termination
of such employment or consulting relationship; and
(l) The Sellers will not, and will cause the Companies to not,
authorize or propose any of the foregoing or enter into any contract,
agreement, commitment or arrangement to do any of the foregoing.
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6.2 PERMITTED ACTIONS. Notwithstanding any other provisions herein
to the contrary, as contemplated by Section 7.7(c), prior to the Closing,
Sellers shall (i) cause each of the Companies to transfer by way of dividend or
otherwise to Holding or AHP, as the case may be, any cash or cash equivalents
held by such Company from time to time up to and including the Closing Date
except to the extent of the amount of all checks of the Companies outstanding
as of the close of business on the Closing Date (and in connection therewith
Sellers shall cause the Companies to have at the close of business on the
Closing Date sufficient cash to cover all outstanding checks), (ii) except to
the extent otherwise agreed between Sellers and Buyer, extinguish all
intercompany receivables and other intercompany assets, and intercompany
payables and other intercompany liabilities (including without limitation all
intercompany Tax and equity accounts), and (iii) repay obligations for borrowed
money, whether pursuant to the issuance of commercial paper or otherwise. For
purposes of this Section 6.2, intercompany receivables, intercompany assets,
intercompany payables and intercompany liabilities shall mean receivables,
assets, payables and liabilities between any of the Companies and any of their
Affiliates.
6.3 CHANGE OF CORPORATE NAMES. Prior to the Closing, Sellers shall be
permitted to change the corporate name of AHFP and AHF to delete any reference
to "American Home Food(s)" or "American Home" and shall further be permitted to
change the corporate name of CHP to delete any reference to "Canadian Home".
Notwithstanding the foregoing or any other provision contained herein to the
contrary, after the Closing, Surviving Corporation and its Affiliates shall be
entitled to use the name "American International Foods, Inc."
ARTICLE 7
ADDITIONAL AGREEMENTS
7.1 NO TRANSFER OF SHARES. Sellers agree that from the date of this
Agreement through the earlier of the Closing Date or the termination of this
Agreement, they shall not transfer, sell, hypothecate, or otherwise assign any
interest in the Shares except as otherwise contemplated by this Agreement.
7.2 EXPENSES. Except as provided in Section 5.3, all expenses,
including the fees of any attorneys, accountants,
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investment bankers or others engaged by a party, incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expenses whether or not the transactions contemplated by
this Agreement are consummated; provided that any such expenses incurred by a
Company shall be paid by the Sellers and shall not be borne by a Company. All
such expenses incurred by Merger Sub shall be paid by Buyer and shall not be
borne by Merger Sub.
7.3 ADDITIONAL AGREEMENTS. (a) Subject to the terms and conditions
herein provided, each of the parties hereto agrees (i) to use all reasonable
efforts to do, or cause to be done, all things necessary, proper or advisable
to consummate the transactions contemplated by this Agreement and to cooperate
with each other in connection with the foregoing, (ii) to defend all lawsuits
or other legal proceedings challenging this Agreement or the consummation of
the transactions contemplated hereby, (iii) to use all reasonable efforts to
lift or rescind any injunction or restraining order or other order adversely
affecting the ability of the parties to consummate the transactions
contemplated hereby, and (iv) to use all reasonable efforts to effect all
necessary registrations and filings and submissions of information required or
requested by Governmental Authorities.
(b) Neither Buyer nor Merger Sub shall take any actions or permit any
actions to be taken that would cause the representations and warranties set
forth in Section 5.7(a) to be breached in any respect as of the Closing Date.
(c) Buyer shall use all reasonable efforts to promptly arrange and
complete the financing contemplated by the Commitment Letters or other suitable
financing to be provided at Closing and shall keep Sellers informed of the
status of its efforts to arrange and complete such financing, including making
reports with respect to significant developments. Buyer will notify Sellers as
soon as practicable of any determination made by Buyer that it is unable to
arrange any of such financing.
7.4 ACCESS TO INFORMATION.
(a) Prior to the Closing, Sellers shall, and shall cause the
Companies to, afford the officers, employees and agents of Buyer reasonable
access to the facilities, properties, records (including any environmental
studies or reports covering all or any part of the Assets or assets of a
Company that have been prepared subsequent to December 31, 1991) and employees
of the
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Companies during normal business hours and in a manner that will not
unreasonably disrupt the operation of the Business. In connection therewith,
the parties will comply with the terms of the Confidentiality Agreement dated
June 17, 1996 between an Affiliate of Buyer and J.P. Morgan Securities Inc., as
agent to AHP (the "Confidentiality Agreement"), which agreement shall survive
the termination of this Agreement.
(b) All information provided to Buyer by or on behalf of Sellers
or their Affiliates in connection with this Agreement or the transactions
contemplated hereby will be held by Buyer and its Affiliates, agents and
representatives as "Information" as defined in and pursuant to the terms of the
Confidentiality Agreement; provided that effective as of the Closing the
Confidentiality Agreement shall be terminated and be of no force and effect.
(c) Notwithstanding the foregoing or any other provision of
this Agreement, before Closing Buyer shall not have access to (x) personnel
records of Employees relating to individual performance or evaluation records,
medical histories or other information which in Sellers' good faith opinion is
sensitive or the disclosure of which could subject Sellers to risk of
liability, or (y) such price and other competitive information as may involve
antitrust or other similar restrictions.
7.5 FILINGS AND AUTHORIZATIONS. The ultimate parent entities of the
Companies and Buyer have filed or supplied or will, as promptly as practicable,
file or supply, or cause to be filed or supplied, all notifications and
information required to be filed or supplied pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act") and the
regulations promulgated thereunder and, if necessary, any other Competition
Laws, in connection with the transactions contemplated by this Agreement.
Sellers and Buyer, as promptly as practicable, (a) will make, or cause to be
made, all such other filings and submissions under laws, rules and regulations
applicable to them, or to their Affiliates, as may be required for them to
consummate the transactions contemplated hereby in accordance with the terms of
this Agreement, and (b) will use reasonable efforts to obtain, or cause to be
obtained, all authorizations, approvals, consents and waivers from all
Governmental Authorities necessary to be obtained by them, or their Affiliates,
in order for them so to consummate such transactions.
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7.6 TAX MATTERS. (a) Liability for Taxes. (i) Sellers shall be
jointly and severally liable for, and shall indemnify and hold harmless each
member of Buyer's Company Group (including the Surviving Corporation and the
other Companies) against, all (A) Taxes imposed on a Company or for which a
Company may otherwise be liable for any taxable year or period that ends on or
before the Closing Date and, with respect to any Straddle Period, the portion
of such Straddle Period ending on and including the Closing Date (including,
without limitation, any liability from any deferred intercompany taxes or gain
described in Treas. Reg. Section 1.502-13 and any obligation to contribute to
the payment of a Tax determined on a consolidated, combined or unitary basis
with respect to the Companies, (B)Section 338(h)(10) Taxes and (C) all Costs
resulting from a breach of Section 4.7.
(ii) The Surviving Corporation or a Company shall be liable
for, and shall indemnify Sellers against, Taxes imposed on a Company or
Buyer for any taxable year or period that begins after the Closing Date
and with respect to any Straddle Period, the portion of such Straddle
Period beginning after the Closing Date (including, without limitation,
any obligation to contribute to the payment of a Tax determined on a
consolidated, combined or unitary basis with respect to Buyer's Company
Group and any Taxes resulting from a Company ceasing to be a member of
Buyer's Company Group).
(iii) For purposes of paragraphs (a)(i) and (a)(ii) above,
whenever it is necessary to determine the liability for Taxes of a
Company based on income or gross receipts for a Straddle Period, the
determination of the Taxes of a Company for the portion of the Straddle
Period ending on, and the portion of the Straddle Period beginning
after, the Closing Date shall be determined by assuming that the
Straddle Period consisted of two taxable years or periods, one which
ended at the close of business on the Closing Date and the other which
began at the beginning of the day following the Closing Date, and items
of a Company for the Straddle Period shall be allocated between such two
taxable years or periods on a "closing of the books basis" by assuming
that the books of the Company were closed at the close of business on
the Closing Date and in the case of Taxes not based on income or gross
receipts, the liability for Taxes shall be allocated between the two
taxable years
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based on the ratio of the number of days in each taxable year to the
total number of days in the Straddle Period.
(iv) For purposes of paragraphs (a)(i) and (a)(ii), where,
under Applicable Law, a taxable year or period ends as a result of the
purchase of the Shares pursuant to this Agreement, items of income,
gain, deduction, loss or credit shall be allocated between such taxable
year or period and the following taxable year or period in a manner
consistent with the rules in Treas. Reg. Section 1.1502-76(b);
provided, however, that Sellers shall in all events be liable for any
Section 338(h)(10) Taxes.
(v) Sellers shall be liable for any real property transfer or
gains tax, sales tax, use tax, stamp tax, stock transfer tax, or other
similar tax imposed on the transactions contemplated by this Agreement,
provided that any value added tax or goods and services tax shall be the
obligation of the Surviving Corporation to the extent the Surviving
Corporation is entitled to credit for such value added tax or goods and
services tax.
(vi) If Sellers become entitled to a refund or credit of Taxes
for which they are liable under paragraph (a)(i) above to indemnify
Buyer's Company Group (including the Surviving Corporation or a Company
and the other Companies), and such Taxes are attributable solely to the
carryback of losses, credit or similar items from a taxable year or
period that begins after the Closing Date, or for that portion of any
Straddle Period which relates to a period after the Closing Date, and
are attributable to a Company, Sellers shall promptly pay to the
Surviving Corporation or a Company, at Buyer's option, the amount of
such refund or credit together with any interest thereon received by
Sellers. In the event that any refund or credit of Taxes for which a
payment has been made to the Surviving Corporation or a Company is
subsequently reduced or disallowed, the Surviving Corporation or a
Company shall indemnify and hold harmless Sellers for any Tax assessed
against Sellers and interest thereon by reason of the reduction or
disallowance. If the Surviving Corporation or a Company receives or
becomes entitled to a refund or credit of Taxes relating to the
Companies for any periods ending on or before the Closing Date, or for
that portion of any Straddle Period which relates to a period through
Closing Date, the Surviving Corporation or a Company shall promptly
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pay to Sellers the amount of such refund or credit together with any
interest thereon received by the Surviving Corporation or a Company, or
any Affiliate of the Surviving Corporation (other than Sellers). In the
event that any refund or credit of Taxes for which a payment has been
made to Sellers is subsequently reduced or disallowed, Sellers shall
indemnify and hold harmless Buyer, the Surviving Corporation and the
other Companies for any Tax assessed against Buyer, the Surviving
Corporation and the other Companies, including interest thereon by
reason of the reduction or disallowance.
(vii) Sellers have made available to Buyer, true and complete
copies, to the extent available, of: (A) all income tax Returns of the
Companies (or, with respect to consolidated, combined or unitary
returns, the portion thereof relating to the Companies); and (B) any
other Tax Returns as may be relevant to the Companies' assets or
operations thereof. In addition, Sellers will make available any
workpapers or other supporting data reasonably requested by Buyer, the
Surviving Corporation and the other Companies relating to "income taxes
payable" reflected in the books and records of a Company as of December
31, 1995, relating to Tax Returns made available pursuant to (A) or (B)
or relating to Tax Returns referred to in (A) or (B) not yet filed.
(b) Tax Returns. Sellers shall file or cause to be filed when
due all Tax Returns that are required to be filed by or with respect to the
Companies for taxable years or periods ending on or before the Closing Date and
Sellers shall remit (or cause to be remitted) to the appropriate Governmental
Authority any Taxes due in respect of such Tax Returns, and Buyer shall file or
cause to be filed when due all Tax Returns that are required to be filed by or
with respect to the Companies for taxable years or periods ending after the
Closing Date and Buyer shall remit (or cause to be remitted by the Surviving
Corporation) to the appropriate Governmental Authority any Taxes due in respect
of such Tax Returns. Buyer shall allow Sellers (or cause the Surviving
Corporation to allow Sellers) to review, comment upon and reasonably approve
without undue delay any Tax Return relating to a Straddle Period at any time
during the 45 day period immediately preceding the filing of such Tax Return.
Sellers or the Surviving Corporation (or a Company) shall reimburse the other
party the Taxes for which Sellers or the Surviving Corporation (or a Company)
is liable pursuant to
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paragraph (a) of this Section 7.6 but which are payable with any Tax Return to
be filed by the other party pursuant to the previous sentence upon written
request of the party entitled to reimbursement setting forth in detail the
computation of the amount owed by Sellers or the Surviving Corporation (or a
Company), as the case may be, but in no event less than 10 days prior to the
due date for the filing of such Tax Return. All Tax Returns which either
Sellers or the Surviving Corporation or the Companies are required to file or
cause to be filed shall be prepared and filed in a manner consistent with past
practice in preparing and filing similar tax returns and they shall not amend
any Tax Return to take positions inconsistent with past practice.
(c) Contest Provisions. Buyer shall notify Sellers in writing
within a reasonable period following receipt by Buyer, any of its Affiliates,
or the Companies of a written notice of any pending federal, state, local or
foreign Tax audits or assessments which Buyer reasonably believes will
materially affect the Tax liabilities of the Companies for which Sellers would
be required to indemnify Buyer or Buyer's Company Group (including the
Surviving Corporation and the other Companies or their Affiliates) pursuant to
paragraph (a) of this Section 7.6. Sellers shall not take any position in any
settlement context that is inconsistent with Sellers' past practice and Buyer's
representatives shall be permitted to be present at any such audit or
proceeding. Prior to settlement of any claim for Taxes which would adversely
affect the liability for Taxes of Buyer, the Surviving Corporation or the other
Companies, Sellers shall consult in good faith with Buyer concerning such
settlement.
Sellers shall have the sole right to represent the Companies'
interests in any Tax audit or administrative or court proceeding relating to
taxable periods ending on or before the Closing Date, and to employ counsel of
its choice at its expense, provided, however, that Buyer's representatives
shall be permitted, at Buyer's expense, to be present at any such audit or
proceeding.
(d) Cooperation. To the extent not inconsistent with Section
7.6(c) above and subject to the provisions of Section 12.8, Buyer and Sellers
agree to, and Buyer shall cause the Surviving Corporation and the other
Companies to, cooperate and share all required information on a timely basis in
order to timely file all Tax Returns and for the preparation of any audit, and
for the prosecution or defense of any claim, suit or proceeding relating to any
proposed adjustment. Buyer and
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Sellers agree and Buyer shall cause the Surviving Corporation and the other
Companies to retain or cause to be retained all books and records pertinent to
the Companies until the applicable period for assessment under Applicable Law
(giving effect to any and all extensions or waivers) has expired, and to abide
by or cause the abidance with all record retention agreements entered into with
any Governmental Authority. After the Closing, Buyer will give or will cause
the Surviving Corporation or a Company to give Sellers reasonable notice prior
to transferring, discarding or destroying any such books and records relating
to Tax matters and, if Sellers so request, Buyer will allow or will cause the
Surviving Corporation and the other Companies to allow Sellers to take
possession of such books and records. Buyer shall (or shall cause Surviving
Corporation to) and Sellers shall cooperate or cause cooperation with each
other in the conduct of any audit or other proceedings involving the Companies
for any Tax purposes and each shall execute and deliver such powers of attorney
and other documents as are necessary and appropriate to carry out the intent of
this subsection.
(e) Election Under Section 338(h)(10). Sellers and Buyer
shall make or cause to be made a joint election for the Companies under Section
338(h)(10) of the Code and under any applicable similar provisions of state law
with respect to the purchase of the Shares (collectively, the "Section
338(h)(10) Elections"). Buyer shall be responsible for, and control the
preparation and filing of, all federal, state and local forms needed to make
the Section 338(h)(10) Elections requested by Buyer and shall be responsible
for any defects in such election. Sellers represent that an election under
Section 338(h)(10) of the Code is available for the Companies. If the Section
338(h)(10) Elections are made, Sellers and Buyer shall, within 10 days after
receipt of the Allocation Schedule, exchange completed and executed copies of
Internal Revenue Service Form 8023-A, required schedules thereto, and any
similar state forms. If any changes are required in these forms as a result of
information which is first available after these forms are prepared or
otherwise, the parties will promptly agree on such changes, and Sellers shall
take such steps as are reasonably requested by Buyer to effectuate or cure any
defect in the Section 338(h)(10) Elections. Notwithstanding the provision of
this Section 7.6(e) no election pursuant to Section 338 of the Code shall be
made with respect to CHP.
(f) Adjustment to Purchase Price. Any payment by Buyer (or
the Surviving Corporation or a Company) or Sellers to
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each other under this Section 7.6 will be an adjustment to the Purchase Price.
(g) Survival of Obligations. Notwithstanding anything to the
contrary in this Agreement, and notwithstanding Section 11.3 of this Agreement,
the obligations of the parties set forth in this Section 7.6 shall be
unconditional and absolute and shall remain in effect until the expiration of
the applicable statute of limitations.
(h) Procedures. With respect to claims relating to Taxes
addressed in this Section 7.6, the party seeking indemnification shall submit
to the other party a notice of the fact and amounts along with adequate and
sufficient supporting details and the other party shall remit payment within 30
days of receipt of such notice.
7.7 INTERCOMPANY AND OTHER ARRANGEMENTS. Notwithstanding any provision
herein to the contrary, on or prior to the Closing (a) Sellers will cause the
Companies to repay, satisfy or extinguish any intercompany loans outstanding
from Sellers and their Affiliates, (b) Sellers will cause other Affiliates
(other than the Companies) to repay, satisfy or extinguish any intercompany
loans outstanding from the Companies; and (c) except to the extent of the
amount of all checks of the Company outstanding as of the close of business on
the Closing Date, each Company may transfer any and all cash and cash
equivalents by way of dividend or otherwise to Sellers and their Affiliates.
7.8 BULK SALES LAWS. Buyer acknowledges that Sellers and the Companies
have not taken, and do not intend to take, any action required to comply with
any applicable bulk sales or bulk transfer or similar laws.
7.9 USE OF NAME. Subject to Section 6.3, the Surviving Corporation
shall, within a period of six months after the Closing Date, remove all
references to the names "American Home Food Products, Inc.", "American Home
Foods, Inc.", "Canadian Home Products Limited" and "American Home Products
Corporation" and any derivatives or combination thereof, from labels, signs and
other printed material or matter used by the Surviving Corporation in
connection with the Business, and the Surviving Corporation shall clearly
identify to third parties after the Closing that the Business is owned and
operated by the Surviving Corporation.
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7.10 NO SOLICITATION. The Sellers shall not, prior to Closing,
directly or indirectly, through any officer, director, agent or otherwise,
solicit, initiate or encourage the submission of any proposal or offer from any
Person (other than the Buyer) relating to (i) any acquisition or purchase of
all or any material portion of the Shares, the Assets or any of the assets of
the Business or (ii) any merger, consolidation, share exchange, business
combination or similar transaction involving any Company, or participate in any
negotiations regarding, or furnish any information with respect to, or
otherwise cooperate in any way with, or assist or participate in, or facilitate
or encourage, any effort or attempt by any other Person to do or seek any of
the foregoing.
7.11 CERTAIN PROHIBITED ACTIONS. Prior to the Closing, neither Buyer
nor any of its Affiliates will enter into any arrangements, or take any other
actions, to purchase an interest in, or become affiliated with, any Person
engaged in a business competitive with the Business if such action would be
reasonably likely to adversely affect the obtention of approvals of Government
Authorities with respect to Competition Laws.
7.12 INDEBTEDNESS; CHANGE IN CONTROL PAYMENTS. Upon request, the
Sellers shall promptly pay to the Buyer (i) an amount equal to any indebtedness
for borrowed money of the Companies existing immediately prior to the Effective
Time, including any accrued interest thereon and any prepayment penalties
incurred in connection therewith, and (ii) an amount equal to any contractual
obligations of the Companies arising out of or based upon the change in control
of the Companies contemplated by this Agreement.
7.13 ADDITIONAL AGREEMENTS. As soon as reasonably practicable
following the date hereof, Sellers and Buyer will endeavor in good faith to
agree upon the forms of the Registration Rights Agreement and Transition
Services Agreement to be entered into at the Closing.
7.14 SALES OF OLD AHFP SHARES AND TAG ALONG.
(a) From the Closing Date until the earlier of (x) the fifth anniversary
of the Closing Date and (y) the date on which a third party acquires control of
the Surviving Corporation without the consent of the Buyer, Sellers shall not
sell or otherwise dispose of all or any portion of the Old AHFP Shares to an
unaffiliated third party other than pursuant to (i) a registration statement
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filed pursuant to the Securities Act or (ii) Rule 144 under the Securities Act,
unless the Sellers comply with the procedures set forth in Section 7.14(b)
below. A sale to an Affiliate of Sellers shall not be subject to the
restrictions set forth herein provided that such Affiliate enters into an
agreement for the benefit of Buyer to be bound by this Section 7.14.
(b) The procedures referred to in Section 7.14(a) above shall require
that, in the event that Sellers desire to sell all or a portion of the Old AHFP
Shares other than pursuant to a registration statement filed pursuant to the
Securities Act or sales pursuant to Rule 144 under the Securities Act, Sellers
shall notify the Buyer in writing of the number of shares Sellers desire to
sell (the "Offered Shares"); provided however that Sellers shall not have the
right to make any such sale or other disposition until after the first
anniversary of the Closing Date. The Buyer shall have the option for 15 days
from the date of such notice to make a written offer to purchase all but not
less than all of the Offered Shares including the purchase price per share (the
"Offer") and, if the Buyer makes an Offer, Sellers shall have 30 days to accept
or reject the Offer. In the event that Sellers reject such Offer, Sellers
shall be permitted to sell all or not less than 90% of the Offered Shares to a
third party on per share terms no less favorable to Sellers than those set
forth in the Offer, provided, however, that, prior to selling such shares at a
price per share less than 110% of the price per share set forth in the Offer,
Sellers shall offer to sell such shares to the Buyer at such higher price per
share and the Buyer shall have five days in which to accept such offer after
which period (if the Offer is not accepted) Sellers shall be permitted to sell
such shares to such third party at such price. If the Buyer does not make an
Offer to Purchase the Offered Shares, Sellers may sell all of the Offered
Shares to a third party within 120 days after the 15 day period without
restriction with respect to price.
(c) If Sellers accept an Offer or Buyer matches a third party offer
pursuant to Section 7.14(b), the closing of such purchase shall occur within 20
days after acceptance of the Offer by Sellers or such matching acceptance by
Buyer. Upon such acceptance, Sellers and Buyer shall be legally obligated to
consummate the purchase contemplated thereby.
(d) In connection with any sale or potential sale of the Old AHFP Shares
pursuant to Section 7.14(b), Sellers may disclose confidential information
concerning the Surviving Corporation to
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a potential third party purchaser, provided that such potential purchaser shall
execute a confidentiality agreement in a form reasonably acceptable to the
Surviving Corporation and enforceable by the Surviving Corporation.
(e) If Buyer or an Affiliate thereof proposes to sell or dispose of
any New AHFP Shares or other common stock of AHFP for value (such Buyer or
Affiliate being referred to herein as a "Transferor"), but excluding (i) a sale
which is pursuant to a public offering registered under the Securities Act,
(ii) a sale which is made in accordance with Rule 144 under the Securities Act
(or any similar successor provision), (iii) a sale or other disposition to an
Affiliate of such Transferor, and (iv) a sale or sales which are effected by
such Transferor or a group of which such Transferor is a member, in a single
transaction or a series of related transactions, and which in the aggregate do
not involve more than 10% of the outstanding common stock of AHFP, then such
Transferor shall offer (the "Participation Offer") to include in the proposed
sale or disposition a number of shares of AHFP common stock designated by
Sellers, not to exceed the number of shares equal to the product of (A) the
aggregate number of shares to be sold by the Transferor to the proposed
transferee and (B) a fraction with a numerator equal to the sum of the number
of shares of AHFP common stock held by Sellers and their Affiliates and a
denominator equal to the number of shares of common stock held by the
Transferor and its Affiliates and the number of shares of common stock held by
Sellers and their Affiliates. The Transferor shall give written notice to
Sellers of the Participation Offer (the "Transferor's Notice") at least 20 days
prior to the proposed sale. The Transferor's Notice shall specify the proposed
transferee, the number of shares to be sold to such transferee, the amount and
type of consideration to be received therefor, and the place and date on which
the sale is to be consummated. If Sellers wish to include shares in the
proposed sale in accordance with the terms of this Section 7.14(e), Sellers
shall so notify the Transferor not more than 10 days after the date of the
Transferor's Notice. The Participation Offer shall be conditioned upon the
Transferor's sale of shares of common stock pursuant to the transactions
contemplated in the Transferor's Notice with the transferee named therein. If
the Sellers accept the Participation Offer, the Transferor shall reduce to the
extent necessary the number of shares of common stock it otherwise would have
sold in the proposed sale so as to permit the Sellers to sell the number of
shares of common stock that they are entitled to sell under this Section
7.14(e), and the Transferor and Sellers shall sell the
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number of shares specified in the Participation Offer to the proposed
transferee in accordance with the terms of such sale set forth in the
Transferor's Notice (which shall include the terms and conditions of any
applicable purchasing agreement). Notwithstanding any provision contained
herein to the contrary, (X) the rights of the Sellers arising, under this
Section 7.14(e) shall not be assignable to or exercisable by any person who is
not an Affiliate of Sellers and (Y) in the event the consideration to be
received by the transferor in the proposed sale or disposition is securities
issued or sold in a transaction not registered under the Securities Act, then
the rights of the Sellers arising under this Section 7.14(e) shall not be
exercisable unless the exercising party is an "accredited" investor as defined
in Regulation D of the Securities Act.
7.15 CERTAIN RIGHTS OF SELLERS. Following the Closing and for so long
as Sellers beneficially own at least five (5%) of the issued and outstanding
common stock of the Surviving Corporation, (i) at the request of Sellers, the
Buyer and the Surviving Corporation shall use all reasonable efforts to cause
there to be nominated and elected as a member of the Board of Directors of the
Surviving Corporation a designee of Sellers; provided, however, that in the
event that, at any time or times, Sellers do not designate an individual to
serve as a director of the Surviving Corporation, the Surviving Corporation
shall promptly provide Sellers with (x) the right to have a representative
attend all meetings of the Board of Directors and committees thereof, and (y)
all materials provided to the members of the Surviving Corporation's Board of
Directors and committees thereof (except in either case for any such material
or portions of meetings which, in the opinion of counsel to the Surviving
Corporation, is or are subject to the attorney-client privilege and cannot be
provided to or attended by such representative without waiving such privilege,
which material or portions of meetings shall be generally described to
Sellers), and (ii) the Surviving Corporation shall promptly provide Sellers
with (x) all materials provided to banks and other third party lenders, and (y)
such other information, if any, reasonably requested by Sellers in connection
with the preparation of their financial reports and public filings. All
material and information provided to Sellers pursuant to this Section 7.15
shall be maintained by Sellers subject to and in accordance with the provisions
of Section 12.8(c). Sellers acknowledge their obligations requiring the use of
such information under the federal securities laws.
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7.16 TRANSACTIONS WITH AFFILIATES. The Surviving Corporation will not
enter into any transaction, including, without limitation, the purchase, sale
or exchange of property or the receipt of any services, with any Affiliate of
the Surviving Corporation except pursuant to the reasonable requirements of the
business of the Surviving Corporation and upon fair and reasonable terms no
less favorable to the Surviving Corporation than would be obtained in a
comparable arm's length transaction with a person that is not an Affiliate of
the Surviving Corporation.
ARTICLE 8
CONDITIONS
8.1 CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT. The obligation of each party to effect the
transactions contemplated by this Agreement shall be subject to the fulfillment
at or prior to the Closing of the following conditions:
(a) all governmental consents and approvals, if any, necessary
to permit the consummation of the transactions contemplated by this Agreement
shall have been obtained and any waiting period (and any extension thereof)
applicable to the consummation of such transaction under the HSR Act or under
other Competition Laws shall have expired or been terminated; and
(b) no preliminary or permanent injunction or other order,
decree or ruling issued by a court of competent jurisdiction or by a
Governmental Authority nor any Applicable Law shall be in effect that would
restrain or otherwise prevent the consummation of the transactions contemplated
by the Agreement.
8.2 CONDITIONS TO THE OBLIGATION OF SELLERS. The obligation of
Sellers to effect the transactions contemplated by this Agreement is subject to
the fulfillment at or prior to the Closing Date of the following conditions:
(a) Buyer shall have performed in all material respects each
obligation and agreement and complied in all material respects with each
covenant to be performed and complied with by it hereunder at or prior to the
Closing;
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(b) the representations and warranties of Buyer in this
Agreement to the extent qualified as to materiality shall be accurate in all
respects, and, to the extent not so qualified, shall be true and correct in all
material respects, as of the Closing Date with the same force and effect as
though made at such time, except for changes contemplated by this Agreement;
(c) Buyer shall have furnished to Sellers a certificate, dated
as of the Closing Date, signed by a duly authorized officer of Buyer to the
effect that all conditions set forth in Sections 8.2(a) and (b) have been
satisfied;
(d) All legal or financial opinions and/or letters regarding
the recapitalization, solvency of legal entities holding the assets of the
Business subsequent to the Closing, and any redemptions, dividends and
incurrence of debt incurred pursuant to the transactions contemplated hereby,
addressed to Buyer or its Affiliates in connection therewith shall also be
addressed and delivered to Sellers; provided in any event (i) any copies of the
above obtained by Buyer or its Affiliates addressed to a third party shall also
be delivered to Sellers, and (ii) Buyer shall cause to be addressed to and
delivered to Sellers an opinion regarding the solvency of the legal entities
holding the assets of the Business subsequent to the Closing;
(e) The Buyer shall have entered into the Registration Rights
Agreement; and
(f) At the Closing the Sellers shall have received no less
than $1,202,000,000 in immediately available funds, and in the manner described
in Articles 2 and 3.
8.3 CONDITIONS TO THE OBLIGATION OF BUYER. The obligation of Buyer to
effect the transactions contemplated by this Agreement is subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) Sellers shall have performed in all material respects each
obligation and agreement and complied in all material respects with each
covenant to be performed and complied with by them hereunder at or prior to the
Closing;
(b) the representations and warranties of Sellers in this
Agreement to the extent qualified as to materiality shall be accurate in all
respects, and, to the extent not so qualified, shall be true and correct in all
material respects, as of the
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Closing Date with the same force and effect as though made at such time, except
for changes contemplated by this Agreement;
(c) Sellers shall have furnished to Buyer a certificate, dated
as of the Closing Date, signed by duly authorized officers of Sellers to the
effect that all conditions set forth in Sections 8.3(a) and (b) have been
satisfied;
(d) the Buyer shall have received the proceeds of the
financing contemplated by each of the Commitment Letters; and
(e) the Sellers shall have entered into the Registration
Rights Agreement and the Transitional Services Agreement.
ARTICLE 9
AGREEMENTS WITH RESPECT TO EMPLOYEES
AND EMPLOYEE BENEFITS
9.1 POST-CLOSING OBLIGATIONS TO EMPLOYEES. Effective immediately
after the Closing, Buyer will continue (or will cause the Surviving Corporation
and the Companies to continue) to employ all the Employees in comparable
positions, at the same or greater pay. Effective immediately after the Closing
Date and for the period ending one year after the Closing Date, Buyer will
provide (or cause the Surviving Corporation and the Companies to provide)
Employees (other than Employees covered by collective bargaining agreements)
with benefits under (i) Buyer's Welfare Plans, and (ii) Buyer's Defined
Contribution Plan which are substantially equivalent in the aggregate to those
provided to such Employees pursuant to such plans, programs and arrangements of
the Companies in effect at the date hereof including Seller's Defined Benefit
Plan in effect at the date hereof, and will provide Employees and former
employees of the Companies covered by collective bargaining agreements such
benefits as shall be required under the terms of any applicable collective
bargaining agreement; provided, however, that for purposes of providing
Employees with benefits that are substantially equivalent in the aggregate,
Buyer (or the Surviving Corporation and the Companies) may utilize defined
contribution plans in lieu of Seller's Defined Benefit Plan but nothing herein
shall eliminate Buyer's (or the Surviving Corporation's or the Companies')
obligations to comply with any applicable collective bargaining agreement or
the
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obligations contained in Section 9.4(b)(i). This Section shall not be
construed as guaranteeing employment to any particular Employee for a period
greater than otherwise required by any Applicable Law.
9.2 SEVERANCE WITH RESPECT TO EMPLOYEES IN THE UNITED STATES. The
following provisions of this Section 9.2 do not apply with respect to Employees
of CHP.
(a) Except as otherwise provided in Section 9.2(b), Buyer shall
make (or shall cause the Surviving Corporation or a Company to make) or cause
there to be made a severance payment to any Employee whose employment is
terminated because of a reduction in the work force or job elimination at any
time during the two year period following the Closing Date. For exempt and
non-exempt Employees, the payment will be calculated on the basis of two weeks
base pay for each full year of service to the Companies, Seller, or its
Affiliates, with a minimum payment of twelve weeks and a maximum payment of
fifty-two weeks; provided, however, that for the individuals listed on Section
9.2 of the Disclosure Schedule, the minimum severance payment will be nine
months and, provided further that, for Employees who earn greater than U.S.
$75,000 a year, the minimum severance payment will be six months. No such
severance payment shall be made if an employee is terminated for "Cause" which
for purposes of this Section 9.2(a) shall be defined as (i) fraud, embezzlement
against the Surviving Corporation or its Affiliates, falsification of records
or other similar acts, (ii) gross neglect of or a gross failure to perform
substantial job duties, (iii) commission of a felony crime, or (iv)
demonstrated substance abuse. Severance payments will also be made if an
Employee resigns from employment with Buyer or its Affiliates because (x) there
is a reduction in his/her base salary or wages (other than for Cause), (y)
there is a clear, substantial diminution of duties or other similar change in
the nature and extent of his/her job responsibilities other than for Cause, or
(z) a condition of continued employment is a relocation of principal work place
of greater than 50 miles.
(b) In the event that after the Closing Buyer or its Affiliates
terminates the employment of any Employee who is covered by a collective
bargaining agreement, Buyer shall pay (or shall cause the Surviving Corporation
or a Company to pay) severance benefits in accordance with the applicable
collective bargaining agreement.
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(c) For a period the lesser of (i) six months following the
termination of employment of an Employee which triggers a severance payment
under Section 9.2(a) or (b) above, and (ii) the amount of weeks following the
termination of an Employee that is used to calculate a terminated Employee's
severance under Section 9.2(a) or (b) above, Buyer will also extend (or will
cause the Surviving Corporation or a Company to extend) coverage under its
basic life insurance, medical and prescription drug plans to such terminated
Employees. Additionally, any Employee listed on Section 9.2 of the Disclosure
Schedule whose termination triggers such a severance payment will be offered
outplacement benefits and educational assistance benefits, following
termination having a value of not less than $10,000 per employee and provided
through a firm acceptable to Sellers with a program reasonably acceptable to
Sellers.
9.3 SEVERANCE WITH RESPECT TO EMPLOYEES IN CANADA. The following
provisions of this Section 9.3 apply solely with respect to Employees of CHP.
(a) Except as otherwise provided in Section 9.3(b), Buyer
shall make (or cause the Surviving Corporation or a Company to make) a
severance payment to any Employee whose employment is terminated because of a
reduction in the work force or job elimination at any time during the two year
period following the Closing Date. For exempt and non-exempt Employees, the
payment will be calculated on the basis of two weeks base pay for each year of
service to CHP, Sellers, or their Affiliates, with a minimum payment of twelve
weeks and a maximum payment of fifty-two weeks; provided, however, that for the
President and Vice Presidents of CHP, the minimum severance payment will be
nine months and provided further, that for Employees who earn greater than CDN
$75,000 a year, the minimum severance payment will be six months. No such
severance payment shall be made if an Employee is terminated for "Cause" which
for purposes of this Section 9.3(a) shall be defined as (i) fraud or
embezzlement against the Surviving Corporation or its Affiliates, falsification
of records or other similar acts, (ii) gross neglect of or gross failure to
perform substantial job duties, (iii) commission of a felony crime,or (iv)
demonstrated substance abuse. Severance payments will also be made if an
Employee resigns from employment with CHP because (x) there is a reduction in
his base salary or wages (other than for Cause), (y) there is a clear
diminution of duties or other similar substantial change in the nature and
extent of his/her job responsibilities other
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than for Cause or (z) a condition of continued employment is a relocation of
principal work place of greater than 50 miles.
(b) In the event that after Closing Buyer or its Affiliates
terminates the employment of any Employee who is covered by a collective
bargaining agreement, Buyer shall pay ( or shall cause the Surviving
Corporation or a Company to pay) severance benefits in accordance with the
applicable collective bargaining agreement.
(c) For the period the lesser of (i) six months following the
termination of employment of an Employee which triggers a severance payment
under Section 9.3(a) or (b) above, and (ii) the amount of weeks following the
termination of an Employee that is used to calculate a terminated Employee's
severance under Section 9.3(a) or (b) above, Buyer will also extend (or will
cause the Surviving Corporation or a Company to extend) coverage under its
basic life insurance, medical and prescription drug plans to such terminated
Employees. Additionally, any Employee set forth on Section 9.2 of the
Disclosure Schedule whose termination triggers such a severance payment will be
offered outplacement benefits and educational assistance benefits following
termination having a value of not less than $10,000 CDN per employee and
provided through a firm acceptable to Sellers with a program reasonably
acceptable to Sellers.
Notwithstanding the previous provisions of Sections 9.2 and 9.3, if,
during the one year period following the Closing, (i) Sellers receive notice
from Buyer or its Affiliates of its intention to terminate any of the Employees
set forth in Section 9.2 of the Disclosure Schedule not later than ten business
days prior to termination, and (ii) Sellers employ such Employee within 60 days
of such termination, then Surviving Corporation shall not have any severance
obligations to such Employee pursuant to the terms of this Article 9.
9.4 BENEFIT PLANS WITH RESPECT TO EMPLOYEES.
The obligations set forth under Section 9.4 shall be in furtherance of
and not by way of limitation on Buyer's obligations under Section 9.1.
(a) (i) Effective immediately after the Closing, all Employees
who are non-union employees shall be eligible to participate in a defined
contribution plan adopted by Buyer (or
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by the Surviving Corporation and/or the Companies) ("Buyer's Defined
Contribution Plan") in accordance with the terms of such plan. Service
completed by the Employees while employed by a Company, Sellers or their
Affiliates shall be recognized for purposes of determining eligibility for
participation and vesting of benefits, but not for benefit computation purposes
under Buyer's Defined Contribution Plan.
(ii) Sellers maintain a qualified defined benefit pension plan,
the American Home Products Corporation Retirement Plan -- United States and a
related supplemental benefits plan ("Sellers' Retirement Plans").
(iii) Sellers agree to amend Sellers' Retirement Plans to provide
that, with respect to benefits accrued under Sellers' Retirement Plans through
the Closing Date, the Employees' period of service with the Buyer (or the
Surviving Corporation and/or the Companies) shall be taken into account for
purposes of determining eligibility for subsidized early retirement benefits
and vesting of benefits under Sellers' Retirement Plans.
(b) (i) Promptly after the Closing Date if required under the
terms of the collective bargaining agreements covering Employees other than
Employees of CHP, Buyer shall adopt or cause the Companies to adopt new defined
benefit pension plan(s) and establish trust(s) thereunder (or make provision
for the use of existing plans or trusts of Buyer) to provide benefits no less
favorable than the benefits provided under Sellers' Coordinated Bargaining
Retirement Plan--United States ("Sellers' Union Pension Plan") for the benefit
of all Employees who are covered under Sellers' Union Pension Plan.
"Continuous service" recognized and defined in Sellers' Union Pension Plan
shall be recognized for purposes of determining eligibility for participation,
eligibility for subsidized early retirement benefits and vesting of benefits,
but not for benefit computation purposes under such new defined benefit pension
plan(s).
(ii) Sellers agree to amend Sellers' Union Pension Plans to
provide that, with respect to benefits accrued under Sellers' Union Pension
Plan through the Closing Date on behalf of all Employees, such Employees'
continuous service recognized under the new defined benefit pension plan(s)
shall be taken into account for purposes of determining eligibility for
participation, eligibility for subsidized early retirement benefits and vesting
of benefits, but not for benefit computation purposes under Sellers' Union
Pension Plan.
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(c) (i) Buyer maintains (or will adopt, or cause the Surviving
Corporation and/or the Companies to adopt, before Closing) a tax-qualified
savings plan ("Buyer's Savings Plan"). Immediately after the Closing Date, all
non-union Employees, other than the Employees of CHP, shall be eligible to
participate in Buyer's Savings Plan in accordance with the terms of such plan.
Service completed by the Employees while employed by a Company, Sellers or
their Affiliates shall be recognized for purposes of determining eligibility to
participate and vesting of benefits under Buyer's Savings Plan. As soon as
practicable after the Closing Date, Sellers shall cause matching contributions
to be made to the Sellers' Savings Plan with respect to all contributions by or
on behalf of Employees relating to compensation paid to Employees through the
Closing Date. As soon as practicable after the Closing Date (and after such
matching contributions have been made), Sellers shall cause the assets held in
trust under the Sellers' Savings Plan (as defined below) in respect of the
aggregate benefits accrued by the Employees who were participants in Sellers'
Savings Plan immediately prior to such date to be valued and transferred to the
trust under Buyer's Savings Plan; provided, however, that Sellers shall first
have provided Buyer with an opinion of counsel reasonably satisfactory to Buyer
or the Surviving Corporation that the Sellers' Savings Plan is qualified in
form under Section 401(a) of the Code, and Buyer shall first have provided
Sellers with an opinion of counsel reasonably satisfactory to Sellers that the
Buyer's Savings Plan is qualified in form under Section 401(a) of the Code.
The assets to be transferred from the trust under the Sellers' Savings Plan
pursuant to this Section 9.4(c) shall be in cash or, to the extent mutually
agreed to by Sellers and Buyer, a combination of cash, securities and other
property; provided, however, any participant loans shall be transferred in
kind. The amount transferred from the trust under the Sellers' Savings Plan
shall be adjusted to reflect any distributions properly attributable to such
Plan during the period prior to the transfer date. At the time the assets that
are held in the trust with respect to the Sellers' Savings Plan on behalf of
the Employees are paid to the trust under the Buyer's Savings Plan, the Buyer's
Savings Plan shall assume all liabilities of the Sellers' Savings Plan for the
transferred benefits thereunder, and such transfer shall be in full discharge
of all obligations of the Sellers' Savings Plan in respect of the accounts
being transferred. During the period following the Closing Date and preceding
the transfer of assets and liabilities pursuant to this Section 9.4(c), Buyer
and Seller will cooperate with and assist each other in the continued
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administration of the Sellers' Savings Plan and in the filing of documents
required by the transfer of assets and liabilities herein. Notwithstanding the
above, the amount transferred to the Plan shall be in no event less than the
amount necessary to satisfy the requirements of Section 414(1) of the Code.
(ii) Sellers maintain a qualified savings plan, the American
Home Products Corporation Savings Plan ("Sellers' Savings Plan"). Sellers
shall amend the Sellers' Savings Plan to provide that all Employees who are
non-union employees shall be fully vested in any Matching Contributions to such
employee's accounts in the Sellers' Savings Plan upon the Closing.
(d) To the extent permitted under Applicable Law, Sellers will
make amendments similar to those set forth in Section 9.4(a)(iii), 9.4(b)(ii)
and 9.4(c)(ii) to the American Home Products Corporation Coordinated Bargaining
Retirement Plan -- Canada and the American Home Products Corporation Retirement
Savings Plan - Canada, and Buyer shall (or shall cause the Surviving
Corporation or a Company to) cover and make provisions for the Canadian
Employees covered under Buyer's (or the Surviving Corporation's) pension and
savings plans for Canadian Employees in a manner consistent with the provisions
of subsections (a), (b) and (c) above.
(e) Buyer shall assume (or shall cause the Surviving
Corporation or a Company to assume) the sponsorship of, and discharge all
liabilities under, or to cause its Affiliates to continue to sponsor and
discharge all liabilities under, the AHF, Inc. Pension Plan - Highspire, PA.
("Highspire Retirement Plan") maintained by American Home Food Products, Inc.
pursuant to a collective bargaining agreement with Local 330 - American
Federation of Grain Millers.
(f) Buyer maintains (or will adopt or will cause the Surviving
Corporation or the Companies to adopt) medical, dental, prescription drug,
vacation, death, accidental death and dismemberment, short-term disability and
long-term disability benefit plans ("Buyer's Welfare Plans") for its employees.
Upon implementation Employees shall be eligible to participate in Buyer's
Welfare Plans in accordance with the terms of such plans and employment with
the Companies, Sellers and their Affiliates shall be taken into account for
purposes of determining eligibility for participation and benefits under
Buyer's Welfare Plans; provided, however, that the Employees shall participate
in the Buyer's Welfare Plans without any waiting periods and without
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any evidence of insurability; and Buyer shall (or shall cause the Surviving
Corporation or the Companies to) count claims arising on or prior to the
Closing Date for purposes of satisfying deductibles, out-of-pocket maximums and
other similar limitations.
(g) Sellers agree that any claims for welfare benefits arising
on or before the Closing Date with respect to any Employees or former
employees of the Companies (or their covered dependents or beneficiaries) shall
be the responsibility of Sellers or the insurers of Sellers' welfare plans and
Buyer agrees that any claims for welfare benefits and worker's compensation
arising subsequent to the Closing Date with respect to any Employees (or their
covered dependents or beneficiaries) shall be the responsibility of the
Surviving Corporation and the Companies or the insurers of Buyer's Welfare
Plans. Except as otherwise provided below, a claim is deemed to have arisen
when services relating to the condition that is the subject of the claim were
performed. In the case of an individual who is hospitalized on the Closing
Date, all claims relating to such hospitalization (including, without
limitation, hospital charges and physician fees) shall be deemed to be claims
arising on or before the Closing Date. With respect to worker's compensation
claims which are single - accident specific, a claim is deemed to have arisen
on the date of occurrence. With respect to all other worker's compensation
claims, a claim is deemed to have arisen on the date the worker's compensation
award is made. With respect to life insurance or other death-related benefits,
a claim is deemed to have arisen when the death of the Employee or covered
dependent occurred.
(h) Buyer maintains (or will adopt or will cause the Surviving
Corporation or the Companies to adopt) for a period of not less than one year
following the Closing Date a program of medical, prescription drugs and life
insurance benefits for certain retired employees substantially similar to
Sellers' programs for retired employees ("Buyer's Retiree Welfare Plans").
Sellers currently maintains programs of medical, prescription drugs and life
insurance benefits for certain retired employees ("Sellers' Retiree Medical
Plan"). All Employees who as of the Closing Date have reached age 55 and have
earned at least 10 years of continuous service under Sellers' Retirement Plan
shall be covered by Sellers' Retiree Medical Plans as in effect from time to
time from and after the date that such employees are no longer covered by a
medical plan maintained by Buyer or its Affiliates that provides coverage for
active employees. For
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employees not described in the preceding sentence, continuous service under
Sellers' Retirement Plan and credited as of the Closing Date shall be taken
into account in determining eligibility for coverage under Buyer's Retiree
Welfare Plans, as in effect from time to time.
(i) Sellers shall be responsible for any legally-mandated
continuation of health care coverage for Employees and/or their covered
dependents who have a loss of health care coverage due to a "qualifying event"
(as defined in Section 4980B of the Code or any successor thereto) that occurs
on or before the Closing Date. Buyer shall be (or shall cause the Surviving
Corporation or the Companies to be) responsible for any legally-mandated
continuation of health care coverage for Employees and/or their covered
dependents who have a loss of health coverage due to a qualifying event that
occurs after the Closing Date.
9.5 WARN ACT. After the Closing Date, all obligations to employees or
former employees of any of the Companies under the Worker Adjustment and
Retraining Notification Act, 29 U.S.C. Sections 2101, et. seq., shall be sole
obligation of the Surviving Corporation and the Companies.
9.6 NO THIRD PARTY BENEFICIARIES. No provision of this Agreement shall
create any third party beneficiary or other rights in any Employee or former
employee (including any beneficiary or dependent thereof) in respect of
continued employment with any Company, with Sellers, or with any of their
respective Affiliates and no provisions of this Agreement shall create any such
rights in any such persons in respect of any benefits that may be provided,
directly or indirectly, under any Benefit Plan or any plan or arrangement which
may be established by Buyer or any of its Affiliates. No provision of this
Agreement shall constitute a limitation on rights to amend, modify or terminate
before or after the Closing Date any such plans or arrangements of Sellers, any
Company, Buyer or any of their respective Affiliates (provided that neither the
Sellers nor any Company may amend any such plans to increase benefits
thereunder prior to the Closing Date), or the rights of Buyer, any Company or
any Affiliates of Buyer, any Company or any Affiliates of Buyer to terminate
any Employee at will.
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ARTICLE 10
TERMINATION, AMENDMENT AND WAIVER
10.1 TERMINATION. This Agreement may be terminated at any time prior
to the Closing Date:
(a) by mutual consent of Buyer and Sellers;
(b) by Buyer or Sellers if the Closing shall not have occurred
on or prior to December 10, 1996, provided, however, that the right to
terminate under this Section 10.1(b) shall not relieve any party whose failure
to fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Closing to occur on or before such date of any
liability of such party to the remaining party hereunder for such failure; and
(c) Subject to Section 7.5(b), by Buyer or Sellers if a court
of competent jurisdiction or Governmental Authority shall have issued an order,
decree or ruling or taken any other action, in each case permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated
by this Agreement, and such order, decree, ruling or other action shall have
become final and nonappealable.
The date on which this Agreement is terminated pursuant to any of
the foregoing subsections of this Section 10.1 is herein referred to as the
"Termination Date."
10.2 EFFECT OF TERMINATION. Except as set forth in Sections 7.2 and
7.4 upon the termination of this Agreement pursuant to Section 10.1, this
Agreement shall forthwith become null and void, except that nothing herein
shall relieve any party from liability for breach of this Agreement prior to
such termination.
ARTICLE 11
INDEMNIFICATION
11.1 INDEMNIFICATION. (a) Except with respect to any claim related
to Taxes, for which Section 7.6 of this Agreement shall provide the sole and
exclusive basis of indemnity to Buyer, the Surviving Corporation and the
Companies and subject to Section 11.3, Sellers shall jointly and severally
indemnify, defend and
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hold harmless Buyer and its respective Affiliates (which after the Closing
shall include the Surviving Corporation, CHP, Lucks, AHF and Polaner),
officers, directors, employees and controlling Persons from any liability,
damage, deficiency, loss, judgments, penalties, assessments, cost or expense,
including reasonable attorneys' fees and costs of investigating and defending
against lawsuits, complaints, actions or other pending or threatened
litigation, as such may be incurred (being hereafter referred to in this
Article 11 as "Costs"), arising from or attributable to:
(i) the breach of any representation or warranty made by
Sellers in this Agreement;
(ii) any failure of Sellers duly to perform or observe any
covenant or agreement to be performed or observed by Sellers pursuant to
this Agreement;
(iii) the pending litigation matters listed as numbers in Section
4.12 of the Disclosure Schedule;
(iv) any personal injury to any Person caused by any products
manufactured or produced by the Business prior to the Closing Date except to
the extent such injuries are attributable to the negligence of Buyer or its
Affiliates or its distributors in the handling, storage or shipment of products
after the Closing Date;
(v) the withdrawal by the Surviving Corporation from the
multiemployer plans set forth in Section 4.16(f) of the Disclosure Schedule to
the extent of the amount, if any, of the unfunded liability allocated to the
Surviving Corporation as of December 31, 1996, as determined as soon as
reasonably practicable following such date by an actuary experienced in such
determinations and reasonably acceptable to Sellers and the Buyer; provided
that Sellers have received notice of the withdrawal of the Surviving
Corporation from any such plans and the incurrence of such withdrawal liability
within three years from the Closing Date; and
(vi) the "reportable event" listed in Section 4.16(e) of the
Disclosure Schedule.
(b) Except with respect to any claim related to Taxes, for
which Section 7.6 of this Agreement shall provide the sole and exclusive basis
of indemnity to Seller, Buyer, the Surviving
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Corporation and the Companies shall jointly and severally indemnify and hold
harmless each Seller, its officers, directors and employees from Costs arising
from or attributable to:
(i) the breach of any representation or warranty made by Buyer
in this Agreement;
(ii) any failure of Buyer duly to perform or observe any
covenant or agreement to be performed or observed by Buyer pursuant to
this Agreement;
(iii) except for matters set forth in Sections 11.1(a) and 7.6,
the liabilities of the Companies (and the Surviving Corporation) and the
Assumed Liabilities;
(iv) any noncompliance by any of the Companies, first occurring
after the Closing Date, with any Environmental Laws, any Release,
threatened Release or presence of any Hazardous Substance at the Real
Property first occurring after the Closing Date or any disposal or
arrangement therefor or any Hazardous Substance first generated by the
Companies after the Closing Date;
(v) any personal injury to a Person caused by any products
manufactured or produced by the Business after the Closing Date or
manufactured or produced prior to the Closing, to the extent such
injuries are attributable to the negligence of Buyer or its Affiliates
or distributors in handling, storage or shipment of any products after
the Closing Date;
(vi) except for the matters set forth in Sections 11.1(a) and
7.6, any other liabilities of the Companies and all liabilities arising
out of, or relating primarily to, the Business; and
(vii) the transactions described in Sections 2.1 and 2.8.
11.2 PROCEDURES. (a)(i) In order for a party (the "Aggrieved Party")
to be entitled to any indemnification provided for under this Agreement (other
than under Section 7.6) in respect of, arising out of or involving a claim or
demand made by any Person or Governmental Authority against the Aggrieved Party
(a "Third Party Claim"), such Aggrieved Party must notify the indemnifying
party (the "Indemnifying Party"), in writing, and in reasonable
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detail, of the Third Party Claim within 10 business days after receipt by such
Aggrieved 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 such failure or delay impairs the
Indemnifying Party's ability to contest any such Third Party Claim (except that
the Indemnifying Party shall not be liable for any expenses incurred during the
period in which the Aggrieved Party failed to give such notice). Thereafter,
the Aggrieved Party shall deliver to the Indemnifying Party, within five
business days after the Aggrieved Party's receipt thereof, copies of all
notices and documents (including court papers) received by the Aggrieved Party
relating to the Third Party Claim.
If a Third Party Claim is made against an Aggrieved 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 satisfactory to the Aggrieved Party. Should
the Indemnifying Party so elect to assume the defense of a Third Party Claim,
the Indemnifying Party will not be liable to the Aggrieved Party for legal
expenses subsequently incurred by the Aggrieved Party in connection with the
defense thereof, unless (x) the Indemnifying Party has authorized the
employment of legal counsel by the Aggrieved Party or (y) the Aggrieved Party
and the Indemnifying Party are each named parties to such action (including
impleaded parties) and shall have been advised in writing by its legal counsel
that there may be conflicting interests between the Aggrieved Party and the
Indemnifying Party (in which case the Indemnifying Party shall not have the
right to assume the defense of such Third Party Claim on behalf of the
Aggrieved Party provided that, in such event, legal counsel selected by the
Aggrieved Party shall be required to cooperate fully with legal counsel for the
Indemnifying Party). If the Indemnifying Party assumes such defense, the
Aggrieved Party shall have the right to consult 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 Party shall
control such defense. The Indemnifying Party shall be liable for the
reasonable fees and expenses of counsel employed by the Aggrieved Party for any
period during which the Indemnifying Party has not assumed (or is not entitled
to assume hereunder) the defense thereof (other than during any period in which
the Aggrieved Party shall have failed to give notice of the Third Party Claim
as provided above). If the Indemnifying Party chooses to defend or prosecute
any Third Party
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Claim, all of the parties hereto shall cooperate 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
additional information and explanation of any material provided hereunder.
Whether or not the Indemnifying Party shall have assumed the defense of a Third
Party Claim, the Aggrieved 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.)
(ii) If there shall be any conflicts between the provisions of this
Section 11.2 and Section 7.6, the provisions of Section 7.6 shall control with
respect to Tax matters.
11.3 LIMITATIONS. (a) An Aggrieved Party shall not be entitled to
recover any Costs under Sections 11.1(a)(i) or 11.1(b)(i) (other than in
respect of Sections 4.2, 4.16(d), 4.16(f), 4.18, 4.20, 5.3 and 5.7 as to which
this clause (a) of Section 11.3 shall not apply) until the aggregate amount of
the Costs suffered by the Aggrieved Party thereunder shall exceed $10 million
(the "Minimum Loss"), at which time the indemnification provided under Sections
11.1(a)(i) or 11.1(b)(i) shall apply to all Costs in excess of the Minimum
Loss, and (b) the maximum liability under Section 11.1 (other than in respect
of Sections 4.2, 4.18 4.20, 5.3 and 5.7 as to which this clause (b) of Section
11.3 shall not apply) for an Indemnifying Party shall not exceed $300 million
in the aggregate. For purposes of determining the aggregate amount of Minimum
Loss suffered by an Aggrieved Party, each representation, warranty, covenant
and agreement contained in this Agreement for which indemnification can be or
is sought hereunder shall be read without regard to any materiality (including
Material Adverse Effect) or knowledge qualifications that may be contained
therein. Notwithstanding anything to the contrary contained herein, a party
shall not be entitled to indemnification under Article 11 with respect to any
matter to the extent a purchase price adjustment has been made with respect to
such matter pursuant to Section 3.6. Notwithstanding the foregoing provisions
to the contrary, the limitations set forth in this Section 11.3 shall not apply
to any indemnities with respect to Taxes, under clause (iii) of Section
11.1(a).
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11.4 INDEMNIFICATION AS SOLE REMEDY. Except as provided in Section
7.6 and except with respect to fraudulent or intentional conduct, the
indemnification provided in this Article 11, subject to the limitations set
forth herein, shall be the exclusive post-Closing remedy for damages available
to any Aggrieved Party. Notwithstanding the foregoing or any other provision
of this Agreement, Buyer shall have the right to seek all available equitable
remedies or relief in the event of a breach of this Agreement by the Sellers.
ARTICLE 12
GENERAL PROVISIONS
12.1 PUBLIC STATEMENTS. So long as this Agreement is in effect, none
of the parties hereto shall issue or cause the publication of any press release
or other announcement with respect to this Agreement or the transactions
contemplated hereby without consulting with and obtaining the consent of the
other party; provided, however, that such consent shall not be required where
such release or announcement is required by Applicable Law.
12.2 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given if delivered personally,
mailed by reputable overnight courier or certified mail (return receipt
requested) or sent by telecopier (confirmed thereafter by such overnight
courier or certified mail) to the parties at the following addresses or at such
other addresses as shall be specified by the parties by like notice:
(a) if to Sellers:
c/o American Home Products Corporation
Five Giralda Farms
Madison, New Jersey 07940
Attention: Senior Executive Vice President
Telecopier Number: (201) 660-7156
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with a copy to:
Louis L. Hoynes, Jr.
Senior Vice President and General Counsel
American Home Products Corporation
Five Giralda Farms
Madison, New Jersey 07940
Telecopier Number: (201) 660-6030
(b) if to Buyer:
c/o Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court
Suite 1600
Dallas, Texas 75201
Attention: Lawrence D. Stuart, Jr.
Managing Director & Principal
Telecopier Number: (212) 740-7313
with a copy to:
Michael D. Wortley
Vinson & Elkins L.L.P.
3700 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201-2975
Telecopier Number: (214) 220-7718
Notice so given shall (in the case of notice so given by mail) be
deemed to be given and received on the third calendar day after mailing or the
next business day if sent by a reputable overnight courier and (in the case of
notice so given by telecopier or personal delivery) on the date of actual
transmission or (as the case may be) personal delivery.
12.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND INDEMNITIES. The
respective representations and warranties of the parties hereto shall survive
the Closing and shall remain in full force and effect, provided, however, that
(a) the representations and warranties contained in Section 4.1, 4.2 and 4.7
shall survive until the applicable statute of limitations has run (including
any and all periods of extension or tolling thereof) for the particular subject
matter of such Sections, (b) the representations and warranties contained in
Section 4.11 shall expire on the third anniversary of the Closing Date, (c)
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the representations and warranties contained in Section 4.14 shall expire on
the fifth anniversary of the Closing Date, and (c) all other representations
and warranties shall expire on the eighteen month anniversary of the Closing
Date. Notwithstanding the foregoing, with respect to any matter as to which
any Aggrieved Party has notified the Indemnifying Party in accordance with this
Agreement on or prior to the date that the indemnification obligation of the
Indemnifying Party would otherwise terminate in accordance with this Section
12.3, the indemnification obligation of the Indemnifying Party shall continue
until the liability of the Indemnifying Party shall have been determined
pursuant to this Agreement, and the Indemnifying Party shall have reimbursed
the Aggrieved Party for the full amount of such Costs for which the
Indemnifying Party is responsible under this Agreement. Covenants to be
performed under this Agreement shall survive until performed in accordance with
the terms of this Agreement.
12.4 AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
12.5 WAIVER. At any time prior to the Closing, any term, provision or
condition of this Agreement may be waived in writing (or the time for
performance of any of the obligations or other acts of the parties hereto may
be extended) by the party that is entitled to the benefits thereof.
12.6 PARTIES IN INTEREST. This Agreement may not be assigned by a
party without the prior written consent of the other parties hereto; provided
that the Buyer shall have the right without the prior consent of any party
hereto to assign in all or in part its rights under this Agreement to any
Affiliate thereof or to any Person providing financing for purposes of funding
the transactions contemplated by this Agreement and provided further that, from
and after the Closing, Buyer shall have the right without the prior consent of
any party hereto to assign in all or part its rights under this Agreement to
any Person. This Agreement shall not run to the benefit of or be enforceable
by any Person, including, without limitation, an Employee, other than a party
to this Agreement and its successors and assigns.
12.7 MISCELLANEOUS. This Agreement (including the documents and
instruments referred to herein) constitutes the entire agreement and supersedes
all other prior agreements and
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undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof; is not intended to confer upon any other
person any rights or remedies hereunder; and shall be governed in all respects,
including validity, interpretation and effect, by the internal laws of the
State of New York without giving effect to the principles of conflicts of laws
thereunder. For purposes of this Agreement, "Sellers knowledge" and "knowledge
of Sellers" shall mean the actual knowledge of Sellers or the individuals
listed in Section 12.7 of the Disclosure Schedule. This Agreement may be
executed in one or more counterparts which together shall constitute a single
agreement. If any provisions of this Agreement shall be held to be illegal,
invalid or unenforceable under any applicable law, then such contravention or
invalidity shall not invalidate the entire Agreement. Such provision shall be
deemed to be modified to the extent necessary to render it legal, valid and
enforceable, and if no such modification shall render it legal, valid and
enforceable, then this Agreement shall be construed as if not containing the
provision held to be invalid, and the rights and obligations of the parties
shall be construed and enforced accordingly.
12.8 ACCESS TO RECORDS AFTER EFFECTIVE TIME. (a) For a period of six
years after the Closing Date, Sellers and their representatives shall have
reasonable access to all of the books and records of the Surviving Corporation
with respect to periods prior to the Closing Date to the extent that such
access may reasonably be required by Sellers in connection with matters
relating to or affected by the operations of the Companies prior to the Closing
Date. The Surviving Corporation shall afford such access upon receipt of
reasonable advance notice and during normal business hours. Sellers shall be
solely responsible for any costs or expenses incurred by it pursuant to this
Section 12.8(a). If the Surviving Corporation shall desire to dispose of any
of such books and records prior to the expiration of such six-year period, the
Surviving Corporation shall, prior to such disposition, give Sellers a
reasonable opportunity, at Sellers' expense, to segregate and remove such books
and records as Sellers may elect.
(b) For a period of six years after the Closing Date, Buyer,
the Surviving Corporation and their respective representatives shall have
reasonable access to all of the books and records relating to the Surviving
Corporation or the Business which Sellers or any of their Affiliates may retain
after the Closing Date. Such access shall be afforded by Sellers and their
Affiliates upon receipt of reasonable advance notice and during normal business
hours. Buyer or the Surviving Corporation, as
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the case may be, shall be solely responsible for any costs and expenses
incurred by it pursuant to this Section 12.8(b). If Sellers or any of their
Affiliates shall desire to dispose of any of such books and records prior to
the expiration of such six-year period, Sellers shall, prior to such
disposition, give Buyer and the Surviving Corporation a reasonable opportunity,
at Buyer's or the Surviving Corporation's expense, to segregate and remove such
books and records as Buyer or the Surviving Corporation may elect.
(c)(A) Sellers, the Surviving Corporation and Buyer covenant and
agree that any confidential information disclosed pursuant to Section 12.8(a)
or Section 12.8(b) hereof shall be kept confidential by the receiving party and
shall not be disclosed to any third parties other than the receiving party's
employees, advisors or counsel for a period for three years form the date of
disclosure unless the receiving party is required to disclose such information
to a Governmental Authority (specifically including, but not limited to, the
U.S. Internal Revenue Service or similar Governmental Authority) or by other
requirements of law or applicable legal process. Confidential information
described above shall not include information which (i) is or becomes publicly
known other than through a breach of this agreement by the receiving party;
(ii) can be proven to have been in the receiving party's possession, without
obligation of secrecy tot he disclosing party and was not previously acquired
directly or indirectly from the disclosing party; or (iii) is subsequently
disclosed to the receiving party by a third party who did not to the receiving
party's knowledge receive it under any obligation of confidentiality to the
disclosing party. If a receiving party is required to disclose any of the
confidential information to a Governmental Authority, it shall give prompt
notice to the disclosing party of such requirement
12.9 MITIGATION. An Aggrieved Party and a party seeking
indemnification under Section 7.6, shall take all responsible steps necessary
to mitigate Costs upon becoming aware of any event that could reasonably be
expected to give rise thereto.
12.10 RETURN OF INFORMATION. If for any reason whatsoever the
transactions contemplated by this Agreement are not consummated, Buyer shall
promptly return to Sellers all books and records furnished by Sellers or their
Affiliates or their respective agents, employees or representatives, and all
copies, summaries and extracts thereof shall be destroyed (with such
destruction confirmed in writing to Sellers) and shall not used or disclosed
for any purpose or make such information available to any Person.
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12.11 DIRECTORS, OFFICERS AND STOCKHOLDER LIABILITY. The directors,
officers and stockholders of the Buyer and its Affiliates (other than Merger
Sub or any other Affiliate who becomes a party hereunder) shall not have any
personal liability or obligation arising under this Agreement (including any
claims that the Surviving Corporation or other Companies may assert) other than
as an assignee of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above.
AMERICAN HOME PRODUCTS CORPORATION
By:/s/ GERALD A. JIBILIAN
-----------------------------------------
Name: Gerald A. Jibilian
Title: Vice President
AHP SUBSIDIARY HOLDING CORP.
By: /s/ JOHN R. CONSIDINE
-----------------------------------------
Name: John R. Considine
Title: Vice President and Treasurer
AMERICAN HOME FOOD PRODUCTS, INC.
By: /s/ JOHN R. CONSIDINE
-----------------------------------------
Name: John R. Considine
Title: Vice President
AHFP HOLDING CORPORATION
By: /s/ ALAN B. MENKES
-----------------------------------------
Name: Alan B. Menkes
Title: Vice President, Treasurer and
Secretary
AHFP ACQUISITION CORPORATION
By: /s/ ALAN B. MENKES
-----------------------------------------
Name: Alan B. Menkes
Title: Vice President, Treasurer and
Secretary
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Exhibit A
EXHIBIT A
TERMS OF THE REGISTRATION RIGHTS AGREEMENT
The Registration Rights Agreement shall provide the following terms and
provisions:
1. Demand Rights
Sellers and Buyer shall each have three demand registration
rights (the "Demand Rights") in respect of the common stock of
the Surviving Corporation that they own after the Closing Date
("Registrable Securities") that are exercisable commencing six
months after the date on which the Surviving Corporation
consummates its initial underwritten public offering of its
common stock (an "IPO"). The Demand Rights may only be exercised
with respect to a number of Registrable Securities that is at
least equal to the lesser of (a) Registrable Securities
representing 5% or more of the then outstanding shares of common
stock of the Surviving Corporation or (b) Registrable Securities
having an estimated aggregate offering price of at least $20
million. The Surviving Corporation may defer the filing of any
registration statement related to a Demand Right if at the time
(a) the Surviving Corporation is engaged in confidential business
activities that would be required to be disclosed in such
registration statement, (b) the Surviving Corporation is then
proceeding with fulfilling another Demand request, (c) the
Surviving Corporation is then proceeding with a registered
offering for its own account. The Demand Rights may not be
exercised within 90 days after the closing of an underwritten
public equity offering by the Surviving Corporation made on its
behalf or on behalf of any holder of Demand Rights.
2. Piggy-Back Rights
During the period ending ten years after the Closing Date,
Sellers and Buyer shall each have seven piggy-back registration
rights (the "Piggy-Back Rights") in
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respect of the Registrable Securities. The Piggy-Back Rights may
be exercised with respect to any registration statement filed
with the Securities and Exchange Commission (the "Commission") by
the Surviving Corporation with respect to its common stock
(including a registration statement filed in connection with an
IPO), other than a registration statement (i) on Form S-4 or Form
S-8 or any similar successor forms adopted by the Commission (ii)
filed in connection with an offering solely to existing security
holders of the Surviving Corporation or (iii) pursuant to an
exercise of a Demand Right. To exercise a Piggy-Back Right in
connection with an underwritten public offering, the requesting
holder of Registrable Securities must accept the terms of the
underwriting agreement between the Surviving Corporation and the
managing underwriters. If the underwriters, acting in good
faith, advise the Surviving Corporation that the total amount of
securities, including Registrable Securities, to be included in
an offering is sufficiently large to materially and adversely
affect price or likely success of such offering, then the size of
the offering shall be reduced with the securities to be included
in the offering to be allocated first to the Surviving
Corporation, and then proportionately to the holders of
Registrable Securities on the basis of Registrable Securities
owned; provided, however that if the shares proposed to be
included on behalf of the Sellers or their affiliates pursuant to
the exercise of a Demand Right is reduced by 25% or more, Sellers
shall have one additional Demand Right.
3. Lock-Ups
If requested by the Surviving Corporation or an underwriter,
Holdings and Buyer shall each agree not to effect any public sale
or distribution of Registrable Securities, including a sale
pursuant to Rule 144 under the Securities Act of 1933, during the
period beginning 20 days before and ending not later than 120
days after the effective date of any registration statement filed
by the Surviving Corporation, except as part of such registration
statement.
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4. Expenses
The Surviving Corporation will pay all expenses (including out-
of-pocket expenses of the holders of Registrable Securities)
associated with a registered offering except for underwriting
fees, discounts or commissions attributable to Registrable
Securities.
5. Miscellaneous
The agreement will contain other provisions customary in
registration rights agreements, including provisions regarding
indemnification against claims arising out of or based upon any
untrue statement in or omission from a registration statement and
provisions for cooperation in connection with affecting any
offering contemplated by the agreement. The Agreement will also
provide that rights thereunder may be assigned to any purchaser
of the Registrable Securities that enters into a counterpart of
such agreement and that Buyer and its Affiliates shall not
receive any registration rights in addition to those granted to
Sellers pursuant to this Agreement.
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EXHIBIT B
TERMS OF THE TRANSITION SERVICES AGREEMENT
The Transition Services Agreement shall provide the following terms and
provisions.
1. Facilities and Related Services
During the period ending six months after the Closing Date, to
the extent requested by the Buyer, AHP and its Affiliates shall
agree to provide to the Surviving Corporation and its Affiliates
the use of the space currently used and occupied by Surviving
Corporation at 5 Giralda Farms, Madison, New Jersey, and services
incidental thereto, including telecommunication, mail, courier,
shipping, receiving, security, utilities, maintenance, parking
and janitorial services, all of the foregoing to the extent
provided before the Closing Date. These facilities and services
will be provided for $75,000 per month.
2. Legal Services Related to Intellectual Property
During the period ending six months after the Closing Date, to
the extent requested by the Buyer, AHP and its Affiliates shall
provide to the Surviving Corporation and its Affiliates legal
services related to the establishment and maintenance of their
intellectual property rights to the same extent provided before
the Closing Date. These services will be provided at Sellers'
cost.
3. Marketing and Advertising Services
During the period ending six months after the Closing Date, to
the extent requested by the Buyer, AHP and its Affiliates shall
provide to the Surviving Corporation and its Affiliates services
related to the purchasing of marketing and advertising services
in both the electronic and print media. These services will be
provided at the historical allocated cost.
4. Prior to Closing, AHP will assist the Buyer in setting up Buyer's
Welfare Plans with the Surviving Corporation
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<PAGE> 90
and the Companies as the sponsor(s) thereof. In addition, AHP
shall for a period of up to 90 days assist in the administration
of such plans and will receive compensation for services provided
and reimbursement for any actual out of pocket costs associated
with the administration and maintenances of such plans (all
calculated in accordance with past practices.)
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<PAGE> 1
EXHIBIT 2.2
FIRST AMENDMENT
TO
AGREEMENT OF SALE AND PLAN OF MERGER
This First Amendment to Agreement of Sale and Plan of Merger dated as of
October 31, 1996, (the "First Amendment") is entered into by and among AHP
Subsidiary Holding Corporation, a Delaware corporation, American Home Products
Corporation, a Delaware corporation, International Home Foods, Inc. (formerly
known as American Home Food Products, Inc.), a Delaware corporation, AHFP
Holding Corporation, a Delaware corporation, and AHFP Acquisition Corporation,
a Delaware corporation.
W I T N E S S E T H:
WHEREAS, the parties hereto have previously entered into that certain
Agreement of Sale and Plan of Merger dated September 5, 1996 (the "Agreement");
WHEREAS, pursuant to Section 2.1(a) of the Agreement, AHFP has effected
a 1,275,000 for one forward split of the AHFP Shares resulting in 1,275,000,000
AHFP Shares being issued and outstanding;
WHEREAS, the parties have determined that the amount of Merger Equity
will be $264,000,000; and
WHEREAS, the parties hereto desire to amend the Agreement as provided in
this First Amendment.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements set forth in this First Amendment and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
1. Amendments to Sections 2.7 and 2.8 of the Agreement. Sections
2.7 and 2.8 of the Agreement are hereby amended and restated as follows:
"2.7 MERGER CONSIDERATION; CONVERSION AND CANCELLATION OF
SECURITIES. At the Effective Time, by virtue of the Merger and without
any action on the part of AHFP, Merger Sub or any other party, the
following shall occur:
(a) Shares of common stock, par value $0.01 per share
of Merger Sub (the "Merger Sub Common Stock") issued and outstanding
immediately prior to the Effective Time shall by virtue of the Merger
and without any action on the part of the holder thereof,
<PAGE> 2
be converted into an aggregate of 264,000,000 shares of common stock of
the Surviving Corporation (the "New AHFP Shares"); and
(b) With respect to all AHFP Shares issued and
outstanding immediately prior to the Effective Time, an aggregate amount
of 264,000,000 shares shall, by virtue of the Merger and without any
action on the part of Holdings as the holder thereof, be converted into
the right to receive in cash from Buyer at the Effective Time the Merger
Equity and to the extent not so converted pursuant to the foregoing the
remaining 1,011,000,000 shares of the AHFP Shares issued and outstanding
immediately prior to the Effective Time shall remain outstanding after
the Merger (the "Old AHFP Shares").
2.8 REDEMPTION OF OLD AHFP SHARES. At the Closing, the
Surviving Corporation shall cause the financing contemplated herein to
be funded by the lenders thereof in such amount as may be necessary,
when added to the amount of the Merger Equity, to equal the amount of
$1,275,000,000 minus the product of 25% times the Merger Equity (the
"Purchase Price"). It is acknowledged that the total amount to be
received in cash by Sellers at Closing in respect of the transactions
contemplated herein shall in no event be less than $1,202,000,000. At
the Closing the Surviving Corporation shall redeem 945,000,000 shares of
the Old AHFP Shares at an aggregate redemption amount equal to the
Purchase Price minus the sum of the amount of the Merger Equity and the
amount, if any, of the PAM Asset Purchase Price and the AHF Share
Purchase Price paid at the Closing pursuant to Section 3.2(c) (the
"Redemption Price")."
2. Amendments to Section 3.6(9). Section 3.6(a) is hereby amended
and restated to read as follows:
" 3.6 CLOSING STATEMENT. (a) As promptly as practicable, but no
later than 90 days after the Closing Date, Sellers will cause to be
prepared and delivered to Buyer two statements (the "Closing
Statements"), one such statement (the "Closing Date Statement") setting
forth the value of the Net Assets as of the close of business on the day
immediately prior to the Closing Date (the "Closing Net Asset Value")
and the other such statement (the "Average Value Statement") setting
forth the average month end value of the Net Assets for the 12 months
ended immediately prior to the Closing Date (the "Average Net Asset
Value"). The Closing Statement shall include line items and notes
substantially consistent with those of the 1995 audited combined
statement of adjusted Net Assets included in the Audited Financial
Statements and the June 30, 1996 combined statement of adjusted Net
Assets included in the Audited Financial Statements; provided however,
that the amount of cash or cash equivalents remaining in the Company as
of the close of business on the day immediately prior to the Closing
Date that is in excess of the amount required to cover checks of the
Company outstanding as of the close of business on the day immediately
prior to the Closing Date, shall be reflected on the Closing Statements.
Buyer shall cause the Companies and their respective employees to assist
Sellers in the preparation of the Closing Statements, including the
taking of a physical inventory and shall provide Sellers and their
independent auditors, Andersen, access at all reasonable times to the
personnel, properties, books and records of the Companies for such
purpose and, insofar as such books and records
-2-
<PAGE> 3
pertain to the Business, any of Buyer's Affiliates for such purpose.
The Closing Date Statement shall be accompanied by an audit report from
Andersen stating that in its opinion such statement presents fairly, in
all material respects, the combined Net Assets as of the close of
business on the day immediately prior to the Closing Date, in conformity
with GAAP (except as set forth in the notes thereto) applied
consistently with the accounting principles applied in the Audited
Financial Statements and the Average Value Statement shall be
accompanied by a review report from Andersen stating that in its opinion
nothing has come to its attention which would cause them to believe such
statement was not prepared on a consistent basis with those of December
31, 1995 and June 30, 1996."
3. Amendments to Section 3.7(a). Section 3.7(a) of the Agreement is
hereby amended and restated to read as follows:
"3.7 ADJUSTMENT OF PURCHASE PRICE.
(a) For purposes of this paragraph, "Base Net Asset
Value" means the higher of (i) $256,530,000 or (ii) an amount equal to
the Final Average Net Asset Value minus $13 million. If the Base Net
Asset Value exceeds Final Net Asset Value, Sellers shall pay to the
Surviving Corporation, in the manner and with interest as provided in
Section 3.7(b), the amount of such excess. If Final Net Asset Value
exceeds the Base Net Asset Value, Buyer shall cause the Surviving
Corporation to pay to Sellers, in the manner and with interest as
provided in Section 3.7(b), the amount of such excess. Any such payment
pursuant to this Section 3.7(a) shall be made at a mutually convenient
time and place (i) within 30 days after Sellers' delivery of the
documents referred to in Section 3.6(a) if no notice of disagreement is
duly delivered pursuant to Section 3.6(b), or (ii) if a notice of
disagreement is duly delivered pursuant to Section 3.6(b), then within
10 days after the earlier of (A) agreement between the parties pursuant
to Section 3.6(c) or (B) delivery of the calculation of Final Net Asset
Value and Final Average Net Asset Value referred to in Section 3.6(c)."
4. Amendments to Clause (i) of Section 6.2. Clause (i) of Section
6.2 is hereby amended and restated to read as follows:
"(i) cause each of the Companies to transfer by way of dividend
or otherwise to Holding or AHP, as the case may be, any cash or cash
equivalents held by such Company from time to time up to and including
the close of business on the day immediately prior to the Closing Date
except to the extent of the amount of all checks of the Companies
outstanding as of the close of business on the day immediately prior to
the Closing Date (and in connection therewith Sellers shall cause the
Companies to have at the close of business on the day immediately prior
to the Closing Date sufficient cash to cover all outstanding checks),"
5. Amendments to Clause (c) of Section 7.7. Clause (c) of Section
7.7 is hereby amended and restated to read as follows:
-3-
<PAGE> 4
"(c) except to the extent of the amount of all checks of the Company
outstanding as of the close of business on the day immediately prior to
the Closing Date, each Company may transfer any and all cash and cash
equivalents held as of the close of business on the day immediately
prior to the Closing Date by way of dividend or otherwise to Sellers and
their Affiliates."
6. Amendment. This First Amendment constitutes an amendment to the
Agreement pursuant to Section 12.4 of the Agreement. Except as expressly
amended by this First Amendment, each and every provision of the Agreement
remains in full force and effect in accordance with the terms thereof and, by
reference, the terms and provisions of the Agreement are incorporated herein
and made hereof.
-4-
<PAGE> 5
IN WITNESS WHEREOF, this First Amendment has been signed by each of the
parties hereto as of the date provided above.
AHP SUBSIDIARY HOLDING CORPORATION
By: /s/ JOHN R. CONSIDINE
---------------------------------
Name: John R. Considine
--------------------------------
Title: Vice President
-------------------------------
AMERICAN HOME PRODUCTS CORPORATION
By: /s/ JOHN R. CONSIDINE
---------------------------------
Name: John R. Considine
--------------------------------
Title: Vice President
-------------------------------
INTERNATIONAL HOME FOODS, INC.
(formerly known as American Home Food
Products, Inc.)
By: /s/ JOHN R. CONSIDINE
---------------------------------
Name: John R. Considine
--------------------------------
Title: Vice President
-------------------------------
AHFP HOLDING CORPORATION
By: /s/ ANDREW S. ROSEN
----------------------------------
Name: Andrew S. Rosen
--------------------------------
Title: Vice President and Assistant
-------------------------------
Secretary
-------------------------------
AHFP ACQUISITION CORPORATION
By: /s/ ANDREW S. ROSEN
----------------------------------
Name: Andrew S. Rosen
--------------------------------
Title: Vice President and Assistant
-------------------------------
Secretary
-------------------------------
-5-
<PAGE> 1
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
AMERICAN HOME FOOD PRODUCTS, INC.
The undersigned, a natural person, for the purpose of organizing a
corporation for conducting the business and promoting the purposes hereinafter
stated, under the provisions and subject to the requirements of the laws of the
State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code and the
acts amendatory thereof and supplemental thereto, and known, identified and
referred to as the ("General Corporation Law of the State of Delaware"), hereby
certifies that:
FIRST: The name of this corporation (hereinafter called the
"Corporation") is American Home Food Products, Inc.
SECOND: The address, including street, number, city, and county, of
the registered office of the Corporation in the State of Delaware is 229 South
State Street, City of Dover, County of Kent; and the name of the registered
agent of the Corporation in the State of Delaware at such address is The
Prentice-Hall Corporation System, Inc.
THIRD: The nature of the business and the purposes to be conducted
and promoted by the Corporation, which shall be in addition to the authority of
the Corporation to conduct any lawful business, to promote any lawful purpose,
and to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of Delaware, is as
follows:
To purchase, receive, take by grant, gift, devise, bequest or
otherwise, lease, or otherwise acquire, own, hold, improve, employ,
use and otherwise deal with any investor in connection 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 its property and assets, or any
interest therein, wherever situated.
To carry on a general mercantile, industrial, investing, and
trading business in all its branches; to devise, invent, manufacture,
fabricate, assemble, install, service, maintain, alter, buy, sell,
import, export, license as licensor or licensee, lease as lessor or
lessee, distribute, job, enter into, negotiate, execute, acquire, and
assign contracts in respect of, acquire, receive, grant, and assign
licensing arrangements, options, franchises, and other rights in
respect of, and generally deal in and with, at wholesale and retail,
as principal, and as sales, business, special, or general agent,
representative, broker, factor, merchant, distributor, jobber,
advisor, and in any other lawful capacity, goods, wares, merchandise,
commodities, and unimproved, improved, finished, processed, and other
real, personal, and mixed property of any and all kinds, together with
the components, resultants, and by-products thereof.
To apply for, register, obtain, purchase, lease, take licenses
in respect of or otherwise acquire, and to hold, own, use, operate,
develop, enjoy, turn to account, grant licenses and
<PAGE> 2
immunities in respect of, manufacture under and to introduce, sell,
assign, mortgage, pledge or otherwise dispose of, and, in any manner
deal with and contract with reference to:
To lend money in furtherance of its corporate purposes and to
invest and reinvest its funds from time to time to such extent, to
such persons, firms, associations, corporations, governments or
agencies or instrumentalities thereof, and on such terms and on such
security, if any, as the Board of Directors of the corporation may
determine.
To make contracts of guaranty and suretyship of all kinds and
endorse or guarantee the payment of principal, interest or dividends
upon, and to guarantee the performance of sinking fund or other
obligations of, any securities, and to guarantee in any way permitted
by law the performance of any of the contracts or other undertakings
in which the corporation may otherwise be or become interested, of any
persons, firm, association, corporation, government or agency or
instrumentality thereof, or of any other combination, organization or
entity whatsoever.
To borrow money without limit as to amount and at such rates
of interest as it may determine; from time to time to issue and sell
its own securities, including its shares of stock, notes, bonds,
debentures, and other obligations, in such amounts, on such terms and
conditions, for such purposes and for such prices, now or hereafter
permitted by the laws of the State of Delaware and by this certificate
of incorporation, as the Board of Directors of the Corporation may
determine, and to secure any of its obligations by mortgage, pledge or
other encumbrances of all or any of its property, franchises and
income.
To be a promoter or manager of other corporations of any type
or kind; and to participate with others in any corporation,
partnership, limited partnership, joint venture, or other association
of any kind, or in any transaction, undertaking or arrangement which
the Corporation would have power to conduct by itself, whether or not
such participation involves sharing or delegation of control with or
to others.
To draw, make, accept, endorse, discount, execute, and issue
promissory notes, drafts, bills of exchange, warrants, bonds,
debentures, and other negotiable or transferable instruments and
evidences of indebtedness whether secured by mortgage or otherwise, as
well as to secure the same by mortgage or otherwise, so far as may be
permitted by the laws of the State of Delaware.
The foregoing provisions of this Article THIRD shall be construed both
as purposes and powers and each as an independent purpose and power. The
foregoing enumeration of specific purposes and powers shall not be held to
limit or restrict in any manner the purposes and powers of the Corporation, and
the purposes and powers herein specified shall, except when otherwise provided
in this Article THIRD, be in no wise limited or restricted by reference to, or
inference from, the terms of any provision of this or any other Article of this
certificate of incorporation; provided, that the Corporation shall not conduct
any business, promote any purpose, or exercise any power or privilege within or
without the State of Delaware which, under the laws thereof, the corporation
may not lawfully conduct, promote, or exercise.
<PAGE> 3
FOURTH: The total number of shares of stock which the Corporation
shall have authority to issue is 1,000 shares. Each such share shall be of no
par value. All such shares are of one class and are shares of Common Stock.
FIFTH: The name and the mailing address of the incorporator are as
follow:
NAME MAILING ADDRESS
---- ---------------
Bradford A. Lewin 685 Third Avenue
New York, New York 10017
SIXTH: The Corporation is to have perpetual existence.
SEVENTH: 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 consequences 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.
EIGHTH: For the management of the business and for the conduct of the
affairs of the Corporation, and in further definition, limitation and
regulation of the powers of the Corporation and of its directors and of its
stockholders or any class thereof, as the case may be, it is further provided:
1. The management of the business and the conduct of the
affairs of the Corporation shall be vested in its Board of Directors.
The number of directors which shall constitute the whole Board of
Directors shall be fixed by, or in the manner provided in, the
By-Laws. The phrase "whole Board" and the phrase "total number of
directors" shall be deemed to have the same meaning, to wit, the total
number of directors which the Corporation would have if there were no
vacancies. No election of directors need be by written ballot.
2. After the original or other By-Laws of the
corporation have been adopted, amended, or repealed, as the case may
be, in accordance with the provisions of Section 109 of the General
Corporation Law of the State of Delaware, and, after the Corporation
has received any payment for any of its stock, the power to adopt,
amend, or repeal the By-Laws
<PAGE> 4
of the Corporation may be exercised by the Board of Directors of the
Corporation; provided however, that any provision for the
classification of directors of the Corporation for staggered terms
pursuant to the provisions of subsection (d) of Section 141 of the
General Corporation Law of the State of Delaware shall be set forth in
an initial By-Law or in a By-Law adopted by the stockholders entitled
to vote of the corporation unless provisions for such classification
shall be set forth in this certificate of incorporation.
3. Whenever the corporation shall be authorized to issue
only one class of stock, each outstanding share shall entitle the
holder thereof to notice of, and the right to vote at, any meeting of
stockholders. Whenever the Corporation shall be authorized to issue
more than one class of stock, no outstanding share of any class of
stock which is denied voting power under the provisions of the
certificate of incorporation shall entitle the holder thereof to the
right to vote at any meeting of stockholders except as the provisions
of paragraph (c)(2) of Section 242 of the Corporation Law of the State
of Delaware shall otherwise require; provided, that no share of any
such class which is otherwise denied voting power shall entitle the
holder thereof to vote upon the increase or decrease in the number of
authorized shares of said class.
NINTH: The Corporation shall, to the fullest extent permitted by
Section 145 of the General Corporation Law of the State of Delaware, as the
same may be amended and supplemented, indemnify any and all persons whom it
shall have power to indemnify under said section from and against any and all
of the expenses, liabilities or other matters referred to in or covered by said
section, and the indemnification provided for herein shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any By-Laws, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
TENTH: From time to time any of the provisions of this certificate of
incorporation may be amended, altered or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed by said laws, and
all rights at any time conferred upon the stockholders of the Corporation by
this certificate of incorporation are granted subject to the provisions of this
Article TENTH.
ELEVENTH: The effective date of the certificate of incorporation of
the Corporation, and the date upon which the existence of the Corporation shall
commence, shall be upon filing.
Signed on October 28, 1986 /s/ BRADFORD A. LEWIN
-----------------------------
Bradford A. Lewin
<PAGE> 5
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
AMERICAN HOME FOOD PRODUCTS, INC.
(Pursuant to Section 242 of the General Corporation
Law of the State of Delaware)
American Home Food Products, Inc., a corporation organized and
existing under and by virtue of the General Corporation Law of Delaware (the
"Corporation"), hereby certifies the following:
FIRST: That Article First of the Certificate of Incorporation of the
Corporation be, and hereby is, amended and restated to read in its entirety as
follows:
FIRST: The name of this corporation (hereinafter called the
"Corporation") is International Home Foods, Inc.
SECOND: That Article Fourth of the Certificate of Incorporation of
the Corporation be, and hereby is, amended and restated to read in its entirety
as follows:
FOURTH: The total number of shares of all classes of stock
which the Corporation shall have authority to issue is 2,000,000,000
shares, consisting of (i) 100,000,000 shares of preferred stock, par
value $0.01 per share (the "Preferred Stock"); and (ii) 1,900,000,000
shares of common stock, par value $0.01 per share ("the Common
Stock").
Upon the filing of this Certificate of Amendment of the
Certificate of Incorporation with the Delaware Secretary of State,
each share of the Corporation's Common Stock, no par value (the "Old
Common Stock"), issued and outstanding immediately prior to the
filing hereof shall, without any action on the part of the holder
thereof, be converted and reclassified into, and immediately represent
1,275,000 shares of Common Stock and upon delivery to the Corporation
of the certificate or certificates evidencing the shares of Old Common
Stock previously owned by such stockholder, as set forth on the
Corporation's stock register, the holder thereof shall be entitled to
receive a certificate or certificates representing the shares of
Common Stock into which such shares have been converted.
The designations and the powers, preferences, rights,
qualifications, limitations, and restrictions of the Common Stock and
the Preferred Stock are as follows:
1. Provisions Relating to the Common Stock.
(a) Dividends. Subject to the prior rights and
preferences, if any, applicable to shares of Preferred Stock or any
class or series thereof, each share of Common Stock shall entitle the
holder of record thereof to receive dividends out of funds legally
<PAGE> 6
available therefor, when, as and if declared by the board of directors
of the Corporation in respect of Common Stock.
(b) Liquidation Rights. The holders of Common
Stock shall be entitled to share ratably in the net assets of the
Corporation remaining after any dissolution, liquidation or winding up
of the affairs of the Corporation, whether voluntary or involuntary,
and after payment or provision for the payment of the debts and
liabilities of the Corporation and payment of the liquidation
preference, if any, on any shares of capital stock of the Corporation
having such a preference. A dissolution, liquidation or winding-up of
the Corporation, as such terms are used in this paragraph (b), shall
not be deemed to be occasioned by, or to include, any consolidation or
merger of the Corporation with or into any other corporation or
corporations or other entity or a sale, lease, exchange or conveyance
of all, or any part of, the assets of the Corporation.
(c) Voting Rights. Each share of Common Stock
shall entitle the registered holder thereof to one vote on all matters
brought before the common stockholders of the Corporation for a vote.
2. Provisions Relating to the Preferred Stock.
(a) The Preferred Stock may be issued from time
to time in one or more classes or series, the shares of each class or
series to have any designations, powers, preferences and rights, and
qualifications, limitations and restrictions thereof, as are stated
and expressed in this Article and in the resolution or resolutions
providing for the issuance of such class or series adopted by the
board of directors of the Corporation as hereafter prescribed.
(b) Authority is hereby expressly granted to and
vested in the board of directors of the Corporation to authorize the
issuance of Preferred Stock from time to time in one or more classes
or series, and with respect to each class or series of the Preferred
Stock, to state by the resolution or resolutions from time to time
adopted providing for the issuance thereof the following:
(i) whether the class or series is to
have voting rights in addition to any voting rights required
by law, special or limited, and, if so, the terms of such
voting rights, or whether such class or series is to be
without voting rights, and whether such class or series is to
be entitled to vote as a separate class either alone or
together with the holders of one or more other classes or
series of stock;
(ii) the number of shares to constitute
the class or series and the designations thereof;
(iii) whether the shares of any class or
series shall be redeemable at the option of the Corporation or
the holders thereof or upon the happening of any
2
<PAGE> 7
specified event, and, if redeemable, the redemption price or
prices (which may be payable in the form of cash, notes,
securities, or other property), and the time or times at
which, and the terms and conditions upon which, such shares
shall be redeemable and the manner of redemption;
(iv) whether the shares of a class or
series shall be subject to the operation of retirement or
sinking funds to be applied to the purchase or redemption of
such shares for retirement, and, if such retirement or sinking
fund or funds are to be established, the periodic amount
thereof, and the terms and provisions relative to the
operation thereof;
(v) the dividend rate, whether dividends
are payable in cash, stock of the Corporation, or other
property, the conditions upon which, and the times when, such
dividends are payable, the relative rights of priority, if
any, of payment of dividends on shares of that series and any
other class or series of stock, whether such dividends shall
be cumulative or noncumulative, and if cumulative, the date or
dates from which such dividends shall accumulate;
(vi) the preferences, if any, and the
amounts thereof which the holders of any class or series
thereof shall be entitled to receive upon the voluntary or
involuntary dissolution of, or upon any distribution of the
assets of, the Corporation, and whether or not a dissolution,
liquidation or winding-up of the Corporation, as such terms
are used in this paragraph (vi), shall be deemed to be
occasioned by or to include any consolidation or merger of the
Corporation with or into any other corporation or corporations
or other entity or a sale, lease, exchange or conveyance of
all, or any part of the assets of the Corporation;
(vii) whether the shares of any class or
series, at the option of the Corporation or the holder thereof
or upon the happening of any specified event, shall be
convertible into or exchangeable for the shares of any other
class or classes or of any other series of the same or any
other class or classes of stock, securities, or other property
of the Corporation and the conversion price or prices or ratio
or ratios or the rate or rates at which such conversion or
exchange may be made, with such adjustments, if any, as shall
be stated and expressed or provided for in such resolution or
resolutions, and any other terms and conditions of conversion
or exchange; and
(viii) any other powers, preferences and
relative, participating, optional, or other special rights, if
any, and the qualifications, limitations, or restrictions
thereof, if any, with respect to any class or series.
(c) The shares of each class or series of
Preferred Stock may vary from the shares of any other class or series
thereof in any or all of the foregoing respects and in any other
manner as shall be determined by the resolutions adopted by the board
of directors
3
<PAGE> 8
providing for the issuance thereof. The board of directors of the
Corporation may increase the number of shares of the Preferred Stock
designated for any existing class or series by a resolution adding to
such class or series authorized and unissued shares of the Preferred
Stock not designated for any other class or series. The board of
directors of the Corporation may decrease the number of shares of the
Preferred Stock designated for any existing class or series by a
resolution subtracting from such class or series authorized and
unissued shares of the Preferred Stock designated for such existing
class or series, and the shares so subtracted shall become authorized,
unissued and undesignated shares of the Preferred Stock.
THIRD: That a new Article Tenth of the Certificate of Incorporation
of the Corporation be, and hereby is, added to read in its entirety as follows:
TENTH: A director shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (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 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. If the General Corporation Law of the
State of Delaware is amended after approval of the stockholders of
this Article to authorize corporate action further eliminating or
limiting the personal liability of directors, then the liability of a
director of the Corporation shall be eliminated or limited to the
fullest extent permitted by the General Corporation Law of the State
of Delaware, as so amended. Any repeal or modification of this
Article by the stockholders shall not adversely affect any right or
protection of a director of the Corporation existing at the time of
such repeal or modification.
FOURTH: That Article Tenth of the Certificate of Incorporation of the
Corporation in effect immediately prior to this amendment be, and hereby is,
renumbered as Article Eleventh of the Certificate of Incorporation with no
other change, and that Article Eleventh of the Certificate of Incorporation of
the Corporation in effect immediately prior to this amendment be, and hereby
is, renumbered as Article Twelfth of the Certificate of Incorporation with no
other change.
FIFTH: That the foregoing amendments to the Certificate of
Incorporation were duly adopted by the board of directors of the Corporation in
accordance with the provisions of Section 141(f) and Section 242 of the
General Corporation Law of the State of Delaware.
SIXTH: That the foregoing amendments to the Certificate of
Incorporation were duly adopted and approved by written consent by the holders
of all shares of capital stock of the Corporation entitled to vote thereon in
accordance with the provisions of the Certificate of Incorporation and Section
228(a) and Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, this instrument has been executed for, on behalf
of, and in the name of the Corporation by its officers thereunto duly
authorized on October 30, 1996.
AMERICAN HOME FOOD PRODUCTS, INC.
By: /s/ KENNETH J. MARTIN
-----------------------------------
Name: Kenneth J. Martin
Title: President
ATTEST:
By: /s/ CAROL G. EMERLING
--------------------------------
Name: Carol G. Emerling
Title: Secretary
4
<PAGE> 1
EXHIBIT 3.2
BY - LAWS
OF
AMERICAN HOME FOOD PRODUCTS, INC.
(A Delaware Corporation)
ARTICLE I
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK. Every holder of stock in the
corporation shall be entitled to have a certificate signed by, or in the name
of, the corporation by the Chairman or Vice-Chairman of the Board of Directors,
if any, or by the President or a Vice-President and by 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.
Any and all signatures on any such certificate may be facsimiles. In case any
officer, transfer agent, or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent, or registrar before such certificate is issued, it may
be issued by the corporation with the same effect as if he were such officer,
transfer agent, or registrar at the date of issue.
Whenever the corporation shall be authorized to issue more than one
class of stock or more than one series of any class of stock, and whenever the
corporation shall issue any shares of its stock as partly paid stock, the
certificates representing shares of any such class or series or of any such
partly paid stock shall set forth thereon the statements prescribed by the
General Corporation Law. Any restrictions on the transfer or registration of
transfer of any shares of stock of any class or series shall be noted
conspicuously on the certificate representing such shares.
The corporation may issue a new certificate of stock in place of any
certificate theretofore issued by it, alleged to have been lost, stolen, or
destroyed, and the Board of Directors may require the owner of any lost,
stolen, or destroyed certificate, or his legal representative, to give the
corporation a bond sufficient to indemnify the corporation against any claim
that may be made against it on account of the alleged loss, theft, or
destruction of any such certificate or the issuance of any such new
certificate.
2. FRACTIONAL SHARE INTERESTS. The corporation may, but shall
not be required to, issue fractions of a share. If the corporation does not
issue fractions of a share, it shall (1) arrange for the disposition of
fractional interests by those entitled thereto, (2) pay in cash the fair value
of fractions of a share as of the time when those entitled to receive such
fractions are determined or (3) issue scrip or warrants in registered or bearer
form which shall entitle the holder to receive a certificate for a full share
upon the surrender of such scrip or warrants aggregating a full share. A
certificate for a fractional share shall, but scrip or warrants shall not
unless otherwise
<PAGE> 2
provided therein, entitle the holder to exercise voting rights, to receive
dividends thereon, and to participate in any of the assets of the corporation
in the event of liquidation. The Board of Directors may cause scrip or
warrants to be issued subject to the conditions that they shall become void if
not exchanged for certificates representing full shares before a specified
date, or subject to the conditions that the shares for which scrip or warrants
are exchangeable may be sold by the corporation and the proceeds thereof
distributed to the holders of scrip or warrants, or subject to any other
conditions which the Board of Directors may impose.
3. STOCK TRANSFERS. Upon compliance with provisions restricting
the transfer or registration of transfer of shares of stock, if any, transfers
or registration of transfers of shares of stock of the corporation shall be
made only on the stock ledger of the corporation by the registered holder
thereof, or by his attorney thereunto authorized by power of attorney duly
executed and filed with the Secretary of the corporation or with a transfer
agent or a registrar, if any, and on surrender of the certificate or
certificates for such shares of stock properly endorsed and the payment of all
taxes due thereon.
4. RECORD DATE FOR STOCKHOLDERS. For the purpose of determining
the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or the allotment of any rights, or entitled to
exercise any rights in respect to any change, conversion, or exchange of stock
or for the purpose of any other lawful action, the directors may fix, in
advance, a record date, which shall not be more than sixty days nor less than
ten days before the date of such meeting, nor more than sixty days prior to any
other action. If no record date is fixed, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders
shall be at the close of business on the day next preceding the day on which
notice is given, or, if notice is waived, at the close of business on the day
next preceding the day on which the meeting is held; the record date for
determining stockholders entitled to express consent to corporate action in
writing without a meeting, when no prior action by the Board of Directors is
necessary, shall be the day on which the first written consent is expressed;
and the record date for determining stockholders for any other purpose shall be
at the close of business on the day on which the Board of Directors adopts the
resolution relating thereto. A determination of stockholders of record
entitled to notice of or to vote at any meeting of stockholders shall apply to
any adjournment of the meeting; provided, however, that the Board of Directors
may fix a new record date for the adjourned meeting.
5. MEANING OF CERTAIN TERMS. As used herein in respect of the
right to notice of a meeting of stockholders or a waiver thereof or to
participate or vote thereat or to consent or dissent in writing in lieu of a
meeting, as the case may be, the term "share" or "shares" or "share of stock"
or "shares of stock" or "stockholder" or "stockholders" refers to an
outstanding share or shares of stock and to a holder or holders of record of
outstanding shares of stock when the corporation is authorized to issue only
one class of shares of stock, and said reference is also intended to include
any outstanding share or shares of stock and any holder or holders of record of
outstanding shares of stock of any class upon which or upon whom the
certificate of incorporation
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<PAGE> 3
confers such rights where there are two or more classes or series of shares of
stock or upon which or upon whom the General Corporation Law confers such
rights notwithstanding that the certificate of incorporation may provide for
more than one class or series of shares of stock, one or more of which are
limited or denied such rights thereunder; provided, however, that no such right
shall vest in the event of an increase or a decrease in the authorized number
of shares of stock of any class or series which is otherwise denied voting
rights under the provisions of the certificate of incorporation.
6. STOCKHOLDER MEETINGS.
TIME. The annual meeting of the stockholders of the corporation
should be held annually on the last Monday in March of each year at such time
and place within or without the State of Delaware as shall be stated in the
notice of the meeting, a duly executed waiver or a duly executed unanimous
consent, for the purpose of electing directors and for the transaction of such
other business as may properly be brought before the meeting.
CALL. Annual meetings and special meetings may be called by the
directors or by any officer instructed by the directors to call the meeting.
NOTICE OR WAIVER OF NOTICE. Written notice of all meetings shall be
given, stating the place, date, and hour of the meeting and stating the place
within the city or other municipality or community at which the list of
stockholders of the corporation may be examined. The notice of an annual
meeting shall state that the meeting is called for the election of directors
and for the transaction of other business which may properly come before the
meeting, and shall, (if any other action which could be taken at a special
meeting is to be taken at such annual meeting) state the purposes. The notice
of a special meeting shall in all instances state the purpose or purposes for
which the meeting is called. The notice of any meeting shall also include, or
be accompanied by, any additional statements, information, or documents
prescribed by the General Corporation Law. Except as otherwise provided by the
General Corporation Law, a copy of the notice of any meeting, shall be given,
personally or by mail, not less than ten days nor more than sixty days before
the date of the meeting, unless the lapse of the prescribed period of time
shall have been waived, and directed to each stockholder at his record address
or at such other address which he may have furnished by request in writing to
the Secretary of the corporation. Notice by mail shall be deemed to be given
when deposited, with postage thereon prepaid, in the United States Mail. If a
meeting is adjourned to another time, not more than thirty days hence, and/or
to another place, and if an announcement of the adjourned time and/or place is
made at the meeting it shall not be necessary to give notice of the adjourned
meeting unless the directors, after adjournment, fix a new record date for the
adjourned meeting. Notice need not be given to any stockholder who submits a
written waiver of notice signed by him before or after the time stated therein.
Attendance of a stockholder at the meeting of stockholders shall constitute a
waiver of notice of such meeting, except when the stockholder attends the
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called
or convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders need be specified in any written
waiver of notice.
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<PAGE> 4
STOCKHOLDER LIST. The officer who has charge of the stock ledger of
the corporation shall prepare and make, at least ten days before every meeting
of stockholders, a complete list of the stockholders, arranged in alphabetical
order, and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city or other municipality or community
where the meeting is to be held, which place shall be specified in the notice
of the meeting, or if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is present. The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required by this
section or the books of the corporation, or to vote at any meeting of
stockholders.
CONDUCT OF MEETING. Meetings of the stockholders shall be presided
over by one of the following officers in the order of seniority and if present
and acting - the Chairman of the Board, if any, the Vice-Chairman of the Board,
if any, the President, a Vice-President, or, if none of the foregoing is in
office and present and acting, by a chairman to be chosen by the stockholders.
The Secretary of the corporation, or in his absence, an Assistant Secretary,
shall act as secretary of every meeting, but if neither the Secretary nor an
Assistant Secretary is present the Chairman of the meeting shall appoint a
secretary of the meeting.
PROXY REPRESENTATION. Every stockholder may authorize another person
or persons to act for him by proxy in all matters in which a stockholder is
entitled to participate, whether by waiving notice of any meeting, voting or
participating at a meeting, or expressing consent or dissent without the
meeting. Every proxy must be signed by the stockholder or by his
attorney-in-fact. No proxy shall be voted or acted upon after three years from
its date unless such proxy provides for a longer period. A duly executed proxy
shall be irrevocable if it states that it is irrevocable and, if, and only as
long as, it is coupled with an interest sufficient in law to support an
irrevocable power. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the corporation generally.
INSPECTORS. The directors, in advance of any meeting, may, but need
not, appoint one or more inspectors of election to act at the meeting or any
adjournment thereof. If an inspector or inspectors are not appointed, the
person presiding at the meeting may, but need not, appoint one or more
inspectors. In case any person who may be appointed as an inspector fails to
appear or act, the vacancy may be filled by appointment made by the directors
in advance of the meeting or at the meeting by the person presiding thereat.
Each inspector, if any, before entering upon the discharge of his duties, shall
take and sign an oath faithfully to execute the duties of inspector at such
meeting with strict impartiality and according to the best of his ability. The
inspectors, if any, shall determine the number of shares of stock outstanding
and the voting power of each, the shares of stock represented at the meeting,
the existence of a quorum, the validity and effect of proxies, and shall
receive votes, ballots or consents, hear and determine all challenges and
questions arising in connection with the right to vote, count and tabulate all
votes, ballots or consents, determine the
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<PAGE> 5
result, and do such acts as are proper to conduct the election or vote with
fairness to all stockholders. On request of the person presiding at the
meeting, the inspector or inspectors, if any, shall make a report in writing of
any challenge, question or matter determined by him or them and execute a
certificate of any fact found by him or them.
QUORUM. The holders of a majority of the outstanding shares of stock
shall constitute a quorum at a meeting of stockholders for the transaction of
any business. The stockholders present may adjourn the meeting despite the
absence of a quorum.
VOTING. Each share of stock shall entitle the holder thereof to one
vote. In the election of directors, a plurality of the votes cast shall elect.
Any other action shall be authorized by a majority of the votes cast except
where the General Corporation Law prescribes a different percentage of votes
and/or a different exercise of voting power, and except as may be otherwise
prescribed by the provisions of the certificate of incorporation and these By-
Laws. In the election of directors, and for any other action, voting need not
be by ballot.
7. STOCKHOLDER ACTION WITHOUT MEETINGS. Any action required by
the General Corporation Law to be taken at any annual or special meeting of
stockholders, or any action which may be taken at any annual or special meeting
of stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking or the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE II
DIRECTORS
1. FUNCTIONS AND DEFINITION. The business and affairs of the
corporation shall be managed by or under the direction of the Board of
Directors of the corporation. The Board of Directors shall have the authority
to fix the compensation of the members thereof. The use of the phrase "whole
board" herein refers to the total number of directors which the corporation
would have if there were no vacancies.
2. QUALIFICATIONS AND NUMBER. A director need not be a
stockholder, a citizen of the United States, or a resident of the State of
Delaware. The initial Board or Directors shall consist of 3 persons.
Thereafter the number of directors constituting the whole board shall be at
least one. Subject to the foregoing limitation and except for the first Board
of Directors, such number may be fixed from time to time by action of the
stockholders or the directors, or, if the number is not fixed, the number shall
not be less than 3 nor more than 7. The number of directors may be increased
or decreased by action of the stockholders or of the directors.
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<PAGE> 6
3. ELECTION AND TERM. The first Board of Directors, unless the
members thereof shall have been named in the certificate of incorporation,
shall be elected by the incorporator or incorporators and shall hold office
until the first annual meeting of stockholders and until their successors are
elected and qualified or until their earlier resignation or removal. Any
director may resign at any time upon written notice to the corporation.
Thereafter, directors who are elected at an annual meeting of stockholders, and
directors who are elected in the interim to fill vacancies and newly created
directorships, shall hold office until the next annual meeting of stockholders
and until their successors are elected and qualified or until their earlier
resignation or removal. In the interim between annual meetings of stockholders
or of special meetings of stockholders called for the election of directors
and/or for the removal of one or more directors and for the filling of any
vacancy in that connection, newly created directorships and any vacancies in
the Board of Directors, including unfilled vacancies resulting from the removal
of directors for cause or without cause, may be filled by the vote of a
majority of the remaining directors then in office, although less than a
quorum, or by the sole remaining directors.
4. MEETINGS.
TIME. Meetings shall be held at such time as the Board shall fix,
except that the first meeting of a newly elected Board shall be held as soon
after the election as the directors may conveniently assemble.
PLACE. Meetings shall be held at such place within or without the
State of Delaware as shall be fixed by the Board.
CALL. No call shall be required for regular meeting for which the time
and place have been fixed. Special meetings may be called by or at the
direction, of the Chairman of the Board, if any, the Vice-Chairman of the
Board, if any, of the President, or of a majority of the directors in office.
NOTICE OF ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be required
for regular meetings for which the time and place have been fixed. Written,
oral, or any other mode of notice of the time and place shall be given for
special meetings in sufficient time for the convenient assembly of the
directors thereat. Notice need not be given to any director or to any member
of a committee of directors who submits a written waiver of notice signed by
him before or after the time stated therein. Attendance of any such person at
a meeting shall constitute a waiver of notice of such meeting, except when he
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the directors need be specified in any
written waiver of notice.
QUORUM AND ACTION. A majority of the whole Board shall constitute a
quorum except when a vacancy or vacancies prevents such majority, whereupon a
majority of the directors in office shall constitute a quorum, provided, that
such majority shall constitute at least one-third of the whole Board. A
majority of the directors present, whether or not a quorum is present, may
adjourn a
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<PAGE> 7
meeting to another time and place. Except as herein otherwise provided by the
General Corporation Law, the vote of the majority of the directors present at a
meeting at which a quorum is present shall be the act of the Board. The quorum
and voting provisions herein stated shall not be construed as conflicting with
any provisions of the General Corporation Law and these By-Laws which govern a
meeting of directors held to fill vacancies and newly created directorships in
the Board of action of disinterested directors.
Any member or members of the Board of Directors or of any committee
designated by the Board may participate in a meeting of the Board, or any such
committee, as the case may be, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other.
CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and if
present and acting, shall preside at all meetings. Otherwise, the
Vice-Chairman of the Board, if any and if present and acting, or the President,
if present and acting, or any other director chosen by the Board, shall
preside.
5. REMOVAL OF DIRECTORS. Except as may otherwise be provided by
the General Corporation Law, any director or the entire Board of Directors may
be removed, with or without cause, by the holders of a majority of the shares
then entitled to vote at an election of directors.
6. COMMITTEES. Whenever its number consists of three or more,
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 two 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. In the absence or
disqualification of any member of any such committee or committees, the member
or the 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, shall have and may exercise the powers and
authority of the Board of Directors in the management of the business and
affairs of the corporation with the exception of any authority the delegation
of which is prohibited by Section 141 of the General Corporation Law, and may
authorize the seal of the corporation to be affixed to all papers which may
require it.
7. WRITTEN ACTION. Any action required or permitted to be taken
at any meeting of the Board of Directors or any committee thereof may be taken
without a meeting if all members of the Board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board or committee.
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<PAGE> 8
ARTICLE III
OFFICERS
The officers of the corporation shall consist of a President, a
Secretary, a Treasurer, and, if deemed necessary, expedient, or desirable by
the Board of Directors, a Chairman of the Board, a Vice Chairman of the Board,
an Executive Vice-President, one or more other Vice-Presidents, one or more
Assistant Secretaries, one or more Assistant Treasurers, and such other
officers with such titles as the resolution of the Board of Directors choosing
them shall designate. Except as may otherwise be provided in the resolution of
the Board of Directors choosing him, no officer other than the Chairman or
Vice-Chairman of the Board, if any, need be a director. Any number of offices
may be held by the same person, as the directors may determine, except that no
person may hold the offices of President and Secretary simultaneously.
Unless otherwise provided in the resolution choosing him, each officer
shall be chosen for a term which shall continue until the meeting of the Board
of Directors following the next annual meeting of stockholders and until his
successor shall have been chosen and qualified.
All officers of the corporation shall have such authority and perform
such duties in the management and operation of the corporation as shall be
prescribed in the resolutions of the Board of Directors designating and
choosing such officers and prescribing their authority and duties, and shall
have such additional authority and duties and are incident to their office
except to the extent that such resolutions may be inconsistent therewith. The
Secretary or an Assistant Secretary of the corporation shall record all of the
proceedings of all meetings and actions in writing of stockholders, directors,
and committees of directors, and shall exercise such additional authority and
perform such additional duties as the Board shall assign to him. Any officer
may be removed, with or without cause, by the Board of Directors. Any vacancy
in any office may be filled by the Board of Directors.
ARTICLE IV
CORPORATE SEAL
The corporate seal shall be in such form as the Board of Directors shall
prescribe.
ARTICLE V
INSTRUMENT EXECUTION
Unless otherwise provided by law or by the Board of Directors, all
instruments to be executed on behalf of the Corporation, whether or not
requiring the seal of the Corporation, may be executed by the President, any
Vice President and attested to by the Secretary or any Assistant Secretary.
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<PAGE> 9
ARTICLE VI
FISCAL YEAR
The fiscal year of the corporation shall be on a calendar year basis.
ARTICLE VII
CONTROL OVER BY-LAWS
Subject to the provisions of the certificate of incorporation and the
provisions of the General Corporation Law, the power to amend, alter or repeal
these By-Laws and to adopt new By-Laws may be exercised by the Board of
Directors or by the stockholders.
I HEREBY CERTIFY that the foregoing is a full, true and correct copy
of the By-Laws of AMERICAN HOME FOOD PRODUCTS, INC., a Delaware corporation, as
in effect on the date hereof.
WITNESS my hand and the seal of the corporation.
Dated: December 2, 1986.
/s/ Bradford A. Lewin
---------------------
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<PAGE> 1
EXHIBIT 3.3
CERTIFICATE OF INCORPORATION
OF
AMERICAN HOME FOODS, INC.
We, the undersigned, for the purpose of associating to establish a
corporation for the transaction of the business and the promotion and conduct
of the objects and purposes hereinafter stated, under the provisions and
subject to the requirements of the laws of the State of Delaware (particularly
Chapter I, Title 8 of the 1953 Delaware Code and the acts amendatory thereof
and supplemental thereto, and known as the "General Corporation Law of the
State of Delaware"), do make and file this Certificate of Incorporation in
writing and do hereby certify as follows, to wit:
FIRST: The name of the corporation (hereinafter called the
corporation) is AMERICAN HOME FOODS, INC.
SECOND: The respective names of the County and of the City within the
County in which the principal office of the corporation is to be located in the
State of Delaware are the County of Kent and the City of Dover. The name of
the resident agent of the corporation is The Prentice-Hall Corporation System,
Inc. The street and number of said principal office and the address by street
and number of said resident agent is 229 South State Street, Dover, Delaware.
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 acquire by purchase, exchange, lease, or otherwise and to own,
hold, use, develop, operate, sell, assign, lease, transfer, convey, exchange,
mortgage, pledge or otherwise dispose of or deal in and with, real and personal
property of every class or description and rights and privileges therein
wheresoever situate.
To manufacture, process, purchase, sell and generally to trade and
deal in and with goods, wares and merchandise of every kind, nature and
description, and to engage and participate in any mercantile, industrial or
trading business of any kind or character whatsoever.
To apply for, register, obtain, purchase, lease, take licenses in
respect of or otherwise acquire, and to hold, own, use, operate, develop,
enjoy, turn to account, grant licenses and immunities in respect of,
manufacture, under and to introduce, sell, assign, mortgage, pledge or
otherwise dispose of, and, in any manner deal with and contract with reference
to:
(a) inventions, devices, formulae, processes and any
improvements and modifications thereof;
(b) letters patent, patent rights, patented processes,
copyrights, designs, and similar rights, trade-marks, trade symbols
and other indications of origin and ownership granted by or recognized
under the laws of the United States of America
<PAGE> 2
or of any state or subdivision thereof or of any foreign country or
subdivision thereof, and all rights connected therewith or
appertaining thereunto;
(c) franchises, licenses, grants and concessions.
To purchase or otherwise acquire, and to hold, mortgage, pledge, sell,
exchange or otherwise dispose of, securities (which term, for the purpose of
this Article THIRD, includes, without limitation of the generality thereof, any
shares of stock, bonds, debentures, notes, mortgages, or other obligations, and
any certificates, receipts or other instruments representing rights to receive,
purchase or subscribe for the same, or representing any other rights or
interests therein or in any property or assets) created or issued by any
persons, firms, associations, corporations, or governments or subdivisions
thereof; to make payment therefor in any lawful manner; and to exercise, as
owner or holder of any securities, any and all rights, powers and privileges in
respect thereof.
To make, enter into, perform and carry out contracts of every kind and
description with any person, firm, association, corporation or government or
subdivision thereof.
To acquire by purchase, exchange or otherwise, all, or any part of, or
any interest in, the properties, assets, business and good will of any one or
more persons, firms, associations or corporations heretofore or hereafter
engaged in any business for which a corporation may now or hereafter be
organized under the laws of the State of Delaware; to pay for the same in cash,
property or its own or other securities; to hold, operate, reorganize,
liquidate, sell or in any manner dispose of the whole or any part thereof; and
in connection therewith, to assume or guarantee performance of any liabilities,
obligations or contracts of such persons, firms, associations or corporations,
and to conduct the whole or any part of any business thus acquired.
To lend its uninvested funds from time to time to such extent, to such
persons, firms, associations, corporations, governments or subdivisions
thereof, and on such terms and on such security, if any, as the Board of
Directors of the corporation may determine.
To endorse or guarantee the payment of principal, interest or
dividends upon, and to guarantee the performance of sinking fund or other
obligations of, any securities, and to guarantee in any way permitted by law
the performance of any of the contracts or other undertakings in which the
corporation may otherwise be or become interested, of any persons, firm,
association, corporation, government or subdivision thereof, or of any other
combination, organization or entity whatsoever.
To borrow money for any of the purposes of the corporation, from time
to time, and without limit as to amount; from time to time to issue and sell
its own securities in such amounts, on such terms and conditions, for such
purposes and for such prices, now or hereafter permitted by the laws of the
State of Delaware and by this Certificate of Incorporation, as the Board of
Directors of the corporation may determine; and to secure such securities by
mortgage upon, or the pledge of, or the conveyance or assignment in trust of,
the whole or any part of the properties, assets, business and good will of the
corporation, then owned or thereafter acquired.
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<PAGE> 3
To draw, make, accept, endorse, discount, execute, and issue
promissory notes, drafts, bills of exchange, warrants, bonds, debentures, and
other negotiable or transferable instruments and evidences of indebtedness
whether secured by mortgage or otherwise, as well as to secure the same by
mortgage or otherwise, so far as may be permitted by the laws of the State of
Delaware.
To purchase, hold, cancel, reissue, sell, exchange, transfer or
otherwise deal in its own securities from time to time to such an extent and in
such manner and upon such terms as the Board of Directors of the corporation
shall determine; provided that the corporation 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 to the extent permitted by
law; and provided further that shares of its own capital stock belonging to the
corporation shall not be voted upon directly or indirectly.
To organize or cause to be organized under the laws of the State of
Delaware, or of any other State of the United States of America, or of the
District of Columbia, or of any territory, dependency, colony or possession of
the United States of America, or of any foreign country, a corporation or
corporations for the purpose of transacting, promoting or carrying on any or
all of the objects or purposes for which the corporation is organized, and to
dissolve, wind up, liquidate, merge or consolidate any such corporation or
corporations or to cause the same to be dissolved, wound up, liquidated, merged
or consolidated.
To conduct its business in any and all of its branches and maintain
offices both within and without the State of Delaware, in any and all States of
the United States of America, in the District of Columbia, in any or all
territories, dependencies, colonies or possessions of the United States of
America, and in foreign countries.
To such extent as a corporation organized under the General
Corporation Law of the State of Delaware may now or hereafter lawfully do, to
do, either as principal or agent and either alone or in connection with other
corporations, firms or individuals, all and everything necessary, suitable,
convenient or proper for, or in connection with, or incident to, the
accomplishment of any of the purposes or the attainment of any one or more of
the objects herein enumerated, or designed directly or indirectly to promote
the interests of the corporation or to enhance the value of its properties; and
in general to do any and all things and exercise any and all powers, rights and
privileges which a corporation may now or hereafter be organized to do or to
exercise under the General Corporation Law of the State of Delaware or under
any act amendatory thereof, supplemental thereto or substituted therefor.
The foregoing provisions of this Article THIRD shall be construed both
as purposes and powers and each as an independent purpose and power. The
foregoing enumeration of specified purposes and powers shall not be held to
limit or restrict in any manner the purposes and powers of the corporation, and
the purposes and powers herein specified shall, except when otherwise provided
in this Article THIRD, be in no wise limited or restricted by reference to, or
inference from, the terms of any provision of this or any other Article of this
Certificate of Incorporation; provided that nothing herein contained shall be
construed as authorizing the corporation to issue bills, notes or other
evidences of debt for circulation as money, or to carry on the business of
receiving deposits of money or the business of buying gold or silver bullion or
foreign coins or as authorizing the
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<PAGE> 4
corporation to engage in the business of banking or insurance or to carry on
the business of constructing, maintaining or operating public utilities in the
State of Delaware; and provided, further, that the corporation shall not carry
on any business or exercise any power in any state, territory, or country which
under the laws thereof the corporation may not lawfully carry on or exercise.
FOURTH: 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 shall be One ($1.00) Dollar. All such shares are of one
class and are designated as Common Stock.
FIFTH: The minimum amount of capital with which the corporation will
commence business is One Thousand ($1,000.00) Dollars.
SIXTH: The names and places of residence of each of the incorporators
are as follows:
C.D. Crowley, Jr. 509 North Broadway, Yonkers, New York
David S. Junker 22 Montrose Road, Scarsdale, New York
Dorothy Barnes 56-38 Bell Blvd., Bayside, New York
SEVENTH: The corporation is to have perpetual existence.
EIGHTH: The private property of the stockholders of the corporation
shall not be subject to the payment of corporate debts to any extent whatever.
NINTH: For the management of the business and for the conduct of the
affairs of the corporation, and in further definition, limitation and
regulation of the powers of the corporation and of its directors and
stockholders, it is further provided:
1. The number of directors of the corporation shall be
as specified in the By-Laws of the corporation but such number may
from time to time be increased or decreased in such manner as may be
prescribed by the By-Laws. In no event, shall the number of directors
be less than three. The election of directors need not be by ballot.
Directors need not be stockholders.
2. In furtherance and not in limitation of the powers
conferred by the laws of the State of Delaware, the Board of Directors
is expressly authorized and empowered:
(a) To make, alter, amend, and repeal By-Laws,
subject to the power of the stockholders to alter or repeal
the By-Laws made by the Board of Directors.
(b) Subject to the applicable provisions of the
By-Laws then in effect, to determine, from time to time,
whether and to what extent and at what times and places and
under what conditions and regulations the accounts and books
of the corporation, or any of them,
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<PAGE> 5
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, except as conferred by
the laws of the State of Delaware, unless and until authorized
so to do by resolution of the Board of Directors or of the
stockholders of the corporation.
(c) Without the assent or vote of the
stockholders, to authorize and issue obligations of the
corporation, secured or unsecured, to include therein such
provisions as to redeemability, convertibility or otherwise,
as the Board of Directors, in its sole discretion, may
determine, and to authorize the mortgaging or pledging, as
security therefor, of any property of the corporation, real or
personal, including after-acquired property.
(d) To determine whether any, and, if any, what
part, of the net profits of the corporation or of its net
assets in excess of its capital shall be declared in dividends
and paid to the stockholders, and to direct and determine the
use and disposition of any such net profits or such net assets
in excess of capital.
(e) To fix from time to time the amount of
profits of the corporation to be reserved as working capital
or for any other lawful purpose.
(f) To establish bonus, profit-sharing or other
types of incentive or compensation plans for the employees
(including officers and directors) of the corporation and to
fix the amount of profits to be distributed or shared and to
determine the persons to participate in any such plans and the
amounts of their respective participations.
In addition to the powers and authorities hereinbefore or by
statute expressly conferred upon it, the Board of Directors may
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 laws of the State of Delaware, of the Certificate of
Incorporation and of the By-Laws of the corporation.
3. Any director or any officer elected or appointed by
the stockholders or by the Board of Directors may be removed at any
time in such manner as shall be provided in the By-Laws of the
corporation.
4. No contract or other transaction between the
corporation and any other corporation and no other act of the
corporation shall, in the absence of fraud, in any way be affected or
invalidated by the fact that any of the directors of the corporation
are pecuniarily or otherwise interested in, or are directors or
officers of, such other corporation. Any director of the corporation
individually or any firm or association
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<PAGE> 6
of which any director may be a member, may be a party to, or may be
pecuniarily or otherwise interested in, any contract or transaction of
the corporation, provided that the fact that he individually or such
firm or association is so interested shall be disclosed or shall have
been known to the Board of Directors or a majority of such members
thereof as shall be present at any meeting of the Board of Directors
at which action upon any such contract or transaction shall be taken.
Any director of the corporation who is also a director or officer of
such other corporation or who is so interested may be counted in
determining the existence of a quorum at any meeting of the Board of
Directors which shall authorize any such contract or transaction, and
may vote thereat to authorize any such contract or transaction, with
like force and effect as if he were not such director or officer of
such other corporation or not so interested. Any director of the
corporation may vote upon any contract or other transaction between
the corporation and any subsidiary or affiliated corporation without
regard to the fact that he is also a director of such subsidiary or
affiliated corporation.
Any contract, transaction or act of the corporation or of the
directors, which shall be ratified by a majority of a quorum of the
stockholders of the corporation at any annual meeting, or at any
special meeting called for such purpose, shall, in so far as permitted
by law or by the Certificate of Incorporation of the corporation, be
as valid and as binding as though ratified by every stockholder of the
corporation provided, however, that any failure of the stockholders to
approve or ratify any such contract, transaction or act, when and if
submitted, shall not be deemed in any way to invalidate the same or
deprive the corporation, its directors, officer, or employees, of its
or their right to proceed with such contract, transaction or act.
5. Subject to any limitation in the By-Laws, the members
of the Board of Directors shall be entitled to such fees, salaries or
other compensation for their services and to reimbursement for their
expenses as such members as the Board of Directors shall determine.
Nothing contained herein shall preclude any director from serving the
corporation, or any subsidiary or affiliated corporation, in any other
capacity and receiving proper compensation therefor.
6. If the By-Laws so provide, the stockholders and Board
of Directors of the corporation shall have power to hold their
meetings, to have an office or offices and to keep the books of the
corporation, subject to the provisions of the laws of the State of
Delaware, outside of said State at such place or places as may from
time to time be designated by them.
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 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
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<PAGE> 7
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 a 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.
ELEVENTH: From time to time any of the provisions of this Certificate
of Incorporation may be amended, altered or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed by said laws, and
all rights at any time conferred upon the stockholders of the corporation by
this Certificate of Incorporation are granted subject to the provisions of this
Article ELEVENTH.
IN WITNESS WHEREOF, we, the undersigned, being all of the
incorporators hereinabove named, do hereby further certify that the facts
hereinabove stated are truly set forth and accordingly have hereunto set our
respective hands and seals.
Dated: November 22, 1955.
/s/ C.D. Crowley, Jr. (L.S.)
-------------------------------------
/S/ David S. Junker (L.S.)
-------------------------------------
/s/ Dorothy Barnes (L.S.)
-------------------------------------
STATE OF NEW YORK, )
: SS.:
COUNTY OF NEW YORK, )
BE IT REMEMBERED that personally appeared before me, Lillian D.
Ryerson, a Notary Public in and for the County and State aforesaid, C. D.
CROWLEY, JR., DAVID S. JUNKER and DOROTHY BARNES, all the incorporators who
signed the foregoing Certificate of Incorporation, known to me personally to be
such, and 1 having made known to them and each of them the contents of said
Certificate of Incorporation, they did severally acknowledge the same 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 this 22nd day of November,
1955.
/s/ Lillian D. Ryerson
-----------------------------
Notary Public
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<PAGE> 8
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
AMERICAN HOME FOODS, INC.
(Pursuant to Section 242 of Title 8, Chapter 1 of the
Delaware Code of 1953)
---------------
AMERICAN HOME FOODS, INC. (hereinafter called the "corporation"), a
corporation organized and existing under and by virtue of Title 8, Chapter 1 of
the Delaware Code of 1953, does hereby certify as follows:
1. That the following amendment of the Certificate of
Incorporation of the corporation has been duly adopted in accordance with the
provisions of Section 242 of Title 8, Chapter 1 of the Delaware Code of 1953:
By striking out Article FOURTH thereof, reading as follows:
"FOURTH: 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 shall be One ($1.00) Dollar. All
such shares are of one class and are designated as Common Stock."
and substituting in lieu thereof a new Article FOURTH as follows:
"FOURTH: The total number of shares of stock which the
corporation shall have authority to issue is Twenty-Five Thousand
(25,000), and the par value of each of such shares shall be One
($1.00) Dollar. All such shares are of one class and are designated
as Common Stock."
<PAGE> 9
2. That the capital of the corporation will not be reduced
under or by reason of said amendment.
IN WITNESS WHEREOF, the said AMERICAN HOME FOODS, INC. has made under
its corporate seal and signed by E.L. DOSCH, its President, and GILBERT S.
McINERNY, its Secretary, the foregoing certificate, and the said E.L. DOSCH, as
President, and GILBERT S. McINERNY, as Secretary, have hereunto respectively
set their hands and caused the corporate seal of the said corporation to be
affixed this 20th day of December, 1955.
/s/ E.L.Dosch
-------------------------------------
/s/ Gilbert S. McInerny
-------------------------------------
STATE OF NEW YORK, )
: SS.:
COUNTY OF NEW YORK, )
BE IT REMEMBERED, that on this 20 day of December, 1955,
personally came before me, LILLIAN D. RYERSON, a Notary Public in and for the
County and State aforesaid, duly commissioned and sworn to take acknowledgment
or proof of deeds, E.L. DOSCH, President of AMERICAN HOME FOODS, INC., a
corporation of the State of Delaware, the corporation described in the
foregoing Certificate, known to me personally to be such, and he the said E.L.
DOSCH, as such President, duly executed said Certificate before me, and
acknowledged the said Certificate to be his act and deed and made on behalf 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 of the Secretary of said corporation,
respectively, and that the seal affixed to said Certificate is the common or
corporate sale of said corporation, and that his act of sealing, executing,
acknowledging and delivering the said Certificate was duly authorized by the
stockholders of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and seal of
office the day and year aforesaid.
/s/ Lillian D. Ryerson
-------------------------------------
Notary Public
<PAGE> 1
EXHIBIT 3.4
BY - LAWS
OF
AMERICAN HOME FOODS, INC.
(a Delaware Corporation)
ARTICLE I
OFFICES
SECTION 1. Principal Office. The principal office shall be at 229
South State Street, in the City of Dover, County of Kent, State of Delaware,
and the name of the resident agent in charge thereof is THE PRENTICE-HALL
CORPORATION SYSTEM, INC.
SECTION 2. Other Offices. The corporation may also have an office or
offices at such other place or places, within or without the State of Delaware,
as the Board of Directors may from time to time designate or the business of
the corporation require.
ARTICLE II
STOCKHOLDERS' MEETINGS
SECTION 1. Annual Meetings. The annual meeting of the stockholders
of the corporation, commencing with the year 1957, shall be held at the
principal office of the corporation in the State of Delaware, or at such other
place within or without the State of Delaware as may be determined by the Board
of Directors and as shall be designated in the notice of said meeting, on the
last Monday in March of each year (or if said day be a legal holiday, then on
the next succeeding day not a legal holiday), for the purpose of electing
directors and for the transaction of such other business as may properly be
brought before the meeting.
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 special meeting of the
stockholders as soon thereafter as conveniently may be. At such meeting the
stockholders may elect the directors and transact other business with the same
force and effect as at an annual meeting duly called and held.
The place and time of such meeting for the election of directors shall
not be changed within sixty days next before the day on which the election is
to be held. A notice of any such change shall be given to each stockholder at
least twenty days before the election is held, in person or by letter mailed to
him at his post-office address last known to the Secretary of the corporation.
SECTION 2. Special Meetings. Special meetings of the stockholders
shall be held at the principal office of the corporation in the State of
Delaware, or at such other place within or without the State of Delaware as may
be designated in the notice of said meeting, upon call of the Board of
Directors or of the President or any Vice-President, and shall be called by the
President or any Vice-President or the Secretary at the request in writing of
stockholders owning at least twenty-five percent of the issued and outstanding
capital stock of the corporation entitled to vote thereat.
<PAGE> 2
SECTION 3. Notice and Purpose of Meetings. Notice of the purpose or
purposes and of the time and place within or without the State of Delaware of
every meeting of stockholders shall be in writing and signed by the President
or Vice-President or the Secretary or an Assistant Secretary and a copy thereof
shall be served either personally or by mail or by any other lawful means, not
less than ten days before the meeting, upon each stockholder of record entitled
to vote at such meeting. If mailed, such notice shall be directed to each
stockholder at his address as it appears on the stock book unless he shall have
filed with the Secretary of the corporation a written request that notices
intended for him be mailed to some other address, in which case it shall be
mailed or transmitted to the address designated in such request. Such further
notice shall be given as may be required by law. Except as otherwise expressly
provided by statute, no publication of any notice of a meeting of stockholders
shall be required to be given to any stockholder who shall attend such meeting
in person or by proxy, or who shall, in person or by attorney thereunto
authorized, waive such notice in writing or by telegraph, cable, radio, or
wireless either before or after such meeting. Except where otherwise required
by law, notice of any adjourned meeting of the stockholders of the corporation
shall not be required to be given.
SECTION 4. Quorum. A quorum at all meetings of stockholders shall
consist of the holders of record of a majority of the shares of the capital
stock of the corporation, issued and outstanding, entitled to vote at the
meeting, present in person or by proxy, except as otherwise provided by law or
the Certificate of Incorporation. In the absence of a quorum at any meeting or
any adjournment thereof, a majority of those present in person or by proxy and
entitled to vote may adjourn such meeting from time to time. At any such
adjourned meeting at which a quorum is present any business may be transacted
which might have been transacted at the meeting as originally called.
SECTION 5. Organization. Meetings of the stockholders shall be
presided over by the President, or if he is not present, by a Vice-President,
or if neither the President nor a Vice-President is present, by a chairman to
be chosen by a majority of the stockholders entitled to vote who are present in
person or by proxy at the meeting. The Secretary of the corporation, or in his
absence, an Assistant Secretary, shall act as secretary of every meeting, but
if neither the Secretary nor an Assistant Secretary is present, the meeting
shall choose any person present to act as secretary of the meeting.
SECTION 6. Voting. Except as other wise provided in the By-Laws, the
Certificate of Incorporation, or in the laws of the State of Delaware, at every
meeting of the stockholders, each stockholder of the corporation entitled to
vote at such meeting shall have one vote in person or by proxy for each share
of stock having voting rights held by him and registered in his name on the
books of the corporation at the time of such meeting. Any vote on stock of the
corporation may be given by the stockholder entitled thereto in person or by
his proxy appointed by an instrument in writing, subscribed by such stockholder
or by his attorney thereunto authorized and delivered to the secretary of the
meeting; provided, however, that no proxy shall be voted on after three years
from its date unless said proxy provides for a longer period. Except as
otherwise required by statute, by the Certificate of Incorporation or these By-
Laws, or in electing directors, all matters coming before any meeting of the
stockholders shall be decided by the vote of a majority in interest of the
stockholders of the corporation present in person or by proxy at such meeting
and entitled to vote thereat, a quorum being present. At all elections of
directors the voting may but need not be by ballot and a plurality of the votes
cast thereat shall elect.
SECTION 7. List of Stockholders. A complete list of the stockholders
entitled to vote at the ensuing election, arranged in alphabetical order, and
the number of voting shares held by each shall be prepared by the Secretary, or
other officer of the corporation having charge of said stock ledger, and filed
in the office where the election is to be held, at least ten days before every
election, and shall, during the
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<PAGE> 3
usual hours for business, and during the whole time of said election, be open
to the examination of any stockholder.
SECTION 8. Inspectors of Election. At all elections of directors, or
in any other case in which inspectors may act, two inspectors of election shall
be appointed by the chairman of the meeting, except as otherwise provided by
law. The inspectors of election shall take and subscribe an oath faithfully to
execute the duties of inspectors at such meeting with strict impartiality, and
according to the best of their ability, and shall take charge of the polls and
after the vote shall have been taken shall make a certificate of the result
thereof, but no director or candidate for the office of director shall be
appointed as such inspector. If there be a failure to appoint inspectors or if
any inspector appointed be absent or refuse to act, or if his office become
vacant, the stockholders present at the meeting, by a per capita vote, may
choose temporary inspectors of the number required.
ARTICLE III
DIRECTORS
SECTION 1. Powers, Number, Qualification, Term, Quorum and Vacancies.
The property, affairs and business of the corporation shall be managed by its
Board of Directors, consisting of not less than three nor more than eleven
persons. Except as hereinafter provided, directors shall be elected at the
annual meeting of the stockholders and each director shall be elected to serve
for one year and until his successor shall be elected and shall qualify. The
directors shall have power from time to time, and at any time, when the
stockholders as such are not assembled in a meeting, regular or special, to
increase or decrease their own number by an amendment to these By-Laws. If the
number of directors be increased, the additional directors may be elected by a
majority of the directors in office at the time of the increase, or if not so
elected prior to the next annual meeting of the stockholders, they shall be
elected by the stockholders. The number of directors shall never be less than
three.
Directors need not be stockholders.
At all meetings of the board, any number of directors less than a
majority, but not less than one-third, nor less than two, shall be sufficient
to constitute a quorum for the transaction of business, and 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, except as may be otherwise
specifically provided by statute or by the Certificate of Incorporation or by
these By-Laws, but if at any meeting of the Board of Directors there shall be
less than a quorum present, a majority of those present may adjourn the
meeting, without further notice, from time to time until a quorum shall have
been obtained.
In case one or more vacancies shall occur in the Board of Directors by
reason of death, resignation or otherwise, except in so far as otherwise
provided in the case of a vacancy or vacancies occurring by reason of removal
by the stockholders, the remaining directors, although less than a quorum, may,
by a majority vote, elect a successor or successors for the unexpired term or
terms.
SECTION 2. Meetings. Meetings of the Board of Directors shall be
held at such place within or outside the State of Delaware as may from time to
time be fixed by resolution of the Board of Directors, or as may be specified
in the notice of the meeting. Regular meetings of the Board of Directors shall
be held at such times as may from time to time be fixed by resolution of the
Board of Directors, and special meetings may be held at any time upon the call
of the President or any Vice-President or the Secretary or any two directors by
oral, telegraphic or written notice duly served on or sent or mailed to each
director not less than
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<PAGE> 4
two days before such meeting. A meeting of the Board of Directors may be held
without notice immediately after the annual meeting of stockholders. Notice
need not be given of regular meetings of the Board of Directors. Meetings may
be held at any time without notice if all the directors are present, or if at
any time before or after the meeting those not present waive notice of the
meeting in writing.
SECTION 3. Committees. The Board of Directors may, in its
discretion, by the affirmative vote of a majority of the whole Board of
Directors, appoint committees which shall have and may exercise such powers as
shall be conferred or authorized by the resolutions appointing them. A
majority of any such committee, if the committee be composed of more than two
members, may determine its action and fix the time and place of its meetings,
unless the Board of Directors shall otherwise provide. The Board of Directors
shall have power at any time to fill vacancies in, to change the membership of,
or to discharge any such committee.
SECTION 4. Dividends. Subject always to the provisions of the law
and the Certificate of Incorporation, the Board of Directors shall have full
power to determine whether any, and if any, what part of any, funds legally
available for the payment of dividends shall be declared in dividends and paid
to stockholders; the division of the whole or any part of such funds of the
corporation shall rest wholly within the lawful discretion of the Board of
Directors, and it shall not be required at any time, against such discretion,
to divide or pay any part of such funds among or to the stockholders as
dividends or otherwise; and the Board of Directors may fix a sum which may be
set aside or reserved over and above the capital paid in of the corporation as
working capital for the corporation or as a reserve for any proper purpose, and
from time to time may increase, diminish, and vary the same in its absolute
judgment and discretion.
SECTION 5. Removal of Directors. At any special meeting of the
stockholders, duly called as provided in these By-Laws, any director or
directors may by the affirmative vote of the holders of a majority of all the
shares of stock outstanding and entitled to vote for the election of directors
be removed from office, either with or without cause, and his successor or
their successors may be elected at such meeting; or the remaining directors
may, to the extent vacancies are not filled by such election, fill any vacancy
or vacancies created by such removal.
SECTION 6. Indemnification of Directors and Officers. Each director
or officer, whether or not then in office, shall be indemnified by the
corporation against all costs and expenses reasonably incurred by or imposed
upon him in connection with or arising out of any action, suit, or proceeding
in which he may be involved by reason of his being or having been a director or
officer of the corporation, such expenses to include the cost of reasonable
settlements (other than amounts paid to the corporation itself) made with a
view to curtailment of costs of litigation. The corporation shall not,
however, indemnify any director or officer with respect to matters as to which
he shall be finally adjudged in any such action, suit, or proceeding to have
been derelict in the performance of his duty as such director or officer, nor
in respect of any matter on which any settlement or compromise is effected, if
the total expense, including the cost of such settlement, shall substantially
exceed the expense which might reasonably be incurred by such director or
officer in conducting such litigation to a final conclusion. The foregoing
right of indemnification shall not be exclusive of other rights to which any
director or officer may be entitled as a matter of law.
ARTICLE IV
OFFICERS
SECTION 1. Number. The Board of Directors, as soon as may be after
the election thereof held in each year, shall elect a President, a Secretary
and a Treasurer, and from time to time may appoint an
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<PAGE> 5
Executive Vice-President, one or more Vice-Presidents and such Assistant
Secretaries, Assistant Treasurers and such other officers, agent and employees
as it may deem proper. Any two offices may be held by the same person. More
than two offices other than the offices of President and Secretary may be held
by the same person. The President shall be chosen from among the directors.
SECTION 2. Term and Removal. The term of office of all officers
shall be one year and until their respective successors are elected and
qualify, but any officer may be removed from office, either with or without
cause, at any time by the affirmative vote of a majority of the members of the
Board of Directors then in office. A vacancy in any office arising from any
cause may be filled for the unexpired portion of the term by the Board of
Directors.
SECTION 3. Powers and Duties. The officers of the corporation shall
each have such powers and duties as generally pertain to their respective
offices, as well as such powers and duties as from time to time may be
conferred by the Board of Directors. The Executive Vice-President, Vice-
President or Vice-Presidents, the Assistant Secretary or Assistant Secretaries
and the Assistant Treasurer or Assistant Treasurers shall, in the order of
their respective seniorities, in the absence or disability of the President,
Secretary or Treasurer, respectively, perform the duties of such officer and
shall generally assist the President, Secretary or Treasurer respectively.
SECTION 4. Voting, Corporation's Securities. Unless other wise
ordered by the Board of Directors, the President, or, in the event of his
inability to act, the Executive Vice-President or a Vice-President designated
by the Board of Directors to act in the absence of the President, shall have
full power and authority on behalf of the corporation to attend and to act and
to vote at any meetings of security holders of corporations in which the
corporation may hold securities, and at such meetings shall possess and may
exercise any and all rights and powers incident to the ownership of such
securities, and which as the owner thereof the corporation might have possessed
and exercised, if present. The Board of Directors by resolution from time to
time may confer like powers upon any other person or persons.
ARCTIC V
CERTIFICATES OF STOCK
SECTION 1. Form and Transfers. The interest of each stockholder of
the corporation shall be evidenced by certificates for shares of stock,
certifying the number of shares represented thereby and in such form not
inconsistent with the Certificate of Incorporation as the Board of Directors
may from time to time prescribe.
Transfers of shares of the capital stock of the corporation shall be
made only on the books of the corporation by the registered holder thereof, or
by his attorney thereunto authorized by power of attorney duly executed and
filed with the Secretary of the corporation, or with a transfer clerk or a
transfer agent appointed as in Section 4 of this Article provided, and on
surrender of the certificate or certificates for such shares properly endorsed
and the payment of all taxes thereon. The person in whose name shares of stock
stand on the books of the corporation shall be deemed the owner thereof for all
purposes as regards the corporation; provided that whenever any transfer of
shares shall be made for collateral security, and not absolutely, such fact, if
known to the Secretary of the corporation, shall be so expressed in the entry
of transfer. The Board may, from time to time, make such additional rules and
regulations as it may deem expedient, not inconsistent with these By-Laws,
concerning the issue, transfer, and registration of certificates for shares of
the capital stock of the corporation.
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<PAGE> 6
The certificates of stock shall be signed by the President or Executive
Vice-President or a Vice-President and by the Secretary or an Assistant
Secretary or the Treasurer or an Assistant Treasurer, and sealed with the seal
of the corporation. Such seal may be a facsimile, engraved or printed. Where
any such certificate is signed by a transfer agent or a transfer clerk and by a
registrar, the signatures of the President, Executive Vice-President, Vice-
President, Secretary, Assistant Secretary, Treasurer, or Assistant Treasurer
upon such certificate may be facsimiles, engraved or printed. In case any such
officer who has signed or whose facsimile signature has been placed upon such
certificate shall have ceased to be such before such certificate is issued, it
may be issued by the corporation with the same effect as if such officer had
not ceased to be such at the time of its issue.
SECTION 2. Closing of Transfer Books. The Board of Directors shall
have power to close the stock transfer books of the corporation for a period
not exceeding fifty days before any stockholders' meeting, or the last day on
which the consent or dissent of stockholders may be effectively expressed for
any purpose without a meeting, or the date fixed for the payment of any
dividend or the making of any distribution, or for the delivery of evidences of
rights or evidences of interests arising out of any change, conversion or
exchange of capital stock. Provided, however, that in lieu of closing the
stock transfer books as aforesaid the Board of Directors may in its discretion
fix a time not more than fifty days before the date of any meeting of
stockholders, or the last day on which the consent or dissent of stockholders,
may be effectively expressed for any purpose without a meeting, or the date
fixed for the payment of any dividend or for the delivery of evidences of
rights or evidences of interests arising out of any change, conversion or
exchange of capital stock, as the time as of which stockholders entitled to
notice of and to vote at such meeting or whose consent or dissent is required
or may be expressed for any purpose or entitled to receive any such dividend,
distribution, rights or interests shall be determined; and all persons who are
holders of record of voting stock at such time and no others shall be entitled
to notice of and to vote at such meeting or to express their consent or
dissent, as the case may be, and only stockholders of record at the time so
fixed shall be entitled to receive such dividend, distributions, rights or
interests.
SECTION 3. Lost, Stolen, Destroyed or Mutilated Certificates. No
certificate for shares of stock in the corporation shall be issued in place of
any certificate alleged to have been lost, destroyed or stolen, except on
production of such evidence of such loss, destruction or theft and on delivery
to the corporation, if the Board of Directors shall so require, of a bond of
indemnity in such amount (not exceeding twice the value of the shares
represented by such certificates), upon such terms and secured by such surety
as the Board of Directors may in its discretion require.
SECTION 4. Transfer Agent and Registrar. The Board of Directors may
appoint one or more transfer clerks or one or more transfer agents and one or
more registrars, and may require all certificates of stock to bear the
signature or signatures of any of them.
SECTION 5. Examination of Books by Stockholders. The Board shall
have power to determine, from time to time, whether and to what extent and at
what times and places and under what conditions and regulations the accounts
and books and documents of the corporation, 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.
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<PAGE> 7
ARTICLE VI
FISCAL YEAR
The fiscal year of the corporation shall begin on the first day of
January in each year and shall end on the thirty-first day of December next
following, unless otherwise determined by the Board of Directors.
ARTICLE VII
CORPORATE SEAL
The corporate seal of the corporation shall consist of two concentric
circles, between which shall be the name of the corporation, and in the center
shall be inscribed the year of its incorporation and the words, "Corporate
Seal, Delaware".
ARTICLE VIII
AMENDMENTS
The By-Laws of the corporation shall be subject to alteration, amendment
or repeal, and new By-Laws not inconsistent with any provisions of the
Certificate of Incorporation or statute, may be made, either by the affirmative
vote of the holders of a majority in interest of the stockholders of the
corporation present in person or by proxy at any annual or special meeting of
the stockholders and entitled to vote thereat, a quorum being present, or by
the affirmative vote of a majority of the whole Board, given at any regular or
special meeting of the Board, provided that notice of the proposal so to make,
alter, amend, or repeal such By-Laws be included in the notice of such meeting
of the Board or the stockholders, as the case may be. By-laws made, altered,
or amended by the Board may be altered, amended, or repealed by the
stockholders at any annual or special meeting thereof.
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<PAGE> 1
EXHIBIT 3.5
CERTIFICATE OF INCORPORATION
OF
LUCK'S, INCORPORATED
I, the undersigned, for the purpose of establishing a corporation for
the transaction of the business and the promotion and conduct of the objects
and purposes hereinafter stated, under the provisions and subject to the
requirements of the laws of the State of Delaware (particularly Chapter 1,
Title 8 of the Delaware Code and the acts amendatory thereof and supplemental
thereto, and known as the "General Corporation Law of the State of Delaware"),
do make and file this Certificate of Incorporation in writing and do hereby
certify as follows, to wit:
FIRST: The name of the corporation (hereinafter called the corporation)
LUCK'S, INCORPORATED.
SECOND: The address, including street, number, city and county, of
the registered office of the corporation in the State of Delaware is 229 South
State Street, City of Dover, County of Kent; and the name of the registered
agent of the corporation in the State of Delaware at such address is The
Prentice-Hall Corporation System, Inc.
THIRD: The nature of the business of the corporation and the object or
purposes to be transacted, promoted or carried on by it are as follows:
To acquire by purchase, exchange, lease, or otherwise and to own, hold,
use, develop, operate, sell, assign, lease, transfer, convey, exchange,
mortgage, pledge or otherwise dispose of or deal in and with, real and personal
property of every class or description and rights and privileges therein
wheresoever situate.
To manufacture, process, purchase, sell and generally to trade and deal
in and with goods, wares and merchandise of every kind, nature and description,
and to engage and participate in any mercantile, industrial or trading business
of any kind or character whatsoever.
To apply for, register, obtain, purchase, lease, take licenses in
respect of or otherwise acquire, and to hold, own, use, operate, develop,
enjoy, turn to account, grant licenses and immunities in respect of,
manufacture under and to introduce, sell, assign, mortgage, pledge or otherwise
dispose of, and in a manner deal with and contract with reference to:
(a) inventions, devices, formulae, processes and any
improvements and modifications thereof;
(b) letters patent, patent rights, patented processes,
copyrights, designs, and similar rights, trademarks, trade symbols and
other indications of origin and ownership granted by or recognized under
the laws of the United States of America
<PAGE> 2
or of any state or subdivision thereof, or of any foreign country or
subdivision thereof, and all rights connected therewith or appertaining
thereunto;
(c) franchises, licenses, grants and concessions.
To purchase or otherwise acquire, and to hold, mortgage, pledge, sell,
exchange or otherwise dispose of, securities (which term, for the purpose of
this Article THIRD, includes, without limitation of the generality thereof,
any shares of stock, bonds, debentures, notes, mortgages, or other obligations,
and any certificates, receipts or other instruments representing rights to
receive, purchase or subscribe for the same, or representing any other rights
or interests therein or in any property or assets) created or issued by any
persons, firms, associations, corporations, or governments or subdivisions
thereof; to make payment therefor in any lawful manner; and to exercise, as
owner or holder of any securities, any and all rights, powers and privileges in
respect thereof.
To make, enter into, perform and carry out contracts of every kind and
description with any person, firm, association, corporation or government or
subdivision thereof.
To acquire by purchase, exchange or otherwise, all, or any part of, or
any interest in, the properties, assets, business and good will of any one or
more persons, firm, associations or corporations heretofore or hereafter
engaged in any business for which a corporation may now or hereafter be
organized under the laws of the State of Delaware; to pay for the same in cash,
property or its own or other securities; to hold, operate, reorganize,
liquidate, sell or in any manner dispose of the whole or any part thereof; and
in connection therewith to assume or guarantee performance of any liabilities,
obligations or contracts of such persons, firms, associations or corporations,
and to conduct the whole or any part of any business thus acquired.
To lend its uninvested funds from time to time to such extent, to such
persons, firms, associations, corporations, governments or subdivisions
thereof, and on such terms and on such security, if any, as the Board of
Directors of the corporation may determine.
To endorse or guarantee the payment of principal, interest or dividends
upon, and to guarantee the performance of sinking fund or other obligations of,
any securities, and to guarantee in any way permitted by law the performance of
any of the contracts or other undertakings in which the corporation may
otherwise be or become interested, of any persons, firm, association,
corporation, government or subdivision thereof, or of any other combination,
organization or entity whatsoever.
To borrow money for any of the purposes of the corporation, from time to
time, and without limit as to amount; from time to time to issue and sell its
own securities in such accounts, on such terms and conditions, for such
purposes and for such prices, now or hereafter permitted by the laws of the
State of Delaware and by this Certificate of Incorporation, as the Board of
Directors of the corporation may determine; and to secure such securities by
mortgage upon, or the pledge of, or the conveyance or assignment in trust of,
the whole or any part of the properties, assets, business and good will of the
corporation, then owned or thereafter acquired.
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<PAGE> 3
To draw, make, accept, endorse, discount, execute and issue promissory
notes, drafts, bills of exchange, warrants, bonds, debentures, and other
negotiable or transferrable instruments and evidences of indebtedness, whether
secured by mortgage or otherwise, as well as to secure the same by mortgage or
otherwise, so far as may be permitted by the laws of the State of Delaware.
To purchase, hold, cancel, reissue, sell, exclude, transfer or otherwise
deal in its own securities from time to time to such an extent and in such
manner and upon such terms as the Board of Directors of the corporation shall
determine; provided that the corporation 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 to the extent permitted by law; and
provided further that shares of its own capital stock belonging to the
corporation shall not be voted upon directly or indirectly.
To organize or cause to be organized under the laws of the State of
Delaware, or of any other State of the United States of America, or of the
District of Columbia, or any territory, dependency, colony or possession of the
United States of America, or of any foreign country, a corporation or
corporations for the purpose of transacting, promoting or carrying on any or
all of the objects or purposes for which the corporation is organized, and to
dissolve, wind up, liquidate, merge or consolidate any such corporation or
corporations or to cause the same to be dissolved, wound up, liquidated, merged
or consolidated.
To conduct its business in any and all of its branches and maintain
offices both within and without the State of Delaware, in any and all states of
the United States of America, in the District of Columbia, in any and all
territories, dependencies, colonies or possessions of the United States of
America, and in foreign countries.
To such extent as a corporation organized under the General Corporation
Law of the State of Delaware may now or hereafter lawfully do, to do, either as
principal or agent and either alone or in connection with other corporations,
firms or individuals, all and everything necessary, suitable, convenient or
proper for, or in connection with, or incident to, the accomplishment of any of
the purposes or the attainment of any one or more of the objects herein
enumerated, or designed directly or indirectly to promote the interests of the
corporation or to enhance the value of its properties; and in general to do any
and all things and exercise any and all powers, rights and privileges which a
corporation may now or hereafter be organized to do or to exercise under the
General Corporation Law of the State of Delaware or under any act amendatory
thereof, supplemental thereto or substituted therefor.
The foregoing provisions of this Article THIRD shall be construed both
as purposes and powers and each as an independent purpose and power. The
foregoing enumeration of specified purposes and powers shall not be held to
limit or restrict in any manner the purposes and powers of the corporation, and
the purposes and powers herein specified shall, except when otherwise provided
in this Article THIRD, be in no wise limited or restricted by reference to, or
inference from, the terms of any provision of this or any other Article of this
Certificate of Incorporation; provided that nothing herein contained shall be
construed as authorizing the corporation to issue bills, notes or other
evidences of debt for circulation as money or the business of buying gold or
silver bullion or foreign coins or as authorizing the corporation to engage in
the business of banking or insurance or
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<PAGE> 4
to carry on the business of constructing, maintaining or operating public
utilities in the State of Delaware; and provided, further, that the corporation
shall not carry on any business or exercise any power in any state, territory
or country which under the laws thereof the corporation may not lawfully carry
on or exercise.
FOURTH: The total number of shares of stock which the corporation
have authority to issue is Five Hundred (500) without par value. All such
shares are of one class and are designated as common stock.
FIFTH: The minimum amount of capital with which the corporation
will commence business One Thousand Dollars ($1,000.00).
SIXTH: The name and place of residence of the incorporator is as
follows:
NAME PLACE OF RESIDENCE
---- ------------------
R. G. Dickerson 229 South State Street
Dover, Delaware
SEVENTH: The corporation is to have perpetual existence.
EIGHTH: The private property of the stockholders of the
corporation shall not be subject to the payment of corporate debts to any
extent whatever.
NINTH: For the management of the business and for the conduct of
the affairs of the corporation, and in further definition, limitation and
regulation of the powers of the corporation and of its directors and
stockholders, it is further provided:
1. The number of directors of the corporation shall be as
specified in the By-laws of the corporation but such number may from
time to time be increased or decreased in such manner as may be
prescribed by the By-laws. In no event, shall the number of directors be
less than three. The election of directors need not be by ballot.
Directors need not be stockholders.
2. In furtherance and not in limitation of the powers
conferred by the laws of the State of Delaware, the Board of Directors
is expressly authorized and empowered:
(a) To make, alter, amend and repeal By-laws, subject
to the power of the stockholders to alter or repeal the By-laws
made by the Board of Directors.
(b) Subject to the applicable provisions of the By-laws
then in effect, to determine, from time to time, whether and to
what extent and at what times and places and under what
conditions and
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<PAGE> 5
regulations the accounts and books of the corporation, 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, except as conferred by the laws
of the State of Delaware, unless and until authorized so to do by
resolution of the Board of Directors or of the stockholders of
the corporation.
(c) Without the assent or vote of the stockholders, to
authorize and issue obligations of the corporation, secured or
unsecured, to include therein such provisions as to
redeemability, convertibility or otherwise, as the Board of
Directors, in its sole discretion, may determine, and to
authorize the mortgaging or pledging, as security therefor, of
any property of the corporation, real or personal, including
after-acquired property.
(d) To determine whether any, and, if any, what part,
of the net profits of the corporation or of its net assets in
excess of its capital shall be declared in dividends and paid to
the stockholders, and to direct and determine the use and
disposition of any such net profits or such net assets in excess
of capital.
(e) To fix from time to time the amount of profits of
the corporation to be reserved as working capital or for any
other lawful purpose.
(f) To establish bonus, profit-sharing or other types
of incentive or compensation plans for the employees (including
officers and directors) of the corporation and to fix the amount
of profits to be distributed or shares and to determine the
persons to participate in any such plans and the amounts of their
respective participations.
In addition to the powers and authorities hereinbefore or by
statute expressly conferred upon it, the Board of Directors may 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
laws of the State of Delaware, of the Certificate of Incorporation and
of the By-laws of the corporation.
3. Any director or any officer elected or appointed by the
stockholders or by the Board of Directors may be removed at any time in
such manner as shall be provided in the By-laws of the corporation.
4. No contract or other transaction between the corporation
and other corporation and no other act of the corporation shall, in the
absence of fraud, in anyway be affected or invalidated by the fact that
any of the directors of the corporation are pecuniarily or otherwise
interested in, or are directors or officers of,
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<PAGE> 6
such other corporation. Any director of the corporation individually or
any firm or association of which any director may be a member, may be a
party to, or may be pecuniarily or otherwise interested in, any contract
or transaction of the corporation, provided that the fact that he
individually or such firm or association in so interested shall be
disclosed or shall have been known to the Board of Directors or a
majority of such members thereof as shall be present at any meeting of
the Board of Directors at which action upon any such contract or
transaction shall be taken. Any director of the corporation which is
also a director or officer of such other corporation or who is so
interested may be counted in determining the existence of a quorum at
any meeting of the Board of Directors, which shall authorize any such
contract or transaction, and may vote thereat to authorize any such
contract or transaction, with like force and effect as if he were not
such director or officer of such other corporation or not so interested.
Any director of the corporation may vote upon any contract or other
transaction between the corporation and any subsidiary or affiliated
corporation without regard to the fact that he is also a director of
such subsidiary or affiliated corporation.
Any contract, transaction or act of the corporation or of the
directors, which shall be ratified by a majority of a quorum of the
stockholders of the corporation at any annual meeting, or at any special
meeting called for such purpose, shall, insofar as permitted by law or
by the Certificate of Incorporation of the corporation, be as valid and
as binding as though ratified by every stockholder of the corporation;
provided, however, that any failure of the stockholders to approve or
ratify any such contract, transaction or act, when and if submitted,
shall not be deemed in any way to invalidate the same or deprive the
corporation, its directors, officers or employees, of its or their right
to proceed with such contract, transaction or act.
5. Subject to any limitation in the By-laws, the members of
the Board of Directors shall be entitled to such fees, salaries or other
compensation for their services and to reimbursement for their expenses
as such members as the Board of Directors shall determine. Nothing
contained herein shall preclude any director from serving the
corporation, or any subsidiary or affiliated corporation, in any other
capacity receiving proper compensation therefor.
6. If the By-laws no provide, the stockholders and Board of
Directors of the corporation shall have power to hold their meetings, to
have an office or offices and to keep the books of the corporation,
subject to the provisions of the laws of Delaware, outside of said State
at such place or places as may from time to time be designated by them.
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 stockholder thereof, or on the
application of any receiver or receivers appointed for this corporation under
the provisions of Section
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<PAGE> 7
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, and also on this
corporation.
ELEVENTH: From time to time any of the provisions of this
Certificate of Incorporation may be amended, altered or repealed, and other
provisions authorized by the laws of the State of Delaware at the time in force
may be added or inserted in the manner and at the time prescribed by said laws,
and all rights at any time conferred upon the stockholders of the corporation
by this Certificate of Incorporation are granted subject to the provisions of
this Article ELEVENTH.
IN WITNESS WHEREOF, the undersigned, being the incorporator herein-above
named, does hereby certify that the facts hereinabove stated are truly set
forth and according has hereunto set his hand and seal.
Dated: August 30, 1967.
/s/ R.G. Dickerson (L.S.)
-------------------------------------
STATE OF DELAWARE )
) SS.:
COUNTY OF KENT )
BE IT REMEMBERED that personally appeared before me, the undersigned, a
Notary Public duly authorized to take acknowledgment of deeds by the laws of
the place where the foregoing Certificate of Incorporation was signed, R. G.
Dickerson, the incorporator who signed the foregoing Certificate of
Incorporation, known to me personally to be such, and who acknowledged the same
to be his act and deed, and that the facts therein stated are true.
GIVEN under my hand on August 30, 1967.
/s/
-------------------------------------
Notary Public
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<PAGE> 1
EXHIBIT 3.6
BY-LAWS
OF
LUCK'S, INCORPORATED
(a Delaware Corporation)
----------
ARTICLE I
OFFICES
SECTION 1. Registered Office. The registered office shall be at 229
South State Street, in the City of Dover, County of Kent., State of Delaware,
and the name of the resident agent in charge thereof is THE PRENTICE-HALL
CORPORATION SYSTEM, INC.
SECTION 2. Other Offices. The corporation may also have an office or
offices at such other place or places, within or without the State of Delaware,
as the Board of Directors may from time to time designate or the business of
the corporation require.
ARTICLE II
STOCKHOLDERS MEETINGS
SECTION 1. Annual Meetings. The annual meeting of the stockholders
of the corporation, commencing with the year 1968, shall be held at the
registered office of the corporation in the State of Delaware, or at such other
place within or without the State of Delaware as may be determined by the Board
of Directors and as shall be designated in the notice of said meeting, on the
third Tuesday in April of each year (or if said day be a legal holiday, then on
the next succeeding day not a legal holiday), for the purpose of electing
directors and for the transaction of such other business as may properly be
brought before the meeting.
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 special meeting of the
stockholders as soon thereafter as conveniently may be. At such meeting the
stockholders may elect the directors and transact other business with the same
force and effect as at an annual meeting duly called and held.
The place and time of such meeting for the election of directors shall
not be changed within sixty days next before the day on which the election is
to be held. A notice of any such change shall be given to each stockholder at
least twenty days before the election is held, in person or by letter mailed to
him at his post office address last known to the Secretary of the corporation.
SECTION 2. Special Meetings. Special Meetings of the stockholders
shall be held at the principal office of the corporation in the State of
Delaware, or at such other place within or without the State of Delaware as may
be designated in the notice of said meeting, upon call of the Board of
Directors or of the President or any Vice President, and shall be called by the
President or any Vice President or the Secretary at the request in writing of
stockholders owning at least twenty-five percent of the issued and outstanding
capital stock of the corporation entitled to vote thereat.
<PAGE> 2
SECTION 3. Notice and Purpose of Meetings. Notice of the purpose or
purposes and of the time and place within or without the State of Delaware of
every meeting of stockholders shall be in writing and signed by the President
or Vice President or the Secretary or an Assistant Secretary and a copy thereof
shall be served either personally or by mail or by any other lawful means, not
less than ten days before the meeting, upon each stockholder of record entitled
to vote at such meeting. If mailed, such notice shall be directed to each
stockholder at his address as it appears on the stock book unless he shall have
filed with the Secretary of the corporation a written request that notices
intended for him be mailed to some other address, in which case it shall be
mailed or transmitted to the address designated in such request. Such further
notice shall be given as may be required by law. Except as otherwise expressly
provided by statute, no publication of any notice of a meeting of stockholders
shall be required to be given to any stockholder who shall attend such meeting
in person or by proxy, or who shall, in person or by attorney thereunto
authorized, waive such notice in writing or by telegraph, cable, radio, or
wireless either before or after such meeting. Except where otherwise required
by law, notice of any adjourned meeting of the stockholders of the corporation
shall not be required to be given.
SECTION 4. Quorum. A quorum at all meetings of stockholders shall
consist of the holders of record of a majority of the shares of the capital
stock of the corporation, issued and outstanding, entitled to vote at the
meeting, present in person or by proxy, except as otherwise provided by law or
the Certificate of Incorporation. In the absence of a quorum at any meeting or
any adjournment thereof, a majority of those present in person or by proxy and
entitled to vote may adjourn such meeting from time to time. At any such
adjourned meeting at which a quorum is present any business may be transacted
which might have been transacted at the meeting as originally called.
SECTION 5. Organization. Meetings of the stockholders shall be
presided over by the President, or if he is not present, by a Vice President,
or if neither the President nor a Vice President is present, by a chairman to
be chosen by a majority of the stockholders entitled to vote who are present in
person or by proxy at the meeting. The Secretary of the corporation, or in his
absence, an Assistant Secretary, shall act as secretary of every meeting, but
if neither the Secretary nor an Assistant Secretary is present, the meeting
shall choose any person present to act as secretary of the meeting.
SECTION 6. Voting. Except as otherwise provided in the By-laws, the
Certificate of Incorporation, or in the laws of the State of Delaware, at every
meeting of the stockholders, each stockholder of the corporation entitled to
vote at such meeting shall have one vote in person or by proxy for each share
of stock having voting rights held by him and registered in his name on the
books of the corporation at the time of such meeting. Any vote on stock of the
corporation may be given by the stockholder entitled thereto in person or by
his proxy appointed by an instrument in writing, subscribed by such stockholder
or by his attorney thereunto authorized and delivered to the secretary of the
meeting; provided, however, that no proxy shall be voted on after three years
from its date unless said proxy provides for a longer period. Except as
otherwise required by statute, by the Certificate of Incorporation or these By-
laws, or in electing directors, all matters coming before any meeting of the
stockholders shall be decided by the vote of a majority in interest of the
stockholders of the corporation present in person or by proxy at such meeting
and entitled to vote thereat, a quorum being present. At all elections of
directors the voting may, but need not be, by ballot and a plurality of the
votes cast thereat shall elect.
SECTION 7. List of Stockholders. A complete list of the stockholders
entitled to vote at the ensuing election, arranged in alphabetical order, and
the number of voting shares held by each shall be prepared by the Secretary, or
other officer of the corporation having charge of said stock ledger, and filed
in the office where the election is to be held, at least ten days before every
election and shall, during the usual hours for business and during the whole
time of said election, be open to the examination of any stockholder.
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ARTICLE III
DIRECTORS
SECTION 1. Powers, Number, Qualification, Term, Quorum and Vacancies.
The property, affairs and business of the corporation shall be managed by its
Board of Directors, consisting of not less than three nor more than eleven
persons. Except as hereinafter provided, directors shall be elected at the
annual meeting of the stockholders and each director shall be elected to serve
for one year and until his successor shall be elected and shall qualify. The
directors shall have power from time to time, and at any time, when the
stockholders as such are not assembled in a meeting, regular or special, to
increase or decrease their own number by an amendment to these By-laws. If the
number of directors be increased, the additional directors may be elected by a
majority of the directors in office at the time of the increase, or if not so
elected prior to the next annual meeting of stockholders, they shall be elected
by the stockholders. The number of directors shall never be less than three.
Directors need not be stockholders.
At all meetings of the board, any number of directors less than a
majority, but not less than one-third, nor less than two, shall be sufficient
to constitute a quorum for the transaction of business, and 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, except as may be otherwise
specifically provided by statute or by the Certificate of Incorporation or by
these By-laws, but if at any meeting of the Board of Directors there shall be
less than a quorum present, a majority of those present may adjourn the
meeting, without further notice, from time to time until a quorum shall have
been obtained.
In case one or more vacancies shall occur in the Board of Directors by
reason of death, resignation or otherwise, except insofar as otherwise provided
in the case of vacancy or vacancies occurring by reason of removal by the
stockholders, the remaining directors, although less than a quorum, may, by a
majority vote, elect a successor or successors for the unexpired term or terms.
SECTION 2. Meetings. Meetings of the Board of Directors shall be
held at such place within or outside the State of Delaware as may from time to
time be fixed by resolution of the Board of Directors, or as may be specified
in the notice of the meeting. Regular meetings of the Board of Directors shall
be held at such times as may from time to time be fixed by resolution of the
Board of Directors, and special meetings may be held at any time upon the call
of the President or any Vice President or the Secretary or any two directors by
oral, telegraphic or written notice duly served on or sent or mailed to each
director not less than two days before such meeting. A meeting of the Board of
Directors may be held without notice immediately after the annual meeting of
stockholders. Notice need not be given of regular meetings of the Board of
Directors. Meetings may be held at any time without notice if all the
directors are present, or if at any time before or after the meeting those not
present waive notice of the meeting in writing.
SECTION 3. Committees. The Board of Directors may, in its
discretion, by the affirmative vote of a majority of the whole Board of
Directors, appoint committees which shall have and may exercise such powers as
shall be conferred or authorized by the resolutions appointing them. A
majority of any such committee, if the committee be composed of more than two
members, may determine its action and fix the time and place of its meetings,
unless the Board of Directors shall otherwise provide. The Board of Directors
shall have power at any time to fill vacancies in, to change the membership of,
or to discharge any such committee.
SECTION 4. Dividends. Subject always to the provisions of the law
and the Certificate of Incorporation, the Board of Directors shall have full
power to determine whether any, and if any, what part of
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any, funds legally available for the payment of dividends shall be declared in
dividends and paid to stockholders; the division of the whole or any part of
such funds of the corporation shall rest wholly within the lawful discretion of
the Board of Directors, and it shall not be required at any time, against such
discretion, to divide or pay any part of such funds among or to the
stockholders as dividends or otherwise; and the Board of Directors may fix a
sum which may be set aside or reserved over and above the capital paid in of
the corporation as working capital for the corporation or as a reserve for any
proper purpose, and from time to time may increase, diminish, and vary the same
in its absolute judgment and discretion.
SECTION 5. Removal of Directors. At any special meeting of the
stockholders, duly called as provided in these By-laws, any director or
directors may by the affirmative vote of the holders of a majority of all the
shares of stock outstanding and entitled to vote for the election of directors
be removed from office, either with or without cause, and his successor or
their successors may be elected at such meeting; or the remaining directors
may, to the extent vacancies are not filled by such election, fill any vacancy
or vacancies created by such removal.
SECTION 6. Indemnification of Directors and Officers. Each director
or officer, whether or not then in office, shall be indemnified by the
corporation against all costs and expenses reasonably incurred by or imposed
upon him in connection with or arising out of any action, suit, or proceeding
in which he may be involved by reason of his being or having been a director or
officer of the corporation, such expenses to include the cost of reasonable
settlements (other than amounts paid to the corporation itself) made with a
view to curtailment of costs of litigation. The corporation shall not,
however, indemnify any director or officer with respect to matters as to which
he shall be finally adjudged in any such action, suit, or proceeding to have
been derelict in the performance of his duty as such director or officer, nor
in respect of any matter on which any settlement or compromise is effected, if
the total expense, including the cost of such settlement, shall substantially
exceed the expense which might reasonably be incurred by such director or
officer in conducting such litigation to a final conclusion. The foregoing
right of indemnification shall not be exclusive of other rights to which any
director or officer may be entitled as a matter of law.
ARTICLE IV
OFFICERS
SECTION 1. Number. The Board of Directors, as soon as may be after
the election thereof held in each year, shall elect a President, a Secretary
and a Treasurer, and from time to time may appoint an Executive Vice President,
one or more Vice Presidents and such Assistant Secretaries, Assistant
Treasurers and such other officers, agents and employees as it may deem proper.
Any two offices may be held by the same person. More than two offices, other
than the offices of President and Secretary, may be held by the same person.
The President shall be chosen from among the directors.
SECTION 2. Term and Removal. The term of office of all officers
shall be one year and until their respective successors are elected and
qualify, but any officer may be removed from office, either with or without
cause, at any time by the affirmative vote of a majority of the members of the
Board of Directors then in office. A vacancy in any office arising from any
cause may be filled for the unexpired portion of the term by the Board of
Directors.
SECTION 3. Powers and Duties. The officers of the corporation shall
each have such powers and duties as generally pertain to their respective
offices, as well as such powers and duties as from time to time may be
conferred by the Board of Directors. The Executive Vice President, Vice
President or Vice Presidents, the Assistant Secretary or Assistant Secretaries
and the Assistant Treasurer or Assistant Treasurers shall, in the order of
their respective seniorities, in the absence or disability of the President,
Secretary or Treasurer,
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respectively, perform the duties of such officer and shall generally assist the
President, Secretary or Treasurer, respectively.
SECTION 4. Voting Corporation's Securities. Unless otherwise ordered
by the Board of Directors, the President, or, in the event of his inability to
act, the Executive Vice President or a Vice President designated by the Board
of Directors to act in the absence of the President, shall have full power and
authority on behalf of the corporation to attend and to act and to vote at any
meetings of security holders of corporations in which the corporation may hold
securities, and at such meetings shall possess and may exercise any and all
rights and powers incident to the ownership of such securities, and which as
the owner thereof the corporation might have possessed and exercised, if
present. The Board of Directors by resolution from time to time may confer
like powers upon any other person or persons.
ARTICLE V
CERTIFICATES OF STOCK
SECTION 1. Form and Transfers. The interest of each stockholder of
the corporation shall be evidenced by certificates for shares of stock,
certifying the number of shares represented thereby and in such form not
inconsistent with the Certificate of Incorporation as the Board of Directors
may from time to time prescribe.
Transfers of shares of the capital stock of the corporation shall be
made only on the books of the corporation by the registered holder thereof, or
by his attorney thereunto authorized by power of attorney duly executed and
filed with the Secretary of the corporation, or with a transfer clerk or a
transfer agent as in SECTION 4 of this ARTICLE provided, and on surrender of
the certificate or certificates for such shares properly endorsed and the
payment of all taxes thereon. The person in whose name shares of stock stand
on the books of the corporation shall be deemed the owner thereof for all
purposes as regards the corporation; provided that whenever any transfer of
shares shall be made for collateral security, and not absolutely, such fact, if
known to the Secretary of the corporation, shall be so expressed in the entry
of transfer. The Board may, from time to time, make such additional rules and
regulations as it may deem expedient, not inconsistent with these By-laws,
concerning the issue, transfer, and registration of certificates for shares of
the capital stock of the corporation.
The certificates of stock shall be signed by the President or Executive
Vice President or a Vice President and by the Secretary or an Assistant
Secretary or the Treasurer or an Assistant Treasurer, and sealed with the seal
of the corporation. Such seal may be a facsimile, engraved or printed. Where
any such certificate is signed by a transfer agent or a transfer clerk and by a
registrar, the signatures of the President, Executive Vice President, Vice
President, Secretary, Assistant Secretary, Treasurer or Assistant Treasurer
upon such certificate may be facsimiles, engraved or printed. In case any such
officer who has signed or whose facsimile signature has been placed upon such
certificate shall have ceased to be such before such certificate is issued, it
may be issued by the corporation with the same effect as if such officer had
not ceased to be such at the time of its issue.
SECTION 2. Closing of Transfer Books. The Board of Directors shall
have power to close the stock transfer books of the corporation for a period
not exceeding fifty days before any stockholders' meeting, or the last day on
which the consent or dissent of stockholders may be effectively expressed for
any purpose without a meeting, or the date fixed for the payment of any
dividend or the making of any distribution, or for the delivery of evidences of
rights or evidences of interests arising out of any change, conversion or
exchange of capital stock. Provided, however, that in lieu of closing the
stock transfer books as aforesaid the Board of Directors may in its discretion
fix a time not more than fifty days before the date of any meeting of
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stockholders, or the last day on which the consent or dissent of stockholders
may be effectively expressed for any purpose without a meeting, or the date
fixed for the payment of any dividend or for the delivery of evidences of
rights or evidences of interests arising out of any change, conversion or
exchange of capital stock, as the time as of which stockholders entitled to
notice of and to vote at such meeting or whose consent or dissent is required
or may be expressed for any purpose or entitled to receive any such dividend,
distribution, rights or interests shall be determined; and all persons who are
holders of record of voting stock at such time and no others shall be entitled
to notice of and to vote at such meeting or to express their consent or
dissent, as the case may be, and only stockholders of record at the time so
fixed shall be entitled to receive such dividend, distributions, rights or
interests.
SECTION 3. Lost, Stolen, Destroyed or Mutilated Certificates. No
certificates for shares of stock in the corporation shall be issued in place of
any certificate alleged to have been lost, destroyed or stolen except on
production of such evidence of such loss, destruction or theft and on delivery
to the corporation, if the Board of Directors shall so require, of a bond of
indemnity in such amount (not exceeding twice the value of the shares
represented by such certificates), upon such terms and secured by such surety
as the Board of Directors may in its discretion require.
SECTION 4. Transfer Agent and Registrar. The Board of Directors may
appoint one or more transfer clerks or one or more transfer agents and one or
more registrars, and may require all certificates of stock to bear the
signature or signatures of any of them.
SECTION 5. Examination of Books by Stockholders. The Board shall
have power to determine, from time to time, whether and to what extent and at
what times and places and under what conditions and regulations the accounts
and. books and documents of the corporation, 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.
ARTICLE VI
FISCAL YEAR
The fiscal year of the corporation shall begin on the first day of
January in each year and shall end on the thirty-first day of December next
following, unless otherwise determined by the Board of Directors.
ARTICLE VI
CORPORATE SEAL
The corporate seal of the corporation shall consist of two concentric
circles, between which shall be the name of the corporation, and in the center
shall be inscribed the year of its incorporation and the words, "Corporate
Seal, Delaware".
ARTICLE VIII
AMENDMENTS
The By-laws of the corporation shall be subject to alteration, amendment
or repeal, and new By-laws not inconsistent with any provisions of the
Certificate of Incorporation or statute, may be made, either by the affirmative
vote of the holders of a majority in interest of the stockholders of the
corporation present in person or by proxy at any annual or special meeting of
the stockholders and entitled to vote thereat, a quorum being
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present, or by the affirmative vote of a majority of the whole Board, given at
any regular or special meeting of the Board, provided that notice of the
proposal so to make, alter, amend or repeal such By-laws be included in the
notice of such meeting of the Board or the stockholders, as the case may be.
By-laws made, altered or amended by the Board may be altered, amended or
repealed. by the stockholders at any annual or special meeting thereof.
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EXHIBIT 3.7
CERTIFICATE OF INCORPORATION
OF
AHP Subsidiary (12) Corporation
The undersigned, a natural person, for the purpose of organizing a
corporation for conducting the business and promoting the purposes hereinafter
stated, under the provisions and subject to the requirements of the laws of the
State of Delaware (particularly Chapter 1, Title 8 of Delaware Code and the
acts amendatory thereof and supplemental thereto, and known, identified and
referred to as the ("General Corporation Law of the State of Delaware"), hereby
certifies that:
FIRST: The name of this corporation (hereinafter called the
"Corporation") is AHP Subsidiary (12) Corporation.
SECOND: The address, including street, number, city, and county, of the
registered office of the corporation in the State of Delaware is 32 Loockerman
Square, Suite L- 100, City of Dover, County of Kent; and the name of the
registered agent of the corporation in the State of Delaware at such address is
The Prentice-Hall Corporation System, Inc.
THIRD: The nature of the business and the purposes to be conducted and
promoted by the Corporation, which may be in addition to the authority of the
Corporation to conduct any lawful business, to promote any lawful purpose, and
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware, is as follows:
To purchase, receive, take by grant, gift, devise, bequest or
otherwise, lease, or otherwise acquire, own, hold, improve, employ, use
and otherwise deal with any investor in on 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 its property and assets, or any interest
therein, wherever situated.
To carry on a general mercantile, industrial, investing, and
trading business in all its branches; to devise, invent, manufacture,
fabricate, assemble, install, service, maintain, alter, buy, sell,
import, export, license as licensor or licensee, lease as lessor or
lessee, distribute, job, enter into, negotiate, execute, acquire, and
assign contracts in respect of, acquire, receive, grant, and assign
licensing arrangements, options, franchises, and other rights in respect
of, and generally deal in and with, at wholesale and retail, as
principal, and as sales, business, special, or general agent,
representative, broker, factor, merchant, distributor, jobber, advisor,
and in any other lawful capacity, goods, wares, merchandise,
commodities, and unimproved, improved, finished, processed, and other
real, personal and mixed property of any and all kinds, together with
the components, resultants, and by-products thereof.
To apply for, register, obtain, purchase, lease, take licenses in
respect of or otherwise acquire, and to hold, own, use, operate,
develop, enjoy, turn to account, grant licenses and immunities in
respect of, manufacture under and to introduce, sell, assign, mortgage
pledge or otherwise dispose of, and, in any manner deal with and
contract with reference to:
<PAGE> 2
(a) inventions, devices, formulae, processes and any
improvements and modifications thereof;
(b) letters patent, patent rights, patented processes,
copyrights, designs, and similar rights, trade-marks,
trade names, trade symbols and other indications of origin
and ownership granted by or recognized under the laws of
the United States of America, the District of Columbia,
any state or subdivision thereof, and any commonwealth,
territory, possession, dependency, colony, possession,
agency or instrumentality of the United States of America
and of any foreign country, and all rights connected
therewith or appertaining thereunto;
(c) franchises, licenses, grants and concessions.
To make, enter into, perform and carry out contracts of every kind and
description with any person, firm, association, corporation or government or
agency or instrumentality thereof.
To conduct its business, promote its purposes, and carry on its
operations in any and all of its branches, and maintain offices both within and
without the State of Delaware, in any and all States of the United States of
America, in the District of Columbia, and in any or all commonwealths,
territories, dependencies, colonies, possessions, agencies, or
instrumentalities of the United States of America and of foreign governments.
To promote and exercise all or any part of the foregoing purposes and
powers in any and all parts of the world, and to conduct its business in all or
any of its branches as principal, agent broker, factor, contractor, and in any
other lawful capacity, either alone or through or in conjunction with any
corporations, associations, partnerships, firms, trustees, syndicates,
individuals, organizations, and other entities in any part of the world, and,
in conducting its business and promoting any of its purposes, to maintain
offices, branches and agencies in any part of the world, to make and perform
any contracts and to do any acts and things, and to carry on any business, and
to exercise any powers and privileges suitable, convenient, or proper for the
conduct, promotion, and attainment of any of the business and purposes herein
specified or which at any time may be incidental thereto or may appear
conducive to or expedient for the accomplishment of any of such business and
purposes and which might be engaged in or carried on by a corporation
incorporated or organized under the General Corporation Law of the State of
Delaware, and to have and exercise all of the powers conferred by the laws of
the State of Delaware upon corporations incorporated or organized under the
General Corporation Law of the State of Delaware.
To acquire by purchase, exchange or otherwise, all, or any part of, or
any interest in, the properties, assets. business and good will of any one or
more persons, firms, associations, trusts or corporations heretofore or
hereafter engaged in any business for which a corporation may now or hereafter
be organized under the laws of the State of Delaware; to pay for the same in
cash, property or its own or other securities; to hold, operate, reorganize,
liquidate, sell or in any manner dispose of the whole or any part thereof; and
in connection therewith, to assume or guarantee performance
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of any liabilities, obligations or contracts of such persons, firms,
associations or corporations, and to conduct the whole or any part of any
business thus required.
To make, manage and maintain investments; to collect and distribute the
income from such investments. To lend money in furtherance of its corporate
purposes and to invest and reinvest its funds from time to time to such extent,
to such persons, firms, associations, corporations, governments or agencies or
instrumentalities thereof, and on such terms and on such security, if any, as
the Board of Directors of the Corporation may determine.
To make contracts of guaranty and suretyship of all kinds and endorse or
guarantee the payment of principal, interest or dividends upon, and to
guarantee the performance of sinking fund or other obligations of, any
securities, and to guarantee in any way permitted by law the performance of any
of the contracts or other undertakings in which the Corporation may otherwise
be or become interested, of any persons, firm, association, corporation,
government or agency or instrumentality thereof, or of any other combination,
organization or entity whatsoever.
To borrow money without limit as to amount and at such rates of interest
as it may determine; from time to time to issue and sell its own securities,
including its shares of stock, notes, bonds, debentures, and other obligations,
in such amounts, on such terms and conditions, for such purposes and for such
prices, now or hereafter permitted by the laws of the State of Delaware and by
this certificate of incorporation, as the Board of Directors of the Corporation
may determine, and to secure any of its obligations by mortgage, pledge or
other encumbrance of all or any of its property, franchises and income.
To be a promoter or manager of other corporations of any type or kind;
and to participate with others in any corporation, partnership, limited
partnership, joint venture, or other association of any kind, or in any
transaction, undertaking or arrangement which the Corporation would have power
to conduct by itself, whether or not such participation involves sharing or
delegation of control with or to others.
To draw, make, accept, endorse, discount, execute, and issue promissory
notes, drafts, bills of exchange, warrants, bonds, debentures, and other
negotiable or transferable instruments and evidences of indebtedness whether
secured by mortgage or otherwise, as well as to secure the same by mortgage or
otherwise, so far as may be permitted by the laws of the State of Delaware.
The foregoing provisions of this Article THIRD shall be construed both
as purposes and powers and each as an independent purpose and power. The
foregoing enumeration of specific purposes and powers shall not be held to
limit or restrict in any manner the purposes and powers of the Corporation, and
the purposes and powers herein specified shall, except when otherwise provided
in this Article THIRD, be in no wise limited or restricted by reference to, or
inference from, the terms of any provision of this or any other Article of this
certificate of incorporation provided, that the Corporation shall not conduct
any business, promote any purpose, or exercise any power or privilege within or
without the State of Delaware which, under the laws thereof, the Corporation
may not lawfully conduct, promote, or exercise.
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<PAGE> 4
FOURTH: The total number of shares of stock which the corporation
shall have authority to issue is 1,000 shares. Each such share shall be of no
par value. All such shares are of one class and are shares of Common Stock.
FIFTH: The name and the mailing address of the incorporator are as
follows:
NAME MAILING ADDRESS
---- ---------------
Mariee Pilkington 685 Third Avenue
New York, New York 10017
SIXTH: The Corporation is to have perpetual existence.
SEVENTH: 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.
EIGHTH: For the management of the business and for the conduct of
the affairs of the Corporation, and in further definition, limitation and
regulation of the powers of the Corporation and of its directors and of its
stockholders or any class thereof, as the case may be, it is further provided
that:
1. The management of the business and the conduct of the affairs of
the Corporation shall be vested in its Board of Directors. The number of
directors which shall constitute the whole Board of Directors shall be fixed
by, or in the manner provided in, the By-Laws. The phrase "whole Board" and
the phrase "total number of directors" shall be deemed to have the same
meaning, to wit, the total number of directors which the Corporation would have
if there were no vacancies. No election of directors need be by written
ballot.
2. After the original or other By-Laws of the Corporation have been
adopted, or repealed, as the case may be, in accordance with the provisions of
Section 109 of the General
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Corporation Law of the State of Delaware, and, after the Corporation has
received any payment for any of its stock, the power to adopt, amend, or repeal
the By-Laws of the Corporation may be exercised by the Board of Directors of
the Corporation; provided, however, that any provision for the classification
of directors of the Corporation for staggered terms pursuant to the provisions
of subsection (d) of Section 141 of the General Corporation Law of the State of
Delaware shall be set forth in an initial By-Law or in a By-Law adopted by the
stockholders entitled to vote of the Corporation unless provisions for such
classification shall be set forth in this certificate of incorporation.
3. Whenever the Corporation shall be authorized to issue only one
class of stock, each outstanding share shall entitle the holder thereof to
notice of, and the right to vote at, any meeting of stockholders. Whenever the
Corporation shall be authorized to issue more than one class of stock, no
outstanding share of any class of stock which is denied voting power under the
provisions of the certificate of incorporation shall entitle the holder thereof
to the right to vote at any meeting of stockholders except as the provisions of
paragraph (b)(2) of Section 242 of the General Corporation Law of the State of
Delaware shall otherwise require; provided, that no share of any such class
which is otherwise denied voting power shall entitle the holder thereof to vote
upon the increase or decrease in the number of authorized shares of said class.
NINTH: The Corporation shall, to the fullest extent permitted by
Section 145 of the General Corporation Law of the State of Delaware, as the
same may be amended and supplemented, indemnify any and all persons whom it
shall have power to indemnify under said section from and against any and all
of the expenses, liabilities or other matters referred to in or covered by said
section, and the indemnification provided for herein shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any By-Laws, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
TENTH: From time to time any of the provisions of this certificate of
incorporation may be amended, altered or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed by said laws, and
all rights at any time conferred upon the stockholders of the Corporation by
this certificate of incorporation are granted subject to the provisions of this
Article TENTH.
ELEVENTH: The effective date of the certificate of incorporation of
the Corporation, and the date upon which the existence of the Corporation shall
commence, shall be upon filing.
Signed on February 22, 1993
/s/ Mariee Pilkington
-------------------------------------
Mariee Pilkington
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CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
AHP SUBSIDIARY (12) CORPORATION
It is hereby certified that:
1. The name of the corporation (hereinafter called the
"Corporation") is AHP Subsidiary (12) Corporation.
2. The Certificate of Incorporation of the Corporation is hereby
amended by striking out Article FIRST thereof and by substituting in lieu of
said Article the following new Article:
"FIRST: The name of this corporation (hereinafter called the
"Corporation") is M. Polaner, Inc.
3. The Amendment of the Certificate of Incorporation of the
Corporation herein certified has been duly adopted in accordance with the
provisions of Section 228 and 242 of the General Corporation Law of the State
of Delaware.
Signed and attested on March 22, 1993.
/s/ Thomas M. Nee
-------------------------------------
Thomas M. Nee
Vice President
Attest:
/s/ Carol G. Emerling
- ----------------------------
Carol G. Emerling
Secretary
-6-
<PAGE> 1
EXHIBIT 3.8
BY - LAWS
OF
AHP SUBSIDIARY (12) CORPORATION
(A Delaware Corporation)
ARTICLE I
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK. Every holder of stock in the
corporation shall be entitled to have a certificate signed by, or in the name
of, the corporation by the Chairman or Vice-Chairman of the Board of Directors,
if any, or by the President or a Vice-President and by 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.
Any and all signatures on any such certificate may be facsimiles. In case any
officer, transfer agent, or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent, or registrar before such certificate is issued, it may
be issued by the corporation with the same effect as if he were such officer,
transfer agent, or registrar at the date of issue.
Whenever the corporation shall be authorized to issue more than one
class of stock or more than one series of any class of stock, and whenever the
corporation shall issue any shares of its stock as partly paid stock, the
certificates representing shares of any such class or series or of any such
partly paid stock shall set forth thereon the statements prescribed by the
General Corporation Law. Any restrictions on the transfer or registration of
transfer of any shares of stock of any class or series shall be noted
conspicuously on the certificate representing such shares.
The corporation may issue a new certificate of stock in place of any
certificate theretofore issued by it, alleged to have been lost, stolen, or
destroyed, and the Board of Directors may require the owner of any lost,
stolen, or destroyed certificate, or his legal representative, to give the
corporation a bond sufficient to indemnify the corporation against any claim
that may be made against it on account of the alleged loss, theft, or
destruction of any such certificate or the issuance of any such new
certificate.
2. STOCK TRANSFERS. Upon compliance with provisions restricting the
transfer or registration of transfer of shares of stock, if any, transfers or
registration of transfers of shares of stock of the corporation shall be made
only on the stock ledger of the corporation by the registered holder thereof,
or by his attorney thereunto authorized by power of attorney duly executed and
filed with the Secretary of the corporation or with a transfer agent or a
registrar, if any, and on surrender of the certificate or certificates for such
shares of stock properly endorsed and the payment of all taxes due thereon.
3. RECORD DATE FOR STOCKHOLDERS. For the purpose of determining the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or the allotment of any rights, or entitled to exercise any rights
in respect to any change, conversion, or exchange of stock or for the purpose
of any other lawful action, the directors may fix, in advance, a record date,
which shall not be more than sixty days nor less than ten days before the date
of such meeting, nor more than sixty days prior to any other action. If no
record date is fixed, the record date for determining
<PAGE> 2
stockholders entitled to notice of or to vote at a meeting of stockholders
shall be at the close of business on the day next preceding the day on which
notice is given, or, if notice is waived, at the close of business on the day
next preceding the day on which the meeting is held; the record date for
determining stockholders entitled to express consent to corporate action in
writing without a meeting, when no prior action by the Board of Directors is
necessary, shall be the day on which the first written consent is expressed;
and the record date for determining stockholders for any other purpose shall be
at the close of business on the day on which the Board of Directors adopts the
resolution relating thereto. A determination of stockholders of record
entitled to notice of or to vote at any meeting of stockholders shall apply to
any adjournment of the meeting; provided, however, that the Board of Directors
may fix a new record date for the adjourned meeting.
4. MEANING OF CERTAIN TERMS. As used herein in respect of the right
to notice of a meeting of stockholders or a waiver thereof or to participate or
vote thereat or to consent or dissent in writing in lieu of a meeting, as the
case may be, the term "share" or "shares" or "share of stock" or "shares of
stock" or "stockholder" or "stockholders" refers to an outstanding share or
shares of stock and to a holder or holders of record of outstanding shares of
stock when the corporation is authorized to issue only one class of shares of
stock, and said reference is also intended to include any outstanding share or
shares of stock and any holder or holders of record of outstanding shares of
stock of any class upon which or upon whom the certificate of incorporation
confers such rights where there are two or more classes or series of shares of
stock or upon which or upon whom the General Corporation Law confers such
rights notwithstanding that the certificate of incorporation may provide for
more than one class or series of shares of stock, one or more of which are
limited or denied such right thereunder; provided, however, that no such right
shall vest in the event of an increase or a decrease in the authorized number
of shares of stock of any class or series which is otherwise denied voting
rights under the provisions of the certificate of incorporation.
5. STOCKHOLDER MEETING.
- TIME. The annual meeting of the stockholders of the corporation
should be held annually during the month of February each year at such time and
place within or without the State of Delaware as shall be stated in the notice
of the meeting, a duly executed waiver or a duly executed unanimous consent,
for the purpose of electing directors and for the transaction of such other
business as may properly be brought before the meeting.
- CALL. Annual meetings and special meetings may be called by the
directors or by any officer instructed by the directors to call the meeting.
- NOTICE OR WAIVER OF NOTICE. Written notice of all meetings shall
be given, stating the place, date, and hour of the meeting and stating the
place within the city or other municipality or community at which the list of
stockholders of the corporation may be examined. The notice of an annual
meeting shall state that the meeting is called for the election of directors
and for the transaction of other business which may properly come before the
meeting, and shall, (if any other action which could be taken at a special
meeting is to be taken at such annual meeting) state the purposes. The notice
of a special meeting shall in all instances state the purpose or purposes for
which the meeting is called. The notice of any meeting shall also include, or
be accompanied by, any additional statements, information, or documents
prescribed by the General Corporation Law. Except as otherwise provided by the
General Corporation Law, a copy of the notice of any meeting shall be given,
personally or by mail, not less than ten days nor more than sixty days before
the date of the meeting, unless the lapse of the prescribed period of time
shall have been waived, and directed to each stockholder at his record address
or at such other address which he may have furnished by request in writing to
the Secretary of the corporation. Notice by mail shall be deemed to be given
when deposited, with postage thereon prepaid, in the United States Mail. If a
meeting is adjourned to another time, not more than thirty days hence, and/or
to another place, and if an announcement of the adjourned time and/or place is
made at the meeting, it shall not be necessary to give notice of the adjourned
meeting unless the directors, after adjournment, fix a new record date for the
adjourned meeting. Notice need not be given to any stockholder who submits a
written waiver of notice signed by him before or after the time stated therein.
-2-
<PAGE> 3
Attendance of a stockholder at a meeting of stockholders shall constitute a
waiver of notice of such meeting, except when the stockholder attends the
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called
or convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders need be specified in any written
waiver of notice.
- STOCKHOLDER LIST. The officer who has charge of the stock ledger
of the corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city or other municipality or community
where the meeting is to be held, which place shall be specified in the notice
of the meeting, or if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is present. The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required by this
section or the books of the corporation, or to vote at any meeting of
stockholders.
- CONDUCT OF MEETING. Meetings of the stockholders shall be
presided over by one of the following officers in the order of seniority and if
present and acting - the Chairman of the Board, if any, the Vice-Chairman of
the Board, if any, the President, a Vice President, or, if none of the
foregoing is in office and present and acting, by a chairman to be chosen by
the stockholders. The Secretary of the corporation, or in her absence, an
Assistant Secretary, shall act as secretary of every meeting, but if neither
the Secretary nor an Assistant Secretary is present the Chairman of the meeting
shall appoint a secretary of the meeting.
- PROXY REPRESENTATION. Every stockholder may authorize another
person or persons to act for him by proxy in all matters in which a stockholder
is entitled to participate, whether by waiving notice of any meeting, voting or
participating at a meeting, or expressing consent or dissent without a meeting.
Every proxy must be signed by the stockholder or by his attorney-in-fact. No
proxy shall be voted or acted upon after three years from its date unless such
proxy provides for a longer period. A duly executed proxy shall be irrevocable
if it states that it is irrevocable and, if, and only as long as, it is coupled
with an interest sufficient in law to support an irrevocable power. A proxy
may be made irrevocable regardless of whether the interest with which it is
coupled is an interest in the stock itself or an interest in the corporation
generally.
- INSPECTORS. The directors, in advance of any meeting, may, but
need not, appoint one or more inspectors of election to act at the meeting or
any adjournment thereof. If an inspector or inspectors are not appointed, the
person presiding at the meeting may, but need not, appoint one or more
inspectors. In case any person who may be appointed as an inspector fails to
appear or act, the vacancy may be filled by appointment made by the directors
in advance of the meeting or at the meeting by the person presiding thereat.
Each inspector, if any, before entering upon the discharge of his duties, shall
take and sign an oath faithfully to execute the duties of inspector at such
meeting with strict impartiality and according to the best of his ability. The
inspectors, if any, shall determine the number of shares of stock outstanding
and the voting power of each, the shares of stock represented at the meeting,
the existence of a quorum, the validity and effect of proxies, and shall
receive votes, ballots or consents, hear and determine all challenges and
questions arising in connection with the right to vote, count and tabulate all
votes, ballots or consents, determine the result, and do such acts as are
proper to conduct the election or vote with fairness to all stockholders. On
request of the person presiding at the meeting, the inspector or inspectors, if
any, shall make a report in writing of any challenge, question or matter
determined by him or them and execute a certificate of any fact found by him or
them.
-3-
<PAGE> 4
- QUORUM. The holders of a majority of the outstanding shares of
stock shall constitute a quorum at a meeting of stockholders for the
transaction of any business. The stockholders present may adjourn the meeting
despite the absence of a quorum.
- VOTING. Each share of stock shall entitle the holder thereof to
one vote. In the election of directors, a plurality of the votes cast shall
elect. Any other action shall be authorized by a majority of the votes cast
except where the General Corporation Law prescribes a different percentage of
votes and/or a different exercise of voting power, and except as may be
otherwise prescribed by the provisions of the certificate of incorporation and
these By-Laws. In the election of directors, and for any other action, voting
need not be by ballot.
6. STOCKHOLDER ACTION WITHOUT MEETINGS. Any action required by the
General Corporation Law to be taken at any annual or special meeting of
stockholders, or any action which may be taken at any annual or special meeting
of stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a
meeting by less an unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE II
DIRECTORS
1. FUNCTIONS AND DEFINITION. The business and affairs of the
corporation shall be managed by or under the direction of the Board of
Directors of the corporation. The Board of Directors shall have the authority
to fix the compensation of the members thereof. The use of the phrase "whole
board" herein refers to the total number of directors which the corporation
would have if there were no vacancies.
2. QUALIFICATIONS AND NUMBER. A director need not be a stockholder,
a citizen of the United States, or a resident of the State of Delaware. The
initial Board of Directors shall consist of 5 persons. Thereafter the number
of directors constituting the whole board shall be at least two. Subject to
the foregoing limitation and except for the first Board of Directors, such
number may be fixed from time to time by action of the stockholders or of the
directors, or, if the number is not fixed, the number shall be not less than 3
nor more than 7. The number of directors may be increased or decreased by
action of the stockholders or of the directors.
3. ELECTION AND TERM. The first Board of Directors, unless the
members thereof shall have been named in the certificate of incorporation,
shall be elected by the incorporator or incorporators and shall hold office
until the first annual meeting of stockholders and until their successors are
elected and qualified or until their earlier resignation or removal. Any
director may resign at any time upon written notice to the corporation.
Thereafter, directors who are elected at an annual meeting of stockholders, and
directors who are elected in the interim to fill vacancies and newly created
directorships, shall hold office until the next annual meeting of stockholders
and until their successors are elected and qualified or until their earlier
resignation or removal. In the interim between annual meetings of stockholders
or of special meetings of stockholders called for the election of directors
and/or for the removal of one or more directors and for the filling of any
vacancy in that connection, newly created directorships and any vacancies in
the Board of Directors, including unfilled vacancies resulting from the removal
of directors for cause or without cause, may be filled by the vote of a
majority of the remaining directors then in office, although less than a
quorum, or by the sole remaining directors.
-4-
<PAGE> 5
4. MEETINGS,
- TIME Meetings shall be held at such time as the Board shall
fix, except that the first meeting of a newly elected Board shall be held as
soon after its election as the directors may conveniently assemble.
- PLACE. Meetings shall be held at such place within or without
the State of Delaware as shall be fixed by the Board.
- CALL. No call shall be required for regular meeting for which
the time and place have been fixed. Special meetings may be called by or at
the direction, of the Chairman of the Board, if any, the Vice-Chairman of the
Board, if any, of the President, or of a majority of the directors in office.
- NOTICE OF ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be
required for regular meetings for which the time and place have been fixed.
Written, oral, or any other mode of notice of the time and place shall be given
for special meetings in sufficient time for the convenient assembly of the
directors thereat. Notice need not be given to any director or to any member
of a committee of directors who submits a written waiver of notice signed by
him before or after the time stated therein. Attendance of any such person at
a meeting shall constitute a waiver of notice of such meeting, except when he
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the directors need be specified in any
written waiver of notice.
- QUORUM AND ACTION. A majority of the whole Board shall
constitute a quorum except when a vacancy or vacancies prevents such majority,
whereupon a majority of the directors in office shall constitute a quorum,
provided, that such majority shall constitute at least one-third of the whole
Board. A majority of the directors present, whether or not a quorum is
present, may adjourn a meeting to another time and place. Except as herein
otherwise provided, by the General Corporation Law, the vote of the majority of
the directors present at a meeting at which a quorum is present shall be the
act of the Board. The quorum and voting provisions herein stated shall not be
construed as conflicting with any provisions of the General Corporation Law and
these By-Laws which govern a meeting of directors held to fill vacancies and
newly created directorships in the Board of action of disinterested directors.
Any member or members of the Board of Directors or of any committee
designated by the Board may participate in a meeting of the Board, or any such
committee, as the case may be, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other.
- CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and if
present and acting, shall preside at all meetings. Otherwise, the Vice-
Chairman of the Board, if any and if present and acting, or the President, if
present and acting, or any other director chosen by the Board, shall preside.
5. REMOVAL OF DIRECTORS. Except as may otherwise be provided by the
General Corporation Law, any director or the entire Board of Directors may be
removed, with or without cause, by the holders of a majority of the shares then
entitled to vote at an election of directors.
6. COMMITTEES. Whenever its number consists of three or more, 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 two 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. In the absence or
disqualification of any member of any such committee or committees, the
-5-
<PAGE> 6
member or the 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, shall have and may exercise the powers
and authority of the Board of Directors in the management of the business and
affairs of the corporation with the exception of any authority the delegation
of which is prohibited by Section 141 of the General Corporation Law, and may
authorize the seal of the corporation to be affixed to all papers which may
require it.
7. WRITTEN ACTION. Any action required or permitted to be taken at
any meeting of the Board of Directors or any committee thereof may be taken
without a meeting if all members of the Board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board or committee.
ARTICLE III
OFFICERS
The officers of the corporation shall consist of a President, a
Secretary, a Treasurer, and, if deemed necessary, expedient, or desirable by
the Board of Directors, a Chairman of the Board, a Vice-Chairman of the Board,
an Executive Vice-President, one or more other Vice Presidents, one or more
Assistant Secretaries, one or more Assistant Treasurers, and such other
officers with such titles as the resolution of the Board of Directors choosing
them shall designate. Except as may otherwise be provided in the resolution of
the Board of Directors choosing him, no officer other than the Chairman or
Vice-Chairman of the Board, if any, need be a director. Any number of offices
may be held by the same person, as the directors may determine, except that no
person may hold the offices of President or Secretary simultaneously.
Unless otherwise provided in the resolution choosing him, each officer
shall be chosen for a term which shall continue until the meeting of the Board
of Directors following the next annual meeting of stockholders and until his
successor shall have been chosen and qualified.
All officers of the corporation shall have such authority and perform
such duties in the management and operation of the corporation as shall be
prescribed in the resolutions of the Board of Directors designating and
choosing such officers and prescribing their authority and duties, and shall
have such additional authority and duties as are incident to their office
except to the extent that such resolutions may be inconsistent therewith. The
Secretary or an Assistant Secretary of the corporation shall record all of the
proceedings of all meetings and actions in writing of stockholders, directors,
and committees of directors, and shall exercise such additional authority and
perform such additional duties as the Board shall assign to him. Any officer
may be removed, with or without cause, by the Board of Directors. Any vacancy
in any office may be filled by the Board of Directors.
ARTICLE IV
CORPORATE SEAL
The corporate seal shall be in such form as the Board of Directors shall
prescribe.
-6-
<PAGE> 7
ARTICLE V
INSTRUMENT EXECUTION
Unless otherwise provided by law or the Board of Directors, all
instruments to be executed on behalf of the Corporation, whether or not
requiring the seal of the Corporation, may be executed by the President or any
Vice President, and attested to by the Secretary or any Assistant Secretary.
ARTICLE VI
FISCAL YEAR
The fiscal year of the corporation shall be fixed, and shall be subject
to change, by the Board of Directors.
ARTICLE VII
CONTROL OVER BY-LAWS
Subject to the provisions of the certificate of incorporation and the
provisions of the General Corporation Law, the power to amend, alter or repeal
these By-Laws and to adopt new By-Laws may be exercised by the Board of
Directors or by the stockholders.
I HEREBY CERTIFY that the foregoing is a full, true and correct copy of
the By-Laws of AHP Subsidiary (12) Corporation, a Delaware corporation, as in
effect on the date hereof.
WITNESS my hand and the seal of the corporation.
Dated February 22, 1993.
/s/ Mariee Pilkington
-------------------------------------
Mariee Pilkington
-7-
<PAGE> 1
EXHIBIT 3.9
Canada Business
Corporations Act
Form 11
Articles of Continuance
(Section 181)
________________________________________________________________________________
1. Name of Corporation
Canadian Home Products Limited/Produits domestiques Canadiens Limitee
________________________________________________________________________________
2. The place in Canada where the registered offices is to be situated
Municipality of Niagara Falls,
Province of Ontario L2E 6Y2
________________________________________________________________________________
3. The classes and number of shares that the Corporation is authorized to
issue
The Corporation is authorized to issue 10,000 common shares and the
holders thereof are entitled to vote at all meetings of shareholders
and to receive the remaining property of the Corporation upon a
dissolution.
________________________________________________________________________________
4. Restrictions, if any, on share transfers
The annexed Schedule 1 is incorporated in this form.
________________________________________________________________________________
5. Number (or minimum and maximum number of directors)
The annexed Schedule 2 is incorporated in this form.
________________________________________________________________________________
6. Restrictions, if any, on business
There are no restrictions in its Articles on the business which the
Corporation may carry on.
________________________________________________________________________________
7. If change of name effected, previous name
Canadian Home Products Limited
________________________________________________________________________________
8. Other provisions if any
The annexed Schedule 3 is incorporated in this form.
Date Signature Description of Office
October 20, 1978 /s/ Treasurer Treasurer
<PAGE> 2
SCHEDULE 1
to
Articles of Continuance
of
Canadian Home Products Limited/
Produits Domestiques Canadiens Limitee
1. No shares of the Corporation may be sold, transferred or otherwise
disposed of without the previous express sanction of the directors of the
Corporation expressed by a resolution passed by the votes of a majority of the
directors of the Corporation at a meeting of the board of directors or by an
instrument or instruments in writing signed by a majority of the directors.
2. Without limiting the provisions of paragraph 1 above, no shareholder
shall be entitled to transfer or otherwise dispose of his, her or their shares
in the Corporation to persons who are not then shareholders of the Corporation,
without the prior written consent of the holder or holders of a majority of the
remaining shares of the Corporation.
<PAGE> 3
SCHEDULE 2
to
Articles of Continuance
of
Canadian Home Products Limited/
Produits Domestiques Canadiens Limitee
The board of directors of the Corporation shall consist of such
number, not less than 3 and not more than 9, as may be determined from time to
time by the directors.
<PAGE> 4
SCHEDULE 3
to
Articles of Continuance
of
Canadian Home Products Limited/
Produits Domestiques Canadiens Limitee
1. The number of shareholders of the Corporation shall be limited to
fifty (50), not including persons who are in the employment of the Corporation
and persons, who, having been formerly in the employment of the Corporation,
were, while in the employment, and have continued after the determination of
that employment to be shareholders of the Corporation, two or more persons
holding one or more shares jointly being counted as a single shareholder;
2. Any invitation to the public to subscribe for any securities of the
Corporation shall be prohibited.
<PAGE> 5
CANADA BUSINESS
CORPORATIONS ACT
FORM 4
ARTICLES OF AMENDMENT
(SECTION 27 OR 171)
----------------------
1 - Name of Corporation
CANADIAN HOME PRODUCTS LIMITED/PRODUITS DOMESTIQUES CANADIENS LIMITEE
2 - Corporation No.
034724-8-R
3 - The articles of the above-named Corporation are amended as follows:
Change in the place in Canada where the registered office is situated.
FROM: Municipality of Niagara Falls
Province of Niagara Falls
TO: Suite #400,
200 Consumers Rd.
City of North York, Ontario
M2J 4R4
Date Signature Description of Office
July 21/86 /s/ Robert J. Harder Director of Finance &
Administration
<PAGE> 6
CANADA BUSINESS
CORPORATIONS ACT
FORM 4
ARTICLES OF AMENDMENT
(SECTION 27 OR 171)
--------------
1 - NAME OF CORPORATION
CANADIAN HOME PRODUCTS LIMITED
PRODUITS DOMESTIQUES CANADIENS LIMITEE
2 - CORPORATION NO.
034724-8
3 - THE ARTICLES OF THE ABOVE-NAMED CORPORATION ARE AMENDED AS FOLLOWS:
The articles of the Corporation be and are hereby amended as follows:
A. By the redesignation of the existing shares of the Corporation
as common shares; and
B. By the creation of an unlimited number of common shares, an
unlimited number of Class A Shares and an unlimited number of Class B
shares, so that the authorized capital of the Corporation shall
consist of:
An unlimited number of common shares;
An unlimited number of Class A shares; and
An unlimited number of Class B shares.
The Class A shares and the Class B shares shall have attached thereto
the following rights, privileges, restrictions and conditions:
I. CLASS A SHARES
(a) Each Class A share shall entitle the holder thereof to one (1)
vote at all meetings of the shareholders of the Corporation
(except meetings at which only holders of another specified
class of shares are entitled to vote pursuant to the
provisions hereof or pursuant to the provisions of the Canada
Business Corporations Act).
(b) The holders of the Class A shares shall be entitled to receive
during each year, as and when declared by the board of
directors, but always in preference and priority to any
payment of dividends on the common shares of the Corporation
or any other shares of the Corporation ranking junior to the
Class A shares, but after payment to the holders of the Class
B shares, non-cumulative dividends at a rate of eight percent
(8%) per annum of the Class A Redemption Price, payable in
money, property or by the issue of fully paid shares of any
class of the Corporation. The holders of the
<PAGE> 7
Class a shares shall not be entitled to any dividend in excess
of the dividend hereinbefore provided for.
(c) In the event of the liquidation, dissolution or winding-up of
the Corporation, whether voluntary or involuntary, or other
distribution of assets of the Corporation among shareholders
for the purpose of winding-up its affairs, the holders of the
Class A shares shall be entitled to receive for each Class A
share, in preference and priority to any distribution of the
property or assets of the Corporation to the holders of the
common shares or any other shares ranking junior ro the Class
A shares, but after distribution to the holders of the Class B
shares, an amount equal to the redemption price (in paragraph
I. (d) defined), but shall not be entitled to share any
further in the distribution of the property or assets of the
Corporation.
(d) The Corporation may, in the manner hereinafter provided,
redeem at any time all, or from time to time any part, of the
outstanding Class A shares on payment for each Class A share
to be redeemed of an amount equal to the Class A Redemption
Price plus all declared and unpaid dividends thereon (in
paragraphs I. (e), (f) and (i) called the "redemption price").
(e) Before redeeming any Class A shares, the Corporation shall
mail or deliver to each person who, at the date of such
mailing or delivery, shall be a registered holder of Class A
shares to be redeemed, notice of the intention of the
Corporation to redeem such shares held by such registered
holder; such notice shall be delivered to, or mailed by
ordinary prepaid post addressed to, the last address of such
holder as it appears on the records of the Corporation, or in
the event of the address of any such holder not appearing on
the records of the Corporation, then to the last address of
such holder known to the Corporation, at least one (1) day
before the date specified for redemption; such notice shall
set out the redemption price, the date on which the redemption
is to take place and, if part only of the Class A shares held
by the person to whom it is addressed is to be redeemed, the
number thereof so to be redeemed; on or after the date so
specified for redemption the Corporation shall pay or cause to
be paid the redemption price to the registered holders of the
Class A shares to be redeemed on presentation and surrender of
the certificates for the Class A shares so called for
redemption at the registered office of the Corporation or at
such other place or places as may be specified in such notice,
and the certificates for such Class A shares shall thereupon
be cancelled, and the Class A shares represented thereby shall
thereupon be redeemed; from and after the date specified for
redemption in such notice, the holders of the Class A shares
called for redemption shall cease to be entitled to dividends
in respect of such shares and shall not be entitled to
exercise any of the rights of the holders thereof, except the
right to receive the redemption price, unless payment of the
redemption price shall not be made by the Corporation in
accordance with the foregoing provisions, in which case the
rights of the holders of such shares shall remain unaffected;
on or before the date specified for redemption, the
Corporation shall have the right to deposit the redemption
price of the Class A shares called for redemption in a special
account with any chartered bank or trust company in Canada
named in the notice of redemption, to be paid, without
interest, to or to the order of the respective holders of such
Class A shares called for redemption, upon presentation and
surrender of the certificates representing the same
<PAGE> 8
and, upon such deposit being made or upon the date specified
for redemption, whichever is later, the Class A shares in
respect whereof such deposit shall have been made, shall be
deemed to be redeemed and the rights of the respective holders
thereof, after such deposit or after such redemption date, as
the case may be, shall be limited to receiving, out of the
moneys so deposited, without interest, the redemption price
applicable to their respective Class A shares against
presentation and surrender of the certificates representing
such Class A shares. If less than all the Class A shares are
to be redeemed, the shares to be redeemed shall be redeemed
pro rata, disregarding fractions, unless the holders of the
Class A shares unanimously agree to the adoption of another
method of selection of the Class A shares to be redeemed. If
less than all the Class A shares represented by any
certificate be redeemed, a new certificate for the balance
shall be issued.
(f) A holder of Class A shares shall be entitled to require the
Corporation to redeem at any time all, or from time to time
any part, of the Class A shares registered in the name of such
holder by tendering to the Corporation at its registered
office the share certificate(s) representing the Class A
shares which the registered holder desires to have the
Corporation redeem together with a request in writing
specifying (i) the number of Class A shares which the
registered holder desires to have redeemed by the Corporation
and (ii) the Business day (in this paragraph referred to as
the redemption date on which the holder desires to have the
Corporation redeem such Class A shares, which redemption date
shall not be less than five (5) days after the day on which
the request in writing is given to the Corporation. Upon
receipt of the share certificate(s) representing the Class A
shares which the registered holder desires to have the
Corporation redeem together with such a request, the
Corporation shall on, or at its option, before, the redemption
date redeem such Class A shares by paying to the registered
holder thereof, for each share to be redeemed, an amount equal
to the redemption price in respect thereof; such payment shall
be made by cheque payable at par at any branch of the
Corporation's bankers for the time being in Canada. The said
Class A shares shall be deemed to be redeemed on the date by
payment of the redemption price and from and after such date
such Class A preferred shares shall cease to be entitled to
dividends and the holders thereof shall not be entitled to
exercise any of the rights of the holders of Class A shares in
respect thereof. Notwithstanding the foregoing, the
Corporation shall only be obliged to redeem Class A shares so
tendered for redemption to the extent that such redemption
would not be contrary to any applicable law, and if such
redemption of any such Class A shares would be contrary to any
applicable law, the Corporation shall only be obliged to
redeem such Class A shares to the extent that the moneys
applied thereto shall be such amount (rounded to the next
lower multiple of one hundred dollars ($100.00)) as would not
be contrary to such law, in which case the Corporation shall
pay to each holder his pro rata share of the purchase moneys
allocable. If less than all the Class A shares represented by
any certificate be redeemed, a new certificate for the balance
shall be issued.
(g) Upon a redemption of Class A shares as set out in paragraphs
I. (d), (e) and (f) hereof, the Corporation shall deduct from
the stated capital account maintained for the Class A shares
an amount equal to the result obtained by multiplying the
amount contained in the stated capital account maintained for
the Class A shares by the
<PAGE> 9
number of such shares which are redeemed, divided by the
number of Class A shares issued and outstanding immediately
before such redemption.
(h) Subject to the provisions of the following subparagraph, for
the purpose of the foregoing paragraphs I. (b), (d) and (e),
the "Class A Redemption Price" of each Class A share shall be
an amount equal to (i) the monetary consideration received by
the Corporation upon the issuance of such share, if such share
has been issued for money; or (ii) the fair market value of
the consideration, calculated as at the time of receipt,
received by the Corporation (including, without limitation,
shares of another class of the Corporation) upon the issuance
of such share, if such share has been issued for consideration
other than money or if such share has been issued for a
combination of consideration other than money and money. Such
fair market value is to be determined by the directors of the
Corporation on the basis of generally accepted accounting and
valuation principles.
Provided that, if at any time the Minister of National Revenue
or any other competent taxing authority makes or proposes to
make any tax assessment or reassessment determining that the
fair market value of the consideration for which each Class A
share was issued determined as hereinabove provided was
greater or lesser than the Class A Redemption Price determined
as hereinabove provided, then the Class A Redemption Price of
each Class A share shall be retroactively augmented or
diminished so that it shall be equal to the amount finally
determined to be the fair market value of the consideration
for which each such Class A shares was issued. Any such
determination shall be deemed to be a final determination if
its is pursuant to an assessment or reassessment by the
Minister of National Revenue or other competent taxing
authority, and no appeal is taken therefrom, of if any
agreement is reached between any holder of a Class A share and
any such taxing authority in settlement of a dispute regarding
such determination, or if determined by a court or tribunal of
competent jurisdiction, and no appeal is taken therefrom.
In the case of a former holder of Class A shares, in the event
that the Class A Redemption Price of each Class A share is
adjusted as aforementioned, either the Corporation shall pay
out to the former holders of such redeemed Class A shares or
the said former holders of the redeemed Class A shares will
reimburse the Corporation as the case may be, the difference
between the Class A Redemption Price of the said Class A
shares as adjusted and the amount paid by the Corporation upon
redemption, within sixty (60) days from the date of adjustment
of the Class A Redemption Price.
(i) The Corporation may purchase for cancellation at any time all,
or from time to time any part, of the Class A shares
outstanding, by private contract at any price, with the
unanimous consent of the holders of the Class A shares then
outstanding, or by invitation for tenders addressed to all the
holders of the Class A shares at the lowest price at which, in
the opinion of the directors, such shares are obtainable but
not exceeding the redemption price thereof. If less than all
the Class A shares represented by any certificate be purchased
for cancellation, a new certificate for the balance shall be
issued.
<PAGE> 10
II. CLASS B SHARES
(a) Subject to the provisions of the Act or as otherwise expressly
provided herein, the holders of the Class B shares shall not
be entitled to receive notice of, nor to attend or vote at
meetings of the shareholders of the Corporation.
(b) The holders of the Class B shares shall be entitled to receive
during each year, as and when declared by the board of
directors, but always in preference and priority to any
payment of dividends on the Class A shares or the common
shares of the Corporation or any other shares of the
Corporation ranking junior to the Class B shares,
non-cumulative dividends at a rate of nine percent (9%) per
annum of the Class B Redemption Price, payable in money,
property or by the issue of fully paid shares of any class of
the Corporation. The holders of the Class B shares shall not
be entitled to any dividend in excess of the dividend
hereinbefore provided for.
(c) In the event of the liquidation, dissolution or winding-up of
the Corporation, whether voluntary or involuntary, or other
distribution of assets of the Corporation among shareholders
for the purpose of winding-up its affairs, the holders of the
Class B shares shall be entitled to receive for each Class B
share, in preference and priority to any distribution of the
property or assets of the Corporation to the holders of the
Class A shares or the common shares or any other shares
ranking junior to the Class B shares, an amount equal to the
redemption price (in paragraph II. (d) defined), but shall not
be entitled to share any further in the distribution of the
property or assets of the Corporation.
(d) The Corporation may, in the manner hereinafter provided,
redeem at any time all, or from time to time any party, of the
outstanding Class B shares on payment for each Class B share
to be redeemed of an amount equal to the Class B Redemption
Price plus all declared and unpaid dividends thereon (in
paragraphs II. (e), (f) and (i) called the "redemption
price").
(e) Before redeeming any Class B shares, the Corporation shall
mail or deliver to each person who, at the date of such
mailing or delivery, shall be a registered holder of Class B
shares to be redeemed, notice of the intention of the
Corporation to redeem such shares held by such registered
holder; such notice shall be delivered to, or mailed by
ordinary prepaid post addressed to, the last address of such
holder as it appears on the records of the Corporation, or in
the event of the address of any such holder not appearing on
the records of the Corporation, then to the last address of
such holder known to the Corporation, at least one (1) day
before the date specified for redemption; such notice shall
set out the redemption price, the date on which the redemption
is to take place and, if part only of the Class B shares held
by the person to whom it is addressed is to be redeemed, the
number thereof so to be redeemed; on or after the date so
specified for redemption the Corporation shall pay or cause to
be paid the redemption price to the registered holders of the
Class B shares to be redeemed on presentation and surrender of
the certificates for the Class B shares so called for
redemption at the registered office of the Corporation or at
such other place or places as may be specified in such notice,
and the certificates for such Class B shares shall thereupon
be cancelled, and the Class B shares represented thereby shall
<PAGE> 11
thereupon be redeemed; from and after the date specified for
redemption in such notice, the holders of the Class B shares
called for redemption shall cease to be entitled to dividends
in respect of such shares and shall not be entitled to
exercise any of the rights of the holders thereof, except the
right to receive the redemption price, unless payment of the
redemption price shall not be made by the Corporation in
accordance with the foregoing provisions, in which case the
rights of the holders of such shares shall remain unaffected;
on or before the date specified for redemption, the
Corporation shall have the right to deposit the redemption
price of the Class B shares called for redemption in a special
account with any chartered bank or trust company in Canada
named in the notice of redemption, to be paid, without
interest, to or to the order of the respective holders of such
Class B shares called for redemption, upon presentation and
surrender of the certificates representing the same and, upon
such deposit being made or upon the date specified for
redemption, whichever is later, the Class B shares in respect
whereof such deposit shall have been made, shall be deemed to
be redeemed and the rights of the respective holders thereof,
after such deposit or after such redemption date, as the case
may be, shall be limited to receiving, out of the moneys so
deposited, without interest, the redemption price applicable
to their respective Class B shares against presentation and
surrender of the certificates representing such Class B
shares. If less than all the Class B shares are to be
redeemed, the shares to be redeemed shall be redeemed pro
rata, disregarding fractions, unless the holders of the Class
B shares unanimously agree to the adoption of another method
of selection of the Class B shares to be redeemed. If less
than all the Class B shares represented by any certificate be
redeemed, a new certificate for the balance shall be issued.
(f) A holder of Class B shares shall be entitled to require the
Corporation to redeem at any time all, or from time to time
any part, of the Class B shares registered in the name of such
holder by tendering to the Corporation at its registered
office the share certificate(s) representing the Class B
shares which the registered holder desires to have the
Corporation redeem together with a request in writing
specifying (i) the number of Class B shares which the
registered holder desires to have redeemed by the Corporation
and (ii) the business day (in this paragraph referred to as
the "redemption date") on which the holder desires to have the
Corporation redeem such Class B shares, which redemption date
shall not be less than five (5) days after the day on which
the request in writing is given to the Corporation. Upon
receipt of the share certificate(s) representing the Class B
shares which the registered holder desires to have the
Corporation redeem together with such a request, the
Corporation shall on, or at its option, before, the redemption
date redeem such Class B shares by paying to the registered
holder thereof, for each share to be redeemed, an amount equal
to the redemptio price in respect thereof; such payment shall
be made by cheque payable at par at any branch of the
Corporation's bankers for the time being in Canada. The said
Class B shares shall be deemed to be redeemed on the date of
payment of the redemption price and from and after such date
such Class B preferred shares shall cease to be entitled to
dividends and the holders thereof shall not be entitled to
exercise any of the rights of the holders of Class B shares
in respect thereof. Notwithstanding the foregoing, the
Corporation shall only be obliged to redeem Class B shares so
tendered for redemption to the extent that such redemption
would not be contrary to any applicable law, and if such
redemption of any such
<PAGE> 12
Class B shares would be contrary to any applicable law, the
Corporation shall only be obliged to redeem such Class B
shares to the extent that the moneys applied thereto shall be
such amount (rounded to the next lower multiple of one hundred
dollars ($100.00)) as would not be contrary to such law, in
which case the Corporation shall pay to each holder his pro
rata share of the purchase moneys allocable. If less than all
the Class B shares presented by any certificate be redeemed, a
new certificate for the balance shall be issued.
(g) Upon a redemption of Class B shares as set out in paragraphs
II. (d), (e) and (f) hereof, the Corporation shall deduct from
the stated capital account maintained for the Class B shares
an amount equal to the result obtained by multiplying the
amount contained in the stated capital account maintained for
the Class B shares by the number of such shares which are
redeemed, divided by the number of Class A shares issued and
outstanding immediately before such redemption.
(h) For the purpose of the foregoing paragraphs II. (b), (d) and
(e), the "Class B Redemption Price" of each Class B share
shall be an amount equal to one dollar ($1.00).
(i) The Corporation may purchase for cancellation at any time all,
or from time to time any part, of the Class B shares
outstanding, by private contract at any price, with the
unanimous consent of the holders of the Class B shares then
outstanding, or by invitation for tenders addressed to all the
holders of the Class B shares at the lowest price at which, in
the opinion of the directors, such shares are obtainable but
not exceeding the redemption price thereof. If less than all
the Class B shares represented by any certificate be purchased
for cancellation, a new certificate for the balance shall be
issued.
DATE SIGNATURE
May 31, 1990
/s/ Stanley F. Barshay
------------------------------
STANLEY F. BARSHAY
DESCRIPTION OF OFFICE: DIRECTOR
<PAGE> 13
CANADA BUSINESS
CORPORATIONS ACT
FORM 4
ARTICLES OF AMENDMENT
(SECTION 27 OR 177)
---------------------------
1 - Name of Corporation
CANADIAN HOME PRODUCTS LIMITED
PRODUITS DOMESTIQUES CANADIENS LIMITEE
2 - Corporation No.
034724-8-R
3 - The articles of the above-named Corporation are amended as follows:
Change in Canada of the location of Registered Office:
From: Suite 400
200 Consumers Road
City of North York, Ontario
M2J 4R4
To: Suite 600
80 Tiverton Court
Town of Markham, Ontario
L3R 0G4
Date Signature Description of Office
July 21/86 /s/ Robert J. Harder Director of Finance &
Administration
<PAGE> 1
EXHIBIT 3.10
RESOLUTION OF THE BOARD OF DIRECTORS
of
CANADIAN HOME PRODUCTS LTD.
RESOLVED:
That the following By-Law be enacted:
BY-LAW NO. A
A by-law relating generally to the regulation of the affairs
of Canadian Home Products Ltd.
BE IT ENACTED AND IT IS HEREBY ENACTED as by-law Number A of
Canadian Home Products Ltd. (hereinafter called the "Corporation") as follows:
DEFINITIONS
1. In this by-law and all other by-laws of the Corporation, unless the
context otherwise specifies or requires:
(a) "Act" means the Canada Business Corporations Act, Statutes of
Canada, 1974-75, c.33, as from time to time amended, and every
statute that may be substituted therefor and, in the case of
such amendment or substitution, any reference in the by-laws
of the Corporation shall be read as referring to the amended
or substituted provisions therefor;
(b) "Articles" means the articles, as from time to time amended,
of the Corporation;
(c) "by-law" means any by-law of the Corporation, from time to
time in force and effect;
(d) "unanimous shareholders agreement" means an agreement as
described in subsection 140(2) of the Act made by the
shareholders of the Corporation;
(e) words importing the singular number only shall include the
plural and vice versa; words importing the masculine gender
shall include the feminine and neuter genders and vice-versa;
words importing persons shall include bodies corporate,
corporations, companies; partnerships, syndicates, trusts and
any number or aggregate of individuals;
(f) the headings used in the by-laws are inserted for reference
purposes only and are not to be considered or taken into
account in construing the terms or provisions thereof or to be
deemed in any way to clarify, modify or explain the effect of
any such terms or provisions; and
(g) all terms contained in the by-laws and which are defined in
the Act shall have the meanings given to such terms in the
Act.
REGISTERED OFFICE
2. The Corporation may from time to time (i) by resolution of the board
of directors change the location of the address of the registered office of the
Corporation within the place specified in the articles and (ii) by articles of
amendment change the place in which its registered office is situated to
another place within Canada.
<PAGE> 2
CORPORATE SEAL
3. The Corporation may have one or more corporate seals which shall be
such as the board of directors may by resolution from time to time adopt and
change.
DIRECTORS
4. Number and Powers. There shall be a board of directors consisting of
such fixed number, or minimum and maximum number, of directors as may be set
out in the articles. A majority of the board of directors must be resident
Canadians unless the Corporation is a holding corporation referred to in
section 100(4) of the Act.
5. Vacancies. If the number of directors is increased, the resulting
vacancies shall be filled at a meeting of shareholders duly called for that
purpose. Notwithstanding the provisions of section 7 of these by-laws and
subject to the provisions of the Act, if a vacancy should otherwise occur in
the board, the remaining directors, if constituting a quorum, may appoint a
qualified person to fill the vacancy for the remainder of the term. In the
absence of a quorum the remaining directors shall forthwith call a meeting of
shareholders to fill the vacancy pursuant to section 106(2) of the Act. Where
a vacancy or vacancies exist in the board, the remaining directors may exercise
all of the powers of the board so long as a quorum remains in office.
6. Term of office. A director's term of office shall be from the meeting
to which he is elected or appointed until the annual meeting next following or
until his successor is elected or appointed, or until, if earlier, he dies or
resigns, or is removed or disqualified pursuant to the provisions of the Act.
7. Vacation of Office. The office of a director shall ipso facto be
vacated if:
(a) he dies;
(b) by notice in writing to the Corporation he resigns his office
and such resignation, if not effective immediately, becomes
effective in accordance with its terms;
(c) he is removed from office in accordance with section 104 of
the Act; or
(d) he ceases to be qualified to be a director.
8. Election. Directors shall be elected by the shareholders by ordinary
resolution in general meeting on a show of hands unless a poll is demanded and
if a poll is demanded such election shall be by ballot.
A retiring director shall retain office until the adjournment or
termination of the meeting at which his successor is elected unless such
meeting was called for the purpose of removing him from office as a director in
which case the director so removed shall vacate office forthwith upon the
passing of the resolution for his removal.
MEETING OF DIRECTORS
9. Place of Meeting. Subject to the articles, meetings of directors may
held at any place within or outside Canada as the directors may from time to
time determine or the person convening the meeting may give notice. A meeting
of the board of directors may be convened by the Chairman of the Board (if
any), the President (if any) or any director at any time. The Secretary (if
any) shall upon direction of any of the foregoing convene a meeting of the
board of directors.
-2-
<PAGE> 3
Notice. Notice of the time and place for the holding of any such
meeting shall be delivered, mailed, telegraphed, cabled or telexed to each
director at his latest address as shown on the records of the Corporation not
less than two (2) days (exclusive of the day on which the notice is delivered,
mailed, telegraphed, cabled or telexed but inclusive of the day for which
notice is given) before the date of the meeting; provided that meetings of the
board of directors may be hold at any time without notice if all the directors
have waived notice.
For the first meeting of the board of directors to be held immediately
following the election of directors at an annual or special meeting of the
shareholders, no notice of such meeting need be given to the newly elected or
appointed director or directors in order for the meeting to be duly
constituted, provided a quorum of the directors is present.
A notice of a meeting of directors shall specify any matter referred
to in subsection 110(3) of the Act that is to be dealt with at the meeting.
Waiver of Notice. Notice of any meeting of the board of directors or
any irregularity in any meeting or in the notice thereof may be waived by any
director in writing or by telegram, cable or telex addressed to the Corporation
or in any other manner, and such waiver may be validly given either before or
after the meeting to which such waiver relates. The attendance of a director
at a meeting of directors is a waiver of notice of the meeting except where a
director attends a meeting for the express purpose of objecting to the
transaction of any business on the grounds that the meeting is not lawfully
called.
Telephone Participation. A director may, if all the directors of the
Corporation consent thereto (either before, during or after the meeting),
participate in a meeting of directors by means of such telephone or other
communications facilities as permit all persons participating in the meeting to
hear each other, and a director participating in such a meeting by such means
shall be deemed to be present at that meeting.
10. Adjournment. Any meeting of the board of directors may be adjourned
from time to time by the chairman of the meeting, with the consent of the
meeting, to a fixed time and place and no notice of the time and place for the
continuance of the adjourned meeting need be given to any director. Any
adjourned meeting shall be duly constituted if held in accordance with the
terms of the adjournment and a quorum s present thereat. The directors who
formed a quorum at the original meeting are not required to form the quorum at
the adjourned meeting. If there is no quorum present at the adjourned meeting,
the original meeting shall be deemed to have terminated forthwith after its
adjournment.
11. Quorum and Voting. Subject to the articles, a majority of the number
directors or a minimum number of directors required by the articles shall
constitute a quorum for the transaction of business. Subject to subsection
112(1) of the Act, no business shall be transacted by the directors except at a
meeting of directors at which a quorum of the board is present. Questions
arising at any meeting of the board of directors shall be decided by a majority
of votes cast. In case of an equality of votes, the chairman of the meeting,
in addition to his original vote shall have a second or casting vote. Where
the Corporation has only one director, that director may constitute the
Meeting.
12. Resolution in lieu of meeting. A resolution in writing, signed by all
the directors entitled to vote on that resolution at a meeting of directors, is
as valid as if it had been passed at a meeting of directors or committee of
directors.
A copy of every such resolution shall be kept with the minutes of the
proceedings of the directors or committee of directors.
-3-
<PAGE> 4
REMUNERATION OF DIRECTORS
13. Subject to the articles of any unanimous shareholders agreement, the
remuneration to be paid to the directors shall be such as the board of
directors shall from time to time determine and such remuneration shall be in
addition to the salary paid to any officer of the Corporation who is also a
member of the board of directors. The directors may also by resolution award
special remuneration to any director undertaking any special services on the
Corporation's behalf other than the routine work ordinarily required of a
director by the Corporation. The confirmation of any such resolution or
resolutions by the shareholders shall not be required. The directors shall also
be entitled to be paid their traveling and other expenses properly incurred by
them in connection with the affairs of the Corporation.
SUBMISSION OF CONTRACTS OR TRANSACTIONS
TO SHAREHOLDERS FOR APPROVAL
14. The board of directors in their discretion may submit any contract,
act or transaction for approval, ratification or confirmation at any annual
meeting of the shareholders or at any special meeting of the shareholders
called for the purpose of considering the same and any contract, act or
transaction that shall be approved, ratified or confirmed by resolution passed
by a majority of the votes cast at any such meeting (unless any different or
additional requirement is imposed by the Act or by the Corporation's articles
or any other by-law) shall be as valid and as binding upon the Corporation and
upon all the shareholders as though it had been approved, ratified and/or
confirmed by every shareholder of the Corporation,
INDEMNITIES TO DIRECTORS AND OTHERS
15. Except in respect of any action by or on behalf of the Corporation or
Another Body Corporate (as hereinafter defined), the Corporation shall
indemnify each director and officer of the Corporation and each former director
and officer of the Corporation and each person who acts or acted at the
Corporation's request as a director or officer of Another Body Corporate, and
his heirs and legal representatives, against all costs, charges and expenses,
including any amount paid to settle an action or satisfy a judgment, reasonably
incurred by him in respect of any civil, criminal or administrative action or
proceeding to which he is made a party by reason of being or having been a
director or officer of the Corporation or Another Body Corporate, as the case
may be, if
(a) he acted honestly and in good faith with a view to the best
interests of the Corporation; and
(b) in the case of a criminal or administrative action or
proceeding that is enforced by a monetary penalty, he had
reasonable grounds for believing that his conduct was lawful.
"Another Body Corporate" as used herein means a body corporate of which the
Corporation is or was a shareholder or creditor.
OFFICERS
16. Appointment of Officers. Subject to the articles or any unanimous
shareholders agreement, the board of directors, annually or as often as may be
required, may elect from among themselves a Chairman of the Board and may
appoint a President and a Secretary and, if deemed advisable, may also appoint
one or more Vice-Presidents, a Treasurer and one or more Assistant Secretaries
and/or one or more Assistant Treasurers. None of such officers, except the
Chairman of the Board, need be a director of the Corporation. Any two or more
of such offices may be held by the same person. In case and whenever the same
person holds the offices of Secretary and Treasurer he may but need not, be
known as the Secretary-Treasurer. The board of directors
-4-
<PAGE> 5
may from time to time designate such other offices and appoint such other
officers, employees and agents as it shall deem necessary who shall have such
authority and shall perform such functions and duties, as may from time to time
be prescribed by resolution of the board of directors.
17. Remuneration and Removal of Officers. Subject to the articles or any
unanimous shareholders agreement, the remuneration of all officers, employees
and agents elected or appointed by the board of directors may be determined
from time to time by resolution of the board of directors. The fact that any
officer, employee or agent is a director or shareholder of the Corporation
shall not disqualify him from receiving such remuneration as may be so
determined. The board of directors may by resolution remove any officer,
employee or agent at any time, with or without cause.
18. Duties of Officers may be Delegated. In case of the absence or
inability or refusal to act of any officer of the Corporation or for any other
reason that the board of directors may deem sufficient, the board may delegate
all or any of the powers of such officer to any other officer or to any
director for the time being.
19. Chairman of the Board. The Chairman of the Board (if any) shall, if
present, preside at all meetings of the board of directors and of shareholders.
He shall sign such contracts, documents or instruments in writing as require
his signature and shall have such other powers and duties as may from time to
time be assigned to him by resolution of the board of directors.
20. President. The President (if any) shall be the chief executive
officer of the Corporation and shall exercise general supervision over the
business and affairs of the Corporation. In the absence of the Chairman of the
Board (if any), the President shall, when present, preside at all meetings of
the board of directors and shareholders; he shall sign such contracts,
documents or instruments in writing as require his signature and shall have
such other powers and shall perform such other duties as may from time to time
be assigned to him by resolution of the board of directors or as are incident
to his office.
21. Vice-President. The Vice-President or, if more than one, the
Vice-President in order of seniority, shall be vested with all the powers and
shall perform all the duties of the President in the absence or inability or
refusal to act of the President, provided, however, that a Vice-President who
is not a director shall not preside as chairman at any meeting of shareholders.
The Vice-President or, if more than one, the Vice-Presidents in order of
seniority, shall sign such contacts, documents or instruments in writing as
require his or their signatures and shall also have such other powers and
duties as may from time to time be assigned to him or them by resolution of the
board of directors.
22. Secretary. The Secretary (if any) shall give or cause to be given
notices for all meetings of the board of directors, of committees thereof (if
any) and of shareholders when directed to do so and shall have charge, subject
to the provisions of paragraph 38 hereof, of the records referred to in section
20 of the Act (except the accounting records) and of the corporate seal or
seals (if any). He shall sign such contracts, documents or instruments in
writing as require hie signature and shall have such other powers and duties as
may from time to time be assigned to him by resolution of the board of
directors or as are incident to his office.
23. Treasurer. Subject to the provisions of any resolution of the board
of directors, the Treasurer (if any) shall have the care and custody of all the
funds and securities of the Corporation and shall deposit the same in the name
of the Corporation in such bank or banks or with such other depositary or
depositories as the board of directors may by resolution direct. He shall
prepare, maintain and keep or cause to be kept adequate books or accounts and
accounting records. He shall sign such contracts, documents or instruments in
writing as require his signature and shall have such other powers and duties as
may from time to time be assigned to him by resolution of the board of
directors or as are incident to his office. He may be required to give such
bond for the faithful performance of his duties as the board of directors in
their uncontrolled discretion may require
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<PAGE> 6
and no director shall be liable for failure to require any such bond or for the
insufficiency of any such bond or for any loss by reason of the failure of the
Corporation to receive any indemnity thereby provided.
24. Assistant Secretary and Assistant Treasurer. The Assistant Secretary
or, if more than one, the Assistant Secretaries in order of seniority, and the
Assistant Treasurer or, if more than one, the Assistant Treasurers in order of
seniority, shall respectively perform all the duties of the Secretary and
Treasurer, respectively, in the absence or inability to act of the Secretary or
Treasurer as the case may be. The Assistant Secretary or Assistant
Secretaries, if more than one, and the Assistant Treasurer or Assistant
Treasurers, if more than one, shall sign such contracts, documents or
instruments in writing as require his or their signatures respectively and
shall have such other powers and duties as may from time to time be assigned to
them by resolution of the board of directors.
MANAGING DIRECTOR
25. The board of directors may from time to time appoint from their number
a Managing Director who is a resident Canadian and may delegate to him any of
the powers of the board of directors except as provided in subsection 110(3) of
the Act. The Managing Director shall conform to all lawful orders given to him
by the board of directors of the Corporation and shall at all reasonable times
give to the directors or any of them all information they may require regarding
the affairs of the Corporation. Any agent or employee appointed by the
Managing Director shall be subject to discharge by the board of directors.
COMMITTEES
26. The board of directors may from time to time appoint from their number
one or more committees consisting of one or more individuals and delegate to
such committee or committees any of the powers of the directors except as
provided in subsection 110(3) of the Act. Except in the case of a holding
corporation referred to in subsection 100(4) of the Act, a majority of the
members of any such committee must be resident Canadians. Unless otherwise
ordered by the board, a committee of directors shall have power to fix its
quorum, to elect its chairman and to regulate its proceedings.
SHAREHOLDERS' MEETINGS
27. Annual Meeting. Subject to compliance with section 127 of the Act,
the annual meeting of the shareholders shall be convened on such day in each
year and at such time as the directors may by resolution determine.
28. Special Meetings. Other meetings of the shareholders may be convened
by order of the Chairman of the Board, the President or a Vice-President who is
a director or by the board of directors, to be held at such time and place as
may be specified in such order.
Special meetings of shareholders may also be called by written
requisition to the Directors signed by shareholders holding between them not
less than five percent of the outstanding shares of the capital stock of the
Corporation entitled to vote thereat. Such requisition shall state the
business to be transacted at the meeting and shall be sent to the registered
office of the Corporation.
Except as otherwise provided in subsection 137(3) of the Act, it shall
be the duty of the Directors on receipt of such requisition, to cause the
Meeting to be called by the Secretary of the Corporation.
If the Directors do not, within twenty-one days after receiving such
requisition call a meeting, any shareholder who signed the requisition may call
the meeting.
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<PAGE> 7
29. Place of Meetings. Meetings of shareholders of the Corporation shall
be held at the registered office of the Corporation or at such other place in
Canada as may be specified in the notice convening such meeting.
Notwithstanding the foregoing, a meeting of shareholders may be held outside
Canada if all the shareholders entitled to vote at that meeting so agree, and a
shareholder who attends a meeting of shareholders held outside Canada is deemed
to have so agreed except when he attends the meeting for the express purpose of
objecting to the transaction of any business on the grounds that the meeting is
not lawfully held.
30. Notice. A printed, written or typewritten notice stating the day,
hour and place of meeting and, subject to Subsection 129(6) of the Act, the
general nature of the business to be transacted shall be served to each person
who is entitled to vote at such meeting, each director of the Corporation and
the auditor of the Corporation, either personally or by sending such notice by
prepaid mail not less than twenty-one (21) days or more than fifty (50) days
before the meeting. If such notice is served by mail it shall be directed to
the latest address as shown in the records of the Corporation, of the intended
recipient. Notice of any meeting of shareholders or any irregularity in any
such meeting or in the notice thereof may be waived by any shareholder, the
duly appointed proxy of any shareholder, any directors or the auditor of the
Corporation in writing, by telegram, cable or telex addressed to the
Corporation or by any other manner, and any such waiver may be validly given
either before or after the meeting to which such waiver relates.
31. Voting. Voting at a meeting of shareholders shall be by show of hands
except where a ballot is demanded by a shareholder entitled to vote at the
meeting. A shareholder may demand a ballot either before or after any vote by
show of hands.
32. Omission of Notice. The accidental omission to give notice of any
meeting to or the non-receipt of any notice by any person shall not invalidate
any resolution passed or any proceeding taken at any meeting of shareholders.
33. Record Dates. The directors may by resolution fix in advance a date
and time as the record date for the determination of (i) the shareholders
entitled to notice of meetings of the shareholders, (ii) the shareholders
entitled to vote at meetings of the shareholders, and (iii) the shareholders
entitled to receive the financial statements of the Corporation pursuant to
subsection 153(l) of the Act.
If the directors fail to fix in advance a date and time as the record
date in respect of all or any of the matters described above for any meeting of
the shareholders of the Corporation, the following provisions shall apply, as
the case may be:
(a) the record date for the determination of the shareholders
entitled to receive notice of a meeting of shareholders shall
be at the close of business on the day immediately preceding
the day on which notice is given or sent;
(b) the record date for the determination of the shareholders
entitled to vote at a meeting of shareholders shall be the day
on which the meeting is held; and
(c) the record date for the determination of the shareholders
entitled to receive the financial statements of the
Corporation shall be the close of business on the day on which
the directors pass the resolution relating thereto.
34. Votes. Every question submitted to any meeting of shareholders shall
be decided in the first instance, unless a ballot is demanded, on a show of
hands and in case of an equality of votes the chairman of the meeting shall,
both on a show of hands and on a ballot, have a second or casting vote in
addition to the vote or votes to which he may be entitled as a shareholder.
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<PAGE> 8
At any meeting, unless a ballot is demanded, a declaration by the
chairman of the meeting that a resolution has been carried or carried
unanimously or by a particular majority or lost or not carried by a particular
majority shall be conclusive evidence of the fact without proof of the number
of proportion of votes recorded in favor of or against the motion.
In the absence of the Chairman of the Board, the President and every
Vice-President who is a director, the shareholders present entitled to vote
shall choose another director as chairman of the meeting and if no director as
present or if all the directors present decline to take the chair then the
shareholders present shall choose one of their number to be Chairman.
If at any meeting a ballot is demanded on the election of a chairman
or on the question of adjournment or termination it shall be taken forthwith
without adjournment. If a ballot is demanded on any other question or as to
the election of directors it shall be taken in such manner and either at once
or later at the meeting or after adjournment as the chairman of the meeting
directs. The result of a ballot shall be deemed to be the resolution of the
meeting at which the ballot was demanded. A demand for a ballot may be
withdrawn.
Where a person holds shares as a personal representative, such person
or his proxy is the person entitled to vote at all meetings of shareholders in
respect of the shares so held by him.
Where a person mortgages or hypothecates his shares, such person or
his proxy is the person entitled to vote at all meetings of shareholders in
respect of such shares unless, in the instrument creating the mortgage or
hypothec, he has expressly empowered the person holding the mortgage or
hypothec to vote in respect of such shares, in which case, subject to the
Corporation's articles, such holder or his proxy is the person entitled to
vote in respect of the shares.
Where two or more persons hold the same share or shares jointly, any
one of such persons present at a meeting of shareholders has the right, in the
absence of the other or others, to vote in respect of such share or shares, but
if more than one of such persons are present or represented by proxy and vote,
they shall vote together as one on the share or shares jointly held by them.
35. Proxies. A shareholder, including a shareholder that is a body
corporate, entitled to vote at a meeting of shareholders may by means of a
proxy appoint a proxyholder or one or more alternate proxyholders, who are not
required to be shareholders, to attend and act at the meeting in the manner and
to the extent authorized by the proxy and with the authority conferred by the
proxy.
An instrument appointing a proxy shall be in writing and shall be
executed by the shareholder or his attorney authorized in writing or, if the
shareholder is a body corporate, either under its seal or by an officer or
attorney thereof, duly authorized. A proxy is valid only at the meeting in
respect of which it is given or any adjournment thereof.
Unless the Act requires another form, an instrument appointing a
proxyholder may be in the following form:
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<PAGE> 9
"The undersigned shareholder of ____________________ hereby appoints
____________________ of ____________________ or failing him,
____________________ of ____________________ as the nominee of the undersigned
to attend and act for and on behalf of the undersigned at the meeting of the
shareholders of the said Corporation to be held on the ___ day of
_____________, 19___, and at any adjournment thereof to the same extent and
with the same power as if the undersigned were personally present at the said
meeting or such adjournment thereof.
Dated the ____ day of _____________, 19___.
----------------------------------
Signature of Shareholder
NOTE:
This form of proxy must be signed by a shareholder or his attorney authorized
in writing or, if the shareholder is a body corporate, either under its seal or
by an officer or attorney thereof duly authorized."
The directors may from time to time pass regulations regarding the
deposit of instruments appointing a proxyholder at some place or places other
than the place at which a meeting or adjourned meeting of shareholders is to be
held and for particulars of such instruments to be telegraphed, cabled, telexed
or sent in writing before the meeting or adjourned meeting to the Corporation
or any agent of the Corporation for the purpose of receiving such particulars
and providing that instruments appointing a proxyholder so lodged may be voted
upon as though the instruments themselves were produced at the meeting or
adjourned meeting and votes given in accordance with such regulations shall be
valid and shall be counted. The chairman of any meeting of shareholders may,
subject to any regulations made as aforesaid, in his discretion accept
telegraphic, telex, cable or written communication as to the authority of
anyone claiming to vote on behalf of and to represent a shareholder
notwithstanding that no instrument of proxy conferring such authority has been
lodged with the Corporation, and any votes given in accordance with such
telegraphic, telex, cable or written communication accepted by the chairman of
the meeting shall be valid and shall be counted.
36. Adjournment. The chairman of the meeting may with the consent of the
meeting adjourn any meeting of shareholders from time to time to a fixed time
and place. If a meeting of shareholders is adjourned less than thirty (30)
days, it is not necessary to give notice of the adjourned meeting other than by
announcement at the earliest meeting that is adjourned. It a meeting of
shareholders is adjourned by one or more adjournments for an aggregate of
thirty (30) days or more, notice of the adjourned meeting shall be given as for
an original meeting but, unless the meeting is adjourned by one or more
adjournments for an aggregate or more than ninety (90) days, the requirements
of subsection 143(l) of the Act relating to mandatory solicitation of proxies
does not apply.
Any adjourned meeting shall be duly constituted if held in accordance
with the terms of the adjournment and a quorum is present thereat. The persons
who formed a quorum at the original meeting are not required to form a quorum
at the adjourned meeting. If there is no quorum present at the adjourned
meeting, the original meeting shall be deemed to have terminated forthwith
after its adjournment. Any business may be brought before or dealt with at any
adjourned meeting which might have been brought before or dealt with at the
original meeting in accordance with the notice calling same.
37. Quorum. Two (2) persons present and each holding or representing by
proxy at least one (1) issued share of the Corporation shall be a quorum of any
meeting of shareholders for the choice of a chairman of the
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<PAGE> 10
meeting and for the adjournment of the meeting; for all other purposes a quorum
for any meeting (unless a different number of shareholders and/or a different
number of shares are required to be represented by the Act or by the articles
or by any other by-law) shall be persons present being not less than two (2) in
number and holding or representing by proxy a majority of the shares entitled
to vote at such meeting. If a quorum is present at the opening of a meeting of
the shareholders, the shareholders present may proceed with the business of the
meeting, notwithstanding that a quorum is not present throughout the meeting.
Where the Corporation has only one shareholder or only one holder of any class
or series of shares, the shareholder present in person or by proxy constitutes
a meeting.
38. Resolution in lieu of meeting. Except where a written statement is
submitted by a director under subsection 105(2) of the Act or by an auditor
under subsection 162(5) of the Act, a resolution in writing signed by all the
shareholders entitled to vote on that resolution at a meeting of shareholders
is as valid as if it had been passed at a meeting of the shareholders.
A copy of every such resolution shall be kept with the minutes of the
meetings of shareholders.
39. Certificates. Share certificates (and the form of stock transfer
power on the reverse side thereof) shall (subject to compliance with section 45
of the Act) be in such form and be signed by such director(s) or officer(s) as
the board of directors may from time to time by resolution determine.
40. Registrar and Transfer Agent. The board of directors may from time to
time by resolution appoint or remove one or more registrars and/or branch
registrars (which may but need not be the same person) to keep the register of
security holders and/or one or more transfer agents and/or branch transfer
agents (which may but need not be the same person) to keep the register of
transfer, and (subject to section 46 of the Act) may provide for the
registration of issues and the registration of transfers of the securities of
the Corporation in one or more places and such registrars and/or branch
registrars and/or transfer agents and/or branch transfer agents shall keep all
necessary books and registers of the Corporation for the registration of the
issuance and the registration of transfers of the securities of the Corporation
for which they are so appointed. All certificates issued after any such
appointment representing securities issued by the Corporation shall be
countersigned by or on behalf of one of the said registrars and/or branch
registrars and/or transfer agents and/or branch transfer agents, as the case
may be.
41. Surrender of Share Certificates. No transfer of a share issued by the
Corporation shall be recorded or registered unless or until the certificate
representing the share to be transferred has been surrendered and cancelled or,
if no certificate has been issued by the Corporation in respect of such share,
unless or until a duly executed share transfer power in respect thereof has
been presented for registration.
42. Defaced, Destroyed Stolen or Lost Certificates. If the defacement,
destruction or apparent destruction, theft, or other wrongful taking or loss of
a share certificate is reported by the owner to the Corporation or to a
registrar, branch registrar, transfer agent or branch transfer agent of the
Corporation (hereinafter, in this paragraph, called the "Corporation's transfer
agent") and such owner gives to the Corporation or the Corporation's transfer
agent a written statement verified by oath or statutory declaration as to the
defacement, destruction or apparent destruction, theft, or other wrongful
taking or loss and the circumstances concerning the same, a request for the
issuance of a new certificate to replace the one so defaced, destroyed,
wrongfully taken or lost and a bond of a surety company (or other security
approved by the board of directors) in such form as is approved by the board of
directors or by the Chairman of the Board, the President, a Vice-President, the
Secretary or the Treasurer of the Corporation, indemnifying the Corporation
(and the Corporation's transfer agent, if any), against all loss, damage or
expense, which the Corporation and/or the Corporation's transfer agent may
suffer or be liable for by reason of the issuance of a new certificate to such
shareholder, a new certificate may be issued in replacement of the one defaced,
destroyed or apparently destroyed, stolen or
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<PAGE> 11
otherwise wrongfully taken or lost, if such issuance is ordered and authorized
by any one of the Chairman of the Board, the President, a Vice President, the
Secretary or the Treasurer of the Corporation or by resolution of the board of
directors.
DIVIDENDS
43. Subject to the relevant provisions of the Act, the board of directors
may from time to time by resolution declare and the Corporation may pay
dividends on its issued shares, subject to the relevant provisions (if any) of
the articles.
NOTICE
44. Shares registered in more than one name. All notices or other
documents required to be sent to a shareholder by the Act, the regulations
under the Act, the articles or the by-laws of the Corporation shall, with
respect to any shares in the capital of the Corporation registered in more than
one name, be given to whichever of such persons is named first in the records
of the Corporation and any notice or other document so given shall be
sufficient notice or delivery of such document to all the holders of such
shares.
45. Persons becoming entitled by operation of law. Every person who by
operation of law, transfer or by any other means whatsoever shall become
entitled to any shares in the capital of the Corporation shall be bound by
every notice or other document in respect of such shares which prior to his
name and address being entered on the records of the Corporation shall have
been duly given to the person or persons from who he derives his title to such
shares.
46. Deceased Shareholder. Any notice or other document delivered or sent
by post or left at the address of any shareholder as the same appears in the
records of the Corporation shall, notwithstanding that such shareholder be then
deceased and whether or not the Corporation has notice of his decease, be
deemed to have been duly served in respect of the shares held by such
shareholder (whether held solely or with other persons) until some other person
be entered in his stead in the records of the Corporation as the holder or one
of the holders thereof and such service shall for all purposes be deemed a
sufficient service of such notice or other document on his heirs, executors or
administrators and all persons (if any) interested with him in such shares.
47. Signatures to Notices. The signature of any director or officer of
the Corporation to any notice may be written, stamped, typewritten or printed
or partly written, stamped, typewritten or printed.
48. Computation of Time. Where a given number of days' notice or notice
extending over any period is required to he given under any provisions of the
articles or by-laws of the Corporation, the day of service or posting of the
notice shall, unless it is otherwise provided, be counted in such number of
days or other period and such notice shall be deemed to have been given or sent
on the day of service or posting;
49. Proof of Service. A certificate of any officer of the Corporation in
office at the time of the making of the certificate or of a transfer officer of
any transfer agent or branch transfer agent of shares of any class of the
Corporation as to facts in relation to the mailing or delivery or service of
any notice or other documents to any shareholder, director, officer or auditor
or publication of any notice or other document shall be conclusive evidence
thereof and shall be binding on every shareholder, director, officer or auditor
of the Corporation, as the case may be.
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<PAGE> 12
CHEQUES, DRAFTS, NOTES, ETC.
50. All cheques, drafts or orders for the payment of money and all notes,
acceptances and bills of exchange shall be signed by such officer or officers
or other person or persons, whether or not officers of the Corporation, and in
such manner as the board of directors may from time to time designate by
resolution.
CUSTODY OF SECURITIES
51. All securities (including warrants) owned by the Corporation shall be
lodged (in the name of the Corporation) with a chartered bank or a trust
company or in a safety deposit box or, if so authorized by resolution of the
board of directors, with such other depositories or in such other manner as may
be determined from time to time by the board of directors.
All securities (including warrants) belonging to the Corporation may
be issued and held in the name of a nominee or nominees of the Corporation (and
if issued or held in the names of more than one nominee shall be held in the
names of the nominees jointly with right of survivorship) and shall be endorsed
in blank with endorsement guaranteed in order to enable transfer thereof to be
completed and registration thereof to be effected.
EXECUTION OF CONTRACTS, ETC.
52. Contracts, documents or instruments in writing requiring the signature
of the Corporation may be signed by two persons, one of whom holds the office
of chairman of the board, president, managing director, vice-president or
director and the other of whom holds one of the said offices or the office of
secretary, treasurer, assistant secretary or assistant treasurer or any other
office created by by-law or by resolution of the board. All contracts,
documents or instruments in writing so signed shall be binding upon the
Corporation without any further authorization or formality. The board of
directors is authorized from time to time by resolution to appoint any officer
or officers or any other person or persons on behalf of the Corporation either
to sign contracts, documents or instruments in writing generally or to sign
specific contracts, documents or instruments in writing. Where the Corporation
has only one director and officer being the same person, that person may sign
all such contracts, documents or other written instruments.
The corporate seal (if any) may, when required, be affixed to
contracts, documents or instruments in writing signed as aforesaid or by an
officer or officers, person or persons appointed as aforesaid by resolution of
the board of directors.
The term "contracts, documents or instruments in writing" as used in
this by-law shall include deeds, mortgages, hypothecs, charges, conveyances,
transfers and assignments of property, real or personal, immoveable or
moveable, agreements, releases, receipts and discharges for the payment of
money or other obligations, conveyances, transfers and assignments of shares,
warrants, bonds, debentures or other securities and all paper writings.
In particular, without limiting the generality of the foregoing, two
persons, one of whom holds the office of chairman of the board, president,
managing director, vice-president or director and the other of whom holds one
of the said offices or the office of secretary, treasurer, assistant secretary
or assistant treasurer or any other office created by by-law or by resolution
of the board, are hereby authorized to sell, assign, transfer, exchange,
convert or convey all shares, bonds, debentures, rights, warrants or other
securities owned by or registered in the name of the Corporation and to sign
and execute (under the seal of the Corporation or otherwise) all assignments
transfers, conveyances, powers of attorney and other instruments that may be
necessary for the purpose of selling, assigning, transferring, exchanging,
converting or conveying or enforcing
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<PAGE> 13
or exercising any voting rights in respect of any such Shares, bonds,
debentures, rights, warrants or other securities. Where the Corporation has
only one director and officer, being the same person, that person may perform
the functions and exercise the powers herein contemplated.
The signature or signatures of any officer or director of the
Corporation and/or of any other officer or officers, person or persons
appointed as aforesaid by resolution of the board of directors may, if
specifically authorized by resolution of the directors, be printed, engraved,
lithographed or otherwise mechanically reproduced upon all contracts, documents
or instruments in writing or, subject to subsections 45(4) and (5) of the Act,
bonds, debentures or other securities of the Corporation executed or issued by
or on behalf of the Corporation and all contracts, documents or instruments in
writing or bonds, debentures or other securities of the Corporation on which
the signatures of any of the foregoing officers, directors or persons shall be
so reproduced, by authorization by resolution of the board of directors, shall,
subject to subsections 45(4) and (5) of the Act, be deemed to have been duly
signed by such officers, shall be as valid to all intents and purposes as if
they had been signed manually and notwithstanding that the officers, directors
or persons whose signature or signatures is or are so reproduced way have
ceased to hold office at the date of the delivery or issue of such contracts,
documents or instruments in writing or bonds, debentures or other securities of
the Corporation.
FISCAL YEAR
53. The fiscal period of the Corporation shall terminate on such day in
each year as the board of directors may from time to time by resolution
determine.
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<PAGE> 14
The foregoing By-Law is hereby consented to by the signatures of all
the directors of Canadian Home Products Ltd. pursuant to Section 112(1) of the
Canada Business Corporations Act, this 12 day of June, 1978.
/s/ William F. Laporte
-----------------------------------
William F. Laporte
/s/ David P. Jaicks
-----------------------------------
David P. Jaicks
/s/ Marvin E. Schmalzried
-----------------------------------
Marvin E. Schmalzried
/s/ W.H. Allen
-----------------------------------
W. H. Allen
/s/ W.D. Stoddart
-----------------------------------
W. D. Stoddart
/s/ D.M. Sanderson
-----------------------------------
D. M. Sanderson
/s/ Paul A. Monaghan
-----------------------------------
Paul A. Monaghan
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<PAGE> 1
EXHIBIT 3.11
CERTIFICATE OF INCORPORATION
OF
HERITAGE BRANDS HOLDINGS, INC.
ARTICLE I
The name of the corporation is Heritage Brands Holdings, Inc.
(hereinafter referred to as the "Corporation").
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is 1209 Orange Street, in the City of Wilmington, County of New
Castle, 19801. The name of its registered agent at such address is The
Corporation Trust Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
ARTICLE IV
The total number of shares of stock that the Corporation shall have
authority to issue is ten thousand (10,000) shares of Common Stock, par value
$.01 per share.
ARTICLE V
The name and mailing address of the incorporator is as follows:
NAME MAILING ADDRESS
---- ---------------
Michael J. Cramer 5956 Sherry Lane
Suite 1100
Dallas, Texas 75225
ARTICLE VI
In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors of the Corporation is authorized to adopt, amend or
repeal the By-Laws of the Corporation.
<PAGE> 2
ARTICLE VII
Election of directors of the Corporation need not be by ballot unless
the By-Laws so require.
ARTICLE VIII
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
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 a 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 of the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of the Corporation, as the case may be,
and also on the Corporation.
ARTICLE IX
To the fullest extent that the General Corporation Law of the State of
Delaware as it exists on the date hereof or as it may hereafter be amended
permits the limitation or elimination of the liability of directors, no
director of the Corporation shall be liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director.
No amendment to this Certificate of Incorporation, directly or indirectly by
merger, consolidation or otherwise, having the effect of amending or repealing
any of the provisions of this ARTICLE NINTH shall apply to or have any effect
on the liability or 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 or repeal, unless such amendment shall have the effect of further
limiting or eliminating such liability.
The undersigned, being the sole incorporator named above, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, has signed this Certificate on August 15, 1994, and does
hereby acknowledge that it is his act and deed and that the facts herein stated
are true.
/s/ Michael J. Cramer
------------------------------
Michael J. Cramer
<PAGE> 3
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION OF
HERITAGE BRANDS HOLDINGS, INC.
ADOPTED BEFORE THE PAYMENT OF CAPITAL
PURSUANT TO SECTION 241 OF THE
DELAWARE GENERAL CORPORATION LAW
Heritage Brands Holdings, Inc., a corporation organized and existing
under the by virtue of the General Corporation Law of the State of Delaware
(the "Corporation"), does hereby certify that:
FIRST: The name of the Corporation is Heritage Brands Holdings, Inc.
SECOND: ARTICLE IV of the Corporation's Certificate of Incorporation is
hereby amended to read in its entirety as follows:
ARTICLE IV:
The total number of shares of all classes of capital stock which
the Corporation shall have authority to issue is 2,000,000 shares of a
class designated Common Stock, par value $.01 per share ("Common
Stock").
THIRD: The Corporation has not received payment for any of its capital
stock (including the Common Stock) and, accordingly, this amendment to the
Certificate of Incorporation by the resolution adopted by the Board of
Directors in accordance with Section 241 of the Delaware General Corporation
Law.
IN WITNESS WHEREOF, the undersigned have executed this certificate as of
this 30th day of August, 1994.
HERITAGE BRANDS HOLDINGS, INC.
By:/s/ Michael J. Cramer
---------------------------
Name: Michael J. Cramer
-------------------------
Title:: Vice President
-----------------------
<PAGE> 4
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION OF
HERITAGE BRANDS HOLDING, INC.
Heritage Brands Holdings, Inc., a corporation organized and existing
under any by virtue of the General Corporation Law of the State of Delaware
(the "Corporation"), does hereby certify that:
FIRST: The name of the Corporation is Heritage Brands Holdings, Inc.
SECOND: ARTICLE IV of the Corporation's Certificate of Incorporation is
hereby amended to read in its entirety as follows:
ARTICLE IV:
The total number of shares of all shares of all classes of
capital stock which the Corporation shall have authority to issue is
17,000,000 shares of a class designated Common Stock, par value $.01 per
share ("Common Stock").
THIRD: This amendment to the Certificate of Incorporation has been duly
adopted by the Board of Directors and stockholders of the Corporation in
accordance with Section 241 of the Delaware General Corporation Law.
IN WITNESS WHEREOF, the undersigned has executed this certificate as of
this 9th day of January, 1995.
HERITAGE BRANDS HOLDINGS, INC.
By:/s/ Michael J. Cramer
---------------------------
Name: Michael J. Cramer
-------------------------
Title:: Secretary
-----------------------
<PAGE> 1
EXHIBIT 3.12
BY-LAWS
OF
HERITAGE BRANDS HOLDINGS, INC.
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the
Corporation shall be located at 1209 Orange Street, in the City of Wilmington,
County of New Castle, State of Delaware 19801.
Section 2. Other Offices. The Corporation may also have offices
at such other places both within and without the State of Delaware as the Board
of Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. Meetings of the stockholders for
the election of directors or for any other purpose shall be held at such time
and place, either within or without the State of Delaware, as shall be
designated from time to time by the Board of Directors and stated in the notice
of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual Meetings. The Annual Meeting of Stockholders
shall be held on such date and at such time as shall be designated from time to
time by the Board of Directors and stated in the notice of the meeting, at
which meetings the stockholders shall elect by a plurality vote a Board of
Directors, and transact such other business as may properly be brought before
the meeting. Written notice of the Annual Meeting stating the place, date and
hour of the meeting shall be given to each stockholder entitled to vote at such
meeting not less than ten nor more than 60 days before the date of the meeting.
Section 3. Special Meetings. Unless otherwise prescribed by law
or by the Certificate of Incorporation, Special Meetings of Stockholders, for
any purpose or purposes, may be called by either (a) the Chairman, if there be
one, (b) the President, (c) any Vice President, if there be one, (d) the
Secretary or (e) any Assistant Secretary, if there be one, and shall be called
by any such officer at the request in writing of a majority of the Board of
Directors or at the request in writing of stockholders owning a majority of
capital stock of the Corporation issued and outstanding and entitled to vote.
Such request shall state the purpose or purposes of the proposed meeting.
Written notice of the Special Meeting stating the place, date and hour of the
meeting and the purpose or purposes for which the meeting is called shall be
given not less than ten nor more than 60 days before the date of the meeting to
each stockholder entitled to vote at such meeting.
<PAGE> 2
Section 4. Quorum. Except as otherwise provided by law or by
the Certificate of Incorporation, the holders of a majority of the capital
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. 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 noticed. If the adjournment is for more than 30
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder
entitled to vote at the meeting.
Section 5. Voting. Unless otherwise required by law, the
Certificate of Incorporation or these by-laws, any question brought before any
meeting of stockholders shall be decided by the vote of the holders of a
majority of the stock represented and entitled to vote thereat. Each
stockholder represented at a meeting of stockholders shall be entitled to cast
one vote thereat held by such stockholder. Such votes may be cast in person or
by proxy but no proxy shall be voted on or after three years from its date,
unless such proxy provides for a longer period. The Board of Directors, in its
discretion, or the officer of the Corporation presiding at a meeting of
stockholders, in his discretion, may require that any votes cast at such
meeting shall be cast by written ballot.
Section 6. Consent of Stockholders in Lieu of Meeting. Unless
otherwise provided in the Certificate of Incorporation, any action required or
permitted to be taken at any Annual or Special Meeting of Stockholders of the
Corporation may be taken without a meeting, without prior notice and without a
vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize the taking of such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
Section 7. List of Stockholders Entitled to Vote. The officer
of the Corporation who has charge of the stock ledger of the Corporation shall
prepare and make, at least ten days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or if not so
specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof and may be inspected by any stockholder of the Corporation who is
present.
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<PAGE> 3
Section 8. Stock Ledger. The stock ledger of the Corporation
shall be the only evidence as to who are the stockholders entitled (a) to
examine the stock ledger, the list required by Section 7 of this Article II or
the books of the Corporation and (b) to vote in person or by proxy at any
meeting of stockholders.
ARTICLE III
DIRECTORS
Section 1. Number and Election of Directors. The business and
affairs of the Corporation shall be managed by a Board of Directors initially
consisting of three directors. The number of directors of the Corporation may
be increased or decreased from time to time by resolution adopted by at least
66 2/3% of the Board of Directors, but no decrease by the Board of Directors
shall have the effect of shortening the term of any incumbent director. Except
as provided in Section 2 of this Article III, directors shall be elected by a
plurality of the votes cast at Annual Meetings of stockholders and each
director so elected shall hold office until the next Annual Meeting and until
his successor is duly elected and qualified or until his earlier resignation or
removal. Any director may resign at any time upon written notice to the
Corporation. Directors need not be stockholders.
Section 2. Vacancies. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, though less than a quorum, or by
a sole remaining director and the directors so chosen shall hold office until
the next annual election and until their successors are duly elected and
qualified or until their earlier resignation or removal.
Section 3. Duties and Powers. The business of the Corporation
shall be managed by or under the direction of the 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 Certificate of Incorporation or by these
by-laws directed or required to be exercised or done by the stockholders.
Section 4. Meetings. The Board of Directors of the Corporation
may hold meetings, both regular and special, either within or without the State
of Delaware. Regular meetings of the Board of Directors may be held without
notice at such time and at such place as may from time to time be determined by
the Board of Directors. Special meetings of the Board of Directors may be
called by the Chairman, if there be one, the President or any director(s).
Notice thereof stating the place, date and hour of the meeting shall be given
to each director either by mail not less than 48 hours before the date of the
meeting, by telephone or telegram on 24 hours' notice or on such shorter notice
as the person or persons calling such meeting may deem necessary or appropriate
in the circumstances.
Section 5. Quorum. Except as may be otherwise specifically
provided by law, the Certificate of Incorporation or these by-laws, at all
meetings of the Board of Directors, a majority of the entire Board of Directors
shall constitute a quorum for the transaction of business and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of
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<PAGE> 4
the Board of Directors. If a quorum shall not be present at any meeting of the
Board 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 6. Actions of Board. Unless otherwise provided by the
Certificate of Incorporation or these by-laws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee
thereof may be taken without a meeting, if all the members of the Board of
Directors or committee, as the case may be, consent thereto in writing and the
writing or writings are filed with the minutes of proceedings of the Board of
Directors or committee.
Section 7. Actions Requiring Approval of 66 2/3% of Board of
Directors. Notwithstanding any other provisions of these by-laws, the following
actions may not be taken unless at least 66 2/3% of the entire Board of
Directors shall so approve: (a) the sale or issuance of equity securities of
the Corporation; (b) the registration of the Corporation's securities in a
public offering or distribution on behalf of any person; and (c) the
Corporation's participation with other entities in partnerships, limited
partnerships, joint ventures or other associations other than in the ordinary
course of business.
Section 8. Meetings by Means of Conference Telephone. Unless
otherwise provided by the Certificate of Incorporation or these by-laws,
members of the Board of Directors of the Corporation or any committee
designated by the Board of Directors may participate in a meeting of the Board
of Directors or such committee by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
Section 8 shall constitute presence in person at such meeting.
Section 9. Committees. The Board of Directors may, by
resolution passed by a majority of the entire Board of Directors, designate one
or more committees, each committee to consist of one or more of the directors
of the Corporation. The Board of Directors may designate one or more directors
as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of any such committee. In the absence or
disqualification of a member of a committee, and in the absence of a
designation by the Board of Directors of an alternate member to replace the
absent or disqualified member, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they constitute
a quorum, may unanimously appoint another member of the Board of Directors to
act at the meeting in place of any absent or disqualified member. Any
committee, to the extent allowed by law and provided in the resolution
establishing such committee, 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. Each committee shall keep regular minutes and
report to the Board of Directors when required.
Section 10. Compensation. 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 or other consideration as director. No such
payment shall preclude any director from serving the Corporation in any other
capacity and receiving
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<PAGE> 5
compensation therefor. Members of special or standing committees may be
allowed like compensation for attending committee meetings.
Section 11. Interested Directors. No contract or transaction
between the Corporation and one or more of its directors or officers, or
between the Corporation and any other partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof
which authorizes the contract or transaction, or solely because his or their
votes are counted for such purpose if (a) the material facts as to his or their
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board of Directors or the committee, and the Board of
Directors or committee in good faith authorizes the contract or transaction by
the affirmative vote of a majority of the disinterested directors, even though
the disinterested directors be less than a quorum; or (b) the material facts as
to his or their relationship or interest and as to the contract or transaction
are disclosed or are known to the stockholders entitled to vote thereon, and
the contract or transaction is specifically approved in good faith by the vote
of the stockholders; or (c) the contract or transaction is fair as to the
Corporation as of the time it is authorized, approved or ratified by the Board
of Directors, a committee thereof or the stockholders. Common or interested
directors may be counted in determining the presence of a quorum at a meeting
of the Board of Directors or of a committee which authorizes the contract or
transaction.
ARTICLE IV
OFFICERS
Section 1. General. The officers of the Corporation shall be
chosen by the Board of Directors and shall be a President and a Secretary. The
Board of Directors, in its discretion, may also choose a Chairman of the Board
of Directors (who must be a director), a Treasurer, and one or more Vice
Presidents, Assistant Secretaries, Assistant Treasurers and other officers.
Any number of offices may be held by the same person, unless otherwise
prohibited by law, the Certificate of Incorporation or these by-laws. The
officers of the Corporation need not be stockholders of the Corporation nor,
except in the case of the Chairman of the Board of Directors, need such
officers be directors of the Corporation.
Section 2. Election. The Board of Directors at its first
meeting held after each Annual Meeting of Stockholders shall elect the officers
of the Corporation, 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; and all officers of the Corporation shall
hold office until their successors are chosen and qualified or until their
earlier resignation or removal. Any officer elected 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 shall be
filled by the Board of Directors. The salaries of all officers of the
Corporation shall be fixed by the Board of Directors.
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<PAGE> 6
Section 3. Voting Securities Owned by the Corporation. Powers
of attorney, proxies, waivers of notice of meeting, consents and other
instruments relating to securities owned by the Corporation may be executed in
the name and on behalf of the Corporation by the President or any Vice
President and any such officer may, in the name of and on behalf of the
Corporation, take all such action as any such officer may deem advisable to
vote in person or by proxy at any meeting of security holders of any
corporation in which the Corporation may own securities and at any such meeting
shall possess and may exercise any and all rights and powers incident to the
ownership of such securities and which, as the owner thereof, the Corporation
might have exercised and possessed if present. The Board of Directors may, by
resolution, from time to time confer like powers upon any other person or
persons.
Section 4. Chairman of the Board of Directors. The Chairman of
the Board of Directors, if there be one, shall preside at all meetings of the
stockholders and of the Board of Directors. Except where by law the signature
of the President is required, the Chairman of the Board of Directors shall
possess the same power as the President to sign all contracts, certificates and
other instruments of the Corporation which may be authorized by the Board of
Directors. During the absence or disability of the President, the Chairman of
the Board of Directors shall exercise all the powers and discharge all the
duties of the President. The Chairman of the Board of Directors shall also
perform such other duties and may exercise such other powers as from time to
time may be assigned to him by these by-laws or by the Board of Directors.
Section 5. President. The President shall, subject to the
control of the Board of Directors and, if there be one, the Chairman of the
Board of Directors, have general supervision of the business of the Corporation
and shall see that all orders and resolutions of the Board of Directors are
carried into effect. He shall be the Chief Executive Officer of the
Corporation and shall execute all bonds, mortgages, contracts and other
instruments of the Corporation requiring a seal, under the seal of the
Corporation, except where required or permitted by law to be otherwise signed
and executed and except that the other officers of the Corporation may sign and
execute documents when so authorized by these by-laws, the Board of Directors
or the President. In the absence or disability of the Chairman of the Board of
Directors, or if there be none, the President shall preside at all meetings of
the stockholders and the Board of Directors. The President shall also perform
such other duties and may exercise such other powers as from time to time may
be assigned to him by these by-laws or by the Board of Directors.
Section 6. Vice Presidents. At the request of the President or
in his absence or in the event of his inability or refusal to act (and if there
be no Chairman of the Board of Directors), the Vice President or the Vice
Presidents, if there be more than one (in the order designated by the Board of
Directors) 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. Each Vice President shall perform such other duties and have such
other powers as the Board of Directors from time to time may prescribe. If
there be no Chairman of the Board of Directors and no Vice President, the Board
of Directors shall designate the officer of the Corporation who, in the absence
of the President or in the event of the inability or refusal of the President
to act, 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.
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<PAGE> 7
Section 7. Secretary. The Secretary shall attend all meetings
of the Board of Directors and all meetings of stockholders and record all the
proceedings thereat in a book or books to be kept for that purpose; the
Secretary shall also perform like duties for the standing committees when
required. The Secretary 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. If the Secretary
shall be unable or shall refuse to cause to be given notice of all meetings of
the stockholders and special meetings of the Board of Directors, and if there
be no Assistant Secretary, then either the Board of Directors or the President
may choose another officer to cause such notice to be given. The Secretary
shall have custody of the seal of the Corporation and the Secretary or any
Assistant Secretary, if there be one, shall have authority to affix the same to
any instrument requiring it and when so affixed it may be attested by the
signature of the Secretary or by the signature of any 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. The
Secretary shall see that all books, reports, statements, certificates and other
documents and records required by law to be kept or filed are properly kept or
filed, as the case may be.
Section 8. Treasurer. 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 in such depositories as may be designated by the Board of
Directors. The Treasurer 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 meeting, or when the Board of Directors so requires, an account of
all his transactions as Treasurer and of the financial condition of the
Corporation. If required by the Board of Directors, the Treasurer shall give
the Corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors or 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 9. Assistant Secretaries. Except as may be otherwise
provided in these by-laws, Assistant Secretaries, if there be any, shall
perform such duties and have such powers as from time to time may be assigned
to them by the Board of Directors, the President, any Vice-President, if there
be one, or the Secretary, and in the absence of the Secretary or in the event
of his disability or refusal to act, shall perform the duties of the Secretary,
and when so acting, shall have all the powers of and be subject to all the
restrictions upon the Secretary.
Section 10. Assistant Treasurers. Assistant Treasurers, if
there be any, shall perform such duties and have such powers as from time to
time may be assigned to them by the Board of Directors, the President, any
Vice-President, if there be one, or the Treasurer, and in the absence of the
Treasurer or in the event of his disability or refusal to act, shall perform
the duties of the Treasurer, and when so acting, shall have all the powers of
and be subject to all the restrictions upon the Treasurer. If required by the
Board of Directors, an Assistant Treasurer shall give the Corporation a bond in
such sum and with such surety or sureties as shall be satisfactory to the Board
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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 11. Other Officers. Such other officers as the Board of
Directors may choose shall perform such duties and have such powers as from
time to time may be assigned to them by the Board of Directors. The Board of
Directors may delegate to any other officer of the Corporation the power to
choose such other officers and to prescribe their respective duties and powers.
ARTICLE V
STOCK
Section 1. Form of Certificates. Every holder of stock in the
Corporation shall be entitled to have a certificate signed in the name of the
Corporation (a) by the Chairman of the Board of Directors, the President or a
Vice President and (b) by 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.
Section 2. Signatures. Where a certificate is countersigned by
(a) a transfer agent other than the Corporation or its employee or (b) a
registrar other than the Corporation or its employee, any other signature on
the certificate may be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the Corporation with the
same effect as if he were such officer, transfer agent or registrar at the date
of issue.
Section 3. Lost Certificates. 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, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming the certificate of
stock to be lost, stolen or destroyed. When authorizing such issue of a new
certificate, the Board of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificate, or his legal representative, to advertise the same in
such manner as the Board of Directors shall require and/or to 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, stolen or destroyed.
Section 4. Transfers. Stock of the Corporation shall be
transferable in the manner prescribed by law and in these by-laws. Transfers
of stock shall be made on the books of the Corporation only by the person named
in the certificate or by his attorney lawfully constituted in writing and upon
the surrender of the certificate therefor, which shall be cancelled before a
new certificate shall be issued.
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Section 5. Record Date. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or entitled to express consent to
corporate action in writing without a meeting, or entitled to receive payment
of any dividend or other distribution or allotment of any rights, or entitled
to exercise of any rights in respect of any change, conversion or exchange of
stock, or for the purpose of any other lawful action, the Board of Directors
may fix, in advance, a record date, which shall not be more than sixty days nor
less than ten days before the date of such meeting, nor more than sixty days
prior to any other action. A determination of stockholders of record entitled
to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting.
Section 6. Beneficial Owners. 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 law.
ARTICLE VI
NOTICES
Section 1. Notices. Whenever written notice is required by law,
the Certificate of Incorporation or these by-laws to be given to any director,
member of a committee or stockholder, such notice may be given by mail,
addressed to such director, member of a committee or stockholder, 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. Written notice may also be given
personally or by telegram, telex or cable.
Section 2. Waivers of Notice. Whenever any notice is required
by law, the Certificate of Incorporation or these by-laws to be given to any
director, member of a committee or stockholder, 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 VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, and may be paid in cash, in property or in shares of the capital
stock. 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 Board of
Directors from time to time, in its absolute discretion, deems proper as a
reserve or reserves to meet contingencies, or for
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equalizing dividends, or for repairing or maintaining any property of the
Corporation, or for any proper purpose, and the Board of Directors may modify
or abolish any such reserve.
Section 2. Disbursements. 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.
Section 3. Fiscal Year. The fiscal year of the Corporation
shall be fixed by resolution of the Board of Directors.
Section 4. Corporate Seal. The corporate seal shall have
inscribed thereon the name of the Corporation, the year of its organization and
the words "Corporate Seal, Delaware." The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced.
ARTICLE VIII
INDEMNIFICATION
Section 1. Power to Indemnify in Actions, Suits or Proceedings
Other Than Those by or in the Right or the Corporation. Subject to Section 3
of this Article VIII, the Corporation shall indemnify 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 (other than an 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, 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 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.
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 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 reasonable cause to believe that his conduct was unlawful.
Section 2. Power to Indemnify in Actions, Suits or Proceedings
by or in the Right of the Corporation. Subject to Section 3 of this Article
VIII, the Corporation shall indemnify any person who was or is 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 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 against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such
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<PAGE> 11
action or suit 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; 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.
Section 3. Authorization of Indemnification. Any
indemnification under this Article VIII (unless ordered by a court) shall be
made by the Corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee or agent
is proper in the circumstances because he has met the applicable standards of
conduct set forth in Section 1 or Section 2 of this Article VIII, as the case
may be. Such determination shall be made (i) by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding or (ii) if such a quorum is not obtainable, or even
if obtainable, a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion or (iii) by the stockholders. To the
extent, however, 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 described above, or in the defense of any claim, issue or matter
therein, he shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith, without the
necessity of authorization in the specific case.
Section 4. Good Faith Defined. For purposes of any
determination under Section 3 of this Article VIII, a person shall be deemed to
have acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation, or, with respect to any
criminal action or proceeding, to have had no reasonable cause to believe his
conduct was unlawful, if his action is based on the records or books of account
of the Corporation or another enterprise or on information supplied to him by
the officers of the Corporation or another enterprise in the course of their
duties or on the advice of legal counsel for the Corporation or another
enterprise or on information or records given or reports made to the
Corporation or another enterprise by an independent certified public accountant
or by an appraiser or other expert selected with reasonable care by the
Corporation or another enterprise. The term "another enterprise" as used in
this Section 4 shall mean any other corporation or any partnership, joint
venture, trust or other enterprise of which such person is or was serving at
the request of the Corporation as a director, officer, employee or agent. The
provisions of this Section 4 shall not be deemed to be exclusive or to limit in
any way the circumstances in which a person may be deemed to have met the
applicable standards of conduct set forth in Section 1 or 2 of this Article
VIII, as the case may be.
Section 5. Indemnification by a Court. Notwithstanding any
contrary determination in the specific case under Section 3 of this Article
VIII, and notwithstanding the absence of any determination thereunder, any
director, officer, employee or agent may apply to any court of competent
jurisdiction in the State of Delaware for indemnification to the extent
otherwise permissible under Sections 1 and 2 of this Article VIII. The basis
of such indemnification by a court shall be a determination by such court that
indemnification of the director, officer, employee or agent is proper in the
circumstances because he has met the applicable standards of conduct set forth
in
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<PAGE> 12
Section 1 or 2 of this Article VIII, as the case may be. Notice of any
application for indemnification pursuant to this Section 5 shall be given to
the Corporation promptly upon the filing of such application.
Section 6. Expenses Payable in Advance. Expenses (including
attorneys' fees) incurred by an officer or director in defending any civil,
criminal, administrative or investigative action, suit or proceeding may 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 he is not entitled to be indemnified by the
Corporation as authorized in this Article VIII. Such expenses (including
attorneys' fees) incurred by other employees and agents may be so paid upon
such terms and conditions, if any, as the Board of Directors deems appropriate.
Section 7. Nonexclusivity and Survival of Indemnification. The
indemnification and advancement of expenses provided by, or granted pursuant
to, the other subsections of this Article VIII shall not be deemed exclusive of
any other rights to which those seeking indemnification and advancement of
expenses may be entitled under any by-law, agreement, vote of stockholders or
disinterested directors or pursuant to the direction (howsoever embodied) of
any court of competent jurisdiction or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, it being the policy of the Corporation that indemnification of the
persons specified in Sections 1 and 2 of this Article VIII shall be made to the
fullest extent permitted by law. The provisions of this Article VIII shall not
be deemed to preclude the indemnification of any person who is not specified in
Section 1 or 2 of this Article VIII but whom the Corporation has the power or
obligation to indemnify under the provisions of the General Corporation Law of
the State of Delaware or otherwise.
Section 8. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who 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 any liability
asserted against him and incurred by him in any such capacity or arising out of
his status as such, whether or not the Corporation would have the power or the
obligation to indemnify him against such liability under the provisions of this
Article VIII.
Section 9. Meaning of "Corporation" for Purposes of Article
VIII. For purposes of this Article VIII, references to "the Corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall stand
in the same position under the provisions of this Article VIII with respect to
the resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.
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<PAGE> 13
ARTICLE IX
AMENDMENTS
Section 1. Procedure. These by-laws may be altered, amended or
repealed, in whole or in part, or new by-laws may be adopted by the
stockholders or by the Board of Directors of the Corporation; provided,
however, that notice of such alteration, amendment, repeal or adoption of new
by-laws be contained in the notice of such meeting of stockholders or Board of
Directors, as the case may be. All such amendments must be approved by either
the holders of a majority of the outstanding capital stock entitled to vote
thereon or by a majority of the entire Board of Directors then in office.
Section 2. Entire Board of Directors. As used in this Article
IX and in these by-laws generally, the term "entire Board of Directors" means
the total number of directors which the Corporation would have if there were no
vacancies.
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<PAGE> 1
EXHIBIT 3.13
CERTIFICATE OF INCORPORATION
OF
HERITAGE BRANDS, INC.
ARTICLE I
The name of the corporation is Heritage Brands, Inc. (hereinafter
referred to as the "Corporation").
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is 1209 Orange Street, in the City of Wilmington, County of New
Castle, 19801. The name of its registered agent at such address is The
Corporation Trust Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
ARTICLE IV
The total number of shares of stock that the Corporation shall have
authority to issue is ten thousand (10,000) shares of Common Stock, par value
$.01 per share.
ARTICLE V
The name and mailing address of the incorporator is as follows:
Name Mailing Address
---- -----------------
Michael J. Cramer 5956 Sherry Lane
Suite 1100
Dallas, Texas 75225
ARTICLE VI
In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors of the Corporation is authorized to adopt, amend or
repeal the By-Laws of the Corporation.
ARTICLE VII
Election of directors of the Corporation need not be by ballot unless
the By-Laws so require.
<PAGE> 2
ARTICLE VIII
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
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 a 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 of the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of the Corporation, as the case may be,
and also on the Corporation.
ARTICLE IX
To the fullest extent that the General Corporation Law of the State of
Delaware as it exists on the date hereof or as it may hereafter be amended
permits the limitation or elimination of the liability of directors, no
director of the Corporation shall be liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director.
No amendment to this Certificate of Incorporation, directly or indirectly by
merger, consolidation or otherwise, having the effect of amending or repealing
any of the provisions of this ARTICLE NINTH shall apply to or have any effect
on the liability or 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 or repeal, unless such amendment shall have the effect of further
limiting or eliminating such liability.
The undersigned, being the sole incorporator named above, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, has signed this Certificate on August 15, 1994, and does
hereby acknowledge that it is his act and deed and that the facts herein stated
are true.
/s/ Michael J. Cramer
-------------------------------------
Michael J. Cramer
<PAGE> 1
EXHIBIT 3.14
BY-LAWS
OF
HERITAGE BRANDS, INC.
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the
Corporation shall be located at 1209 Orange Street, in the City of Wilmington,
County of New Castle, State of Delaware 19801.
Section 2. Other Offices. The Corporation may also have offices
at such other places both within and without the State of Delaware as the Board
of Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. Meetings of the stockholders for
the election of directors or for any other purpose shall be held at such time
and place, either within or without the State of Delaware, as shall be
designated from time to time by the Board of Directors and stated in the notice
of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual Meetings. The Annual Meeting of Stockholders
shall be held on such date and at such time as shall be designated from time to
time by the Board of Directors and stated in the notice of the meeting, at
which meetings the stockholders shall elect by a plurality vote a Board of
Directors, and transact such other business as may properly be brought before
the meeting. Written notice of the Annual Meeting stating the place, date and
hour of the meeting shall be given to each stockholder entitled to vote at such
meeting not less than ten nor more than 60 days before the date of the meeting.
Section 3. Special Meetings. Unless otherwise prescribed by law
or by the Certificate of Incorporation, Special Meetings of Stockholders, for
any purpose or purposes, may be called by either (a) the Chairman, if there be
one, (b) the President, (c) any Vice President, if there be one, (d) the
Secretary or (e) any Assistant Secretary, if there be one, and shall be called
by any such officer at the request in writing of a majority of the Board of
Directors or at the request in writing of stockholders owning a majority of
capital stock of the Corporation issued and outstanding and entitled to vote.
Such request shall state the purpose or purposes of the proposed meeting.
Written notice of the Special Meeting stating the place, date and hour of the
meeting and the purpose or purposes for which the meeting is called shall be
given not less than ten nor more than 60 days before the date of the meeting to
each stockholder entitled to vote at such meeting.
<PAGE> 2
Section 4. Quorum. Except as otherwise provided by law or by
the Certificate of Incorporation, the holders of a majority of the capital
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. 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 noticed. If the adjournment is for more than 30
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder
entitled to vote at the meeting.
Section 5. Voting. Unless otherwise required by law, the
Certificate of Incorporation or these by-laws, any question brought before any
meeting of stockholders shall be decided by the vote of the holders of a
majority of the stock represented and entitled to vote thereat. Each
stockholder represented at a meeting of stockholders shall be entitled to cast
one vote thereat held by such stockholder. Such votes may be cast in person or
by proxy but no proxy shall be voted on or after three years from its date,
unless such proxy provides for a longer period. The Board of Directors, in its
discretion, or the officer of the Corporation presiding at a meeting of
stockholders, in his discretion, may require that any votes cast at such
meeting shall be cast by written ballot.
Section 6. Consent of Stockholders in Lieu of Meeting. Unless
otherwise provided in the Certificate of Incorporation, any action required or
permitted to be taken at any Annual or Special Meeting of Stockholders of the
Corporation may be taken without a meeting, without prior notice and without a
vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize the taking of such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
Section 7. List of Stockholders Entitled to Vote. The officer
of the Corporation who has charge of the stock ledger of the Corporation shall
prepare and make, at least ten days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or if not so
specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof and may be inspected by any stockholder of the Corporation who is
present.
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<PAGE> 3
Section 8. Stock Ledger. The stock ledger of the Corporation
shall be the only evidence as to who are the stockholders entitled (a) to
examine the stock ledger, the list required by Section 7 of this Article II or
the books of the Corporation and (b) to vote in person or by proxy at any
meeting of stockholders.
ARTICLE III
DIRECTORS
Section 1. Number and Election of Directors. The business and
affairs of the Corporation shall be managed by a Board of Directors initially
consisting of three directors. The number of directors of the Corporation may
be increased or decreased from time to time by resolution adopted by at least
66 2/3% of the Board of Directors, but no decrease by the Board of Directors
shall have the effect of shortening the term of any incumbent director. Except
as provided in Section 2 of this Article III, directors shall be elected by a
plurality of the votes cast at Annual Meetings of stockholders and each
director so elected shall hold office until the next Annual Meeting and until
his successor is duly elected and qualified or until his earlier resignation or
removal. Any director may resign at any time upon written notice to the
Corporation. Directors need not be stockholders.
Section 2. Vacancies. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, though less than a quorum, or by
a sole remaining director and the directors so chosen shall hold office until
the next annual election and until their successors are duly elected and
qualified or until their earlier resignation or removal.
Section 3. Duties and Powers. The business of the Corporation
shall be managed by or under the direction of the 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 Certificate of Incorporation or by these
by-laws directed or required to be exercised or done by the stockholders.
Section 4. Meetings. The Board of Directors of the Corporation
may hold meetings, both regular and special, either within or without the State
of Delaware. Regular meetings of the Board of Directors may be held without
notice at such time and at such place as may from time to time be determined by
the Board of Directors. Special meetings of the Board of Directors may be
called by the Chairman, if there be one, the President or any director(s).
Notice thereof stating the place, date and hour of the meeting shall be given
to each director either by mail not less than 48 hours before the date of the
meeting, by telephone or telegram on 24 hours' notice or on such shorter notice
as the person or persons calling such meeting may deem necessary or appropriate
in the circumstances.
Section 5. Quorum. Except as may be otherwise specifically
provided by law, the Certificate of Incorporation or these by-laws, at all
meetings of the Board of Directors, a majority of the entire Board of Directors
shall constitute a quorum for the transaction of business and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of
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<PAGE> 4
the Board of Directors. If a quorum shall not be present at any meeting of the
Board 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 6. Actions of Board. Unless otherwise provided by the
Certificate of Incorporation or these by-laws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee
thereof may be taken without a meeting, if all the members of the Board of
Directors or committee, as the case may be, consent thereto in writing and the
writing or writings are filed with the minutes of proceedings of the Board of
Directors or committee.
Section 7. Actions Requiring Approval of 66 2/3% of Board of
Directors. Notwithstanding any other provisions of these by-laws, the following
actions may not be taken unless at least 66 2/3% of the entire Board of
Directors shall so approve: (a) the sale or issuance of equity securities of
the Corporation; (b) the registration of the Corporation's securities in a
public offering or distribution on behalf of any person; and (c) the
Corporation's participation with other entities in partnerships, limited
partnerships, joint ventures or other associations other than in the ordinary
course of business.
Section 8. Meetings by Means of Conference Telephone. Unless
otherwise provided by the Certificate of Incorporation or these by-laws,
members of the Board of Directors of the Corporation or any committee
designated by the Board of Directors may participate in a meeting of the Board
of Directors or such committee by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
Section 8 shall constitute presence in person at such meeting.
Section 9. Committees. The Board of Directors may, by
resolution passed by a majority of the entire Board of Directors, designate one
or more committees, each committee to consist of one or more of the directors
of the Corporation. The Board of Directors may designate one or more directors
as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of any such committee. In the absence or
disqualification of a member of a committee, and in the absence of a
designation by the Board of Directors of an alternate member to replace the
absent or disqualified member, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they constitute
a quorum, may unanimously appoint another member of the Board of Directors to
act at the meeting in place of any absent or disqualified member. Any
committee, to the extent allowed by law and provided in the resolution
establishing such committee, 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. Each committee shall keep regular minutes and
report to the Board of Directors when required.
Section 10. Compensation. 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 or other consideration as director. No such
payment shall preclude any director from serving the Corporation in any other
capacity and receiving
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<PAGE> 5
compensation therefor. Members of special or standing committees may be
allowed like compensation for attending committee meetings.
Section 11. Interested Directors. No contract or transaction
between the Corporation and one or more of its directors or officers, or
between the Corporation and any other partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof
which authorizes the contract or transaction, or solely because his or their
votes are counted for such purpose if (a) the material facts as to his or their
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board of Directors or the committee, and the Board of
Directors or committee in good faith authorizes the contract or transaction by
the affirmative vote of a majority of the disinterested directors, even though
the disinterested directors be less than a quorum; or (b) the material facts as
to his or their relationship or interest and as to the contract or transaction
are disclosed or are known to the stockholders entitled to vote thereon, and
the contract or transaction is specifically approved in good faith by the vote
of the stockholders; or (c) the contract or transaction is fair as to the
Corporation as of the time it is authorized, approved or ratified by the Board
of Directors, a committee thereof or the stockholders. Common or interested
directors may be counted in determining the presence of a quorum at a meeting
of the Board of Directors or of a committee which authorizes the contract or
transaction.
ARTICLE IV
OFFICERS
Section 1. General. The officers of the Corporation shall be
chosen by the Board of Directors and shall be a President and a Secretary. The
Board of Directors, in its discretion, may also choose a Chairman of the Board
of Directors (who must be a director), a Treasurer, and one or more Vice
Presidents, Assistant Secretaries, Assistant Treasurers and other officers.
Any number of offices may be held by the same person, unless otherwise
prohibited by law, the Certificate of Incorporation or these by-laws. The
officers of the Corporation need not be stockholders of the Corporation nor,
except in the case of the Chairman of the Board of Directors, need such
officers be directors of the Corporation.
Section 2. Election. The Board of Directors at its first
meeting held after each Annual Meeting of Stockholders shall elect the officers
of the Corporation, 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; and all officers of the Corporation shall
hold office until their successors are chosen and qualified or until their
earlier resignation or removal. Any officer elected 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 shall be
filled by the Board of Directors. The salaries of all officers of the
Corporation shall be fixed by the Board of Directors.
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<PAGE> 6
Section 3. Voting Securities Owned by the Corporation. Powers
of attorney, proxies, waivers of notice of meeting, consents and other
instruments relating to securities owned by the Corporation may be executed in
the name and on behalf of the Corporation by the President or any Vice
President and any such officer may, in the name of and on behalf of the
Corporation, take all such action as any such officer may deem advisable to
vote in person or by proxy at any meeting of security holders of any
corporation in which the Corporation may own securities and at any such meeting
shall possess and may exercise any and all rights and powers incident to the
ownership of such securities and which, as the owner thereof, the Corporation
might have exercised and possessed if present. The Board of Directors may, by
resolution, from time to time confer like powers upon any other person or
persons.
Section 4. Chairman of the Board of Directors. The Chairman of
the Board of Directors, if there be one, shall preside at all meetings of the
stockholders and of the Board of Directors. Except where by law the signature
of the President is required, the Chairman of the Board of Directors shall
possess the same power as the President to sign all contracts, certificates and
other instruments of the Corporation which may be authorized by the Board of
Directors. During the absence or disability of the President, the Chairman of
the Board of Directors shall exercise all the powers and discharge all the
duties of the President. The Chairman of the Board of Directors shall also
perform such other duties and may exercise such other powers as from time to
time may be assigned to him by these by-laws or by the Board of Directors.
Section 5. President. The President shall, subject to the
control of the Board of Directors and, if there be one, the Chairman of the
Board of Directors, have general supervision of the business of the Corporation
and shall see that all orders and resolutions of the Board of Directors are
carried into effect. He shall be the Chief Executive Officer of the
Corporation and shall execute all bonds, mortgages, contracts and other
instruments of the Corporation requiring a seal, under the seal of the
Corporation, except where required or permitted by law to be otherwise signed
and executed and except that the other officers of the Corporation may sign and
execute documents when so authorized by these by-laws, the Board of Directors
or the President. In the absence or disability of the Chairman of the Board of
Directors, or if there be none, the President shall preside at all meetings of
the stockholders and the Board of Directors. The President shall also perform
such other duties and may exercise such other powers as from time to time may
be assigned to him by these by-laws or by the Board of Directors.
Section 6. Vice Presidents. At the request of the President or
in his absence or in the event of his inability or refusal to act (and if there
be no Chairman of the Board of Directors), the Vice President or the Vice
Presidents, if there be more than one (in the order designated by the Board of
Directors) 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. Each Vice President shall perform such other duties and have such
other powers as the Board of Directors from time to time may prescribe. If
there be no Chairman of the Board of Directors and no Vice President, the Board
of Directors shall designate the officer of the Corporation who, in the absence
of the President or in the event of the inability or refusal of the President
to act, 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.
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Section 7. Secretary. The Secretary shall attend all meetings
of the Board of Directors and all meetings of stockholders and record all the
proceedings thereat in a book or books to be kept for that purpose; the
Secretary shall also perform like duties for the standing committees when
required. The Secretary 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. If the Secretary
shall be unable or shall refuse to cause to be given notice of all meetings of
the stockholders and special meetings of the Board of Directors, and if there
be no Assistant Secretary, then either the Board of Directors or the President
may choose another officer to cause such notice to be given. The Secretary
shall have custody of the seal of the Corporation and the Secretary or any
Assistant Secretary, if there be one, shall have authority to affix the same to
any instrument requiring it and when so affixed it may be attested by the
signature of the Secretary or by the signature of any 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. The
Secretary shall see that all books, reports, statements, certificates and other
documents and records required by law to be kept or filed are properly kept or
filed, as the case may be.
Section 8. Treasurer. 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 in such depositories as may be designated by the Board of
Directors. The Treasurer 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 meeting, or when the Board of Directors so requires, an account of
all his transactions as Treasurer and of the financial condition of the
Corporation. If required by the Board of Directors, the Treasurer shall give
the Corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors or 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 9. Assistant Secretaries. Except as may be otherwise
provided in these by-laws, Assistant Secretaries, if there be any, shall
perform such duties and have such powers as from time to time may be assigned
to them by the Board of Directors, the President, any Vice-President, if there
be one, or the Secretary, and in the absence of the Secretary or in the event
of his disability or refusal to act, shall perform the duties of the Secretary,
and when so acting, shall have all the powers of and be subject to all the
restrictions upon the Secretary.
Section 10. Assistant Treasurers. Assistant Treasurers, if
there be any, shall perform such duties and have such powers as from time to
time may be assigned to them by the Board of Directors, the President, any
Vice-President, if there be one, or the Treasurer, and in the absence of the
Treasurer or in the event of his disability or refusal to act, shall perform
the duties of the Treasurer, and when so acting, shall have all the powers of
and be subject to all the restrictions upon the Treasurer. If required by the
Board of Directors, an Assistant Treasurer shall give the Corporation a bond in
such sum and with such surety or sureties as shall be satisfactory to the Board
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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 11. Other Officers. Such other officers as the Board of
Directors may choose shall perform such duties and have such powers as from
time to time may be assigned to them by the Board of Directors. The Board of
Directors may delegate to any other officer of the Corporation the power to
choose such other officers and to prescribe their respective duties and powers.
ARTICLE V
STOCK
Section 1. Form of Certificates. Every holder of stock in the
Corporation shall be entitled to have a certificate signed in the name of the
Corporation (a) by the Chairman of the Board of Directors, the President or a
Vice President and (b) by 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.
Section 2. Signatures. Where a certificate is countersigned by
(a) a transfer agent other than the Corporation or its employee or (b) a
registrar other than the Corporation or its employee, any other signature on
the certificate may be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the Corporation with the
same effect as if he were such officer, transfer agent or registrar at the date
of issue.
Section 3. Lost Certificates. 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, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming the certificate of
stock to be lost, stolen or destroyed. When authorizing such issue of a new
certificate, the Board of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificate, or his legal representative, to advertise the same in
such manner as the Board of Directors shall require and/or to 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, stolen or destroyed.
Section 4. Transfers. Stock of the Corporation shall be
transferable in the manner prescribed by law and in these by-laws. Transfers
of stock shall be made on the books of the Corporation only by the person named
in the certificate or by his attorney lawfully constituted in writing and upon
the surrender of the certificate therefor, which shall be cancelled before a
new certificate shall be issued.
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Section 5. Record Date. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or entitled to express consent to
corporate action in writing without a meeting, or entitled to receive payment
of any dividend or other distribution or allotment of any rights, or entitled
to exercise of any rights in respect of any change, conversion or exchange of
stock, or for the purpose of any other lawful action, the Board of Directors
may fix, in advance, a record date, which shall not be more than sixty days nor
less than ten days before the date of such meeting, nor more than sixty days
prior to any other action. A determination of stockholders of record entitled
to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting.
Section 6. Beneficial Owners. 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 law.
ARTICLE VI
NOTICES
Section 1. Notices. Whenever written notice is required by law,
the Certificate of Incorporation or these by-laws to be given to any director,
member of a committee or stockholder, such notice may be given by mail,
addressed to such director, member of a committee or stockholder, 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. Written notice may also be given
personally or by telegram, telex or cable.
Section 2. Waivers of Notice. Whenever any notice is required
by law, the Certificate of Incorporation or these by-laws to be given to any
director, member of a committee or stockholder, 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 VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, and may be paid in cash, in property or in shares of the capital
stock. 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 Board of
Directors from time to time, in its absolute discretion, deems proper as a
reserve or reserves to meet contingencies, or for
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<PAGE> 10
equalizing dividends, or for repairing or maintaining any property of the
Corporation, or for any proper purpose, and the Board of Directors may modify
or abolish any such reserve.
Section 2. Disbursements. 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.
Section 3. Fiscal Year. The fiscal year of the Corporation
shall be fixed by resolution of the Board of Directors.
Section 4. Corporate Seal. The corporate seal shall have
inscribed thereon the name of the Corporation, the year of its organization and
the words "Corporate Seal, Delaware." The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced.
ARTICLE VIII
INDEMNIFICATION
Section 1. Power to Indemnify in Actions, Suits or Proceedings
Other Than Those by or in the Right or the Corporation. Subject to Section 3
of this Article VIII, the Corporation shall indemnify 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 (other than an 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, 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 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.
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 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 reasonable cause to believe that his conduct was unlawful.
Section 2. Power to Indemnify in Actions, Suits or Proceedings
by or in the Right of the Corporation. Subject to Section 3 of this Article
VIII, the Corporation shall indemnify any person who was or is 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 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 against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such
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<PAGE> 11
action or suit 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; 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.
Section 3. Authorization of Indemnification. Any
indemnification under this Article VIII (unless ordered by a court) shall be
made by the Corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee or agent
is proper in the circumstances because he has met the applicable standards of
conduct set forth in Section 1 or Section 2 of this Article VIII, as the case
may be. Such determination shall be made (i) by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding or (ii) if such a quorum is not obtainable, or even
if obtainable, a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion or (iii) by the stockholders. To the
extent, however, 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 described above, or in the defense of any claim, issue or matter
therein, he shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith, without the
necessity of authorization in the specific case.
Section 4. Good Faith Defined. For purposes of any
determination under Section 3 of this Article VIII, a person shall be deemed to
have acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation, or, with respect to any
criminal action or proceeding, to have had no reasonable cause to believe his
conduct was unlawful, if his action is based on the records or books of account
of the Corporation or another enterprise or on information supplied to him by
the officers of the Corporation or another enterprise in the course of their
duties or on the advice of legal counsel for the Corporation or another
enterprise or on information or records given or reports made to the
Corporation or another enterprise by an independent certified public accountant
or by an appraiser or other expert selected with reasonable care by the
Corporation or another enterprise. The term "another enterprise" as used in
this Section 4 shall mean any other corporation or any partnership, joint
venture, trust or other enterprise of which such person is or was serving at
the request of the Corporation as a director, officer, employee or agent. The
provisions of this Section 4 shall not be deemed to be exclusive or to limit in
any way the circumstances in which a person may be deemed to have met the
applicable standards of conduct set forth in Section 1 or 2 of this Article
VIII, as the case may be.
Section 5. Indemnification by a Court. Notwithstanding any
contrary determination in the specific case under Section 3 of this Article
VIII, and notwithstanding the absence of any determination thereunder, any
director, officer, employee or agent may apply to any court of competent
jurisdiction in the State of Delaware for indemnification to the extent
otherwise permissible under Sections 1 and 2 of this Article VIII. The basis
of such indemnification by a court shall be a determination by such court that
indemnification of the director, officer, employee or agent is proper in the
circumstances because he has met the applicable standards of conduct set forth
in
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Section 1 or 2 of this Article VIII, as the case may be. Notice of any
application for indemnification pursuant to this Section 5 shall be given to
the Corporation promptly upon the filing of such application.
Section 6. Expenses Payable in Advance. Expenses (including
attorneys' fees) incurred by an officer or director in defending any civil,
criminal, administrative or investigative action, suit or proceeding may 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 he is not entitled to be indemnified by the
Corporation as authorized in this Article VIII. Such expenses (including
attorneys' fees) incurred by other employees and agents may be so paid upon
such terms and conditions, if any, as the Board of Directors deems appropriate.
Section 7. Nonexclusivity and Survival of Indemnification. The
indemnification and advancement of expenses provided by, or granted pursuant
to, the other subsections of this Article VIII shall not be deemed exclusive of
any other rights to which those seeking indemnification and advancement of
expenses may be entitled under any by-law, agreement, vote of stockholders or
disinterested directors or pursuant to the direction (howsoever embodied) of
any court of competent jurisdiction or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, it being the policy of the Corporation that indemnification of the
persons specified in Sections 1 and 2 of this Article VIII shall be made to the
fullest extent permitted by law. The provisions of this Article VIII shall not
be deemed to preclude the indemnification of any person who is not specified in
Section 1 or 2 of this Article VIII but whom the Corporation has the power or
obligation to indemnify under the provisions of the General Corporation Law of
the State of Delaware or otherwise.
Section 8. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who 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 any liability
asserted against him and incurred by him in any such capacity or arising out of
his status as such, whether or not the Corporation would have the power or the
obligation to indemnify him against such liability under the provisions of this
Article VIII.
Section 9. Meaning of "Corporation" for Purposes of Article
VIII. For purposes of this Article VIII, references to "the Corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall stand
in the same position under the provisions of this Article VIII with respect to
the resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.
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ARTICLE IX
AMENDMENTS
Section 1. Procedure. These by-laws may be altered, amended or
repealed, in whole or in part, or new by-laws may be adopted by the
stockholders or by the Board of Directors of the Corporation; provided,
however, that notice of such alteration, amendment, repeal or adoption of new
by-laws be contained in the notice of such meeting of stockholders or Board of
Directors, as the case may be. All such amendments must be approved by either
the holders of a majority of the outstanding capital stock entitled to vote
thereon or by a majority of the entire Board of Directors then in office.
Section 2. Entire Board of Directors. As used in this Article
IX and in these by-laws generally, the term "entire Board of Directors" means
the total number of directors which the Corporation would have if there were no
vacancies.
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EXHIBIT 3.15
CERTIFICATE OF INCORPORATION
OF
CAMPFIRE, INC.
ARTICLE I
The name of the corporation is Campfire, Inc. (hereinafter referred to
as the "Corporation").
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is 1209 Orange Street, in the City of Wilmington, County of New
Castle, 19801. The name of its registered agent at such address is The
Corporation Trust Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
ARTICLE IV
The total number of shares of stock that the Corporation shall have
authority to issue is ten thousand (10,000) shares of Common Stock, par value
$.01 per share.
ARTICLE V
The name and mailing address of the incorporator is as follows:
Name Mailing Address
---- ---------------
Michael J. Cramer 5956 Sherry Lane
Suite 1100
Dallas, Texas 75225
ARTICLE VI
In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors of the Corporation is authorized to adopt, amend or
repeal the By-Laws of the Corporation.
ARTICLE VII
Election of directors of the Corporation need not be by ballot unless
the By-Laws so require.
<PAGE> 2
ARTICLE VIII
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
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 a 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 of the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of the Corporation, as the case may be,
and also on the Corporation.
ARTICLE IX
To the fullest extent that the General Corporation Law of the State of
Delaware as it exists on the date hereof or as it may hereafter be amended
permits the limitation or elimination of the liability of directors, no
director of the Corporation shall be liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director.
No amendment to this Certificate of Incorporation, directly or indirectly by
merger, consolidation or otherwise, having the effect of amending or repealing
any of the provisions of this ARTICLE NINTH shall apply to or have any effect
on the liability or alleged liability of any director of the Corporation for or
with respect to any act or omissions of such director occurring prior to such
amendment or repeal, unless such amendment shall have the effect of further
limiting or eliminating such liability.
The undersigned, being the sole incorporator named above, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, has signed this Certificate on August 29, 1994, and does
hereby acknowledge that it is his act and deed and that the facts herein stated
are true.
/s/ Michael J. Cramer
-------------------------------------
Michael J. Cramer
<PAGE> 1
EXHIBIT 3.16
BY-LAWS
OF
CAMPFIRE, INC.
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the
Corporation shall be located at 1209 Orange Street, in the City of Wilmington,
County of New Castle, State of Delaware 19801.
Section 2. Other Offices. The Corporation may also have offices
at such other places both within and without the State of Delaware as the Board
of Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. Meetings of the stockholders for
the election of directors or for any other purpose shall be held at such time
and place, either within or without the State of Delaware, as shall be
designated from time to time by the Board of Directors and stated in the notice
of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual Meetings. The Annual Meeting of Stockholders
shall be held on such date and at such time as shall be designated from time to
time by the Board of Directors and stated in the notice of the meeting, at
which meetings the stockholders shall elect by a plurality vote a Board of
Directors, and transact such other business as may properly be brought before
the meeting. Written notice of the Annual Meeting stating the place, date and
hour of the meeting shall be given to each stockholder entitled to vote at such
meeting not less than ten nor more than 60 days before the date of the meeting.
Section 3. Special Meetings. Unless otherwise prescribed by law
or by the Certificate of Incorporation, Special Meetings of Stockholders, for
any purpose or purposes, may be called by either (a) the Chairman, if there be
one, (b) the President, (c) any Vice President, if there be one, (d) the
Secretary or (e) any Assistant Secretary, if there be one, and shall be called
by any such officer at the request in writing of a majority of the Board of
Directors or at the request in writing of stockholders owning a majority of
capital stock of the Corporation issued and outstanding and entitled to vote.
Such request shall state the purpose or purposes of the proposed meeting.
Written notice of the Special Meeting stating the place, date and hour of the
meeting and the purpose or purposes for which the meeting is called shall be
given not less than ten nor more than 60 days before the date of the meeting to
each stockholder entitled to vote at such meeting.
<PAGE> 2
Section 4. Quorum. Except as otherwise provided by law or by
the Certificate of Incorporation, the holders of a majority of the capital
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. 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 noticed. If the adjournment is for more than 30
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder
entitled to vote at the meeting.
Section 5. Voting. Unless otherwise required by law, the
Certificate of Incorporation or these by-laws, any question brought before any
meeting of stockholders shall be decided by the vote of the holders of a
majority of the stock represented and entitled to vote thereat. Each
stockholder represented at a meeting of stockholders shall be entitled to cast
one vote thereat held by such stockholder. Such votes may be cast in person or
by proxy but no proxy shall be voted on or after three years from its date,
unless such proxy provides for a longer period. The Board of Directors, in its
discretion, or the officer of the Corporation presiding at a meeting of
stockholders, in his discretion, may require that any votes cast at such
meeting shall be cast by written ballot.
Section 6. Consent of Stockholders in Lieu of Meeting. Unless
otherwise provided in the Certificate of Incorporation, any action required or
permitted to be taken at any Annual or Special Meeting of Stockholders of the
Corporation may be taken without a meeting, without prior notice and without a
vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize the taking of such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
Section 7. List of Stockholders Entitled to Vote. The officer
of the Corporation who has charge of the stock ledger of the Corporation shall
prepare and make, at least ten days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or if not so
specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof and may be inspected by any stockholder of the Corporation who is
present.
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Section 8. Stock Ledger. The stock ledger of the Corporation
shall be the only evidence as to who are the stockholders entitled (a) to
examine the stock ledger, the list required by Section 7 of this Article II or
the books of the Corporation and (b) to vote in person or by proxy at any
meeting of stockholders.
ARTICLE III
DIRECTORS
Section 1. Number and Election of Directors. The business and
affairs of the Corporation shall be managed by a Board of Directors initially
consisting of three directors. The number of directors of the Corporation may
be increased or decreased from time to time by resolution adopted by at least
66 2/3% of the Board of Directors, but no decrease by the Board of Directors
shall have the effect of shortening the term of any incumbent director. Except
as provided in Section 2 of this Article III, directors shall be elected by a
plurality of the votes cast at Annual Meetings of stockholders and each
director so elected shall hold office until the next Annual Meeting and until
his successor is duly elected and qualified or until his earlier resignation or
removal. Any director may resign at any time upon written notice to the
Corporation. Directors need not be stockholders.
Section 2. Vacancies. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, though less than a quorum, or by
a sole remaining director and the directors so chosen shall hold office until
the next annual election and until their successors are duly elected and
qualified or until their earlier resignation or removal.
Section 3. Duties and Powers. The business of the Corporation
shall be managed by or under the direction of the 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 Certificate of Incorporation or by these
by-laws directed or required to be exercised or done by the stockholders.
Section 4. Meetings. The Board of Directors of the Corporation
may hold meetings, both regular and special, either within or without the State
of Delaware. Regular meetings of the Board of Directors may be held without
notice at such time and at such place as may from time to time be determined by
the Board of Directors. Special meetings of the Board of Directors may be
called by the Chairman, if there be one, the President or any director(s).
Notice thereof stating the place, date and hour of the meeting shall be given
to each director either by mail not less than 48 hours before the date of the
meeting, by telephone or telegram on 24 hours' notice or on such shorter notice
as the person or persons calling such meeting may deem necessary or appropriate
in the circumstances.
Section 5. Quorum. Except as may be otherwise specifically
provided by law, the Certificate of Incorporation or these by-laws, at all
meetings of the Board of Directors, a majority of the entire Board of Directors
shall constitute a quorum for the transaction of business and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of
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the Board of Directors. If a quorum shall not be present at any meeting of the
Board 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 6. Actions of Board. Unless otherwise provided by the
Certificate of Incorporation or these by-laws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee
thereof may be taken without a meeting, if all the members of the Board of
Directors or committee, as the case may be, consent thereto in writing and the
writing or writings are filed with the minutes of proceedings of the Board of
Directors or committee.
Section 7. Actions Requiring Approval of 66 2/3% of Board of
Directors. Notwithstanding any other provisions of these by-laws, the following
actions may not be taken unless at least 66 2/3% of the entire Board of
Directors shall so approve: (a) the sale or issuance of equity securities of
the Corporation; (b) the registration of the Corporation's securities in a
public offering or distribution on behalf of any person; and (c) the
Corporation's participation with other entities in partnerships, limited
partnerships, joint ventures or other associations other than in the ordinary
course of business.
Section 8. Meetings by Means of Conference Telephone. Unless
otherwise provided by the Certificate of Incorporation or these by-laws,
members of the Board of Directors of the Corporation or any committee
designated by the Board of Directors may participate in a meeting of the Board
of Directors or such committee by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
Section 8 shall constitute presence in person at such meeting.
Section 9. Committees. The Board of Directors may, by
resolution passed by a majority of the entire Board of Directors, designate one
or more committees, each committee to consist of one or more of the directors
of the Corporation. The Board of Directors may designate one or more directors
as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of any such committee. In the absence or
disqualification of a member of a committee, and in the absence of a
designation by the Board of Directors of an alternate member to replace the
absent or disqualified member, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they constitute
a quorum, may unanimously appoint another member of the Board of Directors to
act at the meeting in place of any absent or disqualified member. Any
committee, to the extent allowed by law and provided in the resolution
establishing such committee, 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. Each committee shall keep regular minutes and
report to the Board of Directors when required.
Section 10. Compensation. 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 or other consideration as director. No such
payment shall preclude any director from serving the Corporation in any other
capacity and receiving
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compensation therefor. Members of special or standing committees may be
allowed like compensation for attending committee meetings.
Section 11. Interested Directors. No contract or transaction
between the Corporation and one or more of its directors or officers, or
between the Corporation and any other partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof
which authorizes the contract or transaction, or solely because his or their
votes are counted for such purpose if (a) the material facts as to his or their
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board of Directors or the committee, and the Board of
Directors or committee in good faith authorizes the contract or transaction by
the affirmative vote of a majority of the disinterested directors, even though
the disinterested directors be less than a quorum; or (b) the material facts as
to his or their relationship or interest and as to the contract or transaction
are disclosed or are known to the stockholders entitled to vote thereon, and
the contract or transaction is specifically approved in good faith by the vote
of the stockholders; or (c) the contract or transaction is fair as to the
Corporation as of the time it is authorized, approved or ratified by the Board
of Directors, a committee thereof or the stockholders. Common or interested
directors may be counted in determining the presence of a quorum at a meeting
of the Board of Directors or of a committee which authorizes the contract or
transaction.
ARTICLE IV
OFFICERS
Section 1. General. The officers of the Corporation shall be
chosen by the Board of Directors and shall be a President and a Secretary. The
Board of Directors, in its discretion, may also choose a Chairman of the Board
of Directors (who must be a director), a Treasurer, and one or more Vice
Presidents, Assistant Secretaries, Assistant Treasurers and other officers.
Any number of offices may be held by the same person, unless otherwise
prohibited by law, the Certificate of Incorporation or these by-laws. The
officers of the Corporation need not be stockholders of the Corporation nor,
except in the case of the Chairman of the Board of Directors, need such
officers be directors of the Corporation.
Section 2. Election. The Board of Directors at its first
meeting held after each Annual Meeting of Stockholders shall elect the officers
of the Corporation, 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; and all officers of the Corporation shall
hold office until their successors are chosen and qualified or until their
earlier resignation or removal. Any officer elected 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 shall be
filled by the Board of Directors. The salaries of all officers of the
Corporation shall be fixed by the Board of Directors.
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Section 3. Voting Securities Owned by the Corporation. Powers
of attorney, proxies, waivers of notice of meeting, consents and other
instruments relating to securities owned by the Corporation may be executed in
the name and on behalf of the Corporation by the President or any Vice
President and any such officer may, in the name of and on behalf of the
Corporation, take all such action as any such officer may deem advisable to
vote in person or by proxy at any meeting of security holders of any
corporation in which the Corporation may own securities and at any such meeting
shall possess and may exercise any and all rights and powers incident to the
ownership of such securities and which, as the owner thereof, the Corporation
might have exercised and possessed if present. The Board of Directors may, by
resolution, from time to time confer like powers upon any other person or
persons.
Section 4. Chairman of the Board of Directors. The Chairman of
the Board of Directors, if there be one, shall preside at all meetings of the
stockholders and of the Board of Directors. Except where by law the signature
of the President is required, the Chairman of the Board of Directors shall
possess the same power as the President to sign all contracts, certificates and
other instruments of the Corporation which may be authorized by the Board of
Directors. During the absence or disability of the President, the Chairman of
the Board of Directors shall exercise all the powers and discharge all the
duties of the President. The Chairman of the Board of Directors shall also
perform such other duties and may exercise such other powers as from time to
time may be assigned to him by these by-laws or by the Board of Directors.
Section 5. President. The President shall, subject to the
control of the Board of Directors and, if there be one, the Chairman of the
Board of Directors, have general supervision of the business of the Corporation
and shall see that all orders and resolutions of the Board of Directors are
carried into effect. He shall be the Chief Executive Officer of the
Corporation and shall execute all bonds, mortgages, contracts and other
instruments of the Corporation requiring a seal, under the seal of the
Corporation, except where required or permitted by law to be otherwise signed
and executed and except that the other officers of the Corporation may sign and
execute documents when so authorized by these by-laws, the Board of Directors
or the President. In the absence or disability of the Chairman of the Board of
Directors, or if there be none, the President shall preside at all meetings of
the stockholders and the Board of Directors. The President shall also perform
such other duties and may exercise such other powers as from time to time may
be assigned to him by these by-laws or by the Board of Directors.
Section 6. Vice Presidents. At the request of the President or
in his absence or in the event of his inability or refusal to act (and if there
be no Chairman of the Board of Directors), the Vice President or the Vice
Presidents, if there be more than one (in the order designated by the Board of
Directors) 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. Each Vice President shall perform such other duties and have such
other powers as the Board of Directors from time to time may prescribe. If
there be no Chairman of the Board of Directors and no Vice President, the Board
of Directors shall designate the officer of the Corporation who, in the absence
of the President or in the event of the inability or refusal of the President
to act, 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.
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Section 7. Secretary. The Secretary shall attend all meetings
of the Board of Directors and all meetings of stockholders and record all the
proceedings thereat in a book or books to be kept for that purpose; the
Secretary shall also perform like duties for the standing committees when
required. The Secretary 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. If the Secretary
shall be unable or shall refuse to cause to be given notice of all meetings of
the stockholders and special meetings of the Board of Directors, and if there
be no Assistant Secretary, then either the Board of Directors or the President
may choose another officer to cause such notice to be given. The Secretary
shall have custody of the seal of the Corporation and the Secretary or any
Assistant Secretary, if there be one, shall have authority to affix the same to
any instrument requiring it and when so affixed it may be attested by the
signature of the Secretary or by the signature of any 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. The
Secretary shall see that all books, reports, statements, certificates and other
documents and records required by law to be kept or filed are properly kept or
filed, as the case may be.
Section 8. Treasurer. 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 in such depositories as may be designated by the Board of
Directors. The Treasurer 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 meeting, or when the Board of Directors so requires, an account of
all his transactions as Treasurer and of the financial condition of the
Corporation. If required by the Board of Directors, the Treasurer shall give
the Corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors or 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 9. Assistant Secretaries. Except as may be otherwise
provided in these by-laws, Assistant Secretaries, if there be any, shall
perform such duties and have such powers as from time to time may be assigned
to them by the Board of Directors, the President, any Vice-President, if there
be one, or the Secretary, and in the absence of the Secretary or in the event
of his disability or refusal to act, shall perform the duties of the Secretary,
and when so acting, shall have all the powers of and be subject to all the
restrictions upon the Secretary.
Section 10. Assistant Treasurers. Assistant Treasurers, if
there be any, shall perform such duties and have such powers as from time to
time may be assigned to them by the Board of Directors, the President, any
Vice-President, if there be one, or the Treasurer, and in the absence of the
Treasurer or in the event of his disability or refusal to act, shall perform
the duties of the Treasurer, and when so acting, shall have all the powers of
and be subject to all the restrictions upon the Treasurer. If required by the
Board of Directors, an Assistant Treasurer shall give the Corporation a bond in
such sum and with such surety or sureties as shall be satisfactory to the Board
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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 11. Other Officers. Such other officers as the Board of
Directors may choose shall perform such duties and have such powers as from
time to time may be assigned to them by the Board of Directors. The Board of
Directors may delegate to any other officer of the Corporation the power to
choose such other officers and to prescribe their respective duties and powers.
ARTICLE V
STOCK
Section 1. Form of Certificates. Every holder of stock in the
Corporation shall be entitled to have a certificate signed in the name of the
Corporation (a) by the Chairman of the Board of Directors, the President or a
Vice President and (b) by 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.
Section 2. Signatures. Where a certificate is countersigned by
(a) a transfer agent other than the Corporation or its employee or (b) a
registrar other than the Corporation or its employee, any other signature on
the certificate may be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the Corporation with the
same effect as if he were such officer, transfer agent or registrar at the date
of issue.
Section 3. Lost Certificates. 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, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming the certificate of
stock to be lost, stolen or destroyed. When authorizing such issue of a new
certificate, the Board of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificate, or his legal representative, to advertise the same in
such manner as the Board of Directors shall require and/or to 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, stolen or destroyed.
Section 4. Transfers. Stock of the Corporation shall be
transferable in the manner prescribed by law and in these by-laws. Transfers
of stock shall be made on the books of the Corporation only by the person named
in the certificate or by his attorney lawfully constituted in writing and upon
the surrender of the certificate therefor, which shall be cancelled before a
new certificate shall be issued.
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Section 5. Record Date. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or entitled to express consent to
corporate action in writing without a meeting, or entitled to receive payment
of any dividend or other distribution or allotment of any rights, or entitled
to exercise of any rights in respect of any change, conversion or exchange of
stock, or for the purpose of any other lawful action, the Board of Directors
may fix, in advance, a record date, which shall not be more than sixty days nor
less than ten days before the date of such meeting, nor more than sixty days
prior to any other action. A determination of stockholders of record entitled
to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting.
Section 6. Beneficial Owners. 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 law.
ARTICLE VI
NOTICES
Section 1. Notices. Whenever written notice is required by law,
the Certificate of Incorporation or these by-laws to be given to any director,
member of a committee or stockholder, such notice may be given by mail,
addressed to such director, member of a committee or stockholder, 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. Written notice may also be given
personally or by telegram, telex or cable.
Section 2. Waivers of Notice. Whenever any notice is required
by law, the Certificate of Incorporation or these by-laws to be given to any
director, member of a committee or stockholder, 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 VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, and may be paid in cash, in property or in shares of the capital
stock. 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 Board of
Directors from time to time, in its absolute discretion, deems proper as a
reserve or reserves to meet contingencies, or for
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equalizing dividends, or for repairing or maintaining any property of the
Corporation, or for any proper purpose, and the Board of Directors may modify
or abolish any such reserve.
Section 2. Disbursements. 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.
Section 3. Fiscal Year. The fiscal year of the Corporation
shall be fixed by resolution of the Board of Directors.
Section 4. Corporate Seal. The corporate seal shall have
inscribed thereon the name of the Corporation, the year of its organization and
the words "Corporate Seal, Delaware." The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced.
ARTICLE VIII
INDEMNIFICATION
Section 1. Power to Indemnify in Actions, Suits or Proceedings
Other Than Those by or in the Right or the Corporation. Subject to Section 3
of this Article VIII, the Corporation shall indemnify 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 (other than an 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, 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 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.
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 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 reasonable cause to believe that his conduct was unlawful.
Section 2. Power to Indemnify in Actions, Suits or Proceedings
by or in the Right of the Corporation. Subject to Section 3 of this Article
VIII, the Corporation shall indemnify any person who was or is 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 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 against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such
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action or suit 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; 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.
Section 3. Authorization of Indemnification. Any
indemnification under this Article VIII (unless ordered by a court) shall be
made by the Corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee or agent
is proper in the circumstances because he has met the applicable standards of
conduct set forth in Section 1 or Section 2 of this Article VIII, as the case
may be. Such determination shall be made (i) by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding or (ii) if such a quorum is not obtainable, or even
if obtainable, a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion or (iii) by the stockholders. To the
extent, however, 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 described above, or in the defense of any claim, issue or matter
therein, he shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith, without the
necessity of authorization in the specific case.
Section 4. Good Faith Defined. For purposes of any
determination under Section 3 of this Article VIII, a person shall be deemed to
have acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation, or, with respect to any
criminal action or proceeding, to have had no reasonable cause to believe his
conduct was unlawful, if his action is based on the records or books of account
of the Corporation or another enterprise or on information supplied to him by
the officers of the Corporation or another enterprise in the course of their
duties or on the advice of legal counsel for the Corporation or another
enterprise or on information or records given or reports made to the
Corporation or another enterprise by an independent certified public accountant
or by an appraiser or other expert selected with reasonable care by the
Corporation or another enterprise. The term "another enterprise" as used in
this Section 4 shall mean any other corporation or any partnership, joint
venture, trust or other enterprise of which such person is or was serving at
the request of the Corporation as a director, officer, employee or agent. The
provisions of this Section 4 shall not be deemed to be exclusive or to limit in
any way the circumstances in which a person may be deemed to have met the
applicable standards of conduct set forth in Section 1 or 2 of this Article
VIII, as the case may be.
Section 5. Indemnification by a Court. Notwithstanding any
contrary determination in the specific case under Section 3 of this Article
VIII, and notwithstanding the absence of any determination thereunder, any
director, officer, employee or agent may apply to any court of competent
jurisdiction in the State of Delaware for indemnification to the extent
otherwise permissible under Sections 1 and 2 of this Article VIII. The basis
of such indemnification by a court shall be a determination by such court that
indemnification of the director, officer, employee or agent is proper in the
circumstances because he has met the applicable standards of conduct set forth
in
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Section 1 or 2 of this Article VIII, as the case may be. Notice of any
application for indemnification pursuant to this Section 5 shall be given to
the Corporation promptly upon the filing of such application.
Section 6. Expenses Payable in Advance. Expenses (including
attorneys' fees) incurred by an officer or director in defending any civil,
criminal, administrative or investigative action, suit or proceeding may 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 he is not entitled to be indemnified by the
Corporation as authorized in this Article VIII. Such expenses (including
attorneys' fees) incurred by other employees and agents may be so paid upon
such terms and conditions, if any, as the Board of Directors deems appropriate.
Section 7. Nonexclusivity and Survival of Indemnification. The
indemnification and advancement of expenses provided by, or granted pursuant
to, the other subsections of this Article VIII shall not be deemed exclusive of
any other rights to which those seeking indemnification and advancement of
expenses may be entitled under any by-law, agreement, vote of stockholders or
disinterested directors or pursuant to the direction (howsoever embodied) of
any court of competent jurisdiction or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, it being the policy of the Corporation that indemnification of the
persons specified in Sections 1 and 2 of this Article VIII shall be made to the
fullest extent permitted by law. The provisions of this Article VIII shall not
be deemed to preclude the indemnification of any person who is not specified in
Section 1 or 2 of this Article VIII but whom the Corporation has the power or
obligation to indemnify under the provisions of the General Corporation Law of
the State of Delaware or otherwise.
Section 8. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who 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 any liability
asserted against him and incurred by him in any such capacity or arising out of
his status as such, whether or not the Corporation would have the power or the
obligation to indemnify him against such liability under the provisions of this
Article VIII.
Section 9. Meaning of "Corporation" for Purposes of Article
VIII. For purposes of this Article VIII, references to "the Corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall stand
in the same position under the provisions of this Article VIII with respect to
the resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.
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ARTICLE IX
AMENDMENTS
Section 1. Procedure. These by-laws may be altered, amended or
repealed, in whole or in part, or new by-laws may be adopted by the
stockholders or by the Board of Directors of the Corporation; provided,
however, that notice of such alteration, amendment, repeal or adoption of new
by-laws be contained in the notice of such meeting of stockholders or Board of
Directors, as the case may be. All such amendments must be approved by either
the holders of a majority of the outstanding capital stock entitled to vote
thereon or by a majority of the entire Board of Directors then in office.
Section 2. Entire Board of Directors. As used in this Article
IX and in these by-laws generally, the term "entire Board of Directors" means
the total number of directors which the Corporation would have if there were no
vacancies.
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EXHIBIT 4.1
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and
entered into as of November 1, 1996, by and among International Home Foods,
Inc., a Delaware corporation (the "Company"), AHP Subsidiary Holding
Corporation, a Delaware corporation ("Seller"), and AHFP Holding Corporation, a
Delaware corporation ("Buyer").
RECITALS:
A. Seller, American Home Products Corporation, a Delaware
corporation, the Company (previously named "American Home Food Products,
Inc."), Buyer and AHFP Acquisition Corporation, a Delaware corporation ("Merger
Sub"), entered into that certain Agreement of Sale and Plan of Merger dated as
of September 5, 1996 (the "Merger Agreement").
B. Pursuant to the Merger Agreement, (i) Merger Sub has been
merged with and into the Company (the "Merger"), with the Company continuing as
the surviving corporation in the Merger, (ii) as a result of the Merger, Buyer
is the owner of 264,000,000 shares of the Company's common stock, no par value
("Common Stock"), and (iii) as a result of the Merger and a stock redemption
made by the Company pursuant to the Merger Agreement, Seller is the owner of
66,000,000 shares of Common Stock.
C. It is contemplated under the Merger Agreement that the Company
grant certain registration rights to Seller and Buyer in respect of the shares
of Common Stock held by them and agree to certain other matters set forth
herein.
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions.
"Advice" shall have the meaning provided in Section 2.5 hereof.
"Affiliate" means, with respect to any Person, any other Person which
directly or indirectly through stock ownership or through other arrangements
either controls, is controlled by or is under common control with such Person;
provided, however, that for purposes of this Agreement the term "Affiliate"
shall not include subsidiaries or other entities in which a Person owns a
majority of the ordinary voting power to elect a majority of the board of
directors or other governing board but is restricted from electing such
majority by contract or otherwise, until such time as such restrictions are no
longer in effect.
"Agreement" means this Registration Rights Agreement.
"Business Day" means a day other than Saturday, Sunday, or any day on
which the principal commercial banks located in New York City, New York are
authorized or obligated to close under applicable Federal or State law.
"Buyer Group Demand Holders" means Buyer and each other Holder who is
a transferee of Registrable Shares directly or indirectly (in a chain of title)
from Buyer to whom the right to cause one or more
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Demand Registrations under Section 2.1 has been expressly assigned in writing
directly or indirectly (in a chain of title) from Buyer.
"Buyer Group Piggyback Holder" means Buyer and each other Holder who
is a transferee of Registrable Shares directly or indirectly (in a chain of
title) from Buyer.
"Buyer" shall have the meaning set forth in the introductory paragraph
hereof.
"Common Stock" means shares of the Common Stock, par value $.01 per
share, of the Company, and any capital stock into which such Common Stock
hereafter may be changed.
"Common Stock Equivalents" means any rights, warrants, options,
convertible securities or indebtedness, exchangeable securities or
indebtedness, or other rights, exercisable for or convertible or exchangeable
into, directly or indirectly, Common Stock of the Company and securities
convertible or exchangeable into Common Stock of the Company, whether at the
time of issuance or upon the passage of time or the occurrence of some future
event.
"Company" shall have the meaning set forth in the introductory
paragraph hereof.
"Demand Holder" means any Seller Group Demand Holder or Buyer Group
Demand Holder.
"Demand Registration" shall have the meaning set forth in Section
2.1.1 hereof.
"Demand Request" shall have the meaning set forth in Section 2.1.1.
hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated by the SEC thereunder.
"Excluded Registration" means a registration under the Securities Act
of (i) securities registered on Form S-8 or any similar successor form and (ii)
securities registered to effect the acquisition of or combination with another
Person.
"Holders" means the Seller and the Buyer and shall include any direct
or indirect transferee of any such Holder who shall become a party to this
Agreement.
"Inspectors" shall have the meaning provided in Section 2.4 hereof.
"Material Adverse Effect" shall have the meaning provided in Section
2.1.4 hereof.
"Merger" shall have the meaning set forth in the Recitals hereto.
"Merger Agreement" shall have the meaning set forth in the Recitals
hereto.
"Merger Sub" shall have the meaning set forth in the Recitals hereto.
"NASD" shall have the meaning provided in Section 2.4 hereof.
"NASDAQ" shall have the meaning provided in Section 2.4 hereof.
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"Person" or "person" means any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization or government or other agency or political subdivision thereof.
"Piggyback Holder" means any Seller Group Piggyback Holder or Buyer
Group Piggyback Holder.
"Piggyback Registration" shall have the meaning set forth in Section
2.2.1.
"Piggyback Request" shall have the meaning set forth in Section 2.2.1.
"Piggyback Securities" shall have the meaning set forth in Section
2.2.1.
"Qualified IPO" means a firm commitment underwritten public offering
of Common Stock or Common Stock Equivalents for cash pursuant to a registration
statement under the Securities Act where the aggregate proceeds to the Company
prior to deducting any underwriters' discounts and commissions from such
offering and any similar prior public offerings exceed $10 million.
"Records" shall have the meaning provided in Section 2.4 hereof.
"Registrable Shares" means at any time the Common Stock of the Company
owned by a Holder, whether owned on the date hereof or acquired hereafter;
provided, however, that Registrable Shares shall not include any shares (x) the
sale of which has been registered pursuant to the Securities Act and which
shares have been sold pursuant to such registration, or (y) which have been
sold to the public pursuant to Rule 144 of the SEC under the Securities Act.
"Registration Expenses" shall have the meaning provided in Section 2.6
hereof.
"Registration Statement" means the registration statement of the
Company on the appropriate form under the Securities Act that covers any of the
Registrable Shares pursuant to the provisions of this Agreement, including the
Prospectus included therein, all amendments and supplements to such
registration statement, including post-effective amendments, all exhibits and
all material incorporated by reference in such registration statement.
"Requesting Holder" shall have the meaning provided in Section
2.1.1(b) hereof.
"Required Filing Date" shall have the meaning provided in Section
2.1.1(d) hereof.
"Required Holders" means Holders who then own beneficially more than
95% of the aggregate number of Registrable Shares.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated by the SEC thereunder.
"Seller" shall have the meaning set forth in the introductory
paragraph hereof.
"Seller Affiliates" shall have the meaning provided in Section 2.7.1
hereof.
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"Seller Group Demand Holders" means Seller and each other Holder who
is a transferee of Registrable Shares directly or indirectly (in a chain of
title) from Seller to whom the right to cause one or more Demand Registrations
under Section 2.1 has been expressly assigned in writing directly or indirectly
(in a chain of title) from Seller.
"Seller Group Piggyback Holder" means Seller and each other Holder who
is a transferee of Registrable Shares directly or indirectly (in a chain of
title) from Seller.
"Subsidiary" of any Person means (i) a corporation a majority of whose
outstanding shares of capital stock or other equity interests with voting
power, under ordinary circumstances to elect directors, is at the time,
directly or indirectly, owned by such Person, by one or more subsidiaries of
such Person or by such Person and one or more subsidiaries of such Person, and
(ii) any other Person (other than a corporation) in which such Person, a
subsidiary of such Person or such Person and one or more subsidiaries of such
Person, directly or indirectly, at the date of determination thereof, has (x)
at least a majority ownership interest or (y) the power to elect or direct the
election of the directors or other governing body of such Person.
"Suspension Notice" shall have the meaning provided in Section 2.5
hereof.
Section 1.2 Rules of Construction. Unless the context otherwise
requires
(1) a term has the meaning assigned to it;
(2) "or" is not exclusive;
(3) words in the singular include the plural, and words
in the plural include the singular;
(4) provisions apply to successive events and
transactions; and
(5) "herein," "thereof" and other words of similar import
refer to this Agreement as a whole and not to any particular Article,
Section or other subdivision.
ARTICLE 2
REGISTRATION RIGHTS
Section 2.1 Demand Registration.
2.1.1 Request for Registration.
(a) Subject to the terms set forth in this Agreement, at
any time commencing on the date which is six months after a Qualified
IPO, each Demand Holder may make a written request (each a "Demand
Request") for registration under the Securities Act (a "Demand
Registration") of all or part of the Registrable Shares held by such
Demand Holder; provided, however, that the Registrable Shares
requested to be registered (i) shall constitute at least 5% of the
shares of the Company's Common Stock outstanding on the date that the
Demand Request is delivered, or (ii) shall have an aggregate gross
offering price of at least $20,000,000. The Company shall not be
required to effect more than three Demand Registrations requested by
Buyer Group Demand Holders and no more than three Demand Registrations
requested by Seller Group Demand Holders; provided, however, that if
the number of Registrable Shares held by Seller Group Demand Holders
included in any Demand Registration effected at the request of the
Seller Group Demand Holders is reduced because of a
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Piggyback Request by 25% or more of the number of such Registrable
Shares originally specified in the Demand Request delivered in
connection with such Demand Registration, the Company, if requested by
such Seller Group Demand Holders, shall be obligated to effect one
additional Demand Registration.
(b) Within ten days after receipt of each Demand Request,
the Company shall give written notice of such Demand Request to all
non-requesting Demand Holders who are Buyer Group Demand Holders or
Seller Group Demand Holders, as applicable, on whose behalf such
Demand Request was made and shall, subject to the provisions of the
following paragraph, include in such registration all Registrable
Shares with respect to which the Company receives written request for
inclusion therein within 15 days after the receipt of the notice of
such Demand Request. Both the Demand Request and any request to join
in such Demand Request shall be considered as a single Demand Request
and shall specify the number of Registrable Shares proposed to be sold
and also the intended method of disposition thereof. Any inclusion of
Registrable Shares owned by a Demand Holder pursuant to a Demand
Request (including a notice to join in a prior Demand Request) shall
be deemed to have been effected pursuant to a single Demand
Registration. All Holders requesting to have their Registrable Shares
included in a Demand Registration shall be deemed "Requesting
Holders."
(c) Also, within ten days after receipt of each Demand
Request, the Company shall give written notice of such Demand Request
to all Piggyback Holders who are not Buyer Group Demand Holders or
Seller Group Demand Holders, as applicable, on whose behalf such
Demand Request was made and shall, subject to the provisions of
Section 2.1.4, include in such registration all Registrable Shares
held by such Piggyback Holders with respect to which the Company
receives from such Piggyback Holders, written requests for inclusion
therein within 15 days after the receipt of the notice of such Demand
Request. Any inclusion of Registrable Shares owned by Piggyback
Holders in a Demand Registration shall be deemed to have been effected
pursuant to a Piggyback Registration by such holders and not by means
of a Demand Registration.
(d) Each Demand Request shall specify the number of
Registrable Shares proposed to be sold. Subject to Section 2.1.6, the
Company shall file the Demand Registration within 90 days after
receiving a Demand Request (the "Required Filing Date") and shall use
all commercially reasonable efforts to cause the same to be declared
effective by the SEC as promptly as practicable after such filing.
(e) Notwithstanding any other provision set forth in this
Section 2.1.1, no Demand Holder shall be entitled to deliver a Demand
Request within 90 days after the effective date of any Registration
Statement filed by the Company for an Underwritten Offering of Common
Stock or other equity securities of the Company made by the Company or
on behalf of any Demand Holder or any other holder of demand
registration rights.
2.1.2 Effective Registration and Expenses. A registration will not
count as a Demand Registration until it has become effective (unless the
Requesting Holders withdraw all their Registrable Shares and the Company has
performed its obligations hereunder in all material respects, in which case
such demand will count as a Demand Registration unless the Requesting Holders
pay all Registration Expenses in connection with such withdrawn registration);
provided, that if, after it has become effective, an offering of Registrable
Shares pursuant to a registration is interfered with by any stop order,
injunction, or other order or requirement of the SEC or other governmental
agency or court, such registration will be deemed not to have been effected and
will not count as a Demand Registration.
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2.1.3 Selection of Underwriters. The offering of Registrable Shares
pursuant to a Demand Registration shall be in the form of a "firm commitment"
underwritten offering. The Requesting Holders of a majority of the Registrable
Shares to be registered in a Demand Registration shall select the investment
banking firm or firms to manage the underwritten offering; provided that such
selection shall be subject to the consent of the Company, which consent shall
not be unreasonably withheld.
2.1.4 Priority on Demand Registrations. If the managing underwriter
or underwriters of a Demand Registration advise the Company in writing that in
their opinion the number of shares of Registrable Shares requested to be
included in a registration under this Section 2.1 is sufficiently large to have
a material adverse effect on the offering price or the success of such offering
(a "Material Adverse Effect"), the Company will include in such registration
the aggregate number of Registrable Shares which in the opinion of such
managing underwriter or underwriters can be sold without resulting in any such
Material Adverse Effect, and the Registrable Shares to be included in such
registration shall be allocated, (i) first to the Demand Holders making such
Demand Request and any Piggyback Holder(s) whose Registrable Shares are to be
included in such registration, pro rata, on the basis of the number of
Registrable Shares proposed to be included in such registration by such
holders, and (ii) second among the Company and any other holders of
registration rights in respect of securities of the Company in accordance with
the terms of the agreements granting such rights.
2.1.5 Deferral of Filing. The Company may defer the filing (but not
the preparation) of a registration statement required by Section 2.1 until a
date not later than 90 days after the Required Filing Date if (i) at the time
the Company receives the Demand Request, the Company or any of its Subsidiaries
are engaged in confidential negotiations or other confidential business
activities, disclosure of which would be required in such registration
statement (but would not be required if such registration statement were not
filed), and the Board of Directors of the Company determines in good faith that
such disclosure would be materially detrimental to the Company and its
stockholders or would have a material adverse effect on any such confidential
negotiations or other confidential business activities, or (ii) prior to
receiving the Demand Request, the Board of Directors had determined to effect a
registered underwritten public offering of the Company's Common Stock or Common
Stock Equivalents for the Company's account and the Company had taken
substantial steps (including, but not limited to, selecting a managing
underwriter for such offering) and is proceeding with reasonable diligence to
effect such offering. A deferral of the filing of a registration statement
pursuant to this Section 2.1.5 shall be lifted, and the requested registration
statement shall be filed forthwith, if, in the case of a deferral pursuant to
clause (i) of the preceding sentence, the negotiations or other activities are
disclosed or terminated, or, in the case of a deferral pursuant to clause (ii)
of the preceding sentence, the proposed registration for the Company's account
is abandoned. In order to defer the filing of a registration statement
pursuant to this Section 2.1.5, the Company shall promptly (but in any event
within 10 days), upon determining to seek such deferral, deliver to each
Requesting Holder a certificate signed by an executive officer of the Company
stating that the Company is deferring such filing pursuant to this Section
2.1.5 and a general statement of the reason for such deferral and an
approximation of the anticipated delay. Within 20 days after receiving such
certificate, the holders of a majority of the Registrable Shares held by the
Requesting Holders and for which registration was previously requested may
withdraw such Demand Request by giving notice to the Company; if withdrawn, the
Demand Request shall be deemed not to have been made for all purposes of this
Agreement. The Company may defer the filing of a particular registration
statement pursuant to this Section 2.1.5 only once.
Section 2.2 Piggyback Registrations.
2.2.1 Right to Piggyback. At any time prior to the tenth
anniversary of the date of this Agreement, if the Company proposes to file a
registration statement under the Securities Act with respect to any offering of
Common Stock (including a proposed Qualified IPO) by the Company for its own
account or for the account of any of its security holders (other than an
Excluded Registration), then the Company shall give written notice
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of such proposed filing to the Piggyback Holders as soon as practicable (but in
no event less than, in the case of a Demand Registration, 10 days after receipt
of a Demand Request, and in all other cases forty-five days before the
anticipated filing date), and such notice shall offer such Piggyback Holders
the opportunity to register such number of Registrable Shares as each such
holder may request (a "Piggyback Registration"). If any Seller Group Piggyback
Holder(s) or any Buyer Group Piggyback Holder(s) desire(s) to effect a
Piggyback Registration, Seller, on behalf of such Seller Group Piggyback
Holder(s), and Buyer, on behalf of such Buyer Group Piggyback Holder(s), may
deliver a request to the Company in writing (a "Piggyback Request") within 15
days after the date of receipt of the notice from the Company (which Piggyback
Request shall set forth the number of Registrable Shares for which registration
is requested). Any Piggyback Holder shall have the right to withdraw such
Piggyback Holder's request for inclusion of such Piggyback Holder's Registrable
Shares in any registration statement pursuant to this Section 2.2.1 by giving
written notice to the Company of such withdrawal. Subject to Section 2.2.2,
the Company shall include in such registration statement all such Registrable
Shares held by Piggyback Holders so requested to be included therein
("Piggyback Securities"); provided, however, that the Company may at any time
withdraw or cease proceeding with any such registration if it shall at the same
time withdraw or cease proceeding with the registration of all other equity
securities originally proposed to be registered.
2.2.2 Priority on Registrations. If the Piggyback Securities
requested to be included in the registration statement by any Holder differ
from the type of securities proposed to be registered by the Company and the
managing underwriter advises the Company that due to such differences the
inclusion of such Piggyback Securities would cause a Material Adverse Effect,
then (i) the number of such Piggyback Holder's or Piggyback Holders' Piggyback
Securities to be included in the registration statement shall be reduced to an
amount which, in the judgment of the managing underwriter, would eliminate such
Material Adverse Effect or (ii) if no such reduction would, in the judgment of
the managing underwriter, eliminate such Material Adverse Effect, then the
Company shall have the right to exclude all such Piggyback Securities from such
registration statement provided no other securities of such type are included
and offered for the account of any other Person in such registration statement.
Any partial reduction in number of Piggyback Securities to be included in the
registration statement pursuant to clause (i) of the immediately preceding
sentence shall be effected pro rata based on the ratio which such Piggyback
Holder's requested shares bears to the total number of like securities
requested to be included in such registration statement by all Persons who have
requested that their like securities be included in such registration
statement. If the Piggyback Securities requested to be included in the
registration statement are of the same type as the securities being registered
by the Company and the managing underwriter advises the Company that the
inclusion of such Piggyback Securities would cause a Material Adverse Effect,
then the amount of securities to be offered for the accounts of the Company,
the Piggyback Holders and other holders registering securities pursuant to
registration rights shall be allocated as follows:
(i) if such registration has been initiated by
the Company as a primary offering, first to the Company, second to the
Piggyback Holders whose Piggyback Securities are to be included in
such registration, pro rata, on the basis of the number of Registrable
Shares owned by such holders, and third to the holders of all other
securities sought to be included pursuant to other registration rights
in accordance with any applicable agreement between the Company and
such holders;
(ii) if such registration has been initiated by a
Demand Holder pursuant to Section 2.1, then such allocation shall be
made in accordance with Section 2.1.4; or
(iii) if such registration has been initiated by a
holder of registration rights arising under an agreement other than
this Agreement, first to such initiating holder, second to the
Piggyback Holders whose Piggyback Securities are to be included in
such registration and to the holders of all
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other securities sought to be included pursuant to other registration
rights, pro rata, on the basis of the number of Registrable Shares
owned by each such holder, and third to the Company.
If as a result of the provisions of this Section 2.2.2 any Piggyback Holder
shall not be entitled to include all Piggyback Securities in a registration
that such Piggyback Holder has requested to be so included, such Piggyback
Holder may withdraw such Holder's request to include Piggyback Securities in
such registration statement.
2.3 Ancillary Agreements.
2.3.1 Holdback Agreement. Unless the managing underwriter otherwise
agrees, each of the Company and the Holders agrees, and the Company agrees, in
connection with any underwritten registration, to use its reasonable efforts to
cause its Affiliates to agree, not to effect any public sale or distribution of
any Common Stock or Common Stock Equivalents during the ten Business Days prior
to the effectiveness under the Securities Act of any underwritten registration
and during such time period after the effectiveness under the Securities Act of
any underwritten registration (not to exceed 120 days) (except, if applicable,
as part of such underwritten registration) as the Company and the managing
underwriter may agree.
2.3.2 Underwriting Agreements. No Person may participate in any
registration statement hereunder unless such Person (x) agrees to sell such
person's Registrable Shares on the basis provided in any underwriting
arrangements approved by the Company and (y) completes and executes all
(appropriate, usual and customary) questionnaires, powers of attorney,
indemnities, underwriting agreements, and other documents reasonably required
under the terms of such underwriting arrangements; provided, however, that no
such Person shall be required to make any representations or warranties in
connection with any such registration other than representations and warranties
as to (i) such Person's ownership of his or its Registrable Shares to be sold
or transferred free and clear of all liens, claims, and encumbrances, (ii) such
Person's power and authority to effect such transfer, and (iii) such matters
pertaining to compliance with securities laws as may be reasonably requested;
provided further, however, that the obligation of such Person to indemnify
pursuant to any such underwriting arrangements shall be several, not joint and
several, among such Persons selling Registrable Shares, and the liability of
each such Person will be in proportion to, and provided further that such
liability will be limited to, the net amount received by such Person from the
sale of his or its Registrable Shares pursuant to such registration and subject
to Section 2.7 hereof.
2.4 Registration Procedures. Whenever any Holder has requested
that any Registrable Shares be registered pursuant to this Agreement, the
Company will use its commercially reasonable efforts to effect the registration
and the sale of such Registrable Shares in accordance with the intended method
of disposition thereof, and pursuant thereto the Company will as expeditiously
as possible:
(i) prepare and file with the SEC a registration statement on any
appropriate form under the Securities Act with respect to such Registrable
Shares and use its commercially reasonable efforts to cause such registration
statement to become effective;
(ii) prepare and file with the SEC such amendments, post-effective
amendments, and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective for a period of not less than 180 days (or such lesser
period as is necessary for the underwriters in an underwritten offering to sell
unsold allotments) and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such registration statement;
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(iii) furnish to each seller of Registrable Shares and the
underwriters of the securities being registered such number of copies of such
registration statement, each amendment and supplement thereto, the prospectus
included in such registration statement (including each preliminary
prospectus), any documents incorporated by reference therein and such other
documents as such seller or underwriters may reasonably request in order to
facilitate the disposition of the Registrable Shares owned by such seller or
the sale of such securities by such underwriters (it being understood that,
subject to the requirements of the Securities Act and applicable State
securities laws, the Company consents to the use of the prospectus and any
amendment or supplement thereto by each seller and the underwriters in
connection with the offering and sale of the Registrable Shares covered by the
registration statement of which such prospectus, amendment or supplement is a
part);
(iv) use its commercially reasonable efforts to register or qualify
such Registrable Shares under such other securities or blue sky laws of such
jurisdictions as the managing underwriter reasonably requests; use its
commercially reasonable efforts to keep each such registration or qualification
(or exemption therefrom) effective during the period in which such registration
statement is required to be kept effective; and do any and all other acts and
things which may be reasonably necessary or advisable to enable each seller to
consummate the disposition of the Registrable Shares owned by such seller in
such jurisdictions (provided, however, that the Company will not be required to
(A) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph or (B) consent to
general service of process in any such jurisdiction);
(v) promptly notify each seller and each underwriter and (if
requested by any such Person) confirm such notice in writing (A) 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, (B) of the issuance by any state
securities or other regulatory authority of any order suspending the
qualification or exemption from qualification of any of the Registrable Shares
under state securities or "blue sky" laws or the initiation of any proceedings
for that purpose, and (C) of the happening of any event which makes any
statement made in a registration statement or related prospectus untrue or
which requires the making of any changes in such registration statement,
prospectus or documents so that they 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, as promptly as
practicable thereafter, prepare and file with the SEC and furnish a supplement
or amendment to such prospectus so that, as thereafter deliverable to the
purchasers of such Registrable Shares, such prospectus will not contain any
untrue statement of a material fact or omit a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading;
(vi) make generally available to the Company's securityholders an
earnings statement satisfying the provisions of Section 11(a) of the Securities
Act no later than 30 days after the end of the 12-month period beginning with
the first day of the Company's first fiscal quarter commencing after the
effective date of a registration statement, which earnings statement shall
cover said 12-month period, and which requirement will be deemed to be
satisfied if the Company timely files complete and accurate information on
Forms 10-Q, 10-K and 8-K under the Exchange Act and otherwise complies with
Rule 158 under the Securities Act;
(vii) if requested by the managing underwriter or any seller
promptly incorporate in a prospectus supplement or post-effective amendment
such information as the managing underwriter or any seller reasonably requests
to be included therein, including, without limitation, with respect to the
Registrable Shares being sold by such seller, the purchase price being paid
therefor by the underwriters and with respect to any other terms of the
underwritten offering of the Registrable Shares to be sold in such offering,
and promptly make all required filings of such prospectus supplement or
post-effective amendment;
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(viii) as promptly as practicable after filing with the SEC of any
document which is incorporated by reference into a registration statement (in
the form in which it was incorporated), deliver a copy of each such document to
each seller;
(ix) cooperate with the sellers and the managing underwriter to
facilitate the timely preparation and delivery of certificates (which shall not
bear any restrictive legends unless required under applicable law) representing
securities sold under any registration statement, and enable such securities to
be in such denominations and registered in such names as the managing
underwriter or such sellers may request and keep available and make available
to the Company's transfer agent prior to the effectiveness of such registration
statement a supply of such certificates;
(x) promptly make available for inspection by any seller, any
underwriter participating in any disposition pursuant to any registration
statement, and any attorney, accountant or other agent or representative
retained by any such seller or underwriter (collectively, the "Inspectors"),
all financial and other records, pertinent corporate documents and properties
of the Company (collectively, the "Records"), as shall be reasonably necessary
to enable them to exercise their due diligence responsibility, and cause the
Company's officers, directors and employees to supply all information requested
by any such Inspector in connection with such registration statement; provided,
that, unless the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in the registration statement or the release of such
Records is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction, the Company shall not be required to provide any
information under this subparagraph (x) if (A) the Company believes, after
consultation with counsel for the Company, that to do so would cause the
Company to forfeit an attorney-client privilege that was applicable to such
information or (B) if either (1) the Company has requested and been granted
from the SEC confidential treatment of such information contained in any filing
with the SEC or documents provided supplementally or otherwise or (2) the
Company reasonably determines in good faith that such Records are confidential
and so notifies the Inspectors in writing unless prior to furnishing any such
information with respect to (A) or (B) such Holder of Registrable Shares
requesting such information agrees to enter into a confidentiality agreement in
customary form and subject to customary exceptions; and provided, further that
each Holder of Registrable Shares agrees that it will, upon learning that
disclosure of such Records is sought in a court of competent jurisdiction, give
notice to the Company to allow the Company, if practical, at its expense, to
undertake appropriate action to prevent disclosure of the Records deemed
confidential;
(xi) furnish to each seller underwriter a signed counterpart of (A)
an opinion or opinions of counsel to the Company, and (B) a comfort letter or
comfort letters from the Company's independent public accountants, each in
customary form and covering such matters of the type customarily covered by
opinions or comfort letters, as the case may be, as the sellers or managing
underwriter reasonably requests;
(xii) cause the Registrable Shares included in any registration
statement to be (A) listed on each securities exchange, if any, on which
similar securities issued by the Company are then listed, or (B) authorized to
be quoted and/or listed (to the extent applicable) on the National Association
of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or the
NASDAQ National Market System if the Registrable Shares so qualify;
(xiii) provide a CUSIP number for the Registrable Shares included in
any registration statement not later than the effective date of such
registration statement;
(xiv) cooperate with each seller and each underwriter participating
in the disposition of such Registrable Shares and their respective counsel in
connection with any filings required to be made with the National Association
of Securities Dealers, Inc. ("NASD");
-10-
<PAGE> 11
(xv) during the period when the prospectus is required to be
delivered under the Securities Act, promptly file all documents required to be
filed with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act;
(xvi) notify each seller of Registrable Shares promptly of any
request by the SEC for the amending or supplementing of such registration
statement or prospectus or for additional information;
(xvii) prepare and file with the SEC promptly any amendments or
supplements to such registration statement or prospectus which, in the opinion
of counsel for the Company or the managing underwriter, is required in
connection with the distribution of the Registrable Shares;
(xviii) enter into such agreements (including underwriting agreements
in the managing underwriter's customary form) as are customary in connection
with an underwritten registration;
(xix) advise each seller of such Registrable Shares, promptly after
it shall receive notice or obtain knowledge thereof, of the issuance of any
stop order by the SEC suspending the effectiveness of such registration
statement or the initiation or threatening of any proceeding for such purpose
and promptly use its best efforts to prevent the issuance of any stop order or
to obtain its withdrawal at the earliest possible moment if such stop order
should be issued; and
(xx) cooperate with the underwriters with respect to all road shows
and other marketing activities as may be reasonably requested by the
underwriters.
2.5 Suspension of Dispositions. Each Holder agrees by acquisition
of any Registrable Shares that, upon receipt of any notice (a "Suspension
Notice") from the Company of the happening of any event of the kind described
in Section 2.4(v)(B) or (C), such Holder will forthwith discontinue disposition
of Registrable Shares until such Holder's receipt of the copies of the
supplemented or amended prospectus, or until it is advised in writing (the
"Advice") by the Company that the use of the prospectus may be resumed, and has
received copies of any additional or supplemental filings which are
incorporated by reference in the prospectus, and, if so directed by the
Company, such Holder will deliver to the Company all copies, other than
permanent file copies then in such Holder's possession, of the prospectus
covering such Registrable Shares current at the time of receipt of such notice.
In the event the Company shall give any such notice, the time period regarding
the effectiveness of registration statements set forth in Section 2.4(ii)
hereof shall be extended by the number of days during the period from and
including the date of the giving of the Suspension Notice to and including the
date when each seller of Registrable Shares covered by such registration
statement shall have received the copies of the supplemented or amended
prospectus or the Advice. The Company shall use its commercially reasonable
efforts and take such actions as are reasonably necessary to render the Advice
as promptly as practicable.
2.6 Registration Expenses. All expenses incident to the Company's
performance of or compliance with this Article 2 including, without limitation,
all registration and filing fees, all fees and expenses associated with filings
required to be made with the NASD (including, if applicable, the fees and
expenses of any "qualified independent underwriter" as such term is defined in
Schedule E of the By-Laws of the NASD, and of its counsel), as may be required
by the rules and regulations of the NASD, 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 Registrable
Shares), rating agency fees, printing expenses (including expenses of printing
certificates for the Registrable Shares in a form eligible for deposit with
Depository Trust Company and of printing prospectuses if the printing of
prospectuses is requested by a holder of Registrable Shares), messenger and
delivery expenses, the Company's internal expenses (including without
limitation all salaries and expenses of its officers and employees performing
legal or accounting duties), the fees and expenses
-11-
<PAGE> 12
incurred in connection with any listing of the Registrable Shares, fees and
expenses of counsel for the Company and its independent certified public
accountants (including the expenses of any special audit or "cold comfort"
letters required by or incident to such performance), securities act liability
insurance (if the Company elects to obtain such insurance), the fees and
expenses of any special experts retained by the Company in connection with such
registration, and the fees and expenses of other persons retained by the
Company and reasonable fees and expenses of one firm of counsel for the sellers
(which shall be selected by the holders of a majority of the Registrable Shares
being included in any particular registration statement) (all such expenses
being herein called "Registration Expenses") will be borne by the Company
whether or not any registration statement becomes effective; provided that,
except as expressed otherwise provided above, in no event shall Registration
Expenses include any underwriting discounts, commissions, or fees attributable
to the sale of the Registrable Shares or any counsel, accountants, or other
persons retained or employed by the Holders.
2.7 Indemnification.
2.7.1 The Company agrees to indemnify and reimburse, to the fullest
extent permitted by law, each seller of Registrable Shares, and each of its
employees, advisors, agents, representatives, partners, officers, and directors
and each Person who controls such seller (within the meaning of the Securities
Act or the Exchange Act) and any agent or investment advisor thereof
(collectively, the "Seller Affiliates") (A) against any and all losses, claims,
damages, liabilities, and expenses, joint or several (including, without
limitation, attorneys' fees and disbursements except as limited by 2.7.3) based
upon, arising out of, related to or resulting from any untrue or alleged untrue
statement of a material fact contained in any registration statement,
prospectus, or preliminary prospectus or any amendment thereof or supplement
thereto, or any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading, (B)
against any and all loss, liability, claim, damage, and expense whatsoever, as
incurred, to the extent of the aggregate amount paid in settlement of any
litigation or investigation or proceeding by any governmental agency or body,
commenced or threatened, or of any claim whatsoever based upon, arising out of,
related to or resulting from any such untrue statement or omission or alleged
untrue statement or omission, and (C) against any and all costs and expenses
(including reasonable fees and disbursements of counsel) as may be reasonably
incurred in investigating, preparing, or defending against any litigation, or
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon, arising out of, related to or
resulting from any such untrue statement or omission or alleged untrue
statement or omission, to the extent that any such expense or cost is not paid
under subparagraph (A) or (B) above; except insofar as the same are made in
reliance upon and in strict conformity with information furnished in writing to
the Company by such seller or any Seller Affiliate for the express purpose of
the use therein or arise from such seller's or any Seller Affiliate's failure
to deliver a copy of the registration statement or prospectus or any amendments
or supplements thereto after the Company has furnished such seller or Seller
Affiliate with a sufficient number of copies of the same. The reimbursements
required by this Section 2.7.1 will be made by periodic payments during the
course of the investigation or defense, as and within 15 Business Days of when
bills are received for expenses incurred.
2.7.2 In connection with any registration statement in which a
seller of Registrable Shares is participating, each such seller will furnish to
the Company in writing such information as the Company reasonably requests for
use in connection with any such registration statement or prospectus and, to
the fullest extent permitted by law, each such seller will indemnify the
Company and its directors and officers and each Person who controls the Company
(within the meaning of the Securities Act or the Exchange Act) against any and
all losses, claims, damages, liabilities, and expenses (including, without
limitation, reasonable attorneys' fees and disbursements except as limited by
Section 2.7.3) resulting from any untrue statement or alleged untrue statement
of a material fact contained in the registration statement, prospectus, or any
preliminary prospectus or any amendment thereof or supplement thereto or any
omission or alleged omission of a material fact required to be stated therein
or necessary to make the statements therein not misleading, but only to the
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<PAGE> 13
extent that such untrue statement or alleged untrue statement or omission or
alleged omission is contained in any information so furnished in writing by
such seller or any of its Seller Affiliates specifically for inclusion in the
registration statement; provided that the obligation to indemnify will be
several, not joint and several, among such sellers of Registrable Shares, and
the liability of each such seller of Registrable Shares will be in proportion
to, and provided further that such liability will be limited to, the net amount
received by such seller from the sale of Registrable Shares pursuant to such
registration statement; provided, however, that such seller of Registrable
Shares shall not be liable in any such case to the extent that prior to the
filing of any such registration statement or prospectus or amendment thereof or
supplement thereto, such seller has furnished in writing to the Company
information expressly for use in such registration statement or prospectus or
any amendment thereof or supplement thereto which corrected or made not
misleading information previously furnished to the Company.
2.7.3 Any Person entitled to indemnification hereunder will (A) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification (provided that the failure to give such notice
shall not limit the rights of such Person) and (B) unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided, however, that any person
entitled to indemnification hereunder shall have the right to employ separate
counsel and to participate in the defense of such claim, but the fees and
expenses of such counsel shall be at the expense of such person unless (X) the
indemnifying party has agreed to pay such fees or expenses, or (Y) the
indemnifying party shall have failed to assume the defense of such claim and
employ counsel reasonably satisfactory to such person. If such defense is not
assumed by the indemnifying party as permitted hereunder, the indemnifying
party will not be subject to any liability for any settlement made by the
indemnified party without its consent (but such consent will not be
unreasonably withheld). If such defense is assumed by the indemnifying party
pursuant to the provisions hereof, such indemnifying party shall not settle or
otherwise compromise the applicable claim unless (1) such settlement or
compromise contains a full and unconditional release of the indemnified party
or (2) the indemnified party otherwise consents in writing. An indemnifying
party who is not entitled to, or elects not to, assume the defense of a claim
will not be obligated to pay the fees and expenses of more than one counsel for
all parties indemnified by such indemnifying party with respect to such claim,
unless in the reasonable judgment of any indemnified party, a conflict of
interest may exist between such indemnified party and any other of such
indemnified parties with respect to such claim, in which event the indemnifying
party shall be obligated to pay the reasonable fees and disbursements of such
additional counsel or counsels.
2.7.4 Each party hereto agrees that, if for any reason the
indemnification provisions contemplated by Section 2.7.1 or Section 2.7.2 are
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, claims, damages, liabilities, or expenses (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, liabilities, or expenses (or actions in respect thereof) in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party and the indemnified party in connection with the actions
which resulted in the losses, claims, damages, liabilities or expenses as well
as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact 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 such statement or omission. The parties hereto agree
that it would not be just and equitable if contribution pursuant to this
Section 2.7.4 were determined by pro rata allocation (even if the Holders or
any underwriters or all of them 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 in this Section 2.7.4. The amount paid or payable by
an indemnified party as a result of the losses, claims, damages, liabilities,
or
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<PAGE> 14
expenses (or actions in respect thereof) referred to above shall be deemed to
include any legal or other fees or expenses reasonably incurred by such
indemnified party in connection with investigating or, except as provided in
Section 2.7.3, defending any such action or claim. Notwithstanding the
provisions of this Section 2.7.4, no Holder shall be required to contribute an
amount greater than the dollar amount by which the proceeds received by such
Holder with respect to the sale of any Registrable Shares exceeds the amount of
damages which such Holder has otherwise been required to pay by reason of such
statement or 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. The Holders' obligations in this Section 2.7.4 to
contribute shall be several in proportion to the amount of Registrable Shares
registered by them and not joint.
If indemnification is available under this Section 2.7, the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in Section 2.7.1 and Section 2.7.2 without regard to the relative
fault of said indemnifying party or indemnified party or any other equitable
consideration provided for in this Section 2.7.4.
2.7.5 The indemnification and contribution provided for under this
Agreement will remain in full force and effect regardless of any investigation
made by or on behalf of the indemnified party or any officer, director, or
controlling Person of such indemnified party and will survive the transfer of
securities.
ARTICLE 3
TERMINATION
The provisions of this Agreement shall terminate on the tenth
anniversary of the date of this Agreement.
ARTICLE 4
MISCELLANEOUS
Section 4.1 Notices. Any notices or other communications
required or permitted hereunder shall be in writing, and shall be sufficiently
given if made by hand delivery, by telex, by telecopier or registered or
certified mail, postage prepaid, return receipt requested, addressed as follows
(or at such other address as may be substituted by notice given as herein
provided):
If to the Company:
International Home Foods, Inc.
c/o Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, TX 75201
Attention: Lawrence D. Stuart, Jr.
Managing Director and Principal
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<PAGE> 15
Copies to:
Vinson & Elkins L.L.P.
3700 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201
Attention: Michael D. Wortley
If to any Holder, at its address listed on the signature pages hereof.
Any notice or communication hereunder shall be deemed to have been
given or made as of the date so delivered if personally delivered; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and
five calendar days after mailing if sent by registered or certified mail
(except that a notice of change of address shall not be deemed to have been
given until actually received by the addressee).
Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders. If a notice
or communication is mailed in the manner provided above, it is duly given,
whether or not the addressee receives it.
Section 4.2 Governing Law; Jurisdiction. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
Section 4.3 Successors and Assigns. Whether or not an express
assignment has been made pursuant to the provisions of this Agreement,
provisions of this Agreement that are for the Holders' benefit as the holders
of any Registrable Securities are also for the benefit of, and enforceable by,
all subsequent holders of Registrable Securities, except as otherwise expressly
provided herein. This Agreement shall be binding upon the Company, each
Holder, and their respective successors and assigns.
Section 4.4 Duplicate Originals. All parties may sign any number
of copies of this Agreement. Each signed copy shall be an original, but all of
them together shall represent the same agreement.
Section 4.5 Severability. In case any provision in this
Agreement shall be held invalid, illegal or unenforceable in any respect for
any reason, the validity, legality and enforceability of any such provision in
every other respect and the remaining provisions shall not in any way be
affected or impaired thereby.
Section 4.6 No Waivers; Amendments.
4.6.1 No failure or delay on the part of the Company or any Holder
in exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to the Company or
any Holder at law or in equity or otherwise.
4.6.2 Any provision of this Agreement may be amended or waived if,
but only if, such amendment or waiver is in writing and is signed by the
Company and the Required Holders; provided that no such amendment or waiver
shall, (i) unless signed by all of the Holders, amend the provisions of Section
2.1, (ii) unless signed by all of the Holders affected, (A) amend the
provisions of this Section 4.6.2 or (B) change the number of Holders which
shall be required for the Holders or any of them to take any action under this
Section 4.6.2 or any other provision of this Agreement.
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<PAGE> 16
4.7 Other Rights. From and after the date of this Agreement, the
Company shall not grant to any Holder any additional registration rights with
respect to, or otherwise register any, Registrable Shares unless such
additional registration rights are also offered to all other Holders of
Registrable Shares.
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<PAGE> 17
SIGNATURES TO AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of the date first written above.
INTERNATIONAL HOME FOODS, INC.
By: /s/ JOHN R. CONSIDINE
--------------------------------
Name: John R. Considine
--------------------------------
Title: Vice President
--------------------------------
AHP SUBSIDIARY HOLDING CORPORATION
Address:
c/o American Home Products Corporation
Five Giralda Farms By: /s/ JOHN R. CONSIDINE
Madison, New Jersey 07940 --------------------------------
Attention: President Name: John R. Considine
--------------------------------
Title: Vice President
--------------------------------
AHFP HOLDING CORPORATION
Address:
c/o Hicks, Muse, Tate & Furst
Incorporated
200 Crescent Court, Suite 1600 By: /s/ ANDREW S. ROSEN
Dallas, TX 75201 --------------------------------
Attention: Lawrence G. Stuart, Jr. Name: Andrew S. Rosen
Managing Director and --------------------------------
Principal Title: Vice President and Assistant
Secretary
--------------------------------
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<PAGE> 1
EXHIBIT 4.2
EXECUTION COPY
============================================================
INTERNATIONAL HOME FOODS, INC.
10 3/8% Senior Subordinated Notes due 2006
=====================
INDENTURE
Dated as of November 1, 1996
====================
UNITED STATES TRUST COMPANY OF NEW YORK,
Trustee
=============================================================
<PAGE> 2
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
<S> <C>
310(a)(1) .............................. 7.10
(a)(2) .............................. 7.10
(a)(3) .............................. N.A.
(a)(4) .............................. N.A.
(b) .............................. 7.8; 7.10
(c) .............................. N.A.
311(a) .............................. 7.11
(b) .............................. 7.11
(c) .............................. N.A.
312(a) .............................. 2.5
(b) .............................. 11.3
(c) .............................. 11.3
313(a) .............................. 7.6
(b)(1) .............................. N.A.
(b)(2) .............................. 7.6
(c) .............................. 7.6
(d) .............................. 7.6
314(a) .............................. 4.2
4.10; 12.2
(b) .............................. N.A.
(c)(1) .............................. 12.4
(c)(2) .............................. 12.4
(c)(3) .............................. N.A.
(d) .............................. N.A.
(e) .............................. 12.5
(f) .............................. 4.9
315(a) .............................. 7.1
(b) .............................. 7.5; 12.2
(c) .............................. 7.1
(d) .............................. 7.1
(e) .............................. 6.11
316(a)(last sentence)........................ 12.6
(a)(1)(A) .............................. 6.5
(a)(1)(B) .............................. 6.4
(a)(2) .............................. N.A.
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
(b) .............................. 6.7
317(a)(1) .............................. 6.8
(a)(2) .............................. 6.9
(b) .............................. 2.4
318(a) .............................. 12.1
</TABLE>
N.A. means Not Applicable.
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of the Indenture.
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
Definitions and Incorporation by Reference . . . . . . . . . . . . . . . . . 1
SECTION 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2. Other Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 1.3. Incorporation by Reference of Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 1.4. Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE II
The Securities . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.1. Form and Dating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.2. Execution and Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.3. Registrar and Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.4. Paying Agent To Hold Money in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.5. Securityholder Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.6. Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.7. Replacement Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 2.8. Outstanding Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 2.9. Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 2.10. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 2.11. Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 2.12. CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE III
Redemption . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 3.1. Notices to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 3.2. Selection of Securities To Be Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 3.3. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 3.4. Effect of Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 3.5. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 3.6. Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
</TABLE>
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<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE IV
Covenants . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 4.1. Payment of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 4.2. SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 4.3. Limitation on Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 4.4. Limitation on Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 4.5. Limitation on Restrictions on Distributions from Restricted Subsidiaries . . . . . . . . . . . 44
SECTION 4.6. Limitation on Sales of Assets and Subsidiary Stock . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 4.7. Limitation on Affiliate Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 4.8. Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 4.9. Limitation on Capital Stock of Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 4.10. Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 4.11. Further Instruments and Acts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 4.12. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE V
Successor Company . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 5.1. When Company May Merge or Transfer Assets . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE VI
Defaults and Remedies . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 6.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 6.2. Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 6.3. Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 6.4. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 6.5. Control by Majority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 6.6. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
</TABLE>
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SECTION 6.7. Rights of Holders to Receive Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 6.8. Collection Suit by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 6.9. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 6.10. Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 6.11. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE VII
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 7.1. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 7.2. Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 7.3. Individual Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 7.4. Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 7.5. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 7.6. Reports by Trustee to Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 7.7. Compensation and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 7.8. Replacement of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 7.9. Successor Trustee by Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 7.10. Eligibility; Disqualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 7.11. Preferential Collection of Claims Against Company . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE VIII
Discharge of Indenture; Defeasance . . . . . . . . . . . . . . . . . . . 63
SECTION 8.1. Discharge of Liability on Securities; Defeasance . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 8.2. Conditions to Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 8.3. Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 8.4. Repayment to Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 8.5. Indemnity for U.S. Government Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 8.6. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE IX
Amendments . . . . . . . . . . . . . . . . . . . . . . . . . 66
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SECTION 9.1. Without Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 9.2. With Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 9.3. Compliance with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 9.4. Revocation and Effect of Consents and Waivers . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 9.5. Notation on or Exchange of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 9.6. Trustee To Sign Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
ARTICLE X
Subordination . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 10.1. Agreement To Subordinate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 10.2. Liquidation, Dissolution, Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 10.3. Default on Senior Indebtedness or Guarantor Senior Indebtedness . . . . . . . . . . . . . . . 70
SECTION 10.4. Acceleration of Payment of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 10.5. When Distribution Must Be Paid Over . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 10.6. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 10.7. Relative Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 10.8. Subordination May Not Be Impaired by Company or the Subsidiary Guarantors . . . . . . . . . . 72
SECTION 10.9. Rights of Trustee and Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 10.10. Distribution or Notice to Representative . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 10.11. Article X Not To Prevent Events of Default or Limit Right To Accelerate . . . . . . . . . . . 73
SECTION 10.12. Trust Moneys Not Subordinated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 10.13. Trustee Entitled To Rely . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 10.14. Trustee To Effectuate Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 10.15. Trustee Not Fiduciary for Holders of Senior Indebtedness and Guarantor Senior
Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 10.16. Reliance by Holders of Senior Indebtedness and Guarantor Senior Indebtedness on
Subordination Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
</TABLE>
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ARTICLE XI
Subsidiary Guarantee . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 11.1. Subsidiary Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 11.2. Limitation on Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 11.3. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 11.4. No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 11.5. Right of Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 11.6. No Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 11.7. Additional Subsidiary Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 11.8. Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
ARTICLE XII
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 12.1. Trust Indenture Act Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 12.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 12.3. Communication by Holders with other Holders . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 12.4. Certificate and Opinion as to Conditions Precedent . . . . . . . . . . . . . . . . . . . . . 80
SECTION 12.5. Statements Required in Certificate or Opinion . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 12.6. When Securities Disregarded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 12.7. Rules by Trustee, Paying Agent and Registrar . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 12.8. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 12.9. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 12.10. No Recourse Against Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 12.11. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 12.12. Multiple Originals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 12.13. Variable Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 12.14. Qualification of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 12.15. Table of Contents; Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
</TABLE>
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<PAGE> 9
INDENTURE dated as of November 1, 1996, among INTERNATIONAL HOME FOODS, INC., a
Delaware corporation (as further defined below, the "Company"), the Subsidiary
Guarantors (as defined herein) identified on the signature pages hereto, and
United States Trust Company of New York, a New York corporation (the "Trustee").
Each party agrees as follows for the benefit of the other parties
and for the equal and ratable benefit of the Holders of the Company's 10 3/8%
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 hereinafter defined), the Company's 10 3/8% Senior Subordinated Notes due
2006 (the "Exchange Notes" and, together with the Initial Notes, the
"Securities"):
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.1. Definitions.
"Additional Assets" means (i) any property or assets (other
than Indebtedness and Capital Stock) in a Related Business; (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 a Restricted Subsidiary of
the Company; (iii) Capital Stock constituting a minority interest in any Person
that at such time is a Restricted Subsidiary of the Company; or (iv) Permitted
Investments of the type and in the amounts described in clause (viii) of the
definition thereof; provided, however, that, in the case of clauses (ii) and
(iii), such Restricted Subsidiary is primarily engaged in a Related Business.
"Affiliate" of any specified Person means any other Person,
directly or indirectly, controlling or controlled by or under direct or
indirect common control with such specified Person. 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.
"Applicable Premium" means, with respect to a Security at any
Redemption Date, the greater of (i) 1.0% of the principal amount of such
Security and (ii) the excess of (A) the present value at such time of (1)
105.188% of the principal amount of such Security plus (2) all required
interest payments due on such Security through November 1, 2001, computed using
a discount rate equal to the Treasury Rate plus 100 basis points, over (B) the
principal amount of such Security.
<PAGE> 10
2
"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 Wholly-Owned 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) dispositions of property for net proceeds which, when taken
collectively with the net proceeds of any other such dispositions under this
clause (iv) that were consummated since the beginning of the calendar year in
which such disposition is consummated, do not exceed 1.5% of the consolidated
book value of the Company's assets as of the most recent date prior to such
disposition for which a consolidated balance sheet of the Company has been
regularly prepared, and (v) transactions permitted under Section 5.1.
"Asset Swap" means the execution of a definitive agreement,
subject only to customary closing conditions that the Company in good faith
believes will be satisfied, for a substantially concurrent purchase and sale,
or exchange, of Productive Assets between the Company or any of its Restricted
Subsidiaries and another Person or group of affiliated Persons; provided,
however, that any amendment to or waiver of any closing condition that
individually or in the aggregate is material to the Asset Swap shall be deemed
to be a new Asset Swap.
"Attributable Indebtedness" in respect of a Sale/Leaseback
Transaction means, as at the time of determination, the present value
(discounted at the interest rate borne by the Securities, compounded annually)
of the total obligations of the lessee for rental payments during the remaining
term of the lease included in such Sale/Leaseback Transaction (including any
period for which such lease has been extended).
"Average Life" means, as of the date of determination, with
respect to any indebtedness, 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 multiplied by the amount of such payment by (ii) the sum of all such
payments.
<PAGE> 11
3
"Bank Indebtedness" means any and all amounts, whether
outstanding on the Issue Date or thereafter incurred, payable by the Company
under or in respect of the Credit Agreement and any related notes, collateral
documents, letters of credit and guarantees, including principal, premium (if
any), interest (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company whether or
not a claim for post filing interest is allowed in such proceedings), fees,
charges, expenses, reimbursement obligations, guarantees and all other amounts
payable thereunder or in respect thereof.
"Board of Directors" means the Board of Directors of the
Company or any committee thereof duly authorized to act on behalf of such Board
of Directors.
"Business Day" means each day which is not a Legal Holiday.
"Capitalized Lease Obligations" means an obligation that is
required to be classified and accounted for as a capitalized lease for
financial reporting purposes in accordance with GAAP, and the amount of
Indebtedness represented by such obligation shall be the capitalized amount of
such obligation 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 such lease may be terminated without
penalty.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person,
including any Preferred Stock, but excluding any debt securities convertible
into such equity.
"Change of Control" means the occurrence of any of the
following events:
(i) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or
substantially all of the assets of the Company and its Subsidiaries to
any Person or group of related Persons for purposes of Section 13(d)
of the Exchange Act (a "Group") (whether or not otherwise in
compliance with the provisions of this Indenture), other than to
Permitted Holders; or
(ii) a majority of the Board of Directors of the Company
(but not a committee thereof) shall consist of Persons who are not
Continuing Directors; or
<PAGE> 12
4
(iii) the acquisition by any Person or Group (other than
the Permitted Holders) of the power, directly or indirectly, to vote
or direct the voting of securities having more than 50% of the
ordinary voting power for the election of directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means International Home Foods, Inc. until a
successor replaces it and, thereafter, means the successor and, for purposes of
any provision contained herein and required by the TIA, each other obligor on
the indenture securities.
"Consolidated Cash Flow" for any period means the Consolidated
Net Income 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, (v) exchange or translation losses on foreign currencies, and (vi) all
other non-cash items reducing Consolidated Net Income (excluding any non-cash
item to the extent it represents an accrual of or reserve for cash
disbursements for any subsequent period prior to the Stated Maturity of the
Securities) and less, to the extent added in calculating Consolidated Net
Income, (x) exchange or translation gains on foreign currencies and (y)
non-cash items (excluding such non-cash items to the extent they represent an
accrual for cash receipts reasonably expected to be received prior to the
Stated Maturity of the Securities), in each case for such period.
Notwithstanding the foregoing, the income tax expense, depreciation expense and
amortization expense of a Subsidiary of the Company shall be included in
Consolidated Cash Flow only to the extent (and in the same proportion) that the
net income of such Subsidiary was included in calculating Consolidated Net
Income.
"Consolidated Coverage Ratio" as of any date of determination
means the ratio of (i) the aggregate amount of Consolidated Cash Flow for the
period of the most recent four consecutive fiscal quarters ending prior to the
date of such determination and as to which financial statements are available
to (ii) Consolidated Interest Expense for such four fiscal quarters: 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
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 (A) such Indebtedness
as if such Indebtedness had been Incurred on the first day of such period
(provided that if such Indebtedness is Incurred under a revolving credit
facility (or similar arrangement or under any predecessor revolving credit or
similar arrangement) only that portion of such Indebtedness that constitutes
the one year projected minimum balance of such Indebtedness (as determined in
good faith by senior management of the Company and assuming a
<PAGE> 13
5
constant level of sales) shall be deemed outstanding for purposes of this
calculation) and (B) 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 any Indebtedness of the Company or
any of its Restricted Subsidiaries has been repaid, repurchased, defeased or
otherwise discharged (other than Indebtedness under a revolving credit or
similar arrangement unless such revolving credit Indebtedness has been
permanently repaid and has not been replaced), Consolidated Interest Expense
for such period shall be calculated after giving pro forma effect thereto as if
such Indebtedness had been repaid, repurchased, defeased or otherwise
discharged on the first day of such period, (3) if since the beginning of such
period the Company or any of its Restricted Subsidiaries shall have made any
Asset Disposition or if the transaction giving rise to the need to calculate
the Consolidated Coverage Ratio is an 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 (i) 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) and (ii) increased by interest income
attributable to the assets which are the subject of such Asset Disposition for
such period, (4) 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 (5) 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,
<PAGE> 14
6
Investment or acquisition of assets that would have required an adjustment
pursuant to clause (3) or (4) 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 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 capital leases, (ii) amortization of debt discount, (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 payments (whether positive or
negative) pursuant to Interest Rate Agreements, (viii) the cash contributions
to any employee stock ownership plan or similar trust to the extent such
contributions are used by such plan or trust to pay interest or fees to any
Person (other than the Company) in connection with Indebtedness Incurred by
such plan or trust and (ix) cash and Disqualified Stock dividends in respect of
all Preferred Stock of Subsidiaries and Disqualified Stock of the Company held
by Persons other than the Company or a Wholly Owned Subsidiary and less (a) to
the extent included in such interest expense, the amortization of capitalized
debt issuance costs and (b) interest income. Notwithstanding the foregoing, the
Consolidated Interest Expense with respect to any Restricted Subsidiary of the
Company, that was not a Wholly-Owned Subsidiary, shall be included only to the
extent (and in the same proportion) that the net income of such Restricted
Subsidiary was included in calculating Consolidated Net Income.
"Consolidated Net Income" means, for any period, the net
income (loss) of the Company and its consolidated Subsidiaries; provided,
however, that there shall not be included in such Consolidated Net Income: (i)
any net income (loss) of any person acquired by the Company or any of its
Restricted Subsidiaries in a pooling of interests transaction for any period
prior to the date of such acquisition, (ii) any net income of any Restricted
Subsidiary of the Company 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 (other than restrictions in effect on the Issue Date with respect to a
Restricted Subsidiary of the Company and other than restrictions that are
created or exist in compliance with Section 4.5), (iii) any gain or loss
realized upon the sale or other disposition of any assets of the Company or its
<PAGE> 15
7
consolidated Restricted Subsidiaries (including pursuant to any Sale/Leaseback
Transaction) 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, (iv) any extraordinary gain or loss, (v) the
cumulative effect of a change in accounting principles, (vi) restructuring
charges or writeoffs recorded within the one year period following the Issue
Date in an aggregate amount not to exceed $25 million,(vii) the net income of
any Person, other than a Restricted Subsidiary, except to the extent of the
lesser of (A) dividends or distributions paid to the Company or any of its
Restricted Subsidiaries by such Person and (B) the net income of such Person
(but in no event less than zero), and the net loss of such Person (other than
an Unrestricted Subsidiary) shall be included only to the extent of the
aggregate Investment of the Company or any of its Restricted Subsidiaries in
such Person and (viii) any non-cash expenses attributable to grants or
exercises of employee stock options. Notwithstanding the foregoing, for the
purpose of Section 4.4 only, there shall be excluded from Consolidated Net
Income any dividends, repayments of loans or advances or other transfers of
assets from Unrestricted Subsidiaries to the Company or a Restricted Subsidiary
to the extent such dividends, repayments or transfers increase the amount of
Restricted Payments permitted under Section 4.4 pursuant to Section
4.4(a)(3)(E).
"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
and for which financial statements are available (but in no event ending more
than 135 days prior to the taking of such action), 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 Stock.
"Continuing Director" means, as of the date of determination,
any Person who (i) was a member of the Board of Directors of the Company on the
date of the Indenture, (ii) was nominated for election or elected to the Board
of Directors of the Company with the affirmative vote of a majority of the
Continuing Directors who were members of such Board of Directors at the time of
such nomination or election, or (iii) is a representative of a Permitted
Holder.
"Credit Agreement" means (i) the Credit Agreement to be
entered into among the Company, The Chase Manhattan Bank, as Administrative
Agent, Bankers Trust Company, as Syndication Agent, Morgan Stanley Senior
Funding, Inc., as Documentation Agent, and the lenders parties thereto from
time to time, as the same may be amended, supplemented or otherwise modified
from time to time and (ii) any renewal, extension, refunding, restructuring,
replacement or
<PAGE> 16
8
refinancing thereof (whether with the original Administrative Agent and lenders
or another administrative agent or agents or other lenders and whether provided
under the original Credit Agreement or any other credit or other agreement or
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 which is, or after notice or passage
of time or both would be, an Event of Default.
"Depositary" means The Depository Trust Company, its nominees
and their respective successors and assigns, or such other depository
institution hereinafter appointed by the Company.
"Designated Senior Indebtedness" means (i) the Bank
Indebtedness in the case of the Company, (ii) any Guarantee by a Subsidiary
Guarantor of the Bank Indebtedness in the case of such Subsidiary Guarantor and
(iii) any other Senior Indebtedness in the case of the Company or Guarantor
Senior Indebtedness in the case of such Subsidiary Guarantor 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 million and is specifically designated by the Company or
such Subsidiary Guarantor in the instrument evidencing or governing such Senior
Indebtedness or Guarantor Senior Indebtedness as "Designated Senior
Indebtedness" for purposes of this Indenture.
"Disqualified 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 Stock (excluding capital stock which is
convertible or exchangeable solely at the option of the Company or a Restricted
Subsidiary) or (iii) is redeemable at the option of the holder thereof, in
whole or in part, in each case on or prior to the Stated Maturity of the
Securities, provided, that only the portion of Capital Stock which so matures
or is mandatorily redeemable, is so convertible or exchangeable or is so
redeemable at the option of the holder thereof prior to such Stated Maturity
shall be deemed to be Disqualified Stock.
"Equity Offering" means an offering for cash by the Company of
its common stock, or options, warrants or rights with respect to its common
stock.
<PAGE> 17
9
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Financial Advisory Agreement" means the Financial Advisory
Agreement between Hicks Muse Partners and the Company as in effect on the Issue
Date.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect as of the date hereof, 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.
"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 of such 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 Senior Indebtedness" means, with respect to a
Subsidiary Guarantor, whether outstanding on the Issue Date or thereafter
issued, any Guarantee of the Bank Indebtedness by such Subsidiary Guarantor,
all other Guarantees by such Subsidiary Guarantor of Senior Indebtedness of the
Company and all Indebtedness of such Subsidiary Guarantor, including interest
and fees thereon, unless, in the instrument creating or evidencing the same or
pursuant to which the same is outstanding, it is provided that the obligations
of such Subsidiary Guarantor in respect of such Indebtedness are not superior
in right of payment to the obligations of such Subsidiary Guarantor under the
Subsidiary Guaranty; provided, however, that Guarantor Senior Indebtedness
shall not include (1) any obligations of such Subsidiary Guarantor to the
Company or any other Subsidiary of the Company, (2) any liability for Federal,
state, local or other taxes owed or owing by such Subsidiary Guarantor, (3) any
accounts payable or other liability to trade creditors arising in the ordinary
course of business (including Guarantees thereof or instruments evidencing such
liabilities) or (4) any Indebtedness, Guarantee or
<PAGE> 18
10
obligation of such Subsidiary Guarantor that is expressly subordinate or junior
in right of payment to any other Indebtedness, Guarantee or obligation of such
Subsidiary Guarantor, including any Guarantor Senior Subordinated Indebtedness
and Guarantor Subordinated Obligations of such Subsidiary Guarantor.
"Guarantor Senior Subordinated Indebtedness" means, with
respect to a Subsidiary Guarantor, the obligations of such Subsidiary Guarantor
under the Subsidiary Guaranty and any other Indebtedness of such Subsidiary
Guarantor that specifically provides that such Indebtedness is to rank pari
passu in right of payment with the obligations of such Subsidiary Guarantor
under the Subsidiary Guaranty and is not subordinated by its terms in right of
payment to any Indebtedness or other obligation of such Subsidiary Guarantor
which is not Guarantor Senior Indebtedness of such Subsidiary Guarantor.
"Guarantor Subordinated Obligation" means, with respect to a
Subsidiary Guarantor, any Indebtedness of such Subsidiary Guarantor (whether
outstanding on the Issue Date or thereafter Incurred) which is subordinate or
junior in right of payment to the obligations of such Subsidiary Guarantor
under the Subsidiary Guaranty pursuant to a written agreement.
"Hicks Muse" means Hicks, Muse, Tate & Furst, Incorporated.
"Hicks Muse Partners" means Hicks Muse Partners, an affiliate
of Hicks Muse.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
"Incur" means issue, assume, Guarantee, incur or otherwise
become liable for; provided, however, that any Indebtedness or Capital Stock of
a Person existing at the time such person becomes a Restricted Subsidiary
(whether by merger, consolidation, acquisition or otherwise) shall be deemed to
be incurred by such Restricted Subsidiary at the time it becomes a Restricted
Subsidiary.
"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
<PAGE> 19
11
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 (except trade payables and accrued expenses incurred 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 and
all Attributable Indebtedness 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, (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 Stock or, with respect to any Restricted Subsidiary of the
Company, any Preferred Stock of such Restricted Subsidiary to the extent such
obligation arises on or before the Stated Maturity of the Securities (but
excluding, in each case, any accrued dividends) and (ix) to the extent not
otherwise included in this definition, obligations under Currency Agreements
and Interest Rate Agreements. The amount of Indebtedness of any Person at any
date shall be the outstanding principal amount of all unconditional obligations
as described above, as such amount would be reflected on a balance sheet
prepared in accordance with GAAP, and the maximum liability of such Person,
upon the occurrence of the contingency giving rise to the obligation, of any
contingent obligations described above at such date.
"Indenture" means this Indenture as amended or supplemented
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, 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 payable 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.
For purposes of Section 4.4, (i) "Investment" shall include the portion
(proportionate to the Company's equity interest in a Restricted Subsidiary to
be designated as an Unrestricted Subsidiary) of the fair market value of the
net assets of such Restricted Subsidiary of the Company at the time that such
Restricted Subsidiary is designated an Unrestricted Subsidiary; provided,
however, that
<PAGE> 20
12
upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company
shall be deemed to continue to have a permanent "Investment" in an Unrestricted
Subsidiary in an amount (if positive) equal to (x) the Company's "Investment"
in such Subsidiary at the time of such redesignation less (y) the portion
(proportionate to the Company's equity interest in such Subsidiary) of the fair
market value of the net assets of such Subsidiary at the time that such
Subsidiary is so re-designated a Restricted Subsidiary; and (ii) any property
transferred to or from an Unrestricted Subsidiary shall be valued at its fair
market value at the time of such transfer, in each case as determined in good
faith by the Board of Directors and evidenced by a resolution of the Board of
Directors certified in an Officers' Certificate to the Trustee.
"Issue Date" means the date on which the Initial Notes are
originally issued.
"Legal Holiday" has the meaning ascribed in Section 12.8.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any conditional sale or
other title retention agreement or lease in the nature thereof).
"Merger" means the merger of AHFP Acquisition Corporation, a
Delaware Corporation, with and into the Company pursuant to the Merger
Agreement.
"Merger Agreement" means the Agreement of Sale and Plan of
Merger, dated as of September 5, 1996, among the Company, AHFP Holding
Corporation, AHFP Acquisition Corporation, American Home Products Corporation
and AHP Subsidiary Holding Corporation.
"Monitoring and Oversight and Agreement" means the Monitoring
and Oversight Agreement between Hicks Muse Partners and the Company as in
effect on the Issue Date.
"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 constituting 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
<PAGE> 21
13
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, (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 and (v) any portion of the purchase price from an Asset Disposition
placed in escrow (whether as a reserve for adjustment of the purchase price,
for satisfaction of indemnities in respect of such Asset Disposition or
otherwise in connection with such Asset Disposition); provided, however, that
upon the termination of such escrow, Net Available Cash shall be increased by
any portion of funds therein released to the Company or any Restricted
Subsidiary.
"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-Recourse Debt" means Indebtedness (i) as to which neither
the Company nor any Restricted Subsidiary (a) provides any guarantee or credit
support of any kind (including any undertaking, guarantee, indemnity, agreement
or instrument that would constitute Indebtedness) or (b) is directly or
indirectly liable (as a guarantor or otherwise) and (ii) no default with
respect to which (including any rights that the holders thereof may have to
take enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any Restricted Subsidiary to declare a default under such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity.
"Offering Memorandum" means the Offering Memorandum dated
October 29, 1996 relating to the Initial Notes; provided that after the
issuance of Exchange Notes, all references herein to "Offering Memorandum"
shall be deemed references to the prospectus relating to the Exchange Notes.
"Officer" means the Chairman of the Board, the President, any
Vice President, the Treasurer or the Secretary of the Company, as applicable.
"Officers' Certificate" means a certificate signed by two
Officers.
<PAGE> 22
14
"Opinion of Counsel" means a written opinion from legal
counsel who is reasonably acceptable to the Trustee. The counsel may be an
employee of or counsel to the Company or the Trustee.
"Permitted Holders" means Hicks Muse, C. Dean Metropoulos &
Co. or any of their Affiliates, officers or directors.
"Permitted Indebtedness" means (i) Indebtedness of the Company
owing to and held by any Wholly-Owned Subsidiary or Indebtedness of a
Restricted Subsidiary owing to and held by the Company or any Wholly-Owned
Subsidiary; provided, however, that any subsequent issuance or transfer of any
Capital Stock or any other event which results in any such Wholly-Owned
Subsidiary ceasing to be a Wholly-Owned Subsidiary or any subsequent transfer
of any such Indebtedness (except to the Company or a Wholly-Owned Subsidiary)
shall be deemed, in each case, to constitute the Incurrence of such
Indebtedness by the issuer thereof; (ii) Indebtedness represented by (x) the
Securities, (y) any Indebtedness (other than the Indebtedness described in
clauses (i), (ii) and (iv) of Section 4.3(b) and other than Indebtedness
Incurred pursuant to clause (i) above or clauses (iv), (v) or (vi) below)
outstanding on the Issue Date and (z) any Refinancing Indebtedness Incurred in
respect of any Indebtedness described in this clause (ii) or Incurred pursuant
to Section 4.3(a); (iii) (A) Indebtedness of a Restricted Subsidiary Incurred
and outstanding on 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 Subsidiary or was otherwise acquired by the
Company); provided, however, that at the time such Restricted Subsidiary is
acquired by the Company, the Company would have been able to Incur $1.00 of
additional Indebtedness pursuant to Section 4.3(a) after giving effect to the
Incurrence of such Indebtedness pursuant to this clause (iii) and (B)
Refinancing Indebtedness Incurred by a Restricted Subsidiary in respect of
Indebtedness Incurred by such Restricted Subsidiary pursuant to this clause
(iii); (iv) Indebtedness (A) in respect of performance bonds, bankers'
acceptances and surety or appeal bonds provided by the Company or any of its
Restricted Subsidiaries to their customers in the ordinary course of their
business, (B) in respect of performance bonds or similar obligations of the
Company or any of its Restricted Subsidiaries for or in connection with
pledges, deposits or payments made or given in the ordinary course of business
in connection with or to secure statutory, regulatory or similar obligations,
including obligations under health, safety or environmental obligations, (C)
arising from Guarantees to suppliers, lessors, licensees, contractors,
franchises or customers of obligations (other than Indebtedness) incurred in
the ordinary course of business and (D) under Currency Agreements and Interest
Rate Agreements; provided, however, that in the case of Currency Agreements and
Interest Rate Agreements, such Currency Agreements and Interest Rate Agreements
are entered into for bona fide hedging purposes of the
<PAGE> 23
15
Company or its Restricted Subsidiaries (as determined in good faith by the
Board of Directors or senior management of the Company) and correspond in terms
of notional amount, duration, currencies and interest rates, as applicable, to
Indebtedness of the Company or its Restricted Subsidiaries Incurred without
violation of the Indenture or to business transactions of the Company or its
Restricted Subsidiaries on customary terms entered into in the ordinary course
of business; (v) Indebtedness arising from agreements providing for
indemnification, adjustment of purchase price or similar obligations, or from
Guarantees or letters of credit, surety bonds or performance bonds securing any
obligations of the Company or any of its Restricted Subsidiaries pursuant to
such agreements, in each case Incurred in connection with the disposition of
any business assets or Restricted Subsidiary of the Company (other than
Guarantees of Indebtedness or other obligations Incurred by any Person
acquiring all or any portion of such business assets or Restricted Subsidiary
of the Company for the purpose of financing such acquisition) in a principal
amount not to exceed the gross proceeds actually received by the Company or any
of its Restricted Subsidiaries in connection with such disposition; provided,
however, that the principal amount of any Indebtedness Incurred pursuant to
this clause (v), when taken together with all Indebtedness Incurred pursuant to
this clause (v) and then outstanding, shall not exceed $20 million; (vi)
Indebtedness consisting of (A) Guarantees by the Company or a Restricted
Subsidiary of Indebtedness Incurred by a Wholly-Owned Subsidiary without
violation of this Indenture and (B) Guarantees by a Restricted Subsidiary of
Senior Indebtedness Incurred by the Company without violation of the Indenture
(so long as such Restricted Subsidiary could have Incurred such Indebtedness
directly without violation of this Indenture); and (vii) Indebtedness arising
from the honoring by a bank or other financial institution of a check, draft or
similar instrument drawn against insufficient funds in the ordinary course of
business, provided that such Indebtedness is extinguished within two Business
Days of its incurrence.
"Permitted Investment" means an Investment by the Company or
any of its Restricted Subsidiaries in (i) a Wholly-Owned Subsidiary of the
Company; provided, however, that the primary business of such wholly-owned
Subsidiary is a Related Business; (ii) another Person if as a result of such
Investment such other Person becomes a Wholly-Owned Subsidiary of the Company
or is merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company or a Wholly-Owned Subsidiary of
the Company; provided, however, that in each case such Person's primary
business is a Related Business; (iii) Temporary Cash Investments; (iv)
receivables owing to the Company or any of its Restricted 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 for purposes of purchasing the Company's common stock in an aggregate
amount outstanding at any one time not to exceed $10 million and other loans
<PAGE> 24
16
and advances to employees made in the ordinary course of business consistent
with past practices of the Company or such Restricted Subsidiary; (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 Restricted
Subsidiaries or in satisfaction of judgments or claims; (viii) a Person engaged
in a Related Business or a loan or advance to the Company the proceeds of which
are used solely to make an Investment in a Person engaged in a Related Business
or a Guarantee by the Company of Indebtedness of any Person in which such
Investment has been made; provided, however, that no Permitted Investments may
be made pursuant to this clause (viii) to the extent the amount thereof would,
when taken together with all other Permitted Investments made pursuant to this
clause (viii), exceed $50 million in the aggregate (plus, to the extent not
previously reinvested, any return of capital realized on Permitted Investments
made pursuant to this clause (viii), or any release or other cancellation of
any Guarantee constituting such Permitted Investment); (ix) Persons to the
extent such Investment is received by the Company or any Restricted Subsidiary
as consideration for asset dispositions effected in compliance with Section
4.6; (x) prepayments and other credits to suppliers made in the ordinary course
of business consistent with the past practices of the Company and its
Restricted Subsidiaries; and (xi) Investments in connection with pledges,
deposits, payments or performance bonds made or given in the ordinary course of
business in connection with or to secure statutory, regulatory or similar
obligations, including obligations under health, safety or environmental
obligations.
"Person" means any individual, corporation, partnership,
limited liability company, 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.
"Productive Assets" means assets of a kind used or usable by
the Company and its Restricted Subsidiaries in the Company's business or any
Related Business.
A "Public Market" exists at any time with respect to the
common stock of the Company if (a) the common stock of the Company is then
registered with the Securities and Exchange Commission pursuant to Section
12(b) or 12(g) of the Exchange Act and traded either on a national securities
exchange or in the National Association of Securities Dealers Automated
Quotation System and (b) at least 15% of the total issued and outstanding
common stock of the
<PAGE> 25
17
Company has been distributed prior to such time by means of an effective
registration statement under the Securities Act.
"QIB" means any "qualified institutional buyer" (as defined
under the Securities Act).
"Redemption Date" means the date specified by the Company in a
notice delivered pursuant to Section 3.3 as the date on which the Company has
elected to redeem all of the Securities pursuant to paragraph 5 of the
Securities after the occurrence of a Change of Control.
"Refinancing Indebtedness" means Indebtedness that refunds,
refinances, replaces, renews, repays or extends (including pursuant to any
defeasance or discharge mechanism) (collectively, "refinances," and
"refinanced" shall have a correlative meaning) any Indebtedness existing on the
date of the Indenture or Incurred in compliance with the Indenture (including
Indebtedness of the Company that refinances Indebtedness of any Restricted
Subsidiary and Indebtedness of any Restricted Subsidiary that refinances
Indebtedness of another Restricted Subsidiary) including Indebtedness that
refinances Refinancing Indebtedness, provided, however, that (i) the
Refinancing Indebtedness has a Stated Maturity no earlier than the earlier of
(A) the first anniversary of the Stated Maturity of the Securities and (B)
Stated Maturity of the Indebtedness being refinanced, (ii) the Refinancing
Indebtedness has an Average Life at the time such Refinancing Indebtedness is
Incurred that is equal to or greater than the lesser of (A) the Average Life of
the Securities and (B) the Average Life of the Indebtedness being refinanced,
and (iii) such Refinancing Indebtedness is Incurred in an aggregate principal
amount (or if issued with original issue discount, an aggregate issue price)
that is equal to (or 101% of, in the case of a refinancing of the Securities in
connection with a Change of Control) or less than the sum of the aggregate
principal amount (or if issued with original issue discount, the aggregate
accreted value) then outstanding of the Indebtedness being refinanced.
"Registered Exchange Offer" shall have the meaning set forth
in the Registration Rights Agreement.
"Registration Rights Agreement" means the Exchange and
Registration Rights Agreement, dated November 1, 1996, among the Company, the
Subsidiary Guarantors, Chase Securities Inc. and BT Securities Corporation.
"Related Business" means any business which is the same as or
related, ancillary or complementary to any of the businesses of the Company and
its Restricted Subsidiaries on the date hereof, as reasonably determined by the
Board of Directors.
<PAGE> 26
18
"Representative" means any trustee, agent or representative
(if any) of an issue of Senior Indebtedness.
"Restricted Subsidiary" means any Subsidiary of the Company
other than an Unrestricted Subsidiary.
"Sale/Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired whereby the Company or a Restricted
Subsidiary transfers such property to a Person and the Company or a Subsidiary
leases it from such Person.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Securities issued under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Custodian" means the custodian with respect to the
Global Security (as appointed by the Depositary), or any successor Person
thereto and shall initially be the Trustee.
"Secured Indebtedness" means any Indebtedness of the Company
or a Subsidiary Guarantor secured by a Lien.
"Senior Indebtedness" means whether outstanding on the Issue
Date or thereafter issued, the Bank Indebtedness and all other Indebtedness of
the Company, including interest and fees thereon, unless, in the instrument
creating or evidencing the same or pursuant to which the same is outstanding,
it is provided that the obligations in respect of such Indebtedness are not
superior in right of payment to the Securities; provided, however, that Senior
Indebtedness will not include (1) any obligation of the Company to any
Subsidiary, (2) any liability for Federal, state, foreign, local or other taxes
owed or owing by the Company, (3) any accounts payable or other liability to
trade creditors arising in the ordinary course of business (including
Guarantees thereof or instruments evidencing such liabilities), or (4) any
Indebtedness, Guarantee or obligation of the Company that is expressly
subordinate or junior in right of payment to any other Indebtedness, Guarantee
or obligation of the Company, including any Senior Subordinated Indebtedness
and any Subordinated Obligations.
"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
<PAGE> 27
19
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 which is not
Senior Indebtedness.
"Shelf Registration Statement" has the meaning ascribed
thereto in the Registration Rights Agreement.
"Significant Subsidiary" means any Restricted Subsidiary that
would be a "Significant Subsidiary" of the Company within the meaning of Rule
1-02 under Regulation S-X promulgated by the SEC.
"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 Obligation" means any Indebtedness of the
Company (whether outstanding on the Issue Date or thereafter Incurred) which is
subordinate or junior in right of payment to the Securities pursuant to a
written agreement.
"Subsidiary" of any Person means any corporation, association,
limited liability company, 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 Guarantor" means each Subsidiary of the Company in
existence on the Issue Date and each Subsidiary (other than foreign
subsidiaries and Unrestricted Subsidiaries) created or acquired by the Company
after the Issue Date.
"Subsidiary Guaranty" means the Guarantee of the Securities by
a Subsidiary Guarantor as set forth in Article XI.
"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
<PAGE> 28
20
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 $250 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 30
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, (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, (v) Investments in securities
with maturities of six months or less from the date of acquisition issued or
fully guaranteed by any state, commonwealth or territory of the United States
of America, or by any political subdivision or taxing authority thereof, and
rated at least "A" by Standard & Poor's Ratings Group or "A" by Moody's
Investors Service, Inc. and (vi) Investments in mutual funds whose investment
guidelines restrict such funds' investments to those satisfying the provisions
of clauses (i) through (v) above.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb) as in effect on the date of this Indenture.
"Transfer Restricted Securities" means Securities that bear or
are required to bear the legend set forth in Section 2.6 hereof.
"Treasury Rate" means the yield to maturity at the time of
computation of United States Treasury securities with a constant maturity (as
compiled and published in the most recent Federal Reserve Statistical Release
H.15(519) which has become publicly available at least two business days prior
to the Redemption Date (or, if such Statistical Release is no longer published,
any publicly available source or similar market data)) most nearly equal to the
period from the Redemption Date to November 1, 2001; provided, however, that if
the period from the Redemption Date to November 1, 2001 is not equal to the
constant maturity of a United States Treasury security for which a weekly
average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the period from the Redemption Date to November 1, 2001
is less than one year, the weekly average yield on actually traded United
States Treasury securities adjusted to a constant maturity of one year shall be
used.
<PAGE> 29
21
"Trustee" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor.
"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.
"Uniform Commercial Code" means the New York Uniform
Commercial Code as in effect from time to time.
"Unrestricted Subsidiary" means (i) any Subsidiary of the
Company that at the time of determination shall be designated an Unrestricted
Subsidiary by the Board of Directors in the manner provided below and (ii) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors may designate
any Subsidiary of the Company (including any newly acquired or newly formed
Subsidiary of the Company) to be an Unrestricted Subsidiary unless such
Subsidiary or any of its Subsidiaries owns any Capital Stock or Indebtedness
of, or owns or holds any Lien on any property of, the Company or any Restricted
Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so
designated; provided, however, that either (A) the Subsidiary to be so
designated has total consolidated total assets of $10,000 or less or (B) if
such Subsidiary has consolidated total assets greater than $10,000, then such
designation would be permitted under Section 4.4. The Board of Directors may
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided,
however, that immediately after giving effect to such designation (x) the
Company could Incur $1.00 of additional Indebtedness under Section 4.3(a) and
(y) no Default shall have occurred and be continuing. Any such designation by
the Board of Directors shall be evidenced to the Trustee by promptly filing
with the Trustee a copy of the resolution of the Board of Directors giving
effect to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing provisions.
"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.
"Voting Stock" of a corporation means all classes of Capital
Stock of such corporation then outstanding and normally entitled to vote in the
election of directors.
"Wholly-Owned Subsidiary" means a Restricted Subsidiary of the
Company, at least 99% of the Capital Stock of which (other than directors'
qualifying shares) is owned by the Company or another Wholly-Owned Subsidiary.
<PAGE> 30
22
SECTION 1.2. Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
<S> <C>
"Affiliate Transaction" . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7
"Agent Member" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
"Bankruptcy Law" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1
"Blockage Notice" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3
"covenant defeasance option" . . . . . . . . . . . . . . . . . . . . . . . . . 8.1(b)
"Custodian" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1
"Definitive Securities" . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
"Event of Default" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1
"Global Security" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(b)
"legal defeasance option" . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1(b)
"Non-Global Purchaser" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
"Offer" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6
"pay the Securities" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3
"Paying Agent" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
"Payment Blockage Period" . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3
"Registrar" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
"Restricted Payment" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4
"Rule 144A" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(b)
"Successor Company" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1
</TABLE>
SECTION 1.3. Incorporation by Reference of Trust Indenture
Act. This Indenture is subject to the mandatory provisions of the TIA which
are incorporated by reference in and made a part of this Indenture. The
following TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
<PAGE> 31
23
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Company and
any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by the TIA reference to another statute or defined by SEC rule
have the meanings assigned to them by such definitions.
SECTION 1.4. Rules of Construction. Unless the context
otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in
the plural include the singular;
(6) unsecured Indebtedness shall not be deemed to be
subordinate or junior to Secured Indebtedness merely by virtue of its
nature as unsecured Indebtedness;
(7) the principal amount of any noninterest bearing or
other discount security at any date shall be the principal amount
thereof that would be shown on a balance sheet of the issuer dated
such date prepared in accordance with GAAP; and
(8) the principal amount of any Preferred Stock shall be
(i) the maximum liquidation preference of such Preferred Stock or (ii)
the maximum mandatory redemption or mandatory repurchase price with
respect to such Preferred Stock, whichever is greater.
ARTICLE II
<PAGE> 32
24
The Securities
SECTION 2.1. Form and Dating. (a) The Initial Notes and the
Trustee's certificate of authentication shall be substantially in the form of
Exhibit A, which is hereby incorporated in and expressly made a part of this
Indenture. The Exchange Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit B, which is hereby incorporated
by reference and expressly made a part of this Indenture. The Securities may
have notations, legends or endorsements required by law, stock exchange rule or
usage, in addition to those set forth on Exhibits A and B. The Company and the
Trustee shall approve the forms of the Securities and any notation, endorsement
or legend on them. Each Security shall be dated the date of its
authentication. The terms of the Securities set forth in Exhibit A and Exhibit
B are part of the terms of this Indenture and, to the extent applicable, the
Company, the Subsidiary Guarantors and the Trustee, by their execution and
delivery of this Indenture, expressly agree to be bound by such terms.
(b) Global Securities. The Initial Notes are being
offered and sold by the Company pursuant to a Purchase Agreement, dated October
29, 1996, among the Company, the Subsidiary Guarantors, Chase Securities Inc.
and BT Securities Corporation (the "Purchase Agreement").
Initial Notes offered and sold to a QIB in reliance on Rule
144A under the Securities Act ("Rule 144A") as provided in the Purchase
Agreement, 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
Exhibit A hereto (each, a "Global Security"), which shall be deposited on
behalf of the purchasers of the Initial Notes represented thereby with the
Trustee, at its New York office, as custodian for the Depositary, and
registered in the name of the Depositary or a nominee of the Depositary, duly
executed by the Company and authenticated by the Trustee as hereinafter
provided. The aggregate principal amount of the Global Securities may from
time to time be increased or decreased by endorsements made on such Global
Securities by the Trustee and the Depositary or its nominee as hereinafter
provided.
(c) Book-Entry Provisions. This Section 2.1(c) shall
apply only to Global Securities deposited with the Trustee, as custodian for
the Depositary.
Members of, or participants in, the Depositary ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Security held on their behalf by the Depositary or by the Trustee as the
custodian of the Depositary or under such Global Security, and the Depositary
may be treated by the Company, the Trustee and any agent of the Company or the
Trustee as the absolute owner of such Global Security for all purposes
whatsoever. Notwithstanding the
<PAGE> 33
25
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 Depositary or impair, as between
the Depositary and its Agent Members, the operation of customary practices of
the Depositary governing the exercise of the rights of a holder of a beneficial
interest in any Global Security.
(d) Certificated Securities. Except as provided in
Section 2.6, owners of beneficial interests in Global Securities will not be
entitled to receive Definitive Securities (as hereinafter defined). Initial
Notes offered and sold to Persons who are not QIBs (referred to herein as the
"Non-Global Purchasers"), as provided in the Purchase Agreement, shall be
issued initially to such Persons in the form of certificated Initial Notes
bearing the Restricted Securities Legend set forth in Exhibit A hereto
("Definitive Securities"); provided, however, that upon transfer of such
Definitive Securities to a QIB, such Definitive Securities will, unless the
Global Security has previously been exchanged, be exchanged for an interest in
a Global Security pursuant to the provisions of Section 2.6 hereof. Definitive
Securities will bear the Restricted Securities Legend set forth on Exhibit A
unless removed in accordance with Section 2.6(g) hereof.
SECTION 2.2. Execution and Authentication. Two Officers
shall sign the Securities for the Company by manual or facsimile signature.
The Company's seal shall be impressed, affixed, imprinted or reproduced on the
Securities and may be in facsimile form.
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security, the Security
shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of
the Trustee manually authenticates the Security. The signature of the Trustee
on a Security shall be conclusive evidence that such Security has been duly and
validly authenticated and issued under this Indenture.
The Trustee shall authenticate and deliver: (1) Initial Notes
for original issue in an aggregate principal amount of $400 million and (2)
Exchange Notes for issue only in a Registered Exchange Offer pursuant to the
Registration Rights Agreement, and only in exchange for Initial Notes of an
equal principal amount, in each case upon a written order of the Company signed
by two Officers or by an Officer and either an Assistant Treasurer or an
Assistant Secretary of the Company. Such order shall specify the amount of the
Securities to be authenticated and the date on which the original issue of
Securities is to be authenticated and whether the Securities are to be Initial
Notes or Exchange Notes. The aggregate principal amount of Securities
outstanding at any time may not exceed $400 million except as provided in
Section 2.7.
<PAGE> 34
26
The Trustee may appoint an agent (the "Authenticating Agent")
reasonably acceptable to the Company to authenticate the Securities. Unless
limited by the terms of such appointment, any such Authenticating Agent may
authenticate Securities whenever the Trustee may do so. Each reference in this
Indenture to authentication by the Trustee includes authentication by such
agent.
SECTION 2.3. Registrar and Paying Agent. The Company shall
maintain an office or agency where Securities may be presented for registration
of transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities and of their transfer and exchange.
The Company may have one or more co-registrars and one or more additional
paying agents. The term "Paying Agent" includes any additional paying agent.
The Company shall enter into an appropriate agency agreement
with any Registrar, Paying Agent or co-registrar not a party to this Indenture,
which shall incorporate the terms of the TIA. The agreement shall implement
the provisions of this Indenture that relate to such agent. The Company shall
notify the Trustee of the name and address of each such agent. If the Company
fails to maintain a Registrar or Paying Agent, the Trustee shall act as such
and shall be entitled to appropriate compensation therefor pursuant to Section
7.7. The Company or any of its domestically incorporated Wholly Owned
Subsidiaries may act as Paying Agent, Registrar, co-registrar or transfer
agent.
The Company initially appoints the Trustee as Registrar and
Paying Agent for the Securities.
SECTION 2.4. Paying Agent To Hold Money in Trust. By at
least 12:00 noon (New York City time) on the date on which any principal of or
interest on any Security is due and payable, the Company shall deposit with the
Paying Agent a sum sufficient to pay such principal or interest when due. The
Company shall require each Paying Agent (other than the Trustee) to agree in
writing that such Paying Agent shall hold in trust for the benefit of
Securityholders or the Trustee all money held by such Paying Agent for the
payment of principal of or interest on the Securities and shall notify the
Trustee of any default by the Company in making any such payment. If the
Company or a Subsidiary acts as Paying Agent, it shall segregate the money held
by it as Paying Agent and hold it as a separate trust fund. The Company at any
time may require a Paying Agent (other than the Trustee) to pay all money held
by it to the Trustee and to account for any funds disbursed by such Paying
Agent. Upon complying with this Section, the Paying Agent (if other than the
Company or a Subsidiary) shall have no further liability for the money
delivered to the Trustee. Upon any bankruptcy, reorganization or similar
proceeding with respect to the Company, the Trustee shall serve as Paying Agent
for the Securities.
<PAGE> 35
27
SECTION 2.5. Securityholder Lists. The Trustee shall
preserve in as current a form as is reasonably practicable the most recent list
available to it of the names and addresses of Securityholders. If the Trustee
is not the Registrar, the Company shall furnish to the Trustee, in writing at
least seven Business Days before each interest payment date and at such other
times as the Trustee may request in writing, a list in such form and as of such
date as the Trustee may reasonably require of the names and addresses of
Securityholders.
SECTION 2.6. Transfer and Exchange.
(a) Transfer and Exchange of Definitive Securities. When
Definitive Securities are presented by a Holder to the Registrar or a
co-registrar with a request:
(x) to register the transfer of such Definitive
Securities; or
(y) to exchange such Definitive Securities for an equal
principal amount of Definitive Securities of other authorized
denominations,
the Registrar or co-registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that:
(i) such Definitive Securities shall be duly endorsed or
accompanied by a written instrument of transfer in form reasonably
satisfactory to the Company and the Registrar or co-registrar, duly
executed by such Holder or his attorney duly authorized in writing;
and
(ii) if such Definitive Securities are Transfer Restricted
Securities, such Definitive Securities shall also be accompanied by
the following additional information and documents, as applicable:
(A) if such Transfer Restricted Securities are
being delivered to the Registrar by a Holder for registration
in the name of such Holder, without transfer, a certification
from such Holder to that effect (in the form set forth on the
reverse of the Security); or
(B) if such Transfer Restricted Securities are
being transferred (x) to the Company or to a QIB in accordance
with Rule 144A under the Securities Act or (y) pursuant to an
effective registration statement under the Securities Act, a
certification from such Holder to that effect (in the form set
forth on the reverse of the Security); or
<PAGE> 36
28
(C) if such Transfer Restricted Securities are
being transferred (w) pursuant to an exemption from
registration in accordance with Rule 144 or Regulation S under
the Securities Act; or (x) to an institutional "accredited
investor" within the meaning of Rule 501(a)(1), (2), (3) or
(7) under the Securities Act that is acquiring the security
for its own account, or for the account of such an
institutional accredited investor, in each case in a minimum
principal amount of the Securities of $250,000 for investment
purposes and not with a view to, or for offer or sale in
connection with, any distribution in violation of the
Securities Act; or (y) in reliance on another exemption from
the registration requirements of the Securities Act: (i) a
certification to that effect from such Holder (in the form set
forth on the reverse of the Security), (ii) if the Company or
the Trustee so requests, an Opinion of Counsel reasonably
acceptable to the Company and to the Trustee to the effect
that such transfer is in compliance with the Securities Act
and (iii) in the case of clause (x), a signed letter from the
transferee substantially in the form of Exhibit C hereto.
(b) Restrictions on Transfer of a Definitive Security for
a Beneficial Interest in a Global Security. A Definitive Security may not be
exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the Trustee
of a Definitive Security, duly endorsed or accompanied by appropriate
instruments of transfer, in form satisfactory to the Trustee, together with:
(i) certification, in the form set forth on the reverse
of the Security, to the effect that such Definitive Security is being
transferred to a QIB in accordance with Rule 144A under the Securities
Act; and
(ii) written instructions from the Holder thereof
directing the Trustee to make, or to direct the Securities Custodian
to make, an endorsement on the Global Security to reflect an increase
in the aggregate principal amount of the Securities represented by the
Global Security,
then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Securities Custodian, the
aggregate principal amount of Securities represented by the Global Security to
be increased accordingly. If no Global Securities are then outstanding, the
Company shall issue and the Trustee shall authenticate, upon written order of
the Company in the form of an Officers' Certificate, a new Global Security in
the appropriate principal amount. The Trustee shall deliver copies of each
certification and instruction received by it pursuant to clauses (i) and (ii)
above to the Depositary and, upon receipt thereof, the Depositary shall make
appropriate
<PAGE> 37
29
adjustments to its books and records to reflect exchange of such Definitive
Security for an interest in the Global Security in accordance with Section
2.6(c).
(c) Transfer and Exchange of Global Securities. (i) The
transfer and exchange of Global Securities or beneficial interests therein
shall be effected through the Depositary, in accordance with this Indenture
(including applicable restrictions on transfer set forth herein, if any) and
the procedures of the Depositary therefor.
(ii) A Global Security deposited with the Depositary or
with the Trustee as custodian for the Depositary pursuant to Section 2.1 shall
be transferred to the beneficial owners thereof only if such transfer complies
with this Section 2.6 and (i) the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary for such Global Security or if at
any time such Depositary 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, or (ii) an Event of Default has occurred and is
continuing and the Registrar has received a request from the Depository or the
Trustee to issue Definitive Securities.
(iii) Any Global Security that is transferable to the
beneficial owners thereof pursuant to this Section shall be surrendered by the
Depositary to the Trustee to be so transferred, in whole or from time to time
in part, without charge, and the Company shall sign and the Trustee shall
authenticate and deliver, upon such transfer of each portion of such Global
Security, an equal aggregate principal amount of Definitive Securities of
authorized denominations. Each Definitive Security delivered in exchange for
any portion of a Global Security transferred pursuant to this Section shall be
executed, authenticated and delivered only in denominations of $1,000 and any
integral multiple thereof and shall be registered in such names as the
Depositary shall direct. Any Definitive Security delivered in exchange for an
interest in the Global Security shall, except as otherwise provided in Section
2.6(g), bear the Restricted Securities Legend set forth in Exhibit A hereto.
(iv) The registered Holder of a Global Security may 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.
(v) In the event of the occurrence of either of the
events specified in Section 2.6(c)(ii), the Company will promptly make
available to the Trustee a reasonable supply of certificated Securities in
definitive, fully registered form without interest coupons.
<PAGE> 38
30
(d) Restriction on Transfer of a Beneficial Interest in a
Global Security for a Definitive Security.
(i) Any person having a beneficial interest in a Global
Security may upon request exchange such beneficial interest for a
Definitive Security of the same aggregate principal amount; provided
that such request is accompanied by the information specified below.
Upon receipt by the Trustee of written instructions (or such other
form of instructions as is customary for the Depositary) from the
Depositary or its nominee on behalf of any Person having a beneficial
interest in a Global Security and, in the case of a Transfer
Restricted Security, the following additional information and
documents (all of which may be submitted by facsimile):
(A) if such beneficial interest is being
transferred to the Person designated by the Depositary as
being the owner of a beneficial interest in a Global Security,
a certification from such Person to that effect (in the form
set forth on the reverse of the Security); or
(B) if such beneficial interest is being
transferred (x) to a QIB in accordance with Rule 144A under
the Securities Act or (y) pursuant to an effective
registration statement under the Securities Act, a
certification from such person to that effect (in the form set
forth on the reverse of the Security); or
(C) if such beneficial interest is being
transferred (w) pursuant to an exemption from registration in
accordance with Rule 144 or Regulation S under the Securities
Act; or (x) to an institutional "accredited investor" within
the meaning of Rule 501(a)(1), (2), (3) or (7) under the
Securities Act that is acquiring the security for its own
account, or for the account of such an institutional
accredited investor, in each case in a minimum principal
amount of the Securities of $250,000 for investment purposes
and not with a view to, or for offer or sale in connection
with, any distribution in violation of the Securities Act; or
(y) in reliance on another exemption from the registration
requirements of the Securities Act: (i) a certification to
that effect from the transferee (in the form set forth on the
reverse of the Security), (ii) if the Company or the Trustee
so requests, an Opinion of Counsel reasonably acceptable to
the Company and to the Trustee to the effect that such
transfer is in compliance with the Securities Act, and (iii)
in the case of clause (x), a signed letter from the transferee
in the form of Exhibit C hereto;
<PAGE> 39
31
then the Securities Custodian, at the direction of the Trustee, will
cause, in accordance with the standing instructions and procedures
existing between the Depositary and the Securities Custodian, the
aggregate principal amount of the Global Security to be reduced
accordingly and, following such reduction, the Company will execute
and the Trustee will authenticate and deliver to the transferee one or
more Definitive Securities in accordance with clause (ii) below.
(ii) Definitive Securities issued in exchange for a
beneficial interest in a Global Security pursuant to this Section
2.6(d) shall be registered in such names and in such authorized
denominations as the Depositary, pursuant to instructions from its
direct or indirect participants or otherwise, shall instruct the
Trustee in writing. The Trustee shall deliver such Definitive
Securities to the Persons in whose names such Securities are so
registered in accordance with the instructions of the Depositary.
(e) Restrictions on Transfer and Exchange of Global
Securities. Notwithstanding any other provisions of this Indenture (other than
the provisions set forth in subsection (c) of this Section 2.6), a Global
Security may not be transferred as a whole except by the Depositary to a
nominee of the Depositary or by a nominee of the Depositary to the Depositary
or another nominee of the Depositary or by the Depositary or any such nominee
to a successor Depositary or a nominee of such successor Depositary.
(f) [Intentionally Omitted];
(g) Legend.
(i) Except as permitted by the following paragraph (ii)
each Security certificate evidencing Global Securities and Definitive
Securities (and all Securities issued in exchange therefor or
substitution thereof) shall bear a legend in substantially the
following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 (THE "SECURITIES ACT"), OR ANY STATE SECURITIES
LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
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THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE
DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS
THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF
AND THE LAST DATE ON WHICH THE ISSUER, ANY GUARANTOR OR ANY
AFFILIATE OF THE ISSUER OR ANY GUARANTOR WAS THE OWNER OF THIS
SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO
THE ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS
BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO
LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO
RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE
UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN INSTITUTIONAL ACCREDITED INVESTOR
WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER
THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL
AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH
ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F)
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUER'S
AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER PURSUANT TO CLAUSES (D), (E) AND (F) TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH CASE,
ONLY IF A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE
OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE ISSUER AND THE TRUSTEE. THIS LEGEND WILL BE
REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE
RESTRICTION TERMINATION DATE."
<PAGE> 41
33
(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by a
Global Security) pursuant to Rule 144 under the Securities Act or
pursuant to an effective registration statement under the Securities
Act:
(A) in the case of any Transfer Restricted
Security that is a Definitive Security, the Registrar shall
permit the Holder thereof to exchange such Transfer Restricted
Security for a Definitive Security that does not bear the
legend set forth in paragraph (i) above and rescind any
restriction on the transfer of such Security; and
(B) in the case of any such Transfer Restricted
Security represented by a Global Security, such Transfer
Restricted Security shall not be required to bear the legend
set forth in paragraph (i) above, although it shall continue
to be subject to the provisions of Section 2.6(c) hereof;
provided, however, that with respect to any request for an
exchange of a Transfer Restricted Security that is represented
by a Global Security for a Definitive Security that does not
bear the legend set forth in paragraph (i) above, which
request is made in reliance upon Rule 144, the Holder thereof
shall certify in writing to the Trustee that such request is
being made pursuant to Rule 144 (such certification to be in
the form set forth on the reverse of the Security).
(h) Cancellation or Adjustment of Global Security. At
such time as all beneficial interests in a Global Security have either been
exchanged for Definitive Securities, redeemed, repurchased or canceled, such
Global Security shall be returned to the Depositary for cancellation or
retained and canceled by the Trustee. At any time prior to such cancellation,
if any beneficial interest in a Global Security is exchanged for Definitive
Securities, redeemed, repurchased or canceled, the principal amount of
Securities represented by such Global Security shall be reduced and an
endorsement shall be made on such Global Security by the Securities Custodian
to reflect such reduction.
(i) Obligations with Respect to Transfers and Exchanges
of Securities.
(i) To permit registrations of transfers and exchanges,
the Company shall, subject to the other terms and conditions of this
Article II, execute and the Trustee shall authenticate Definitive
Securities and Global Securities at the Registrar's or co-registrar's
request.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any transfer
<PAGE> 42
34
tax, assessments, or similar governmental charge payable in connection
therewith (other than any such transfer taxes or similar governmental
charges payable upon exchange or transfer pursuant to Sections 4.6,
4.8 or 9.5 or pursuant to paragraph 5 of the Securities).
(iii) The Registrar or co-registrar shall not be required
to register the transfer of or exchange of (a) any Definitive Security
selected for redemption in whole or in part pursuant to Article III,
except the unredeemed portion of any Definitive Security being
redeemed in part, or (b) any Security for a period beginning (1) 15
Business Days before the mailing of a notice of an offer to repurchase
or redeem Securities and ending at the close of business on the day of
such mailing or (2) 15 Business Days before an interest payment date
and ending on such interest payment date.
(iv) Prior to the due presentation for registration of
transfer of any Security, the Company, the Trustee, the Paying Agent,
the Registrar or any co-registrar may deem and treat the person in
whose name a Security is registered as the absolute owner of such
Security for the purpose of receiving payment of principal of and
interest on such Security and for all other purposes whatsoever,
whether or not such Security is overdue, and none of the Company, the
Trustee, the Paying Agent, the Registrar or any co-registrar shall be
affected by notice to the contrary.
(v) All Securities issued upon any transfer or exchange
pursuant to the terms of this Indenture shall evidence the same debt
and shall be entitled to the same benefits under this Indenture as the
Securities surrendered upon such transfer or exchange.
(j) No Obligation of the Trustee. (i) The Trustee shall
have no responsibility or obligation to any beneficial owner of a Global
Security, a member of, or a participant in, the Depositary or other Person with
respect to the accuracy of the records of the Depositary or its nominee or of
any participant or member thereof, with respect to any ownership interest in
the Securities or with respect to the delivery to any participant, member,
beneficial owner or other Person (other than the Depositary) of any notice
(including any notice of redemption) or the payment of any amount or delivery
of any Securities (or other security or property) under or with respect to such
Securities. All notices and communications to be given to the Holders and all
payments to be made to Holders in respect of the Securities shall be given or
made only to or upon the order of the registered Holders (which shall be the
Depositary or its nominee in the case of a Global Security). The rights of
beneficial owners in any Global Security shall be exercised only through the
Depositary subject to the applicable rules and procedures of the Depositary.
The Trustee may rely and shall be fully protected in relying upon information
furnished by the Depositary with respect to its members, participants and any
beneficial owners.
<PAGE> 43
35
(ii) The Trustee shall have no obligation or duty to
monitor, determine or inquire as to compliance with any restrictions on
transfer imposed under this Indenture or under applicable law with respect to
any transfer of any interest in any Security (including any transfers between
or among Depositary participants, members or beneficial owners in any Global
Security) other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so if and
when expressly required by, the terms of this Indenture, and to examine the
same to determine substantial compliance as to form with the express
requirements hereof.
SECTION 2.7. Replacement Securities. If a mutilated Security
is surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the requirements
of Section 8-405 of the Uniform Commercial Code are met and the Holder
satisfies any other reasonable requirements of the Trustee. If required by the
Trustee or the Company, such Holder shall furnish an indemnity bond sufficient
in the judgment of the Company and the Trustee to protect the Company, the
Trustee, the Paying Agent, the Registrar and any co-registrar from any loss
which any of them may suffer if a Security is replaced. The Company and the
Trustee may charge the Holder for their expenses in replacing a Security.
Every replacement Security is an additional obligation of the Company.
SECTION 2.8. Outstanding Securities. Securities outstanding
at any time are all Securities authenticated by the Trustee except for those
canceled by it, those delivered to it for cancellation and those described in
this Section as not outstanding. A Security does not cease to be outstanding
because the Company or an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.7, it ceases
to be outstanding unless the Trustee and the Company receive proof satisfactory
to them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in
accordance with this Indenture, on a redemption date or maturity date money
sufficient to pay all principal and interest payable on that date with respect
to the Securities (or portions thereof) to be redeemed or maturing, as the case
may be, and the Paying Agent is not prohibited from paying such money to the
Securityholders on that date pursuant to the terms of this Indenture, then on
and after that date such Securities (or portions thereof) cease to be
outstanding and interest on them ceases to accrue.
SECTION 2.9. Temporary Securities. Until definitive
Securities are ready for delivery, the Company may prepare and the Trustee
shall authenticate temporary Securities. Temporary Securities shall be
substantially in the form of definitive Securities but may have
<PAGE> 44
36
variations that the Company considers appropriate for temporary Securities.
Without unreasonable delay, the Company shall prepare and the Trustee shall
authenticate definitive Securities. After the preparation of definitive
Securities, the temporary Securities shall be exchangeable for definitive
Securities upon surrender of the temporary Securities at any office or agency
maintained by the Company for that purpose and such exchange shall be without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary Securities, the Company shall execute, and the Trustee shall
authenticate and deliver in exchange therefor, one or more definitive
Securities representing an equal principal amount of Securities. Until so
exchanged, the Holder of temporary Securities shall in all respects be
entitled to the same benefits under this Indenture as a holder of Definitive
Securities.
SECTION 2.10. Cancellation. The Company at any time may
deliver Securities to the Trustee for cancellation. The Registrar and the
Paying Agent shall forward to the Trustee any Securities surrendered to them
for registration of transfer, exchange or payment. The Trustee and no one else
shall cancel and destroy (subject to the record retention requirements of the
Exchange Act) all Securities surrendered for registration of transfer,
exchange, payment or cancellation and deliver a certificate of such destruction
to the Company unless the Company directs the Trustee to deliver canceled
Securities to the Company. The Company may not issue new Securities to replace
Securities it has redeemed, paid or delivered to the Trustee for cancellation.
SECTION 2.11. Defaulted Interest. If the Company defaults in
a payment of interest on the Securities, the Company shall pay defaulted
interest (plus interest on such defaulted interest to the extent lawful) in any
lawful manner. The Company may pay the defaulted interest to the persons who
are Securityholders on a subsequent special record date. The Company shall fix
or cause to be fixed (or upon the Company's failure to do so the Trustee shall
fix) any such special record date and payment date to the reasonable
satisfaction of the Trustee which specified record date shall not be less than
10 days prior to the payment date for such defaulted interest and shall
promptly mail or cause to be mailed to each Securityholder a notice that states
the special record date, the payment date and the amount of defaulted interest
to be paid. The Company shall notify the Trustee in writing of the amount of
defaulted interest proposed to be paid on each Security and the date of the
proposed payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be paid in
respect of such defaulted interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the proposed payment, such
money when so deposited to be held in trust for the benefit of the Person
entitled to such defaulted interest as provided in this Section.
SECTION 2.12. CUSIP Numbers. The Company in issuing the
Securities may use "CUSIP" numbers (if then generally in use) and, if so, the
Trustee shall use "CUSIP" numbers in
<PAGE> 45
37
notices of redemption as a convenience to Holders, provided, however, that any
such notice may state that no representation is made as to the correctness of
such numbers either as printed on the Securities or as contained in any notice
of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers.
ARTICLE III
Redemption
SECTION 3.1. Notices to Trustee. If the Company elects to
redeem Securities pursuant to paragraph 5 of the Securities, it shall notify
the Trustee in writing of the redemption date and the principal amount of
Securities to be redeemed.
The Company shall give each notice to the Trustee provided for
in this Section at least 60 days before the redemption date unless the Trustee
consents to a shorter period. Such notice shall be accompanied by an Officers'
Certificate from the Company to the effect that such redemption will comply
with the conditions herein. If fewer than all the Securities are to be
redeemed, the record date relating to such redemption shall be selected by the
Company and set forth in the related notice given to the Trustee, which record
date shall be not less than 15 days after the date of such notice.
SECTION 3.2. Selection of Securities To Be Redeemed. If
fewer than all the Securities are to be redeemed, the Trustee shall select the
Securities to be redeemed pro rata or by lot or by a method that complies with
applicable legal and securities exchange requirements, if any, and that the
Trustee considers fair and appropriate and in accordance with methods generally
used at the time of selection by fiduciaries in similar circumstances. The
Trustee shall make the selection from outstanding Securities not previously
called for redemption. The Trustee may select for redemption portions of the
principal of Securities that have denominations larger than $1,000. Securities
and portions of them the Trustee selects shall be in amounts of $1,000 or a
whole multiple of $1,000. Provisions of this Indenture that apply to
Securities called for redemption also apply to portions of Securities called
for redemption. The Trustee shall notify the Company promptly of the
Securities or portions of Securities to be redeemed.
SECTION 3.3. Notice of Redemption. At least 30 days but not
more than 60 days before a date for redemption of Securities, the Company shall
mail a notice of redemption by first-class mail to each Holder of Securities to
be redeemed.
<PAGE> 46
38
The notice shall identify the Securities to be redeemed and
shall state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be
surrendered to the Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to
be redeemed, the identification and principal amounts of the
particular Securities to be redeemed;
(6) that, unless the Company defaults in making such
redemption payment or the Paying Agent is prohibited from making such
payment pursuant to the terms of this Indenture, interest on
Securities (or portion thereof) called for redemption ceases to accrue
on and after the redemption date;
(7) the CUSIP number, if any, printed on the Securities
being redeemed; and
(8) that no representation is made as to the correctness
or accuracy of the CUSIP number, if any, listed in such notice or
printed on the Securities.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such event,
the Company shall provide the Trustee with the information required by this
Section.
SECTION 3.4. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable
on the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued interest to the redemption date;
provided that if the redemption date is after a regular record date and on or
prior to the interest payment date, the accrued interest shall be payable to
the Securityholder of the redeemed Securities registered on the relevant record
date. Failure to give notice or any defect in the notice to any Holder shall
not affect the validity of the notice to any other Holder.
<PAGE> 47
39
SECTION 3.5. Deposit of Redemption Price. By at least 12:00
noon (New York City time) on the date on which any principal of or interest on
any Security is due and payable, the Company shall deposit with the Paying
Agent (or, if the Company or a Subsidiary is the Paying Agent, shall segregate
and hold in trust) money sufficient to pay the redemption price of and accrued
interest on all Securities to be redeemed on that date other than Securities or
portions of Securities called for redemption which are owned by the Company or
a Subsidiary and have been delivered by the Company or such Subsidiary to the
Trustee for cancellation.
If the Company complies with the preceding paragraph, then,
unless the Company defaults in the payment of such redemption price, interest
on the Securities to be redeemed will cease to accrue on and after the
applicable redemption date, whether or not such Securities are presented for
payment.
SECTION 3.6. Securities Redeemed in Part. Upon surrender of
a Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate for the Holder (at the Company's expense) a new Security
equal in a principal amount to the unredeemed portion of the Security
surrendered.
ARTICLE IV
Covenants
SECTION 4.1. Payment of Securities. The Company shall
promptly pay the principal of and interest on the Securities on the dates and
in the manner provided in the Securities and in this Indenture. Principal and
interest shall be considered paid on the date due if on such date the Trustee
or the Paying Agent holds in accordance with this Indenture money sufficient to
pay all principal and interest then due and the Trustee or the Paying Agent, as
the case may be, is not prohibited from paying such money to the
Securityholders on that date pursuant to the terms of this Indenture.
The Company shall pay interest on overdue principal at the
rate specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
Notwithstanding anything to the contrary contained in this
Indenture, the Company may, to the extent it is required to do so by law,
deduct or withhold income or other similar taxes imposed by the United States
of America from principal or interest payments hereunder.
<PAGE> 48
40
SECTION 4.2. SEC Reports. The Company will file with the
Trustee and provide to the holders of the Securities, within 15 days after it
files them with the SEC, copies of the annual reports and of the information,
documents and other reports (or copies of such portions of any of the foregoing
as the SEC may by rules and regulations prescribe) which the Company files with
the SEC pursuant to Section 13 or 15(d) of the Exchange Act. In the event that
the Company is not required to file such reports with the SEC pursuant to the
Exchange Act, the Company will nevertheless deliver such Exchange Act
information to the holders of the Securities within 15 days after it would have
been required to file it with the SEC. Upon qualification of this Indenture
under the TIA, the Company shall also comply with the other provisions of TIA
Section 314(a).
SECTION 4.3. 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 and any of its Restricted
Subsidiaries may Incur Indebtedness if on the date thereof the Consolidated
Coverage Ratio would be greater than 2.00 : 1.00, if such Indebtedness is
Incurred on or prior to the second anniversary of the Issue Date, and 2.25 :
1.00, if such Indebtedness is Incurred thereafter.
(b) Notwithstanding Section 4.3(a), the Company and its Restricted
Subsidiaries may Incur the following Indebtedness: (i) Indebtedness Incurred
pursuant to (A) the Credit Agreement (including, without limitation, any
renewal, extension, refunding, restructuring, replacement or refinancing
thereof referred to in clause (ii) of the definition thereof) or (B) any other
agreements or indentures governing Senior Indebtedness; provided, however, that
the aggregate principal amount of all Indebtedness Incurred pursuant to this
clause (i) does not exceed $770 million at any time outstanding, less the
aggregate principal amount thereof repaid with the net proceeds of Asset
Dispositions (to the extent, in the case of a repayment of revolving credit
Indebtedness, the commitment to advance the loans repaid has been terminated);
(ii) Indebtedness represented by Capitalized Lease Obligations, mortgage
financings or purchase money obligations, in each case Incurred for the purpose
of financing all or any part of the purchase price or cost of construction or
improvement of property used in a Related Business or Incurred to Refinance any
such purchase price or cost of construction or improvement, in each case
Incurred no later than 365 days after the date of such acquisition or the date
of completion of such construction or improvement; provided, however, that the
principal amount of any Indebtedness Incurred pursuant to this Section
4.3(b)(ii) shall not exceed $25 million at any time outstanding; (iii)
Permitted Indebtedness; and (iv) Indebtedness (other than Indebtedness
described in clauses (i) - (iii)) in a principal amount which, when taken
together with the principal amount of all other Indebtedness Incurred pursuant
to this Section 4.3(b)(iv) and then outstanding, will not exceed $75 million
(it being understood that any Indebtedness Incurred under this clause (iv)
shall cease to be deemed Incurred or outstanding for purposes of this clause
(iv) (but shall be deemed to be Incurred for purposes of Section 4.3(a)) from
<PAGE> 49
41
and after the first date on which the Company or its Restricted Subsidiaries
could have Incurred such Indebtedness under Section 4.3(a) without reliance
upon this clause (iv)).
(c) Neither the Company nor any Restricted Subsidiary shall Incur any
Indebtedness under Section 4.3(b) if the proceeds thereof are used, directly or
indirectly, to Refinance any Subordinated Obligations of the Company unless
such Indebtedness shall be subordinated to the Securities to at least the same
extent as such Subordinated Obligations. No Subsidiary Guarantor shall Incur
any Indebtedness under Section 4.3(b) if the proceeds thereof are used,
directly or indirectly, to Refinance any Guarantor Subordinated Obligation of
such Subsidiary Guarantor unless such Indebtedness shall be subordinated to the
obligations of such Subsidiary Guarantor under the Subsidiary Guaranty to at
least the same extent as such Guarantor Subordinated Obligation.
(d) In addition, the Company shall not Incur any Secured Indebtedness
which 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. No Subsidiary Guarantor shall Incur any Secured Indebtedness which is not
Guarantor Senior Indebtedness unless contemporaneously therewith effective
provision is made to secure such Subsidiary Guarantor's obligations under the
Subsidiary Guaranty equally and ratably with such Secured Indebtedness for so
long as such Secured Indebtedness is secured by a Lien.
(e) The Company will not permit any Unrestricted Subsidiary to incur
any Indebtedness other than Non-Recourse Debt; provided, however, if any such
Indebtedness ceases to be Non-Recourse Debt, such event shall be deemed to
constitute an incurrence of Indebtedness by the Company or a Restricted
Subsidiary.
(f) The Company shall not Incur any Indebtedness 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
contractually subordinated in right of payment to Senior Subordinated
Indebtedness. No Subsidiary Guarantor shall Incur any Indebtedness if such
Indebtedness is contractually subordinate or junior in ranking in any respect
to any Guarantor Senior Indebtedness of such Subsidiary Guarantor unless such
Indebtedness is Guarantor Senior Subordinated Indebtedness of such Subsidiary
Guarantor or is contractually subordinated in right of payment to Guarantor
Senior Subordinated Indebtedness of such Subsidiary Guarantor.
SECTION 4.4. Limitation on Restricted Payments. (a) The
Company shall not, and shall not permit any of its Restricted Subsidiaries,
directly or indirectly, to (i) declare or pay any dividend or make any
distribution on or in respect of its Capital Stock (including any payment in
<PAGE> 50
42
connection with any merger or consolidation involving the Company or any of its
Restricted Subsidiaries) except (A) dividends or distributions payable in its
Capital Stock (other than Disqualified Stock) or in options, warrants or other
rights to purchase such Capital Stock, and (B) dividends or distributions
payable to the Company or a Restricted Subsidiary of the Company (and if such
Restricted Subsidiary is not a Wholly-Owned Subsidiary, to its other holders of
Capital Stock on a pro rata basis), (ii) purchase, redeem, retire or otherwise
acquire for value any Capital Stock of the Company held by Persons other than a
Restricted Subsidiary of the Company or any Capital Stock of a Restricted
Subsidiary of the Company held by any Affiliate of the Company, other than
another Restricted Subsidiary (in either case, other than in exchange for its
Capital Stock (other than Disqualified Stock)), (iii) purchase, repurchase,
redeem, defease or otherwise acquire or retire for value, prior to scheduled
maturity, scheduled repayment or scheduled sinking fund payment, any
Subordinated Obligations (other than the purchase, repurchase or other
acquisition of Subordinated Obligations purchased in anticipation of satisfying
a sinking fund obligation, principal installment or final maturity, in each
case due within one year of the date of purchase, repurchase or acquisition) or
(iv) make any Investment (other than a Permitted Investment) in any Person (any
such dividend, distribution, purchase, redemption, repurchase, defeasance,
other acquisition, retirement or Investment being herein referred to in clauses
(i) through (iv) as a "Restricted Payment"), if at the time the Company or such
Restricted Subsidiary makes such Restricted Payment: (1) a Default shall have
occurred and be continuing (or would result therefrom); or (2) the Company is
not able to incur an additional $1.00 of Indebtedness pursuant to Section
4.3(a); or (3) the aggregate amount of such Restricted Payment and all other
Restricted Payments declared or made subsequent to the Issue Date would exceed
the sum of: (A) 50% of the Consolidated Net Income accrued during the period
(treated as one accounting period) from the Issue Date to the end of the most
recent fiscal quarter ending prior to the date of such Restricted Payment as to
which financial results are available (but in no event ending more than 135
days prior to the date of such Restricted Payment) (or, in case such
Consolidated Net Income shall be a deficit, minus 100% of such deficit); (B)
the aggregate net proceeds received by the Company from the issue or sale of
its Capital Stock (other than Disqualified Stock) or other capital
contributions subsequent to the Issue Date (other than net proceeds received
from an issuance or sale of such Capital Stock to a Subsidiary of the Company
or an employee stock ownership plan or similar trust); provided, however, that
the value of any non-cash net proceeds shall be as determined by the Board of
Directors in good faith, except that in the event the value of any non-cash net
proceeds shall be $25 million or more, the value shall be as determined in
writing by an independent investment banking firm of nationally recognized
standing; (C) the aggregate Net Cash Proceeds received by the Company from the
issue or sale of its Capital Stock (other than Disqualified Stock) to an
employee stock ownership plan or similar trust subsequent to the Issue Date;
provided, however, that if such plan or trust Incurs any Indebtedness to or
Guaranteed by the Company or any of its Restricted Subsidiaries to finance the
acquisition of such Capital Stock, such aggregate amount shall be limited to
such Net Cash Proceeds less such Indebtedness Incurred to or
<PAGE> 51
43
Guaranteed by the Company or any of its Restricted Subsidiaries and any
increase in the Consolidated Net Worth of the Company resulting from principal
repayments made by such plan or trust with respect to Indebtedness Incurred by
it to finance the purchase of such Capital Stock; (D) the amount by which
Indebtedness of the Company is reduced on the Company's balance sheet upon the
conversion or exchange (other than by a Restricted Subsidiary of the Company)
subsequent to the Issue Date of any Indebtedness of the Company convertible or
exchangeable for Capital Stock of the Company (less the amount of any cash, or
other property other than such Capital Stock, distributed by the Company upon
such conversion or exchange); (E) the amount equal to the net reduction in
Investments (other than Permitted Investments) made by the Company or any of
its Restricted Subsidiaries in any Person resulting from (i) repurchases or
redemptions of such Investments by such Person, proceeds realized upon the sale
of such Investment to an unaffiliated purchaser, and repayments of loans or
advances or other transfers of assets by such Person to the Company or any
Restricted Subsidiary of the Company or (ii) the redesignation of Unrestricted
Subsidiaries as Restricted Subsidiaries (valued in each case as provided in the
definition of "Investment") not to exceed, in the case of any Unrestricted
Subsidiary, the amount of Investments previously made by the Company or any
Restricted Subsidiary in such Unrestricted Subsidiary, which amount was
included in the calculation of the amount of Restricted Payments; provided,
however, that no amount shall be included under this clause (E) of this Section
4.4(a) to the extent it is already included in Consolidated Net Income; and (F)
the aggregate Net Cash Proceeds received by a Person in consideration for the
issuance of such Person's Capital Stock (other than Disqualified Stock) which
are held by such Person at the time such Person is merged with and into the
Company in accordance with Section 5.1 subsequent to the Issue Date; provided,
however, that concurrently with or immediately following such merger the
Company uses an amount equal to such Net Cash Proceeds to redeem or repurchase
the Company's Capital Stock.
(b) The provisions of Section 4.4(a) shall not prohibit: (i) any
purchase or redemption of Capital Stock or Subordinated Obligations of the
Company made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Capital Stock of the Company (other than Disqualified Stock
and other than Capital Stock issued or sold to a Subsidiary or an employee
stock ownership plan or similar trust); provided, however, that (A) such
purchase or redemption shall be excluded in the calculation of the amount of
Restricted Payments and (B) the Net Cash Proceeds from such sale shall be
excluded from clause (3) (B) of Section 4.4(a); (ii) any purchase or redemption
of Subordinated Obligations of the Company made by exchange for, or out of the
proceeds of the substantially concurrent sale of, Subordinated Obligations of
the Company; provided, however, that such purchase or redemption shall be
excluded in the calculation of the amount of Restricted Payments; (iii) any
purchase or redemption of Subordinated Obligations from Net Available Cash to
the extent permitted under Section 4.6; provided, however, that such purchase
or redemption shall be excluded in the calculation of the amount of Restricted
Payments; (iv) dividends
<PAGE> 52
44
paid within 60 days after the date of declaration if at such date of
declaration such dividend would have complied with this provision; provided,
however, that such dividend shall be included in the calculation of the amount
of Restricted Payments; (v) payments of dividends on the Company's common stock
after an initial public offering of common stock of the Company in an annual
amount not to exceed 6% of the gross proceeds (before deducting underwriting
discounts and commissions and other fees and expenses of the offering) received
by the Company from shares of common stock sold for the account of the Company
(and not for the account of any stockholder) in such initial public offering;
(vi) payments by the Company to repurchase Capital Stock or other securities of
the Company from members of management of the Company in an aggregate amount
not to exceed $15 million; (vii) payments to enable the Company to redeem or
repurchase stock purchase or similar rights granted by the Company with respect
to its Capital Stock in an aggregate amount not to exceed $1 million; (viii)
payments, not to exceed $200,000 in the aggregate, to enable the Company to
make cash payments to holders of its Capital Stock in lieu of the issuance of
fractional shares of its Capital Stock; (ix) payments made pursuant to any
merger, consolidation or sale of assets effected in accordance with Section
5.1; provided, however, that no such payment may be made pursuant to this
clause (ix) unless, after giving effect to such transaction (and the incurrence
of any Indebtedness in connection therewith and the use of the proceeds
thereof), the Company would be able to Incur $1.00 of additional Indebtedness
(other than Permitted Indebtedness) in compliance with Section 4.3(a) such
that, after Incurring that $1.00 of additional Indebtedness, the Consolidated
Coverage Ratio would be greater than 3.5:1.00; and (x) the redemption payment
to be made by the Company on the Issue Date pursuant to the Merger Agreement
and any amount paid subsequent to the Issue Date adjusting such redemption
payment in accordance with the terms of the Merger Agreement; provided,
however, that in the case of clauses (v), (vi), (vii), (viii) and (ix) no
Default or Event of Default shall have occurred or be continuing at the time of
such payment or as a result thereof.
SECTION 4.5. Limitation on Restrictions on Distributions from
Restricted Subsidiaries. The Company shall not, and shall not permit any of
its Restricted Subsidiaries to, create or permit to exist or become effective
any consensual encumbrance or restriction on the ability of any such Restricted
Subsidiary to (i) pay dividends or make any other distributions on its Capital
Stock or pay any Indebtedness or other obligation owed to the Company, (ii)
make any loans or advances to the Company or (iii) transfer any of its property
or assets to the Company; except: (a) any encumbrance or restriction pursuant
to an agreement in effect at or entered into on the Issue Date, including the
Credit Agreement; (b) any encumbrance or restriction with respect to such a
Restricted Subsidiary pursuant to an agreement relating to any Indebtedness
issued by such Restricted Subsidiary on or prior to the date on which such
Restricted Subsidiary was acquired by the Company and outstanding on such date
(other than Indebtedness issued as consideration in, or to provide all or any
portion of the funds or credit support utilized to consummate, the transaction
<PAGE> 53
45
or series of related transactions pursuant to which such Restricted Subsidiary
became a Restricted Subsidiary of the Company or was acquired by the Company);
(c) any encumbrance or restriction with respect to such a Restricted Subsidiary
pursuant to an agreement evidencing Indebtedness Incurred without violation of
the Indenture or effecting a refinancing of Indebtedness issued pursuant to an
agreement referred to in clauses (a) or (b) or this clause (c) or contained in
any amendment to an agreement referred to in clauses (a) or (b) or this clause
(c); provided, however, that the encumbrances and restrictions with respect to
such Restricted Subsidiary contained in any of such agreement, refinancing
agreement or amendment, taken as a whole, are no less favorable to the Holders
in any material respect, as determined in good faith by the senior management
of the Company or Board of Directors of the Company, than encumbrances and
restrictions with respect to such Restricted Subsidiary contained in agreements
in effect at, or entered into on, the Issue Date; (d) in the case of clause
(iii) of this Section 4.5, 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, (B) 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, (C) that is
included in a licensing agreement to the extent such restrictions limit the
transfer of the property subject to such licensing agreement or (D) arising or
agreed to in the ordinary course of business and that does not, individually or
in the aggregate, detract from the value of property or assets of the Company
or any of its Subsidiaries in any manner material to the Company or any such
Restricted Subsidiary; (e) in the case of clause (iii) of this Section 4.5,
restrictions contained in security agreements, mortgages or similar documents
securing Indebtedness of a Restricted Subsidiary to the extent such
restrictions restrict the transfer of the property subject to such security
agreements; (f) any restriction with respect to such 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; and (g)
encumbrances or restrictions arising or existing by reason of applicable law.
SECTION 4.6. Limitation on Sales of Assets and Subsidiary
Stock. (a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any Asset Disposition unless (i) the Company or such
Restricted Subsidiary receives consideration at the time of such Asset
Disposition at least equal to the fair market value, as determined in good
faith by the Company's senior management or the Board of Directors (including
as to the value of all non-cash consideration), of the shares and assets
subject to such Asset Disposition, (ii) at least 75% of the consideration
thereof received by the Company or such Restricted Subsidiary is in the form of
cash or cash equivalents 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 or any
Restricted Subsidiary elects (or is required by the terms of any
<PAGE> 54
46
Senior Indebtedness), to prepay, repay or purchase (x) Senior Indebtedness or
(y) Indebtedness (other than Preferred Stock) of a Wholly-Owned Subsidiary (in
each case other than Indebtedness owed to the Company) within 180 days from the
later of the date of such Asset Disposition or the receipt of such Net
Available Cash; (B) second, within one year from the receipt of such Net
Available Cash, to the extent of the balance of such Net Available Cash after
application in accordance with clause (A), at the Company's election either (x)
to the investment in or acquisition of Additional Assets or (y) to prepay,
repay or purchase (1) Senior Indebtedness or (2) Indebtedness (other than
Preferred Stock) of a Wholly-Owned Subsidiary (in each case other than
Indebtedness owed to the Company); (C) third, within 45 days after the later
of the application of Net Available Cash in accordance with clauses (A) and (B)
and the date that is one year from the receipt of such Net Available Cash, to
the extent of the balance of such Net Available Cash after application in
accordance with clauses (A) and (B), to make an offer to purchase Securities at
par plus accrued and unpaid interest, if any, thereon; 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 (w) the investment in or
acquisition of Additional Assets, (x) the making of Temporary Cash Investments,
(y) the prepayment, repayment or purchase of Indebtedness of the Company or
Indebtedness of any Subsidiary (other than Indebtedness owed to the Company) or
(z) any other purpose otherwise permitted under the Indenture, in each case
within the later of 45 days after the application of Net Available Cash in
accordance with clauses (A), (B) and (C) or the date that is one year from the
receipt of such Net Available Cash; provided, however, that, in connection with
any prepayment, repayment or purchase of Indebtedness pursuant to clause (A),
(B), (C) or (D) 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. Notwithstanding the foregoing provisions, the Company and
its Restricted Subsidiaries shall not be required to apply any Net Available
Cash in accordance herewith except to the extent that the aggregate Net
Available Cash from all Asset Dispositions which are not applied in accordance
with this covenant at any time exceed $15 million. The Company shall not be
required to make an offer for Securities pursuant to this covenant if the Net
Available Cash available therefor (after application of the proceeds as
provided in clauses (A) and (B)) is less than $25 million for any particular
Asset Disposition (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 this covenant, the following will be deemed to be
cash: (x) the assumption by the transferee of Senior Indebtedness of the
Company or Indebtedness of any Restricted Subsidiary of the Company and the
release of the Company or such Restricted Subsidiary from all liability on such
Senior Indebtedness or Indebtedness in connection with such Asset Disposition
(in which case the Company shall, without further action, be deemed to have
applied such assumed Indebtedness in accordance with clause (A) of the
preceding paragraph) and (y)
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47
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.
Notwithstanding the foregoing, the Company and its Restricted
Subsidiaries will be permitted to consummate an Asset Swap if (i) at the time
of entering into such Asset Swap or immediately after giving effect to such
Asset Swap, no Default or Event of Default shall have occurred or be continuing
or would occur as a consequence thereof, (ii) in the event such Asset Swap
involves an aggregate amount in excess of $10 million, the terms of such Asset
Swap have been approved by a majority of the members of the Board of Directors
of the Company, and (iii) in the event such Asset Swap involves an aggregate
amount in excess of $50 million, the Company has received a written opinion
from an independent investment banking firm of nationally recognized standing
that such Asset Swap is fair to the Company or such Restricted Subsidiary, as
the case may be, from a financial point of view.
(b) In the event of an Asset Disposition that requires the purchase of
Securities pursuant to Section 4.6(a)(iii)(C), the Company will be required to
purchase Securities tendered pursuant to an offer (the "Offer") by the Company
for the Securities at a purchase price of 100% of their principal amount plus
accrued and unpaid interest, if any, to the purchase date in accordance with
the procedures (including prorating in the event of oversubscription) set forth
in Section 4.6(c). If the aggregate purchase price of the Securities tendered
pursuant to the offer is less than the Net Available Cash allotted to the
purchase of the Securities, the Company will apply the remaining Net Available
Cash in accordance with Section 4.6(a)(iii)(D) above.
(c) (1) 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 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").
(2) 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 (i) the amount of the
Offer (the "Offer Amount"), (ii) the allocation of the Net Available Cash from
the Asset Dispositions as a result of which such Offer is being made and (iii)
the compliance of such allocation with the provisions of Section 4.6(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
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48
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.
(3) Holders electing to have a Security purchased will be
required to surrender the Security, 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 his 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 will comply, to the extent applicable,
with the requirements of Section 14(e) of the Exchange Act and any other
securities laws or regulations in connection with the repurchase of Securities
pursuant to this Section 4.6. To the extent that the provisions of any
securities laws or regulations conflict with provisions of this Section 4.6,
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 4.7. Limitation on Affiliate Transactions. (a) The
Company will not, and will not permit any of its Restricted Subsidiaries 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 other than a Wholly-Owned Subsidiary
(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 arm's-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 million, 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); and (iii) in the event such
Affiliate Transaction involves an aggregate amount in excess of $15 million,
the Company has received a written opinion from an independent investment
banking
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49
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 foregoing provision of Section 4.7(a) shall not apply to (i)
any Restricted Payment permitted to be made pursuant to Section 4.4, (ii) any
issuance of securities, or other payments, awards or grants in cash, securities
or otherwise pursuant to, or the funding of, employment arrangements, stock
options and stock ownership plans approved by the Board of Directors of the
Company, (iii) loans or advances to employees in the ordinary course of
business of the Company or any of its Restricted Subsidiaries, (iv) any
transaction between Wholly-Owned Subsidiaries, (v) indemnification agreements
with, and the payment of fees and indemnities to, directors, officers and
employees of the Company and its Restricted Subsidiaries, in each case in the
ordinary course of business, (vi) transactions pursuant to agreements as in
existence on the Issue Date, (vii) any employment, non-competition or
confidentiality agreements entered into by the Company or any of its Restricted
Subsidiaries with its employees in the ordinary course of business, (viii)
payments made in connection with the Transaction, including fees to Hicks Muse,
(ix) the issuance of Capital Stock of the Company (other than Disqualified
Stock) and (x) any obligations of the Company pursuant to the Monitoring and
Oversight Agreement and the Financial Advisory Agreement.
SECTION 4.8. Change of Control. (a) Upon the occurrence of
a Change of Control, each Holder shall have the right to require that the
Company repurchase all or any part of such Holder's Securities at a purchase
price in cash equal to 101% of the principal amount thereof plus accrued and
unpaid interest, if any, to the date of purchase (subject to the right of
Holders of record on the relevant record date to receive interest on the
relevant interest payment date), such repurchase to be made in accordance with
Section 4.8(b).
(b) Within 30 days following any Change of Control,
unless the Company has mailed a redemption notice with respect to all the
outstanding Securities in connection with such Change of Control, the Company
shall mail a notice to each Holder with a copy to the Trustee stating:
(1) that a Change of Control has occurred and that such
Holder has the right to require the Company to purchase such Holder's
Securities at a purchase price in cash equal to 101% of the principal
amount thereof plus accrued and unpaid interest, if any, to the date
of purchase (subject to the right of Holders of record on a record
date to receive interest on the relevant interest payment date);
(2) the repurchase date (which shall be no earlier than 30
days nor later than 60 days from the date such notice is mailed); and
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50
(3) the procedures determined by the Company, consistent with
this Section, that a Holder must follow in order to have its
Securities purchased.
(c) Holders electing to have a Security purchased will be
required to surrender the Security, with an appropriate form duly completed, to
the Company at the address specified in the notice at least three Business Days
prior to the purchase date. Each Holder will be entitled to withdraw its
election if the Company receives, not later than one Business Day prior to the
purchase date, 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 his election to have such Security or
Securities purchased.
(d) On the purchase date, all Securities purchased by the
Company under this Section shall be delivered to the Trustee for cancellation,
and the Company shall pay the purchase price plus accrued and unpaid interest,
if any, to the Holders entitled thereto.
(e) The Company shall comply, to the extent applicable,
with the requirements of Section 14(e) of the Exchange Act and any other
securities laws or regulations in connection with the repurchase of Securities
pursuant to this Section 4.8. To the extent that the provisions of any
securities laws or regulations conflict with provisions of this Section 4.8,
the Company shall comply with the applicable securities laws and regulations
and shall not be deemed to have breached its obligations under this Indenture
by virtue thereof.
SECTION 4.9. Limitation on Capital Stock of Subsidiaries.
The Company will not permit any of its Restricted Subsidiaries to issue any
Capital Stock (other than Preferred Stock) to any Person (other than to the
Company or a Wholly-Owned Subsidiary of the Company) or permit any Person
(other than the Company or a Wholly-Owned Subsidiary of the Company) to own any
Capital Stock (other than Preferred Stock) of a Restricted Subsidiary of the
Company, if in either case as a result thereof such Restricted Subsidiary would
no longer be a Restricted Subsidiary of the Company; provided, however, that
this Section 4.9 shall not prohibit (x) the Company or any of its Restricted
Subsidiaries from selling, leasing or otherwise disposing of all of the Capital
Stock of any Restricted Subsidiary or (y) the designation of a Restricted
Subsidiary as an Unrestricted Subsidiary in compliance with this Indenture.
SECTION 4.10. Compliance Certificate. The Company shall
deliver to the Trustee within 120 days after the end of each fiscal year of the
Company an Officers' Certificate stating that in the course of the performance
by the signers of their duties as Officers of the Company they would normally
have knowledge of any Default or Event of Default and whether or not the
signers know
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51
of any Default or Event of Default that occurred during such period. If they
do, the certificate shall describe the Default or Event of Default, its status
and what action the Company is taking or proposes to take with respect thereto.
The Company also shall comply with TIA Section 314(a)(4).
SECTION 4.11. Further Instruments and Acts. Upon request of
the Trustee, the Company will execute and deliver such further instruments and
do such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
SECTION 4.12. Use of Proceeds. The Company shall use the net
proceeds from the sale of the Securities to consummate, in part, the Redemption
contemplated in the Merger Agreement and the Offering Memorandum.
ARTICLE V
Successor Company
SECTION 5.1. When Company May Merge or Transfer Assets. 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 corporation, partnership, trust or
limited liability company 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 hereto, executed and
delivered to the Trustee, in form 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 Subsidiary as a result of such transaction as
having been Incurred by the Successor Company or such Restricted
Subsidiary at the time of such transaction), no Default or Event of
Default shall have occurred and be continuing;
(iii) immediately after giving effect to such transaction,
the Successor Company would be able to incur an additional $1.00 of
Indebtedness pursuant to Section 4.3(a); and
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52
(iv) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that
such consolidation, merger, transfer or lease and such supplemental
indenture (if any) comply with this Indenture.
The Successor Company shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under this
Indenture, but in the case of a lease of all or substantially all its assets,
the Company shall not be released from the obligation to pay the principal of
and interest on the Securities.
Notwithstanding clauses (ii) and (iii) of the first sentence
of this Section 5.1: (1) any Restricted Subsidiary of the Company may
consolidate with, merge into or transfer all or part of its properties and
assets to the Company; and (2) the Company may merge with an Affiliate
incorporated solely for the purpose of reincorporating the Company in another
jurisdiction to realize tax or other benefits.
ARTICLE VI
Defaults and Remedies
SECTION 6.1. Events of Default. An "Event of Default" occurs
if:
(1) 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;
(2) 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;
(3) the Company fails to comply with Section 5.1;
(4) the Company fails to comply with Section 4.2, 4.3, 4.4,
4.5, 4.6, 4.7, 4.8 or 4.9 (in each case other than a failure to
repurchase Securities when required pursuant to Section 4.6 or 4.8
which failure shall constitute an Event of Default under Section
6.1(2)) and such failure continues for 30 days after the notice
specified below;
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(5) the Company or any Subsidiary Guarantor fails to comply
with any of its agreements in the Securities or this Indenture (other
than those referred to in (1), (2), (3) or (4) above) and such failure
continues for 60 days after the notice specified below;
(6) 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 $20.0
million or its foreign currency equivalent at the time and such
default shall not have been cured or such acceleration rescinded
within a 10 day period;
(7) the Company or a Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief
against it in an involuntary case;
(C) consents to the appointment of a Custodian of it
or for any substantial part of its property; or
(D) makes a general assignment for the benefit of
its creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(8) a court of competent jurisdiction enters an
order or decree under any Bankruptcy Law that:
(A) is for relief against the Company or any
Significant Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company or any
Significant Subsidiary or for any substantial part of its
property; or
(C) orders the winding up or liquidation of the
Company or any Significant Subsidiary;
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54
or any similar relief is granted under any foreign laws and the order,
decree or relief remains unstayed and in effect for 60 days;
(9) any judgment or decree for the payment of money in excess
of $20.0 million or its foreign currency equivalent at the time (to
the extent not covered by insurance) is entered against the Company or
any Significant Subsidiary and such judgment or decree remains
undischarged or unstayed for a period of 60 days after such judgment
becomes final and non-appealable; or
(10) any Subsidiary Guaranty by a Significant Subsidiary
ceases to be in full force and effect (except as contemplated by the
terms of this Indenture) or any Subsidiary Guarantor that is a
Significant Subsidiary denies or disaffirms its obligations under this
Indenture or its Subsidiary Guaranty and such Default continues for 10
days.
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 clause (4) or
(5) of this Section 6.1 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 clause (4) or (5) 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".
The Company shall deliver to the Trustee, within 30 days after
the occurrence thereof, written notice in the form of an Officers' Certificate
of any Event of Default under clauses (4), (5), (6), (9) or (10) of this
Section 6.1.
SECTION 6.2. Acceleration. If an Event of Default (other
than an Event of Default specified in Section 6.1(7) or (8) 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
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unpaid interest on all the Securities to be due and payable. Upon such a
declaration, such principal and interest shall be due and payable immediately.
If an Event of Default specified in Section 6.1(7) or (8) with respect to the
Company or a Significant Subsidiary occurs, 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 Securityholders. 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 6.3. 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 Securityholder 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 is exclusive of any other remedy. All available
remedies are cumulative.
SECTION 6.4. Waiver of Past Defaults. The Holders of a
majority in principal amount of the 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 9.2 cannot be amended without the consent of each Securityholder
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 6.5. Control by Majority. The Holders of a majority
in 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 7.1, that the Trustee determines is unduly prejudicial
to the rights of other Securityholders or would involve the Trustee in 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 any action hereunder, 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.
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SECTION 6.6. Limitation on Suits. A Securityholder may not
pursue any remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating
that an Event of Default is continuing;
(2) the Holders of at least 25% in outstanding principal
amount of the Securities make a written request to the Trustee to
pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of security or
indemnity; and
(5) 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 Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
another Securityholder.
SECTION 6.7. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of 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 6.8. Collection Suit by Trustee. If an Event of
Default specified in Section 6.1(1) or (2) 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 7.7.
SECTION 6.9. 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 Securityholders
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
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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
7.7.
SECTION 6.10. Priorities. If the Trustee collects any money
or property pursuant to this Article VI, it shall pay out the money or property
in the following order:
FIRST: to the Trustee for amounts due under Section 7.7;
SECOND: to holders of Senior Indebtedness and Guarantor
Senior Indebtedness to the extent required by Article X;
THIRD: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, 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 Securityholders pursuant to this Section. At least 15 days before
such record date, the Company shall mail to each Securityholder and the Trustee
a notice that states the record date, the payment date and amount to be paid.
SECTION 6.11. 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 does not apply
to a suit by the Trustee, a suit by a Holder pursuant to Section 6.7 or a suit
by Holders of more than 10% in outstanding principal amount of the Securities.
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ARTICLE VII
Trustee
SECTION 7.1. Duties of Trustee. (a) If an Event of Default
has occurred and is continuing, the Trustee shall exercise 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 Person would exercise or use under the
circumstances in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture. However, the Trustee shall examine the
certificates and opinions to determine whether or not they conform to
the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act or its own wilful
misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b)
of this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.5.
(d) Every provision of this Indenture that in any way
relates to the Trustee is subject to paragraphs (a), (b) and (c) of this
Section.
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(e) The Trustee shall not be liable for interest on any
money received by it except as the Trustee may agree in writing with the
Company.
(f) Money held in trust by the Trustee need not be
segregated from other funds except to the extent required by law.
(g) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder or in the exercise of any of
its rights or powers, if it shall have reasonable grounds to believe that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(h) Every provision of this Indenture relating to the
conduct or affecting the liability of or affording protection to the Trustee
shall be subject to the provisions of this Section and to the provisions of the
TIA.
SECTION 7.2. Rights of Trustee. (a) The Trustee may rely on
any document believed by it to be genuine and to have been signed or presented
by the proper person. The Trustee need not investigate any fact or matter
stated in the document.
(b) Before the Trustee acts or refrains from acting, it
may require an Officers' Certificate or an Opinion of Counsel. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on the Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it
takes or omits to take in good faith which it believes to be authorized or
within its rights or powers; provided, however, that the Trustee's conduct does
not constitute wilful misconduct or negligence.
(e) The Trustee may consult with counsel, and the advice
or opinion of counsel with respect to legal matters relating to this Indenture
and the Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder
in good faith and in accordance with the advice or opinion of such counsel.
SECTION 7.3. Individual Rights of Trustee. The Trustee in
its individual or any other capacity may become the owner or pledgee of
Securities and may otherwise deal with the
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Company or its Affiliates with the same rights it would have if it were not
Trustee. Any Paying Agent, Registrar, co- registrar or co-paying agent may do
the same with like rights. However, the Trustee must comply with Sections 7.10
and 7.11.
SECTION 7.4. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for
any statement of the Company in this Indenture or in any document issued in
connection with the sale of the Securities or in the Securities other than the
Trustee's certificate of authentication.
SECTION 7.5. 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 Securityholder 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 7.6. Reports by Trustee to Holders. As promptly as
practicable after each May 15 beginning with the May 15 following the date of
this Indenture, and in any event prior to July 15 in each year, the Trustee
shall mail to each Securityholder a brief report dated as of such May 15 that
complies with TIA Section 313(a). The Trustee also shall comply with TIA
Section 313(b). The Trustee shall also transmit by mail all reports required
by TIA Section 313(c).
A copy of each report at the time of its mailing to
Securityholders shall be filed with the SEC if required by law and each stock
exchange (if any) on which the Securities are listed. The Company agrees to
notify promptly the Trustee whenever the Securities become listed on any stock
exchange and of any delisting thereof.
SECTION 7.7. Compensation and Indemnity. The Company shall
pay to the Trustee from time to time reasonable compensation for its services.
The Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses incurred or made by it,
including costs of collection, costs of preparing and reviewing reports,
certificates and other documents, costs of preparation and mailing of notices
to Securityholders and reasonable costs of counsel retained by the Trustee in
connection with the delivery of an Opinion of Counsel or
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otherwise, in addition to the compensation for its services. Such expenses
shall include the reasonable compensation and expenses, disbursements and
advances of the Trustee's agents, counsel, accountants and experts. The
Company shall indemnify the Trustee against any and all loss, liability or
expense (including reasonable attorneys' fees) incurred by it in connection
with the administration of this trust and the performance of its duties
hereunder, including the costs and expenses of enforcing this Indenture
(including this Section 7.7) and of defending itself against any claims
(whether asserted by any Securityholder, the Company or otherwise). The
Trustee shall notify the Company promptly of any claim for which it may seek
indemnity. Failure by the Trustee to so notify the Company shall not relieve
the Company of its obligations hereunder. The Company shall defend the claim
and the Trustee may have separate counsel and the Company shall pay the fees
and expenses of such counsel. The Company need not reimburse any expense or
indemnify against any loss, liability or expense incurred by the Trustee
through the Trustee's own wilful misconduct, negligence or bad faith.
To secure the Company's payment obligations in this Section,
the Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee other than money or property held in trust to
pay principal of and interest on particular Securities. The Trustee's right to
receive payment of any amounts due under this Section 7.7 shall not be
subordinate to any other liability or indebtedness of the Company.
The Company's payment obligations pursuant to this Section
shall survive the discharge of this Indenture. When the Trustee incurs
expenses after the occurrence of a Default specified in Section 6.1(7) or (8)
with respect to the Company, the expenses are intended to constitute expenses
of administration under any Bankruptcy Law.
SECTION 7.8. Replacement of Trustee. The Trustee may resign
at any time by so notifying the Company. The Holders of a majority in
principal amount of the Securities may remove the Trustee by so notifying the
Trustee and may appoint a successor Trustee. The Company shall remove the
Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes
charge of the Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
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If the Trustee resigns or is removed by the Company or by the
Holders of a majority in principal amount of the Securities and such Holders do
not reasonably promptly appoint a successor Trustee, or if a vacancy exists in
the office of Trustee for any reason (the Trustee in such event being referred
to herein as the retiring Trustee), the Company shall promptly appoint a
successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, subject to the
lien provided for in Section 7.7.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee or the
Holders of 10% in principal amount of the Securities may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to
this Section, the Company's obligations under Section 7.7 shall continue for
the benefit of the retiring Trustee.
SECTION 7.9. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation 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 to the Trustee; and in all such cases such certificates shall
have the full force
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which it is anywhere in the Securities or in this Indenture provided that the
certificate of the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee
shall at all times satisfy the requirements of TIA Section 310(a). The
Trustee shall have a combined capital and surplus of at least $50 million as
set forth in its most recent published annual report of condition. The Trustee
shall comply with TIA Section 310(b); provided, however, that there shall be
excluded from the operation of TIA Section 310(b)(1) any indenture or
indentures under which other securities or certificates of interest or
participation in other securities of the Company are outstanding if the
requirements for such exclusion set forth in TIA Section 310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against
Company. The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated.
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.1. 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 2.7) 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 III hereof 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 2.7), 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 8.1(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.
(b) Subject to Sections 8.1(c) and 8.2, 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
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obligations under Sections 4.2, 4.3, 4.4, 4.5, 4.6, 4.7, 4.8, 4.9, 4.10,
5.1(iii) and 5.1(iv) and the operation of Sections 6.1(4), 6.1(6), 6.1(7) (but
only with respect to a Significant Subsidiary), 6.1(8) (but only with respect
to a Significant Subsidiary), 6.1(9) and 6.1(10) ("covenant defeasance
option"). 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
6.1(4), 6.1(5), 6.1(6), 6.1(7) (but only with respect to a Significant
Subsidiary), 6.1(8) (but only with respect to a Significant Subsidiary), 6.1(9)
and 6.1(10) or because of the failure of the Company to comply with Section
5.1(iii) and Section 5.1(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 8.1(a) and
(b), the Company's obligations in Sections 2.3, 2.4, 2.5, 2.6, 2.7, 7.7, 7.8,
8.4, 8.5 and 8.6 shall survive until the Securities have been paid in full.
Thereafter, the Company's obligations in Sections 7.7, 8.4 and 8.5 shall
survive.
SECTION 8.2. Conditions to Defeasance. The Company may
exercise its legal defeasance option or its covenant defeasance option only if:
(1) 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;
(2) 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 on 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;
(3) the Company shall have delivered to the Trustee an
Opinion of Counsel, subject to certain customary qualifications, to
the effect that (i) the funds so deposited will not be
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subject to any rights of any other holders of Indebtedness of the
Company, and (ii) the funds so deposited will not be subject to
avoidance under applicable Bankruptcy Law;
(4) the deposit does not constitute a default under any other
agreement binding on the Company and is not prohibited by Article X;
(5) 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;
(6) in the case of the legal defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that
(i) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (ii) since the date of this
Indenture 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 Securityholders 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 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;
(7) 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 Securityholders 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; and
(8) 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 VIII 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 8.3. Application of Trust Money. The Trustee shall
hold in trust money or U.S. Government Obligations deposited with it pursuant
to this Article VIII. It shall apply the deposited money and the money from
U.S. Government Obligations through the Paying Agent and
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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 8.4. 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, Securityholders entitled to the money
must look to the Company for payment as general creditors.
SECTION 8.5. 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 8.6. Reinstatement. If the Trustee or Paying Agent
is unable to apply any money or U.S. Government Obligations in accordance with
this Article VIII 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 VIII
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 VIII;
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 IX
Amendments
SECTION 9.1. Without Consent of Holders. The Company and the
Trustee may amend this Indenture or the Securities without notice to or consent
of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
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(2) to comply with Article V;
(3) 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;
(4) to make any change in Article X that would limit or
terminate the benefits available to any holder of Senior Indebtedness
or Guarantor Senior Indebtedness (or Representatives therefor) under
Article X;
(5) to add guarantees with respect to the Securities or to
secure the Securities;
(6) 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;
(7) to comply with any requirements of the SEC in connection
with qualifying this Indenture under the TIA;
(8) to make any change that does not adversely affect the
rights of any Securityholder; or
(9) 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.
An amendment under this Section may not make any change that
adversely affects the rights under Article X of any holder of Senior
Indebtedness or Guarantor Senior Indebtedness then outstanding unless the
holders of such Senior Indebtedness or Guarantor Senior Indebtedness (or any
group or representative thereof authorized to give a consent) consent to such
change.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any
defect therein, shall not impair or affect the validity of an amendment under
this Section.
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SECTION 9.2. With Consent of Holders. The Company and the
Trustee may amend this Indenture or the Securities without notice to any
Securityholder 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 Securityholder affected, an amendment may not:
(1) reduce the amount of Securities whose Holders must
consent to an amendment;
(2) reduce the rate of or extend the time for payment of
interest on any Security;
(3) reduce the principal of or extend the Stated Maturity of
any Security;
(4) 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;
(5) make any Security payable in money other than that stated
in the Security;
(6) 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
(7) make any change in Section 6.4 or 6.7 or the second
sentence of this Section.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
An amendment under this Section may not make any change that
adversely affects the rights under Article X of any holder of Senior
Indebtedness or Guarantor Senior Indebtedness then outstanding unless the
holders of such Senior Indebtedness or Guarantor Senior Indebtedness (or any
group or representative thereof authorized to give a consent) consent to such
change.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any
defect therein, shall not impair or affect the validity of an amendment under
this Section.
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SECTION 9.3. Compliance with Trust Indenture Act. Every
amendment to this Indenture or the Securities shall comply with the TIA as then
in effect.
SECTION 9.4. 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 the 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
Securityholder.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Securityholders 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
Securityholders 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.
SECTION 9.5. 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 9.6. Trustee To Sign Amendments. The Trustee shall
sign any amendment authorized pursuant to this Article IX 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 Officers' Certificate and an Opinion of Counsel
stating that such amendment is authorized or permitted by this Indenture.
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ARTICLE X
Subordination
SECTION 10.1. Agreement To Subordinate. The Company and each
Subsidiary Guarantor agree, and each Securityholder by accepting a Security and
the related Subsidiary Guarantee agrees, that the Indebtedness evidenced by the
Securities and the related Subsidiary Guarantee is subordinated in right of
payment, to the extent and in the manner provided in this Article X, to the
prior payment of (i) all Senior Indebtedness in the case of the Securities and
(ii) all Guarantor Senior Indebtedness of such Subsidiary Guarantor in the case
of its obligations under the Subsidiary Guarantee and that the subordination is
for the benefit of and enforceable by the holders of Senior Indebtedness and
such Guarantor Senior Indebtedness. The Securities shall in all respects rank
pari passu with all other Senior Subordinated Indebtedness of the Company, the
related Subsidiary Guarantee of each Subsidiary Guarantor shall in all respects
rank pari passu with all Guarantor Senior Subordinated Indebtedness of such
Subsidiary Guarantor and only Indebtedness of the Company which is Senior
Indebtedness will rank senior to the Securities and only Indebtedness of such
Subsidiary Guarantor which is Guarantor Senior Indebtedness of such Subsidiary
Guarantor shall rank senior to the obligations of such Subsidiary Guarantor
under the Subsidiary Guarantee in accordance with the provisions set forth
herein. All provisions of this Article X shall be subject to Section 10.12.
SECTION 10.2. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution of the assets of the Company or any Subsidiary
Guarantor to creditors upon a total or partial liquidation or a total or
partial dissolution of the Company or such Subsidiary Guarantor or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company or such Subsidiary Guarantor or their respective
properties:
(1) holders of Senior Indebtedness in the case of the Company
or holders of Guarantor Senior Indebtedness of such Subsidiary
Guarantor in the case of such Subsidiary Guarantor shall be entitled
to receive payment in full in cash of all Senior Indebtedness in the
case of the Company or all such Guarantor Senior Indebtedness in the
case of such Subsidiary Guarantor before Securityholders shall be
entitled to receive any payment of principal of or interest on or
other amounts with respect to the Securities from the Company or such
Subsidiary Guarantor, whether directly by the Company or pursuant to
the Subsidiary Guarantee; and
(2) until the Senior Indebtedness in the case of the Company
or such Guarantor Senior Indebtedness in the case of such Subsidiary
Guarantor is paid in full in cash, any
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payment or distribution to which Securityholders would be entitled but
for this Article X shall be made to holders of Senior Indebtedness in
the case of payments or distributions made by the Company or the
holders of such Guarantor Senior Indebtedness in the case of payments
or distributions made by such Subsidiary Guarantor, in each case as
their respective interests may appear.
SECTION 10.3. Default on Senior Indebtedness or Guarantor
Senior Indebtedness. Neither the Company nor any Subsidiary Guarantor may pay
the principal of, premium (if any) or interest on or other amounts with respect
to the Securities or make any deposit pursuant to Section 8.1 or repurchase,
redeem or otherwise retire any Securities, whether directly by the Company or
by such Subsidiary Guarantor under the Subsidiary Guarantee (collectively, "pay
the Securities") if (i) any Senior Indebtedness in the case of the Company or
any Guarantor Senior Indebtedness of such Subsidiary Guarantor in the case of
such Subsidiary Guarantor is not paid when due or (ii) any other default on
Senior Indebtedness in the case of the Company or such Guarantor Senior
Indebtedness in the case of such Subsidiary Guarantee occurs and the maturity
of such Senior Indebtedness in the case of the Company or such Guarantor Senior
Indebtedness in the case of such Subsidiary Guarantor 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 Senior
Indebtedness in the case of the Company or such Guarantor Senior Indebtedness
in the case of such Subsidiary Guarantor has been paid in full in cash;
provided, however, that the Company or such Subsidiary Guarantor may pay the
Securities, whether directly or pursuant to the Subsidiary Guarantee, without
regard to the foregoing if the Company or such Subsidiary Guarantor and the
Trustee receive written notice approving such payment from the Representative
of the Senior Indebtedness in the case of the Company or such Guarantor Senior
Indebtedness in the case of such Subsidiary Guarantor with respect to which
either of the events set forth in clause (i) or (ii) of this sentence has
occurred or 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 (in the case of Designated Senior
Indebtedness of the Company) nor any Subsidiary Guarantor (in the case of
Designated Senior Indebtedness of such Subsidiary Guarantor) may pay the
Securities, either directly or pursuant to the Subsidiary Guarantee, for a
period (a "Payment Blockage Period") commencing upon the receipt by the Trustee
(with a copy to the Company or such Subsidiary Guarantor) of written notice (a
"Blockage Notice") of such default from the Representative of the holders of
such 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 or such Subsidiary Guarantor from the Person or Persons who gave such
Blockage Notice, (ii) by repayment in full in
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cash of such Designated Senior Indebtedness or (iii) because the default giving
rise to such Blockage Notice is no longer continuing). Notwithstanding the
provisions of the immediately preceding sentence, unless the holders of such
Designated Senior Indebtedness or the Representative of such holders shall have
accelerated the maturity of such Designated Senior Indebtedness, the Company or
such Subsidiary Guarantor may resume payments on the Securities, either
directly or pursuant to the Subsidiary Guarantee, after 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.
SECTION 10.4. Acceleration of Payment of Securities. If
payment of the Securities is accelerated because of an Event of Default, the
Company, the Subsidiary Guarantors 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 (in the case of any Designated Senior Indebtedness of the Company)
nor any Subsidiary Guarantor (in the case of any Designated Senior Indebtedness
of such Subsidiary Guarantor) may pay the Securities, either directly or
pursuant to the Subsidiary Guarantee, until five Business Days after the holder
or Representative of such Designated Senior Indebtedness receives notice of
such acceleration and, thereafter, may pay the Securities, either directly or
pursuant to the Subsidiary Guarantee, only if this Article 10 otherwise permits
payments at that 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 Guarantor Senior
Indebtedness and promptly pay it over to them as their respective interests may
appear.
SECTION 10.6. Subrogation. After all Senior Indebtedness and
Guarantor Senior Indebtedness is paid in full in cash and until the Securities
are paid in full, Securityholders shall be subrogated to the rights of holders
of Senior Indebtedness and Guarantor Senior Indebtedness to receive
distributions applicable to Senior Indebtedness and Guarantor Senior
Indebtedness. A distribution made under this Article X to holders of Senior
Indebtedness or Guarantor Senior Indebtedness which otherwise would have been
made to Securityholders is not, as between the Company and Securityholders, a
payment by the Company of Senior Indebtedness or, as between a Subsidiary
Guarantor and Securityholders, a payment by such Subsidiary Guarantor of
Guarantor Senior Indebtedness.
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SECTION 10.7. Relative Rights. This Article X defines the
relative rights of Securityholders and holders of Senior Indebtedness and
Guarantor Senior Indebtedness. Nothing in this Indenture shall:
(1) impair, as between the Company or the Subsidiary
Guarantors, as the case may be, and Securityholders, the obligation of
the Company or the Subsidiary Guarantors, as the case may be, 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 or Event of Default, subject to
the rights of holders of Senior Indebtedness and Guarantor Senior
Indebtedness to receive distributions otherwise payable to
Securityholders.
SECTION 10.8. Subordination May Not Be Impaired by Company or
the Subsidiary Guarantors. No right of any holder of Senior Indebtedness or
Guarantor Senior Indebtedness to enforce the subordination of the Indebtedness
evidenced by the Securities or the related Subsidiary Guarantee shall be
impaired by any act or failure to act by the Company or any Subsidiary
Guarantor or by the failure of any of them 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 satisfactory to it 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 Senior Indebtedness or Guarantor
Senior Indebtedness may give the notice; provided, however, that, if an issue
of Senior Indebtedness or Guarantor Senior Indebtedness has a Representative,
only the Representative may give the notice.
The Trustee in its individual or any other capacity may hold
Senior Indebtedness or Guarantor 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 or Guarantor Senior Indebtedness which may at any time be held by
it, to the same extent as any other holder of Senior Indebtedness or Guarantor
Senior Indebtedness; and nothing in Article VII 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 7.7.
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SECTION 10.10. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of Senior
Indebtedness or Guarantor 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 in respect of the
Securities, whether directly or pursuant to the Subsidiary Guarantee, by reason
of any provision in this Article X shall not be construed as preventing the
occurrence of a Default or Event of Default. Nothing in this Article X shall
have any effect on the right of the Securityholders or the Trustee to
accelerate the maturity of the Securities or to make a claim for payment under
the Subsidiary Guarantee.
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 under Article VIII
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
Guarantor 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, any Subsidiary Guarantor, any holder of Senior
Indebtedness of the Company, any holder of Guarantor Senior Indebtedness or any
other creditor of the Company or any Subsidiary Guarantor.
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 or Guarantor Senior Indebtedness for the purpose of ascertaining
the Persons entitled to participate in such payment or distribution, the
holders of Senior Indebtedness, Guarantor Senior Indebtedness and other
Indebtedness of the Company or the Subsidiary Guarantors, 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 or Guarantor 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
or Guarantor 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
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provisions of Sections 7.1 and 7.2 shall be applicable to all actions or
omissions of actions by the Trustee pursuant to this Article X.
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 and Guarantor 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 and Guarantor Senior Indebtedness. The Trustee shall not be
deemed to owe any fiduciary duty to the holders of Senior Indebtedness or
Guarantor Senior Indebtedness and shall not be liable to any such holders if it
shall mistakenly pay over or distribute to Securityholders or the Company, the
Subsidiary Guarantors or any other Person, money or assets to which any holders
of Senior Indebtedness or Guarantor Senior Indebtedness shall be entitled by
virtue of this Article X or otherwise.
SECTION 10.16. Reliance by Holders of Senior Indebtedness and
Guarantor 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 or Guarantor Senior
Indebtedness, whether such Senior Indebtedness or Guarantor 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
or Guarantor Senior Indebtedness and such holder of Senior Indebtedness or
Guarantor 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 or Guarantor Senior Indebtedness.
ARTICLE XI
Subsidiary Guarantee
SECTION 11.1. Subsidiary Guarantee. Subject to the
subordination provisions contained in Article X, the Subsidiary Guarantors
hereby, jointly and severally, unconditionally and irrevocably, Guarantee to
each Holder and to the Trustee and its successors and assigns (a) the full and
punctual payment of principal of and interest on the Securities when due,
whether at maturity, by acceleration, by redemption or otherwise, and all other
monetary obligations of the Company
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under this Indenture (including obligations to the Trustee) and the Securities
and (b) the full and punctual performance within applicable grace periods of
all other obligations of the Company under this Indenture and the Securities
(all the foregoing being hereinafter collectively called the "Obligations").
The Subsidiary Guarantors further agree that the Obligations may be extended or
renewed, in whole or in part, without notice or further assent from the
Subsidiary Guarantors, and that the Subsidiary Guarantors will remain bound
under this Article XI notwithstanding any extension or renewal of any
Obligation.
The Subsidiary Guarantors waive presentation to, demand of,
payment from and protest to the Company of any of the Obligations and also
waive notice of protest for nonpayment. The Subsidiary Guarantors waive notice
of any default under the Securities or the Obligations. The obligations of the
Subsidiary Guarantors 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 Obligation; (c) any rescission, waiver, amendment, modification or
supplement of any of the terms or provisions of this Indenture (other than this
Article XI), the Securities or any other agreement; (d) the release of any
security held by any Holder or the Trustee for the Obligations 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; or (f) any change in the
ownership of the Company.
The Subsidiary Guarantors further agree that their Guarantees
herein constitute a guarantee of payment, performance and compliance when due
(and not a guarantee of collection) and waive any right to require that any
resort be had by any Holder or the Trustee to any security held for payment of
the Obligations.
The Guarantee of each Subsidiary Guarantor is, to the extent
and in the manner set forth in Article X, subordinated and subject in right of
payment to the prior payment in full of the principal of and premium, if any,
and interest on all Guarantor Senior Indebtedness of such Subsidiary Guarantor
and this Guarantee is made subject to such provisions of this Indenture.
The obligations of the Subsidiary Guarantors 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, setoff, 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 the Subsidiary Guarantors
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
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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 the Subsidiary Guarantors
or would otherwise operate as a discharge of the Subsidiary Guarantors as a
matter of law or equity.
The Subsidiary Guarantors further agree that their Guarantees
herein shall continue to be effective or be reinstated, as the case may be, if
at any time payment, or any part thereof, of 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 which any Holder or the Trustee has at law or in equity against the
Subsidiary Guarantors by virtue hereof, upon the failure of the Company to pay
any Obligation 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 Obligation, the Subsidiary Guarantors hereby promise to and will, upon
receipt of written demand by the Trustee, 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) and (iii)
all other monetary Obligations of the Company to the Holders and the Trustee.
The Subsidiary Guarantors agree that, as between the
Subsidiary Guarantors, 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 VI for the purposes of the Guarantee herein,
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 VI, such Obligations (whether or not due and payable) shall forthwith
become due and payable by the Subsidiary Guarantors for the purposes of this
Section.
The Subsidiary Guarantors also agree to pay any and all costs
and expenses (including reasonable attorneys' fees) incurred by the Trustee or
any Holder in enforcing any rights under this Section.
SECTION 11.2. Limitation on Liability. Any term or provision
of this Indenture to the contrary notwithstanding, the obligations of each
Subsidiary Guarantor are limited to the maximum amount as will, after giving
effect to all other contingent and fixed liabilities of such Subsidiary
Guarantor (including, without limitation, any guarantees under the Credit
Agreement) and
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after giving effect to any collections from or payments made by or on behalf of
any other Subsidiary Guarantor in respect of the obligations of such other
Subsidiary Guarantor under its Subsidiary Guarantee or pursuant to its
contribution obligations under this Indenture, result in the obligations of
such Subsidiary Guarantor under the Subsidiary Guarantee not constituting a
fraudulent conveyance or fraudulent transfer under federal or state law.
SECTION 11.3. Successors and Assigns. This Article XI shall
be binding upon the Subsidiary Guarantors and their successors and assigns and
shall enure to the benefit of the successors and assigns of the Trustee and the
Holders and, in the event of any transfer or 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.
(b) Notwithstanding the foregoing, all obligations of a
Subsidiary Guarantor under this Article XI shall be automatically and
unconditionally released and discharged upon any sale, exchange or transfer to
any Person which is not a Subsidiary of the Company, of all or substantially
all of the assets of such Subsidiary Guarantor or all of the Capital Stock of
such Subsidiary Guarantor owned by the Company or any Subsidiary; provided that
(i) such sale, exchange or transfer is not prohibited by this Indenture and
(ii) all obligations of such Subsidiary Guarantor in respect of the Bank
Indebtedness and under all of its Guarantees of, and in respect of all Liens on
its assets securing, Indebtedness of the Company are also released and
discharged upon such sale, exchange or transfer.
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. Right of Contribution. Each Subsidiary
Guarantor hereby agrees that to the extent that a Subsidiary Guarantor shall
have paid more than its proportionate share of any payment made hereunder, such
Subsidiary Guarantor shall be entitled to seek and receive contribution from
and against any other Subsidiary Guarantor hereunder who has not paid its
proportionate share of such payment. Each Subsidiary Guarantor's right of
contribution shall be subject to the terms and conditions of Section 11.6. The
provisions of this Section shall in no respect limit the obligations and
liabilities of any Subsidiary Guarantor to the Trustee and the
<PAGE> 87
79
Securityholders and each Subsidiary Guarantor shall remain liable to the
Trustee and the Securityholders for the full amount guaranteed by such
Subsidiary Guarantor hereunder.
SECTION 11.6. No Subrogation. Notwithstanding any payment or
payments made by any of the Subsidiary Guarantors hereunder, no Subsidiary
Guarantor shall be entitled to be subrogated to any of the rights of the
Trustee or any Securityholder against the Company or any other Subsidiary
Guarantor or any collateral security or guarantee or right of offset held by
the Trustee or any Securityholder for the payment of the Obligations, nor shall
any Subsidiary Guarantor seek or be entitled to seek any contribution or
reimbursement from the Company or any other Subsidiary Guarantor in respect of
payments made by such Subsidiary Guarantor hereunder, until all amounts owing
to the Trustee and the Securityholders by the Company on account of the
Obligations are paid in full. If any amount shall be paid to any Subsidiary
Guarantor on account of such subrogation rights at any time when all of the
Obligations shall not have been paid in full, such amount shall be held by such
Subsidiary Guarantor in trust for the Trustee and the Securityholders,
segregated from other funds of such Subsidiary Guarantor, and shall, forthwith
upon receipt by such Subsidiary Guarantor, be turned over to the Trustee in the
exact form received by such Subsidiary Guarantor (duly indorsed by such
Subsidiary Guarantor to the Trustee, if required), to be applied against the
Obligations.
SECTION 11.7. Additional Subsidiary Guarantors. Concurrently
with the creation or acquisition by the Company of any Subsidiary (other than a
foreign subsidiary and other than an Unrestricted Subsidiary), the Company,
such Subsidiary and the Trustee shall execute and deliver a supplement to this
Indenture providing that such Subsidiary will be a Subsidiary Guarantor
hereunder. Each such supplement shall be in a form reasonably satisfactory to
the Trustee.
SECTION 11.8. Modification. No modification, amendment or
waiver of any provision of this Article XI, nor the consent to any departure by
the Subsidiary Guarantors 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 the Subsidiary Guarantors in any
case shall entitle the Subsidiary Guarantors to any other or further notice or
demand in the same, similar or other circumstances.
<PAGE> 88
80
ARTICLE XII
Miscellaneous
SECTION 12.1. Trust Indenture Act Controls. If any provision
of this Indenture limits, qualifies or conflicts with another provision which
is required to be included in this Indenture by the TIA, the provision required
by the TIA shall control.
SECTION 12.2. Notices. Any notice or communication shall be
in writing and delivered in person or mailed by first-class mail addressed as
follows:
if to the Company:
International Home Foods, Inc.
Five Giralda Farms
Madison, New Jersey 07940-0873
Attention of Kenneth S. Martin and
Lynn Misericordia
if to the Subsidiary Guarantors:
International Home Foods, Inc.
Five Giralda Farms
Madison, New Jersey 07940-0873
Attention of Kenneth S. Martin and
Lynn Misericordia
if to the Trustee:
United States Trust Company of New York
114 W. 47 Street
New York, NY 10036
Attention of Corporate Trust Administration
<PAGE> 89
81
The Company, any of the Subsidiary Guarantors, or the Trustee
by notice to the other may designate additional or different addresses for
subsequent notices or communications.
Any notice or communication mailed to a Securityholder shall
be mailed to the Securityholder at the Securityholder's address as it appears
on the registration books of the Registrar and shall be sufficiently given if
so mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 12.3. Communication by Holders with other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).
SECTION 12.4. Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Company to the Trustee to
take or refrain from taking any action under this Indenture, the Company shall
furnish to the Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 12.5. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture shall include:
(1) a statement that the individual making such certificate
or opinion has read such covenant or condition;
(2) 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;
<PAGE> 90
82
(3) a statement that, in the opinion of such individual, 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
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 12.6. When Securities Disregarded. In determining
whether the Holders of the required principal amount of Securities have
concurred in any direction, waiver or consent, Securities owned by the Company
or by any Person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Company shall be disregarded and
deemed not to be outstanding, except that, for the purpose of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Securities which the Trustee knows are so owned shall be so
disregarded. Also, subject to the foregoing, only Securities outstanding at
the time shall be considered in any such determination.
SECTION 12.7. Rules by Trustee, Paying Agent and Registrar.
The Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar and the Paying Agent may make reasonable rules
for their functions.
SECTION 12.8. Legal Holidays. A "Legal Holiday" is a
Saturday, a Sunday or a day on which banking institutions are not required to
be open in the State of New York. If a payment date is a Legal Holiday,
payment shall be made on the next succeeding day that is not a Legal Holiday,
and no interest shall accrue for the intervening period. If a regular record
date is a Legal Holiday, the record date shall not be affected.
SECTION 12.9. Governing Law. This Indenture and the
Securities shall be governed by, and construed in accordance with, the laws of
the State of New York but 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 12.10. No Recourse Against Others. A director,
officer, employee or stockholder, as such, of the Company shall not have any
liability for any obligations of the Company under the Securities or this
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
shall waive and release all such liability. The waiver and release shall be
part of the consideration for the issue of the Securities.
<PAGE> 91
83
SECTION 12.11. Successors. All agreements of the Company and
the Subsidiary Guarantors in this Indenture and the Securities shall bind their
respective successors. All agreements of the Trustee in this Indenture shall
bind its successors.
SECTION 12.12. Multiple Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough
to prove this Indenture.
SECTION 12.13. Variable Provisions. The Company initially
appoints the Trustee as Paying Agent and Registrar and custodian with respect
to any Global Securities.
SECTION 12.14. Qualification of Indenture. The Company shall
qualify this Indenture under the TIA in accordance with the terms and
conditions of the Registration Rights Agreement and shall pay all reasonable
costs and expenses (including attorneys' fees for the Company, the Trustee and
the Holders) incurred in connection therewith, including, but not limited to,
costs and expenses of qualification of the Indenture and the Securities and
printing this Indenture and the Securities. The Trustee shall be entitled to
receive from the Company any such Officers' Certificates, Opinions of Counsel
or other documentation as it may reasonably request in connection with any such
qualification of this Indenture under the TIA.
SECTION 12.15. Table of Contents; Headings. The table of
contents, cross-reference sheet and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.
<PAGE> 92
84
IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed as of the date first written above.
INTERNATIONAL HOME FOODS, INC.
By: /s/ ANDREW S. ROSEN
-----------------------------------
Name: Andrew S. Rosen
Title: Vice President and
Assistant Secretary
UNITED STATES TRUST COMPANY OF NEW
YORK
By: /s/ GERARD F. GANEY
-----------------------------------
Name: Gerard F. Ganey
Title: Senior Vice President
AMERICAN HOME FOODS, INC.
By: /s/ ANDREW S. ROSEN
-----------------------------------
Name: Andrew S. Rosen
Title: Vice President and
Assistant Secretary
LUCK'S INC.
By: /s/ ANDREW S. ROSEN
-----------------------------------
Name: Andrew S. Rosen
Title: Vice President and
Assistant Secretary
M. POLANER, INC.
<PAGE> 93
85
By: /s/ ANDREW S. ROSEN
-----------------------------------
Name: Andrew S. Rosen
Title: Vice President and
Assistant Secretary
CANADIAN HOME PRODUCTS LIMITED
By: /s/ ANDREW S. ROSEN
-----------------------------------
Name: Andrew S. Rosen
Title: Vice President and
Assistant Secretary
HERITAGE BRANDS HOLDINGS, INC.
By: /s/ ANDREW S. ROSEN
-----------------------------------
Name: Andrew S. Rosen
Title: Vice President and
Assistant Secretary
HERITAGE BRANDS, INC.
By: /s/ ANDREW S. ROSEN
-----------------------------------
Name: Andrew S. Rosen
Title: Vice President and
Assistant Secretary
CAMPFIRE, INC.
By: /s/ ANDREW S. ROSEN
-----------------------------------
Name: Andrew S. Rosen
Title: Vice President and
Assistant Secretary
<PAGE> 94
1
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, A NEW YORK CORPORATION ("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 SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS 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 SECURITIES ACT
OF 1933 (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH
<PAGE> 95
2
THE ISSUER, ANY GUARANTOR OR ANY AFFILIATE OF THE ISSUER OR ANY GUARANTOR WAS
THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO
THE ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES
IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT
OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN INSTITUTIONAL ACCREDITED INVESTOR WITHIN THE MEANING
OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS ACQUIRING
THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE
SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR
OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUER'S AND
THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSES (D), (E) AND (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN
EACH CASE, ONLY IF A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER
SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
ISSUER AND THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE
HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
<PAGE> 96
1
INTERNATIONAL HOME FOODS, INC.
No. __ Principal Amount $___________
CUSIP NO. 459655AA4
10-3/8% Senior Subordinated Note due 2006
International Home Foods, Inc., a Delaware corporation,
promises to pay to __________, or registered assigns, the principal sum of
___________________________ Dollars on November 1, 2006.
Interest Payment Dates: May 1 and November 1.
Record Dates: April 15 and October 15.
Additional provisions of this Security are set forth on the
other side of this Security.
Dated: November 1, 1996 INTERNATIONAL HOME FOODS, INC.
by
-----------------------------------
by
-----------------------------------
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
UNITED STATES TRUST COMPANY
OF NEW YORK
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
<PAGE> 97
2
by
---------------------------
Authorized Signatory
<PAGE> 98
3
(Reverse of Security)
10-3/8% Senior Subordinated Note due 2006
1. Interest
International Home Foods, Inc., a Delaware corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company"), promises to pay interest on
the principal amount of this Security at the rate per annum shown above.
The Company will pay interest semiannually on May 1 and
November 1 of each year, commencing May 1, 1997. Interest on the Securities
will accrue from the most recent date to which interest has been paid on the
Securities or, if no interest has been paid, from November 1, 1996. The
Company shall pay interest on overdue principal or premium, if any, at the rate
borne by the Securities to the extent lawful. Interest will be computed on the
basis of a 360-day year of twelve 30-day months.
2. Method of Payment
By at least 12:00 noon (New York City time) on the date on
which any principal of or interest on any Security is due and payable, the
Company shall irrevocably deposit with the Trustee or the Paying Agent money
sufficient to pay such principal, premium, if any, and/or interest. The
Company will pay interest (except defaulted interest) to the Persons who are
registered Holders of Securities at the close of business on the April 15 or
October 15 next preceding the interest payment date even if Securities are
cancelled, repurchased or redeemed after the record date and on or before the
interest payment date. Holders must surrender Securities to a Paying Agent to
collect principal payments. The Company will pay principal and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts. However, the Company may pay principal
and interest by check payable in such money. It may mail an interest check to
a Holder's registered address.
3. Paying Agent and Registrar
<PAGE> 99
4
Initially, United States Trust Company of New York, a New York
corporation (the "Trustee"), will act as Paying Agent and Registrar. The
Company may appoint and change any Paying Agent, Registrar or co-registrar
without notice to any Securityholder. The Company or any of its domestically
incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar or
co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as
of November 1, 1996 (as it may be amended or supplemented from time to time in
accordance with the terms thereof, the "Indenture"), among the Company, the
Subsidiary Guarantors named therein (the "Subsidiary Guarantors") and 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 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date of the
Indenture (the "Act"). Capitalized terms used herein and not defined herein
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 Act for a statement of those terms.
The Securities are general unsecured senior subordinated
obligations of the Company limited to $400.0 million aggregate principal amount
(subject to Section 2.7 of the Indenture). 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.
The Indenture imposes certain limitations on the Incurrence of Indebtedness by
the Company and its Restricted Subsidiaries, the payment of dividends and other
distributions on the Capital Stock of the Company and its Restricted
Subsidiaries, the purchase or redemption of Capital Stock of the Company and
Capital Stock of such Restricted Subsidiaries, certain purchases or redemptions
of Subordinated Obligations, the sale or transfer of assets and Capital Stock
of Restricted Subsidiaries, the issuance or sale of Capital Stock of Restricted
Subsidiaries, the investments of the Company and its Subsidiaries and
transactions with Affiliates. In addition, the Indenture limits the ability of
the Company and its Restricted Subsidiaries to restrict distributions and
dividends from Restricted Subsidiaries.
To guarantee the due and punctual payment of the principal and
interest, if any, 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 Subsidiary Guarantors
have, jointly
<PAGE> 100
5
and severally, unconditionally guaranteed such obligations on a senior
subordinated basis pursuant to the terms of the Indenture.
5. Optional Redemption
Except as set forth in this paragraph 5, the Securities will
not be redeemable at the option of the Company prior to November 1, 2001. On
and after such date, the Securities will be redeemable, at the Company's
option, in whole or in part, upon not less than 30 nor more than 60 days' prior
notice mailed by first class mail to each Holder's registered address, at the
following redemption prices (expressed as percentages of principal amount) plus
accrued and unpaid interest to the redemption date (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date):
If redeemed during the 12-month period commencing on November
1 of the years set forth below:
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2001 . . . . . . . . . . . . . . . . . . . . . . . . 105.188%
2002 . . . . . . . . . . . . . . . . . . . . . . . . 103.458%
2003 . . . . . . . . . . . . . . . . . . . . . . . . 101.729%
2004 and thereafter . . . . . . . . . . . . . . . . 100.000%
</TABLE>
Notwithstanding the foregoing, at any time or from time to
time prior to November 1, 2000, the Company may redeem in the aggregate up to
$160.0 million principal amount of the Securities with the proceeds of one or
more Equity Offerings by the Company so long as there is a Public Market at the
time of such redemption, at a redemption price (expressed as a percentage of
principal amount) of 110.375% plus accrued and unpaid interest to the
redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date);
provided, however, that after giving effect to such redemption, at least $200.0
million principal amount of the Securities remain outstanding.
At any time on or prior to November 1, 2001, the Securities
may also be redeemed in whole, but not in part, at the option of the Company
upon the occurrence of a Change of Control, upon not less than 30 nor more than
60 days' prior notice (but in no event more than 90 days after the occurrence
of such Change of Control) mailed by first- class mail to each Holder's
registered
<PAGE> 101
6
address, at a redemption price equal to 100% of the principal amount thereof
plus the Applicable Premium as of, and accrued but unpaid interest to, the date
of redemption (subject to the right of holders of record on the relevant record
date to receive interest due on the relevant interest payment date).
6. Notice of Redemption
Notice of redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to each Holder of Securities to be
redeemed at his registered address. Securities in denominations of principal
amount larger than $1,000 may be redeemed in part but only in whole multiples
of $1,000. If money sufficient to pay the redemption price of and accrued and
unpaid interest on all Securities (or portions thereof) to be redeemed on the
redemption date is deposited with the Paying Agent on or before the redemption
date and certain other conditions are satisfied, on and after such date
interest ceases to accrue on such Securities (or such portions thereof) called
for redemption.
7. Put Provisions
Upon a Change of Control, any Holder of Securities will have
the right to cause the Company to repurchase all or any part of the Securities
of such Holder at a repurchase price equal to 101% of the principal amount
thereof plus accrued interest to the date of repurchase as provided in, and
subject to the terms of, the Indenture.
8. Subordination
The Securities are subordinated to Senior Indebtedness, as
defined in the Indenture. To the extent provided in the Indenture, Senior
Indebtedness must be paid before the Securities may be paid. The Company
agrees, and each Securityholder by accepting a Security agrees, to the
subordination provisions contained in the Indenture and authorizes the Trustee
to give them effect and appoints the Trustee as attorney-in-fact for such
purpose.
9. Denominations; Transfer; Exchange
<PAGE> 102
7
The Securities are in registered form without coupons in
denominations of principal amount of $1,000 and whole multiples of $1,000. A
Holder may transfer or exchange Securities in accordance with the Indenture.
The Registrar may require a Holder, among other things, to furnish appropriate
endorsements or transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not register the
transfer of or exchange (i) any Securities selected for redemption (except, in
the case of a Security to be redeemed in part, the portion of the Security not
to be redeemed) for a period beginning 15 days before a selection of Securities
to be redeemed and ending on the date of such selection or (ii) any Securities
for a period beginning 15 days before an interest payment date and ending on
such interest payment date.
10. Persons Deemed Owners
The registered holder of this Security may be treated as the
owner of it for all purposes.
11. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back
to the Company at its request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must
look only to the Company and not to the Trustee for payment.
12. Defeasance
Subject to certain conditions set forth in the Indenture, the
Company at any time may terminate some or all of its obligations under the
Securities and the Indenture if the Company deposits with the Trustee money or
U.S. Government Obligations for the payment of principal of and interest on
the Securities to redemption or maturity, as the case may be.
13. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount of the outstanding
Securities and (ii) any default or noncompliance with any provision may
<PAGE> 103
8
be waived with the written consent of the Holders of a majority in principal
amount of the outstanding Securities. Subject to certain exceptions set forth
in the Indenture, without the consent of any Securityholder, the Company, the
Subsidiary Guarantors and the Trustee may amend the Indenture or the Securities
to cure any ambiguity, omission, defect or inconsistency, or to comply with
Article 5 of the Indenture, or to provide for uncertificated Securities in
addition to or in place of certificated Securities, or to add guarantees with
respect to the Securities or to secure the Securities, or to add additional
covenants or surrender rights and powers conferred on the Company, or to comply
with any request of the SEC in connection with qualifying the Indenture under
the Act, or to make any change that does not adversely affect the rights of any
Securityholder, or to provide for the issuance of Exchange Notes.
14. Defaults and Remedies
Under the Indenture, Events of Default include (i) default
for 30 days in payment of interest on the Securities; (ii) default in payment
of principal on the Securities at maturity, upon redemption pursuant to
paragraph 5 of the Securities, upon required repurchase, upon declaration or
otherwise; (iii) failure by the Company to comply with other agreements in the
Indenture or the Securities, in certain cases subject to notice and lapse of
time; (iv) certain accelerations (including failure to pay within any grace
period after final maturity) of other indebtedness of the Company or its
Restricted Subsidiaries if the amount accelerated (or so unpaid) exceeds $20.0
million and such acceleration or failure to pay is not rescinded or cured
within a 10 day period; (v) certain events of bankruptcy or insolvency with
respect to the Company or any Significant Subsidiary; (vi) certain final,
non-appealable judgments or decrees for the payment of money in excess of $20.0
million against the Company or any Significant Subsidiary; and (vii) any
Subsidiary Guaranty by a Significant Subsidiary cease to be in full force and
effect (except as contemplated by the terms of the Indenture) or any Subsidiary
Guarantor that is a Significant Subsidiary denies or disaffirms its obligations
under the Indenture or its Subsidiary Guaranty and such default continues for
10 days. If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the Securities may declare all
the Securities to be due and payable immediately. Certain events of bankruptcy
or insolvency are Events of Default which will result in the Securities being
due and payable immediately upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives reasonable indemnity
or security. Subject to certain limitations, Holders of a majority in
principal amount of the Securities may direct the Trustee in its exercise of
any trust or power. The Trustee may withhold from Securityholders notice of
any continuing Default or Event of Default (except a
<PAGE> 104
9
Default or Event of Default in payment of principal or interest) if it
determines that withholding notice is in their interest.
15. Trustee Dealings with the Company
Subject to certain limitations set forth in the Indenture, the
Trustee under the Indenture, in its individual or any other capacity, may
become the owner or pledgee of Securities and may otherwise deal with and
collect obligations owed to it by the Company or its affiliates and may
otherwise deal with the Company or its affiliates with the same rights it would
have if it were not Trustee.
16. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company or any Subsidiary Guarantor shall not have any liability for any
obligations of the Company or any Subsidiary Guarantor under the Securities or
the Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
17. Authentication
This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent acting on its behalf) manually signs
the certificate of authentication on the other side of this Security.
18. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entirety), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to
Minors Act).
<PAGE> 105
10
19. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures the Company has caused CUSIP numbers
to be printed on the Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
20. Governing Law
This Security shall be governed by, and construed in
accordance with, the laws of the State of New York but 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.
The Company will furnish to any Securityholder upon written
request and without charge to the Securityholder a copy of the Indenture which
has in it the text of this Security in larger type. Requests may be made to:
International Home Foods, 5 Giralda Farms, Madison, New Jersey 07940-0873,
Attention: General Counsel.
<PAGE> 106
1
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security
on the books of the Company. The agent may substitute another to act
for him.
- --------------------------------------------------------------------------------
Date: Your Signature:
----------------------------- -----------------------
Signature Guarantee:
---------------------------------------
(Signature must be guaranteed)
- --------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
In connection with any transfer or exchange of any of the Securities evidenced
by this certificate occurring prior to the date that is three years after the
later of the date of original issuance of such Securities and the last date, if
any, on which such Securities were owned by the Company or any Affiliate of the
Company, the undersigned confirms that such Securities are being:
CHECK ONE BOX BELOW:
1 [ ] acquired for the undersigned's own account, without
transfer (in satisfaction of Section 2.6(a)(ii)(A) or
Section 2.6(d)(i)(A) of the Indenture); or
2 [ ] transferred to the Company; or
3 [ ] transferred pursuant to and in compliance with Rule
144A under the Securities Act of 1933; or
4 [ ] transferred pursuant to an effective registration
statement under the Securities Act; or
<PAGE> 107
2
5 [ ] transferred pursuant to and in compliance with
Regulation S under the Securities Act of 1933; or
6 [ ] transferred to an institutional "accredited investor"
(as defined in Rule 501(a)(1), (2), (3) or (7) under
the Securities Act of 1933), that has furnished to
the Trustee a signed letter containing certain
representations and agreements (the form of which
letter appears as Exhibit C to the Indenture); or
7 [ ] transferred pursuant to another available exemption
from the registration requirements of the Securities
Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Securities evidenced by this certificate in the name of any person other
than the registered holder thereof; provided, however, that if box (5), (6) or
(7) is checked, the Trustee or the Company may require, prior to registering
any such transfer of the Securities, in their sole discretion, such legal
opinions, certifications and other information as the Trustee or the Company
may reasonably request 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 of 1933, such as the exemption provided by
Rule 144 under such Act.
-----------------------------------
Signature
Signature Guarantee:
- ----------------------------------- -----------------------------------
Signature
(Signature must be guaranteed)
- --------------------------------------------
<PAGE> 108
3
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global
Security have been made:
<TABLE>
<CAPTION>
Principal Amount of Signature of
Amount of decrease in Amount of increase in this Global Security authorized officer of
Date of Principal Amount of Principal Amount of following such Trustee or Securities
Exchange this Global Security this Global Security decrease or increase Custodian
<S> <C> <C> <C> <C>
</TABLE>
<PAGE> 109
4
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.6 or 4.8 of the Indenture, check the box:
[ ]
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.6 or 4.8 of the Indenture, state
the amount in principal amount (must be integral multiple of $1,000): $
Date: Your Signature
---------- ------------------------------
(Sign exactly as your name appears on the
other side of the Security)
Signature Guarantee:
-----------------------------------------
(Signature must be guaranteed)
<PAGE> 110
5
EXHIBIT B
[FORM OF FACE OF EXCHANGE NOTE]
INTERNATIONAL HOME FOODS, INC.
No. __ Principal Amount $_____________
CUSIP NO. 459655AA4
10-3/8% Senior Subordinated Note due 2006
International Home Foods, Inc., a Delaware corporation,
promises to pay to __________, or registered assigns, the principal sum of
___________________________ Dollars on November 1, 2006.
Interest Payment Dates: May 1 and November 1.
Record Dates: April 15 and October 15.
Additional provisions of this Security are set forth on the
other side of this Security.
Dated: November 1, 1996 INTERNATIONAL HOME FOODS, INC.
by
-----------------------------------
by
-----------------------------------
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
UNITED STATES TRUST COMPANY
OF NEW YORK
<PAGE> 111
6
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
by
-------------------------------
Authorized Signatory
<PAGE> 112
7
(Reverse of Security)
10-3/8% Senior Subordinated Note due 2006
1. Interest
International Home Foods, Inc., a Delaware corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company"), promises to pay interest on
the principal amount of this Security at the rate per annum shown above.
The Company will pay interest semiannually on May 1 and
November 1 of each year, commencing May 1, 1997. Interest on the Securities
will accrue from the most recent date to which interest has been paid on the
Securities or, if no interest has been paid, from November 1, 1996. The
Company shall pay interest on overdue principal or premium, if any, at the rate
borne by the Securities to the extent lawful. Interest will be computed on the
basis of a 360-day year of twelve 30-day months.
2. Method of Payment
By at least 12:00 noon (New York City time) on the date on
which any principal of or interest on any Security is due and payable, the
Company shall irrevocably deposit with the Trustee or the Paying Agent money
sufficient to pay such principal, premium, if any, and/or interest. The
Company will pay interest (except defaulted interest) to the Persons who are
registered Holders of Securities at the close of business on the April 15 or
October 15 next preceding the interest payment date even if Securities are
cancelled, repurchased or redeemed after the record date and on or before the
interest payment date. Holders must surrender Securities to a Paying Agent to
collect principal payments. The Company will pay principal and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts. However, the Company may pay principal
and interest by check payable in such money. It may mail an interest check to
a Holder's registered address.
3. Paying Agent and Registrar
<PAGE> 113
8
Initially, United States Trust Company of New York, a New York
corporation (the "Trustee"), will act as Paying Agent and Registrar. The
Company may appoint and change any Paying Agent, Registrar or co-registrar
without notice to any Securityholder. The Company or any of its domestically
incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar or
co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as
of November 1, 1996 (as it may be amended or supplemented from time to time in
accordance with the terms thereof, the "Indenture"), among the Company, the
Subsidiary Guarantors named therein (the "Subsidiary Guarantors") and 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 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date of the
Indenture (the "Act"). Capitalized terms used herein and not defined herein
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 Act for a statement of those terms.
The Securities are general unsecured senior subordinated
obligations of the Company limited to $400.0 million aggregate principal amount
(subject to Section 2.7 of the Indenture). 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.
The Indenture imposes certain limitations on the Incurrence of Indebtedness by
the Company and its Restricted Subsidiaries, the payment of dividends and other
distributions on the Capital Stock of the Company and its Restricted
Subsidiaries, the purchase or redemption of Capital Stock of the Company and
Capital Stock of such Restricted Subsidiaries, certain purchases or redemptions
of Subordinated Obligations, the sale or transfer of assets and Capital Stock
of Restricted Subsidiaries, the issuance or sale of Capital Stock of Restricted
Subsidiaries, the investments of the Company and its Subsidiaries and
transactions with Affiliates. In addition, the Indenture limits the ability of
the Company and its Restricted Subsidiaries to restrict distributions and
dividends from Restricted Subsidiaries.
To guarantee the due and punctual payment of the principal and
interest, if any, 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 Subsidiary Guarantors
have, jointly
<PAGE> 114
9
and severally, unconditionally guaranteed such obligations on a senior
subordinated basis pursuant to the terms of the Indenture.
5. Optional Redemption
Except as set forth in this paragraph 5, the Securities will
not be redeemable at the option of the Company prior to November 1, 2001. On
and after such date, the Securities will be redeemable, at the Company's
option, in whole or in part, upon not less than 30 nor more than 60 days' prior
notice mailed by first class mail to each Holder's registered address, at the
following redemption prices (expressed as percentages of principal amount) plus
accrued and unpaid interest to the redemption date (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date):
If redeemed during the 12-month period commencing on November
1 of the years set forth below:
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2001 . . . . . . . . . . . . . . . . . . . . . . . . 105.188%
2002 . . . . . . . . . . . . . . . . . . . . . . . . 103.458%
2003 . . . . . . . . . . . . . . . . . . . . . . . . 101.729%
2004 and thereafter . . . . . . . . . . . . . . . . 100.000%
</TABLE>
Notwithstanding the foregoing, at any time or from time to
time prior to November 1, 2000, the Company may redeem in the aggregate up to
$160.0 million principal amount of the Securities with the proceeds of one or
more Equity Offerings by the Company so long as there is a Public Market at the
time of such redemption, at a redemption price (expressed as a percentage of
principal amount) of 110.375% plus accrued and unpaid interest to the
redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date);
provided, however, that after giving effect to such redemption, at least $200.0
million principal amount of the Securities remain outstanding.
At any time on or prior to November 1, 2001, the Securities
may also be redeemed in whole, but not in part, at the option of the Company
upon the occurrence of a Change of Control, upon not less than 30 nor more than
60 days' prior notice (but in no event more than 90 days after the occurrence
of such Change of Control) mailed by first-class mail to each Holder's
registered
<PAGE> 115
10
address, at a redemption price equal to 100% of the principal amount thereof
plus the Applicable Premium as of, and accrued but unpaid interest to, the date
of redemption (subject to the right of holders of record on the relevant record
date to receive interest due on the relevant interest payment date).
6. Notice of Redemption
Notice of redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to each Holder of Securities to be
redeemed at his registered address. Securities in denominations of principal
amount larger than $1,000 may be redeemed in part but only in whole multiples
of $1,000. If money sufficient to pay the redemption price of and accrued and
unpaid interest on all Securities (or portions thereof) to be redeemed on the
redemption date is deposited with the Paying Agent on or before the redemption
date and certain other conditions are satisfied, on and after such date
interest ceases to accrue on such Securities (or such portions thereof) called
for redemption.
7. Put Provisions
Upon a Change of Control, any Holder of Securities will have
the right to cause the Company to repurchase all or any part of the Securities
of such Holder at a repurchase price equal to 101% of the principal amount
thereof plus accrued interest to the date of repurchase as provided in, and
subject to the terms of, the Indenture.
8. Subordination
The Securities are subordinated to Senior Indebtedness, as
defined in the Indenture. To the extent provided in the Indenture, Senior
Indebtedness must be paid before the Securities may be paid. The Company
agrees, and each Securityholder by accepting a Security agrees, to the
subordination provisions contained in the Indenture and authorizes the Trustee
to give them effect and appoints the Trustee as attorney-in-fact for such
purpose.
9. Denominations; Transfer; Exchange
<PAGE> 116
11
The Securities are in registered form without coupons in
denominations of principal amount of $1,000 and whole multiples of $1,000. A
Holder may transfer or exchange Securities in accordance with the Indenture.
The Registrar may require a Holder, among other things, to furnish appropriate
endorsements or transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not register the
transfer of or exchange (i) any Securities selected for redemption (except, in
the case of a Security to be redeemed in part, the portion of the Security not
to be redeemed) for a period beginning 15 days before a selection of Securities
to be redeemed and ending on the date of such selection or (ii) any Securities
for a period beginning 15 days before an interest payment date and ending on
such interest payment date.
10. Persons Deemed Owners
The registered holder of this Security may be treated as the
owner of it for all purposes.
11. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back
to the Company at its request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must
look only to the Company and not to the Trustee for payment.
12. Defeasance
Subject to certain conditions set forth in the Indenture, the
Company at any time may terminate some or all of its obligations under the
Securities and the Indenture if the Company deposits with the Trustee money or
U.S. Government Obligations for the payment of principal of and interest on
the Securities to redemption or maturity, as the case may be.
13. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount of the outstanding
Securities and (ii) any default or noncompliance with any provision may
<PAGE> 117
12
be waived with the written consent of the Holders of a majority in principal
amount of the outstanding Securities. Subject to certain exceptions set forth
in the Indenture, without the consent of any Securityholder, the Company, the
Subsidiary Guarantors and the Trustee may amend the Indenture or the Securities
to cure any ambiguity, omission, defect or inconsistency, or to comply with
Article 5 of the Indenture, or to provide for uncertificated Securities in
addition to or in place of certificated Securities, or to add guarantees with
respect to the Securities or to secure the Securities, or to add additional
covenants or surrender rights and powers conferred on the Company, or to comply
with any request of the SEC in connection with qualifying the Indenture under
the Act, or to make any change that does not adversely affect the rights of any
Securityholder, or to provide for the issuance of Exchange Notes.
14. Defaults and Remedies
Under the Indenture, Events of Default include (i) default
for 30 days in payment of interest on the Securities; (ii) default in payment
of principal on the Securities at maturity, upon redemption pursuant to
paragraph 5 of the Securities, upon required repurchase, upon declaration or
otherwise; (iii) failure by the Company to comply with other agreements in the
Indenture or the Securities, in certain cases subject to notice and lapse of
time; (iv) certain accelerations (including failure to pay within any grace
period after final maturity) of other indebtedness of the Company or its
Restricted Subsidiaries if the amount accelerated (or so unpaid) exceeds $20.0
million and such acceleration or failure to pay is not rescinded or cured
within a 10 day period; (v) certain events of bankruptcy or insolvency with
respect to the Company or any Significant Subsidiary; (vi) certain final,
non-appealable judgments or decrees for the payment of money in excess of $20.0
million against the Company or any Significant Subsidiary; and (vii) any
Subsidiary Guaranty by a Significant Subsidiary cease to be in full force and
effect (except as contemplated by the terms of the Indenture) or any Subsidiary
Guarantor that is a Significant Subsidiary denies or disaffirms its obligations
under the Indenture or its Subsidiary Guaranty and such default continues for
10 days. If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the Securities may declare all
the Securities to be due and payable immediately. Certain events of bankruptcy
or insolvency are Events of Default which will result in the Securities being
due and payable immediately upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives reasonable indemnity
or security. Subject to certain limitations, Holders of a majority in
principal amount of the Securities may direct the Trustee in its exercise of
any trust or power. The Trustee may withhold from Securityholders notice of
any continuing Default or Event of Default (except a
<PAGE> 118
13
Default or Event of Default in payment of principal or interest) if it
determines that withholding notice is in their interest.
15. Trustee Dealings with the Company
Subject to certain limitations set forth in the Indenture, the
Trustee under the Indenture, in its individual or any other capacity, may
become the owner or pledgee of Securities and may otherwise deal with and
collect obligations owed to it by the Company or its affiliates and may
otherwise deal with the Company or its affiliates with the same rights it would
have if it were not Trustee.
16. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company or any Subsidiary Guarantor shall not have any liability for any
obligations of the Company or any Subsidiary Guarantor under the Securities or
the Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
17. Authentication
This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent acting on its behalf) manually signs
the certificate of authentication on the other side of this Security.
18. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entirety), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to
Minors Act).
<PAGE> 119
14
19. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures the Company has caused CUSIP numbers
to be printed on the Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
20. Governing Law
This Security shall be governed by, and construed in
accordance with, the laws of the State of New York but 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.
The Company will furnish to any Securityholder upon written
request and without charge to the Securityholder a copy of the Indenture which
has in it the text of this Security in larger type. Requests may be made to:
International Home Foods, 5 Giralda Farms, Madison, New Jersey 07940-0873,
Attention: General Counsel.
<PAGE> 120
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security
on the books of the Company. The agent may substitute another to act
for him.
- --------------------------------------------------------------------------------
Date: Your Signature
---------- ------------------------------
(Sign exactly as your name appears on the
other side of the Security)
Signature Guarantee:
-----------------------------------------
(Signature must be guaranteed)
- --------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
In connection with any transfer or exchange of any of the Securities evidenced
by this certificate occurring prior to the date that is three years after the
later of the date of original issuance of such Securities and the last date, if
any, on which such Securities were owned by the Company or any Affiliate of the
Company, the undersigned confirms that such Securities are being:
CHECK ONE BOX BELOW:
1 [ ] acquired for the undersigned's own account, without
transfer (in satisfaction of Section 2.6(a)(ii)(A) or
Section 2.6(d)(i)(A) of the Indenture); or
2 [ ] transferred to the Company; or
3 [ ] transferred pursuant to and in compliance with Rule
144A under the Securities Act of 1933; or
4 [ ] transferred pursuant to an effective registration
statement under the Securities Act; or
<PAGE> 121
2
5 [ ] transferred pursuant to and in compliance with
Regulation S under the Securities Act of 1933; or
6 [ ] transferred to an institutional "accredited investor"
(as defined in Rule 501(a)(1), (2), (3) or (7) under
the Securities Act of 1933), that has furnished to
the Trustee a signed letter containing certain
representations and agreements (the form of which
letter appears as Exhibit C to the Indenture); or
7 [ ] transferred pursuant to another available exemption
from the registration requirements of the Securities
Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Securities evidenced by this certificate in the name of any person other
than the registered holder thereof; provided, however, that if box (5), (6) or
(7) is checked, the Trustee or the Company may require, prior to registering
any such transfer of the Securities, in their sole discretion, such legal
opinions, certifications and other information as the Trustee or the Company
may reasonably request 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 of 1933, such as the exemption provided by
Rule 144 under such Act.
-----------------------------------
Signature
Signature Guarantee:
- ----------------------------------- -----------------------------------
Signature
(Signature must be guaranteed)
- --------------------------------------------
<PAGE> 122
3
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global
Security have been made:
<TABLE>
<CAPTION>
Principal Amount of Signature of
Amount of decrease in Amount of increase in this Global Security authorized officer of
Date of Principal Amount of Principal Amount of following such Trustee or Securities
Exchange this Global Security this Global Security decrease or increase Custodian
<S> <C> <C> <C> <C>
</TABLE>
<PAGE> 123
4
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.6 or 4.8 of the Indenture, check the box:
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.6 or 4.8 of the Indenture, state
the amount in principal amount (must be integral multiple of $1,000): $
Date: Your Signature
---------- ------------------------------
(Sign exactly as your name appears on the
other side of the Security)
Signature Guarantee:
-----------------------------------------
(Signature must be guaranteed)
<PAGE> 124
EXHIBIT C
Transferee Letter of Representation
International Home Foods, Inc.
c/o United States Trust Company of New York
114 West 47 Street
New York, N.Y. 10036
Attention: Corporate Trust
Administration
Dear Sirs:
This certificate is delivered to request a transfer of $
principal amount of the 10 3/8% Senior Subordinated Notes due 2006 (the
"Notes") of International Home Foods, Inc. (the "Company").
Upon transfer, the Notes would be registered in the name of
the new beneficial owner as follows:
Name:
-----------------------------------
Address:
--------------------------------
Taxpayer ID Number:
---------------------
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933
(the "Securities Act")) purchasing for our own account or for the account of
such an institutional "accredited investor," at least $250,000 principal amount
of the Notes, and we are acquiring the Notes not with a view to, or for offer
or sale in connection with, any distribution in violation of the Securities
Act. We have such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risk of our investment in the
Notes and invest in or purchase securities similar to the Notes in the normal
course of our business. We and any accounts for which we are acting are each
able to bear the economic risk of our or its investment.
<PAGE> 125
2
2. We understand that the Notes have not been registered
under the Securities Act and, unless so registered, may not be sold except as
permitted in the following sentence. We agree on our own behalf and on behalf
of any investor account for which we are purchasing Notes to offer, sell or
otherwise transfer such Notes prior to the date which is three years after the
later of the date of original issue and the last date on which the Company or
any affiliate of the Company was the owner of such Notes (or any predecessor
thereto) (the "Resale Restriction Termination Date") only (a) to the Company,
(b) pursuant to a registration statement which has been declared effective
under the Securities Act, (c) in a transaction complying with the requirements
of Rule 144A under the Securities Act, to a person we reasonably believe is a
qualified institutional buyer under Rule 144A (a "QIB") that purchases for its
own account or for the account of a QIB and to whom notice is given that the
transfer is being made in reliance on Rule 144A, (d) pursuant to offers and
sales that occur outside the United States within the meaning of Regulation S
under the Securities Act, (e) to an institutional "accredited investor" within
the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act that is
purchasing for its own account or for the account of such an institutional
"accredited investor", in each case in a minimum principal amount of Notes of
$250,000 or (f) pursuant to any other available exemption from the registration
requirements of the Securities Act, subject in each of the foregoing cases to
any requirement of law that the disposition of our property or the property of
such investor account or accounts be at all times within our or their control
and in compliance with any applicable state securities laws. The foregoing
restrictions on resale will not apply subsequent to the Resale Restriction
Termination Date. If any resale or other transfer of the Notes is proposed to
be made pursuant to clause (e) above prior to the Resale Restriction
Termination Date, the transferor shall deliver a letter from the transferee
substantially in the form of this letter to the Company and the Trustee, which
shall provide, among other things, that the transferee is an institutional
"accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7)
under the Securities Act and that it is acquiring such Notes for investment
purposes and not for distribution in violation of the Securities Act. Each
purchaser acknowledges that the Company and the Trustee reserve the right prior
to any offer, sale or other transfer prior to the Resale Termination Date of
the Notes pursuant to clauses (d), (e) or (f) above to require the delivery of
an opinion of counsel, certifications and/or other information satisfactory to
the Company and the Trustee.
TRANSFEREE:
-----------------------------
BY
--------------------------------------
<PAGE> 1
EXHIBIT 10.1
TRANSITIONAL SERVICES AGREEMENT
THIS TRANSITIONAL SERVICES AGREEMENT (the "Agreement") is made this
1st day of November, 1996, between AMERICAN HOME PRODUCTS CORPORATION, a
Delaware corporation having its principal office at Five Giralda Farms,
Madison, New Jersey 07940 ("AHP") and INTERNATIONAL HOME FOODS, INC. ("IHF"), a
Delaware corporation, having a place of business at Five Giralda Farms,
Madison, New Jersey 07940.
W I T N E S S E T H:
WHEREAS, AHP, AHP Subsidiary Holding Corporation, IHF (formerly
American Home Food Products, Inc.), and AHFP Holding Corporation, and AHFP
Acquisition Corporation have entered into an Agreement of Sale and Plan of
Merger, dated as of September 5, 1996 (the "Purchase Agreement") pursuant to
which AHP disposed of a controlling interest in AHP's food business in a merger
transaction.
WHEREAS, as contemplated by the Purchase Agreement, AHP will provide
certain transitional services to IHF following the Closing on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements herein contained and intending to be legally bound thereby, AHP
and IHF agree as follows:
1. Definitions
Any term used herein which is not defined herein, but is defined in
the Purchase Agreement, shall have the meaning ascribed to it in the Purchase
Agreement.
2. Fees
In consideration of the services to be provided herein, IHF agrees to
pay AHP the fees set forth in Sections 3 and 4 (the "N" Fees). AHP shall
invoice IHF for such fees, as well as any other out-of-pocket expenses
reasonably incurred in connection with the Transitional Services (as defined
below), as and when such charges are incurred or, unless otherwise indicated in
Sections 3 and 4, on a monthly basis. IHF shall make payment in full within
thirty (30) days of receipt of each such invoice setting forth in reasonable
detail the nature of the Fees charged.
3. Transitional Services
Until six months from the date hereof (or earlier as provided
below), AHP shall provide the services described below and in
<PAGE> 2
Section 4 (the "Transitional Services") for the Fees set forth below:
(a) Services Related to Intellectual Property
To the extent requested in writing by IHF, AHP shall provide
to IHF and its subsidiaries services related to the
establishment and maintenance of their intellectual property
rights to the same extent provided before the Closing Date.
The Fee for these Services will be AHP's cost, including
allocable overhead and AHP's out-of-pocket expenses.
(b) Media Buying Services
To the extent requested by IHF, AHP and its Affiliates shall
provide to IHF and its subsidiaries services related to media
purchasing of both the electronic and print media. The Fees
for these services will be the pre-Closing commission rates
charged by AHP or its Affiliates.
(c) Administration
AHP shall for a period of up to 90 days from the date hereof
assist in the administration of IHF's Welfare Plans and will
receive compensation for services provided and reimbursement
for any actual out-of-pocket costs associated with the
administration and maintenance of such plans (all calculated
in accordance with AHP's past practices). In connection with
AHP's assisting in the administration of IHF's Welfare Plans,
it is understood and agreed by the parties that: (i) AHP is
not a fiduciary, as defined in Section 3(31) of the ERISA, and
(ii) IHF is not a participating employer in any welfare
plans maintained by AHP after the Closing.
(d) Fleet Services
For six months or such period as may be agreeable to the
parties, AHP will furnish vehicle fleet administrative
services for the benefit of IHF and its Affiliates under AHP's
current contract with Four Wheels Co., Inc. in the same manner
as such services were provided prior to the Closing. AHP will
endeavor to cause all leases and other rights relating to
vehicles utilized by IHF prior to the Closing to be
transferred to IHF's account at the same rates as AHP's
current agreement with Four Wheels Co., Inc. plus applicable
transfer charges. IHF will be fully responsible for payment of
any and all lease charges,
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<PAGE> 3
related expenses for operating such vehicles and for any
damages to or caused by the operation of such vehicles.
4. Facilities and Related Services
(a) AHP shall provide to IHF and its Affiliates the use of the
office space (and furniture and equipment related thereto) currently used and
occupied by IHF's predecessor at Five Giralda Farms, Madison, New Jersey (the
"Headquarters Facilities"), and services incidental thereto, including
telephone and other telecommunication, mail, courier, shipping, receiving,
security, utilities, maintenance, and janitorial services, all of the foregoing
to the extent provided before the Closing Date. These Facilities and services
will be provided for a total of $75,000 per month. In addition, IHF personnel
shall have access to AHP's company store, parking areas, cafeteria facilities,
fitness center and other services to the same extent and on the same basis as
before the Closing Date.
(b) Should IHF hold over in possession after expiration of six
months from the date hereof, the charge for such holdover period shall be
$112,500 per month.
(c) All Fees payable under this Section 4 shall be proportionately
adjusted for any partial month in which IHF occupies the Headquarters
Facilities.
(d) IHF shall use the Headquarters Facilities for general office
and business-related purposes.
(e) IHF shall not make any alterations to the Headquarters
Facilities without AHP's prior written consent, which shall not be unreasonably
withheld.
(f) AHP and its agents shall have the right to enter the
Headquarters Facilities at all reasonable times to make any repairs and
replacements as AHP may deem necessary and reasonably desirable for the
maintenance of the Headquarters Facilities or the Building.
5. Taxes
IHF shall reimburse AHP on a current basis for 100% of taxes (other
than taxes on or in respect of income) or other charges which AHP becomes
obligated to pay to any Governmental Authority arising out of the performance
of the Transitional Services and which are not included in the Fees otherwise
payable by IHF hereunder.
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<PAGE> 4
6. Standard of Performance
In all material respects, AHP will perform the Transitional Services
in a competent and worklike manner and, except to the extent that IHF requests
and AHP agrees to a deviation from the standard practices and procedures that
AHP uses in its own businesses, in accordance with AHP's standard practices and
procedures. Notwithstanding the foregoing, AHP and its Affiliates and their
respective employees and agents shall have no liability hereunder to IHF or its
Affiliates for any Costs arising out of or relating to this Agreement and the
Transitional Services provided hereunder unless resulting from AHP's gross
negligence or willful misconduct.
7. Termination
(a) The Transitional Services shall terminate on the date provided
for termination of each Transitional Service as set forth in Sections 3 and 4,
provided, however, that, unless this Agreement is terminated as provided in
Section 7(b) or 7(c), all or any portion of the Transitional Services shall
terminate as follows:
(i) IHF may terminate all or any portion of any of the
Transitional Services upon twenty (20) days written notice;
and
(ii) Upon termination pursuant to Section 7(a) (i) of this
Agreement, the parties shall negotiate an appropriate pro rata
reduction of the Fees charged with respect to such
Transitional Services.
(b) If either party hereto becomes bankrupt or insolvent, or
makes an assignment for the benefit of creditors, or if a receiver is appointed
to take charge of its property, the other may immediately terminate this
Agreement by written notice. Any such termination shall be without prejudice to
accrued rights of the terminating party, and to other rights and remedies for
default.
(c) Either party may terminate this Agreement on thirty (30) days
written notice to the other if the other is in breach of this Agreement in any
material respect unless the breaching party, within such thirty (30) day
period, remedies such breach, or, in the case of a breach which cannot
reasonably be remedied within such period, initiates action which can
reasonably be expected to result in curing such breach within a reasonable
period of time.
8. Indemnification
(a) IHF shall indemnify, hold harmless and defend AHP and its
respective directors, officers, employees, advisors, affiliates,
-4-
<PAGE> 5
agents and shareholders from and against any and all Costs arising out of,
based upon or resulting from AHP's performance of any Transitional Service
(other than the Transitional Services set forth in Section 4) under this
Agreement (including, with respect to Section 3(d) above, any damages to
persons or property arising out of the use of any vehicles leased by Four
Wheels Co. to or for the use of IHF), except to the extent that any such loss,
damage, liability, cost, claim or expense arises out of, is based upon or
results from AHP's gross negligence or willful misconduct in the performance of
such Transitional Service.
(b) IHF shall indemnify, defend and save AHP harmless from and
against any liability or expense including reasonable attorneys fees arising
from the acts or omissions in the use or occupancy of the Headquarters
Facilities during the term hereof or anyone in the Headquarters Facilities with
IHF's permission, or from any breach of this Section 4 by IHF. IHF shall
reimburse AHP for all expense, damages or fines incurred by AHP, and for which
AHP has not been or will not be reimbursed by insurance, by reason of any
breach, violation or nonperformance by IHF, or its agents, servants or
employees, of any covenant or provision of this Section 4, or by reason of
damage to persons or property caused by moving property of or for IHF in or out
of the building in which the Headquarters Facilities are located (the
"Building"), or by the installation or removal of furniture, equipment or other
property of or for IHF or by reason of or arising out of the negligence or
improper conduct of IHF, or its agents, servants or employees, in the use or
occupancy of the Headquarters Facilities. IHF shall maintain, throughout the
term hereof, at its own cost and expense, general public liability insurance
against claims for personal injury, death or property damage occurring upon, in
or about the Headquarters Facilities, such insurance to afford protection to
the limit of not less than $2,000,000 in respect of personal injury or death
and damage to property in respect of any one occurrence.
(c) AHP shall indemnify, hold harmless and defend IHF and its
directors, officers, employees, advisors, affiliates, agents and shareholders
from and against any and all Costs arising out of, based upon or resulting from
AHP's gross negligence or willful misconduct in the performance of any
Transitional Service (other than the Transitional Services set forth in Section
4) under this Agreement.
9. Independent Contractors
AHP is performing and shall perform the Transitional Services under
this Agreement as an independent contractor and as such shall have and maintain
exclusive control over all its employees, agents, subcontractors and
operations. AHP shall not be, act as, purport
-5-
<PAGE> 6
to act as or be deemed to be IHF's agent, representative, employee or servant.
10. Notices
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if delivered personally, mailed by
reputable overnight courier or certified mail or sent by telecopier (confirmed
thereafter by such overnight courier or certified mail) to the parties at the
following addresses or at such other addresses as shall be specified by the
parties by like notice:
If to AHP: American Home Products Corporation
Five Giralda Farms
Madison, New Jersey 07940
Attn: Senior Executive Vice President
Telecopier Number: (201) 660-7156
With a copy to: Louis L. Hoynes, Jr.
Senior Vice President and General Counsel
American Home Products Corporation
Five Giralda Farms
Madison, New Jersey 07940
Telecopier Number: (201) 660-7155
If to IHF: International Home Foods, Inc.
Five Giralda Farms
Madison, New Jersey 07940
Attention: President
Telecopier Number: (201) 660-5934
With a copy to: Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court
Suite 1600
Dallas, Texas 75021
Attention: Lawrence D. Stuart, Jr.
Managing Director & Principal
Telecopier Number: (214) 740-7313
and
Michael D. Wortley
Vinson & Elkins L.L.P.
3700 Trammel Crow Center
2001 Ross Avenue
Dallas, Texas 75201-2975
Telecopier Number: (214) 220-7718
-6-
<PAGE> 7
Notice so given shall (in the case of notice so given by mail) be
deemed to be given and received on the third calendar day after mailing or the
next business day if sent by a reputable overnight courier and (in the case of
notice so given by telecopier or personal delivery) on the date of actual
transmission or (as the case may be) personal delivery.
11. Miscellaneous
This Agreement (including the documents and instruments referred to
herein) constitutes the entire agreement and supersedes all other prior
agreements and undertakings, both written and oral, among the parties, or any
of them, with respect to the subject matter hereof; is not intended to confer
upon any other person any rights or remedies hereunder; and shall be governed
in all respects, including validity, interpretation and effect, by the internal
laws of the State of New York without giving effect to the principles of
conflicts of laws thereunder. This Agreement may be executed in one or more
counterparts which together shall constitute a single agreement. If any
provisions of this Agreement shall be held to be illegal, invalid or
unenforceable under any applicable law, then such contravention or invalidity
shall not invalidate the entire Agreement. Such provision shall be deemed to be
modified to the extent necessary to render it legal, valid and enforceable, and
if no such modification shall render it legal, valid and enforceable, then this
Agreement shall be construed as if not containing the provision held to be
invalid, and the rights and obligations of the parties shall be construed and
enforced accordingly.
12. Amendments; No Waivers
(a) This Agreement may not he amended except by an instrument in
writing signed on behalf of each of the parties hereto.
(b) Any term, provision or condition of this Agreement may be
waived in writing (or the time for performance of any of the obligations or
other acts of the parties hereto may be extended) by the party that is entitled
to the benefits thereof.
13. Successors and Assians
This Agreement may not be assigned by a party without the prior
written consent of the other parties hereto.
14. Captions
The captions herein are included for convenience of reference only and
shall be ignored in the construction or interpretation hereof.
-7-
<PAGE> 8
15. Force Majeure
Neither party hereto shall be liable in any manner for failure or
delay of performance of all or part of this Agreement, directly or indirectly,
owing to acts of God, governmental orders or restrictions, strikes or other
labor disturbances, riots, embargoes, power failures, telecommunication line
failures, revolutions, wars, fires, floods, or any other causes or
circumstances beyond the reasonable control of either party. The party,
however, in such delay or failure shall give prompt notice to the other party
and shall exert diligent efforts to remove the causes or circumstances of
nonperformance with all possible dispatch.
16. Administration of Agreement
AHP shall designate one of its employees to serve as chief
administrator and coordinator of the Transitional Services to be performed
under this Agreement and shall advise IHF in writing of the name, business
address, phone and fax number of that employee as promptly as possible after
the Closing.
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<PAGE> 9
IN WITNESS WHEREOF, the parties hereto caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
AMERICAN HOME PRODUCTS CORPORATION
By: /s/ JOHN R. CONSIDINE
-----------------------------------
John R. Considine
Vice President-Finance
INTERNATIONAL HOME FOODS, INC.
By: /s/ KENNETH J. MARTIN
-----------------------------------
Kenneth J. Martin
President
-9-
<PAGE> 1
EXHIBIT 10.2
FINANCIAL ADVISORY AGREEMENT
THIS FINANCIAL ADVISORY AGREEMENT (this "Agreement") is made and
entered into as of November 1, 1996, between International Home Foods, Inc.
(the "Company"), a Delaware corporation, and Hicks, Muse & Co. Partners, L.P.,
a Texas limited partnership (together with its successors, "HMCo.").
WHEREAS, certain affiliates of HMCo., including Hicks, Muse, Tate &
Furst Equity Fund III, L.P. ("HMTF") are simultaneously with the execution of
this Agreement, acquiring all or a portion of the common stock of the Company
(the "Acquisition");
WHEREAS, HMCo. has rendered, financial advisory services in connection
with the negotiation of the Acquisition and the debt and equity financing
transactions related thereto (collectively with the Acquisition, the
"Transaction"); and
WHEREAS, the Company has requested that HMCo. render financial
advisory, investment banking, and other similar services to the Company with
respect to any future proposals for a tender offer, acquisition, sale, merger,
exchange offer, recapitalization, restructuring, or other similar transaction
directly or indirectly involving the Company, or any of its subsidiaries, and
any other person or entity (collectively, "Add-on Transactions");
NOW, THEREFORE, in consideration of the services rendered and to be
rendered by HMCo. and to evidence the obligations of the Company to HMCo. and
the mutual covenants herein contained, the Company and HMCo. hereby agree as
follows:
1. Retention.
(a) The Company hereby acknowledges that it has retained
HMCo. for the benefit of the Company, and HMCo. acknowledges that it has acted,
as financial advisor to the Company in connection with the Transaction.
(b) The Company acknowledges that it has retained HMCo.
as the exclusive financial advisor in connection with any Add-on Transactions
that may be consummated during the term of this Agreement, and that the Company
will not retain any other person or entity to provide such services in
connection with any such Add-on Transaction without the prior written consent
of HMCo. HMCO. agrees that it shall provide such financial advisory, investment
banking, and other similar services in connection with any such Add-on
Transaction as may be requested from time to time by the board of directors of
the Company.
<PAGE> 2
2. Term. The term of this Agreement shall continue until the
earlier to occur of (i) the tenth anniversary of the date hereof or (ii) the
date on which HMTF and its affiliates cease to own beneficially, directly or
indirectly, any securities of the Company or its successors.
3. Compensation.
(a) As compensation for HMCo.'s services as financial
advisor to the Company in connection with the Transaction, the Company hereby
irrevocably agrees to pay to HMCo. a cash fee of $19,125,000 to be paid at the
closing of the Transaction. The parties hereto agree that the compensation due
pursuant to this Section 3(a) shall be allocated among the segments of the
financing for the Transaction in proportion to the dollar amount of each such
segment.
(b) As compensation for HMCo.'s financial advisory,
investment banking, and other similar services rendered in connection with any
Add-on Transaction pursuant to Section 1(b) hereof, the Company shall pay to
HMCo., at the closing of any such Add-on Transaction, a cash fee in the amount
of 1.5% of the Transaction Value of such Add-on Transaction. As used herein,
the term "Transaction Value" means the total value of the Add-on Transaction,
including, without limitation, the aggregate amount of the funds required to
complete the Add-on Transaction (excluding any fees payable pursuant to this
Section 3(b)) including the amount of any indebtedness, preferred stock or
similar items assumed (or remaining outstanding).
4. Reimbursement of Expenses. In addition to the compensation to
be paid pursuant to Section 3 hereof, the Company agrees to reimburse HMCo.,
promptly following demand therefor, together with invoices or reasonably
detailed descriptions thereof, for all reasonable disbursements and
out-of-pocket expenses (including fees and disbursements of counsel) incurred
by HMCo. (i) as financial advisor to the Company in connection with the
Transaction or (ii) in connection with the performance by it of the services
contemplated by Section 1(b) hereof.
5. Indemnification. The Company shall indemnify and hold
harmless each of HMCo., its affiliates, and their respective directors,
officers, controlling persons (within the meaning of Section 15 of the
Securities Act of 1933 or Section 20(a) of the Securities Exchange Act of
1934), if any, agents and employees (HMCo., its affiliates, and such other
specified persons being collectively referred to as "Indemnified Persons" and
individually as an "Indemnified Person") from and against any and all claims,
liabilities, losses, damages and expenses incurred by any Indemnified Person
(including those resulting from the negligence of the Indemnified Person and
fees and disbursements of the respective Indemnified Person's counsel) which
(A) are related to or arise out of (i) actions taken or omitted to be taken
(including any untrue statements made or any statements omitted to be made) by
the Company or (ii) actions taken or omitted to be taken by an Indemnified
Person with the Company's consent or in conformity with the Company's
instructions or the Company's actions or omissions or (B) are otherwise related
to or arise out of HMCo.'s engagement, and will reimburse each Indemnified
Person for all costs and expenses, including fees of any Indemnified Person's
counsel, as they are incurred, in connection with investigating, preparing for,
defending, or appealing any action, formal or informal claim, investigation,
inquiry or other
2
<PAGE> 3
proceeding, whether or not in connection with pending or threatened litigation,
caused by or arising out of or in connection with HMCo.'s acting pursuant to
the engagement, whether or not any Indemnified Person is named as a party
thereto and whether or not any liability results therefrom. The Company will
not however, be responsible for any claims, liabilities, losses, damages, or
expenses pursuant to clause (B) of the preceding sentence that have resulted
primarily from HMCo.'s bad faith, gross negligence or willful misconduct. The
Company also agrees that neither HMCo. nor any other Indemnified Parson shall
have any liability to the Company for or in connection with such engagement
except for any such liability for claims, liabilities, losses, damages, or
expenses incurred by the Company that have resulted primarily from HMCo.'s bad
faith, gross negligence or willful misconduct. The Company further agrees that
it will not, without the prior written consent of HMCo., settle or compromise
or consent to the entry of any judgment in any pending or threatened claim,
action, suit or proceeding in respect of which indemnification may be sought
hereunder (whether or not any Indemnified Person is an actual or potential
party to such claim, action, suit or proceeding) unless such settlement,
compromise or consent includes an unconditional release of HMCo. and each other
Indemnified Person hereunder from all liability arising out of such claim,
action, suit or proceeding. THE COMPANY HEREBY ACKNOWLEDGES THAT THE FOREGOING
INDEMNITY SHALL BE APPLICABLE TO ANY CLAIMS, LIABILITIES, LOSSES, DAMAGES, OR
EXPENSES THAT HAVE RESULTED FROM OR ARE ALLEGED TO HAVE RESULTED FROM THE
ACTIVE OR PASSIVE OR THE SOLE, JOINT OR CONCURRENT ORDINARY NEGLIGENCE OF HMCO.
OR ANY OTHER INDEMNIFIED PERSON.
The foregoing right to indemnity shall be in addition to any rights
that HMCo. and/or any other Indemnified Person may have at common law or
otherwise and shall remain in full force and effect following the completion or
any termination of the engagement. The Company hereby consents to personal
jurisdiction and to service and venue in any court in which any claim which is
subject to this agreement is brought against HMCo. or any other Indemnified
Person.
It is understood that, in connection with HMCo.'s engagement, HMCo.
may also be engaged to act for the Company in one or more additional
capacities, and that the terms of this engagement or any such additional
engagement may be embodied in one or more separate written agreements. This
indemnification shall apply to the engagement specified in the first paragraph
hereof as well as to any such additional engagement(s) (whether written or
oral) and any modification of said engagement or such additional engagement(s)
and shall remain in full force and effect following the completion or
termination of said engagement or such additional engagements.
The Company further understands that if HMCo. is asked to furnish the
Company a financial opinion letter or act for the Company in any other formal
capacity, such further action may be subject to a separate agreement containing
provisions and terms to be mutually agreed upon.
6. Confidential Information. In connection with the performance
of the services hereunder, HMCo. agrees not to divulge any confidential
information, secret processes or trade secrets disclosed by the Company to it
solely in its capacity as a financial advisor, unless the Company consents to
the divulging thereof or such information, secret processes, or trade secrets
are publicly available or otherwise available to HMCo. without restriction or
breach of any
3
<PAGE> 4
confidentiality agreement or unless required by any governmental authority or
in response to any valid legal process.
7. Governing Law. This Agreement shall be construed,
interpreted, and enforced in accordance with the laws of the State of Texas,
excluding any choice-of-law provisions thereof.
8. Assignment. This Agreement and all provisions contained
herein shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns; provided, however, neither this
Agreement nor any of the rights, interests, or obligations hereunder shall be
assigned (other than with respect to the rights and obligations of HMCo., which
may be assigned to any one or more of its principals or affiliates) by any of
the parties without the prior written consent of the other parties.
9. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, and the signature of any
party to any counterpart shall be deemed a signature to, and may be appended
to, any other counterpart.
10. Other Understanding. All discussions, understandings, and
agreements theretofore made between any of the parties hereto with respect to
the subject matter hereof are merged in this Agreement, which alone fully and
completely expresses the Agreement of the parties hereto.
4
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
HICKS, MUSE & CO. PARTNERS, L.P.,
its General Partner
By: HM PARTNERS INC., its General
Partner
By: /s/ ALAN B. MENKES
-------------------------
Name: Alan B. Menkes
-------------------------
Title:
-------------------------
INTERNATIONAL HOME FOODS, INC.
By: /s/ ANDREW S. ROSEN
-------------------------
Name: Andrew S. Rosen
-------------------------
Title: Vice President and
Assistant Secretary
-------------------------
5
<PAGE> 1
EXHIBIT 10.3
INTERNATIONAL HOME FOODS, INC.
1996 STOCK OPTION PLAN
1. Purpose.
International Home Foods, Inc., a Delaware corporation (herein,
together with its successors, referred to as the "Company"), by means of this
1996 Stock Option Plan (the "Plan"), desires to afford certain individuals and
key employees of the Company and any parent corporation or subsidiary
corporation thereof now existing or hereafter formed or acquired (such parent
and subsidiary corporations sometimes referred to herein as "Related Entities")
who are responsible for the continued growth of the Company an opportunity to
acquire a proprietary interest in the Company, and thus to create in such
persons an increased interest in and a greater concern for the welfare of the
Company and any Related Entities. As used in the Plan, the terms "parent
corporation" and "subsidiary corporation" shall mean, respectively, a
corporation within the definition of such terms contained in Sections 424(e)
and 424(f), respectively, of the Internal Revenue Code of 1986, as amended (the
"Code").
The stock options described in Sections 6 and 7 (the "Options"), and
the shares of Common Stock (as hereinafter defined) acquired pursuant to the
exercise of such Options are a matter of separate inducement and are not in
lieu of any salary or other compensation for services.
2. Administration.
The Plan shall be administered by the Option Committee, or any
successor thereto, of the Board of Directors of the Company (the "Board of
Directors"), or by any other committee appointed by the Board of Directors to
administer this Plan (the "Committee"); provided, the entire Board of Directors
may act as the Committee if it chooses to do so. The number of individuals
that shall constitute the Committee shall be determined from time to time by a
majority of all the members of the Board of Directors, and, unless that
majority of the Board of Directors determines otherwise, shall be no less than
two individuals; provided, however, that unless the Plan and the Options
granted thereunder otherwise comply with Rule 16b-3 (or any successor rule)
under the Exchange Act (or any successor law) the Committee shall be composed
of either (a) the entire Board of Directors or (b) persons who are
"Non-Employee Directors under Rule 16b-3. A majority of the Committee shall
constitute a quorum (or if the Committee consists of only two members, then
both members shall constitute a quorum), and subject to the provisions of
Section 5, the acts of a majority of the members present at any meeting at
which a quorum is present, or acts approved in writing by all members of the
Committee, shall be the acts of the Committee.
The members of the Committee shall serve at the pleasure of the Board
of Directors, which shall have the power, at any time and from time to time, to
remove members from or add members to the Committee. Removal from the
Committee may be with or without cause. Any individual serving as a member of
the Committee shall have the right to resign from membership in the Committee
by written notice to the Board of Directors. The Board of Directors, and not
the remaining members of the Committee, shall have the power and authority to
fill vacancies on the Committee, however caused. The Board of Directors shall
promptly fill any vacancy that causes the number of members of the Committee to
be below two or, if the Company has a class of equity securities registered
pursuant to Section 12 of the Exchange Act, any other number that Rule 16b-3
may require from time to time.
3. Shares Available.
Subject to the adjustments provided in Section 10, the maximum
aggregate number of shares of Common Stock, $.01 par value, of the Company
("Common Stock") in respect of which Options may be
<PAGE> 2
granted for all purposes under the Plan shall be 45,000,000 shares. If, for
any reason, any shares as to which Options have been granted cease to be
subject to purchase thereunder, including the expiration of such Option, the
termination of such Option prior to exercise, or the forfeiture of such Option,
such shares shall thereafter be available for grants under the Plan. Options
granted under the Plan may be fulfilled in accordance with the terms of the
Plan with (i) authorized and unissued shares of the Common Stock, (ii) issued
shares of such Common Stock held in the Company's treasury, or (iii) issued
shares of Common Stock reacquired by the Company in each situation as the Board
of Directors or the Committee may determine from time to time.
4. Eligibility and Bases of Participation.
Grants of Incentive Options (as hereinafter defined) and Non-Qualified
Options (as hereinafter defined) may be made under the Plan, subject to and in
accordance with Section 6, to Key Employees. As used herein, the term "Kev
Employee" shall mean any employee of the Company or any Related Entity,
including officers and directors of the Company or any Related Entity who are
also employees of the Company or any Related Entity, who is regularly employed
on a salaried basis and who is so employed on the date of such grant, whom the
Committee identifies as having a direct and significant effect on the
performance of the Company or any Related Entity.
Grants of Non-Qualified Options may be made, subject to and in
accordance with Section 7, to any Eligible Non-Employee. As used herein, the
term "Eligible Non-Employee" shall mean any person or entity of any nature
whatsoever, specifically including an individual, a firm, a company, a
corporation, a partnership, a trust, or other entity (collectively, a
"Person"), that the Committee designates as eligible for a grant of Options
pursuant to this Plan because such Person performs bona fide consulting,
advisory, or other services for the Company or any Related Entity (other than
services in connection with the offer or sale of securities in a
capital-raising transaction) and the Board of Directors or the Committee
determines that the Person has a direct and significant effect on the financial
development of the Company or any Related Entity.
The adoption of this Plan shall not be deemed to give any Person a
right to be granted any Options.
Notwithstanding any other provision of this Plan to the contrary, with
respect to the grant of any Options to any Key Employee or Eligible
Non-Employee, the Committee shall first determine the number of shares in
respect of which Options are to be granted to such Key Employee or Eligible
Non-Employee and shall then cause to be granted to such Key Employee or
Eligible Non-Employee an Option exercisable for such shares. The exercise
price per share of Common Stock under each Option shall be fixed by the
Committee at the time of grant of the Option and shall equal at least 100% of
the Fair Market Value of a share of Common Stock on the date of grant.
5. Authority of Committee.
Subject to and not inconsistent with the express provisions of the
Plan, the Code and, if applicable, Rule 16b-3, the Committee shall have
plenary authority to:
a. determine the Key Employees and Eligible Non-Employees to whom
Options shall be granted, the time when such Options shall be
granted, the number of options, the purchase price or exercise
price of each Option, the period(s) during which such Options
shall be exercisable (whether in whole or in part, including
whether such Options shall become immediately exercisable upon
the consummation of a "Sale of the Company" or a "Qualifying
Public Offering"), the restrictions to be applicable to
Options and all other terms and provisions thereof (which need
not be identical);
<PAGE> 3
b. require, as a condition to the granting of any Option, that
the Person receiving such Option agree not to sell or
otherwise dispose of such Option, any Common Stock acquired
pursuant to such Option, or any other "derivative security"
(as defined by Rule 16a-l(c) under the Exchange Act) for a
period of six months following the later of the date of the
grant of such Option or (ii) the date when the exercise price
of such Option is fixed if such exercise price is not fixed at
the date of grant of such Option, or for such other period as
the Committee may determine;
c. provide an arrangement through registered broker-dealers
whereby temporary financing may be made available to an
optionee by the broker-dealer, under the rules and regulations
of the Board of Governors of the Federal Reserve, for the
purpose of assisting the optionee in the exercise of an
Option, such authority to include the payment by the Company
of the commissions of the broker-dealer;
d. provide the establishment of procedures for an optionee (i) to
have withheld from the total number of shares of Common Stock
to be acquired upon the exercise of an Option (other than an
Incentive Option) that number of shares having a Fair Market
Value which, together with such cash as shall be paid in
respect of fractional shares, shall equal the aggregate
exercise price under such Option for the number of shares then
being acquired (including the shares to be so withheld), and
(ii) to exercise a portion of an Option by delivering that
number of shares of Common Stock already owned by such
optionee having an aggregate Fair Market Value which shall
equal the partial Option exercise price and to deliver the
shares thus acquired by such optionee in payment of shares to
be received pursuant to the exercise of additional portions of
such Option, the effect of which shall be that such optionee
can in sequence utilize such newly acquired shares in payment
of the exercise price of the entire Option, together with such
cash as shall be paid in respect of fractional shares;
provided, however, that in the case of an Incentive Option, no
shares shall be used to pay the exercise price unless such
shares were not acquired through the exercise of an Incentive
Option or, if so acquired, have been held for more than two
years since the grant of such Option and for more than one
year since the exercise of such Option;
e. provide (in accordance with Section 13 or otherwise) the
establishment of a procedure whereby a number of shares of
Common Stock or other securities may be withheld from the
total number of shares of Common Stock or other securities to
be issued upon exercise of an Option (other than an Incentive
Option) to meet the obligation of withholding for income,
social security and other taxes incurred by an optionee upon
such exercise or required to be withheld by the Company or a
Related Entity in connection with such exercise;
f. prescribe, amend, modify and rescind rules and regulations
relating to the Plan;
g. make all determinations permitted or deemed necessary,
appropriate or advisable for the administration of the Plan,
interpret any Plan or Option provision, perform all other
acts, exercise all other powers, and establish any other
procedures determined by the Committee to be necessary,
appropriate, or advisable in administering the Plan or for the
conduct of the Committee's business. Any act of the
Committee, including interpretations of the provisions of the
Plan or any Option and determinations under the Plan or any
Option shall be final, conclusive and binding on all parties.
The Committee may delegate to one or more of its members, or to one or
more agents, such administrative duties as it may deem advisable, and the
Committee or any Person to whom it has delegated
-3-
<PAGE> 4
duties as aforesaid may employ one or more Persons to render advice with
respect to any responsibility the Committee or such Person may have under the
Plan. The Committee may employ attorneys, consultants, accountants, or other
Persons and the Committee, the Company, and its officers and directors shall be
entitled to rely upon the advice, opinions, or valuations of any such Persons.
No member or agent of the Committee shall be personally liable for any action,
determination or interpretation made in good faith with respect to the Plan and
all members and agents of the Committee shall be fully protected by the Company
in respect of any such action, determination or interpretation.
6. Stock Options for Key Employees.
Subject to the express provisions of this Plan, the Committee shall
have the authority to grant incentive stock options pursuant to Section 422 of
the Code ("Incentive Options"), to grant non-qualified stock options (options
which do not qualify under Section 422 of the Code) ("Non-Qualified Options"),
and to grant both types of Options to Key Employees. No Incentive Option shall
be granted pursuant to this Plan after the earlier of ten years from the date
of adoption of the Plan or ten years from the date of approval of the Plan by
the stockholders of the Company. Notwithstanding anything in this Plan to the
contrary, Incentive Options may be granted only to Key Employees. The terms
and conditions of the Options granted under this Section 6 shall be determined
from time to time by the Committee; provided, however, that the Options granted
under this Section 6 shall be subject to all terms and provisions of the Plan
(other than Section 7), including the following:
a. Option Exercise Price. Subject to Section 4, the Committee
shall establish the Option exercise price at the time any
Option is granted at such amount as the Committee shall
determine; provided, that, in the case of an Incentive Option,
such price shall not be less than the Fair Market Value per
share of Common Stock at the date the Option is granted; and
provided, further, that in the case of an Incentive Option
granted to a person who, at the time such Incentive Option is
granted, owns shares of the Company or any Related Entity
which possess more than 10% of the total combined voting power
of all classes of shares of the Company or of any Related
Entity, the option exercise price shall not be less than 110%
of the Fair Market Value per share of Common Stock at the date
the Option is granted. The Option exercise price shall be
subject to adjustment in accordance with the provisions of
Section 10 of the Plan.
b. Payment. The price per share of Common Stock with respect to
each Option exercise shall be payable at the time of such
exercise. Such price shall be payable in cash or by any other
means acceptable to the Committee, including delivery to the
Company of shares of Common Stock owned by the optionee or by
the delivery or withholding of shares pursuant to a procedure
created pursuant to Section 5.d. of the Plan. Shares
delivered to or withheld by the Company in payment of the
Option exercise price shall be valued at the Fair Market Value
of the Common Stock on the day preceding the date of the
exercise of the Option.
c. Continuation of Employment. Each Incentive Option shall
require the optionee to remain in the continuous employ of the
Company or any Related Entity from the date of grant of the
Incentive Option until no more than three months prior to the
date of exercise of the Incentive Option.
d. Exercisability of Stock Option. Subject to Section 8, each
Option shall be exercisable in one or more installments as the
Committee may determine at the time of the grant. No Option
by its terms shall be exercisable after the expiration of ten
years from the date of grant of the Option, unless, as to any
Non-Qualified Option, otherwise expressly provided in such
Option;
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<PAGE> 5
provided, however, that no Incentive Option granted to a
person who, at the time such Option is granted, owns stock of
the Company, or any Related Entity, possessing more than 10%
of the total combined voting power of all classes of stock of
the Company, or any Related Entity, shall be exercisable after
the expiration of five years from the date such Option is
granted.
e. Death. If any optionee's employment with the Company or a
Related Entity terminates due to the death of such optionee,
the estate of such optionee, or a Person who acquired the
right to exercise such Option by bequest or inheritance or by
reason of the death of the optionee, shall have the right to
exercise such Option in accordance with its terms at any time
and from time to time within 180 days after the date of death
unless a longer or shorter period is expressly provided in
such Option or established by the Committee pursuant to
Section 8 (but in no event after the expiration date of such
Option).
f. Disability. If the employment of any optionee terminates
because of his Disability (as defined in Section 18), such
optionee or his legal representative shall have the right to
exercise the Option in accordance with its terms at any time
and from time to time within 180 days after the date of such
termination unless a longer or shorter period is expressly
provided in such Option or established by the Committee
pursuant to Section 8 (but not after the expiration date of
the Option); provided, however, that in the case of an
Incentive Option, the optionee or his legal representative
shall in any event be required to exercise the Incentive
Option within one year after termination of the optionee's
employment due to his Disability.
g. Termination for Cause; Voluntary Termination. Unless an
optionee's Option expressly provides otherwise, such optionee
shall immediately forfeit all rights under his Option, except
as to the shares of stock already purchased thereunder, if the
employment of such optionee with the Company or a Related
Entity is terminated by the Company or any Related Entity for
Good Cause (as defined below) or if such optionee voluntarily
terminates employment without the consent of the Company or
any Related Entity. The determination that there exists Good
Cause for termination shall be made by the Option Committee
(unless otherwise agreed to in writing by the Company and the
optionee).
h. Other Termination of Employment. If the employment of an
optionee with the Company or a Related Entity terminates for
any reason other than those specified in subsections 6(e), (f)
or (g) above, such optionee shall have the right to exercise
his Option in accordance with its terms, within 30 days after
the date of such termination, unless a longer or shorter
period is expressly provided in such Option or established by
the Committee pursuant to Section 8 (but not after the
expiration date of the Option); provided, that no Incentive
Option shall be exercisable more than three months after such
termination.
i. Maximum Exercise. The aggregate Fair Market Value of stock
(determined at the time of the grant of the Option) with
respect to which Incentive Options are exercisable for the
first time by an optionee during any calendar year under all
plans of the Company and any Related Entity shall not exceed
$100,000.
7. Stock Option Grants to Eligible Non-Employees.
Subject to the express provisions of this Plan, the Committee shall
have the authority to grant Non-Qualified Options to Eligible Non-Employees.
The terms and conditions of the Options granted under this Section 7 shall be
determined from time to time by the Committee; provided, however, that the
Options granted
-5-
<PAGE> 6
under this Section 7 shall be subject to all terms and provisions of the Plan
(other than Section 6), including the following:
a. Option Exercise Price. Subject to Section 4, the Committee
shall establish the Option exercise price at the time any
Non-Qualified Option is granted at such amount as the
Committee shall determine. The Option exercise price shall be
subject to adjustment in accordance with the provisions of
Section 10 of the Plan.
b. Payment. The price per share of Common Stock with respect to
each Option exercise shall be payable at the time of such
exercise. Such price shall be payable in cash or by any other
means acceptable to the Committee, including delivery to the
Company of shares of Common Stock owned by the optionee or by
the delivery or withholding of shares pursuant to a procedure
created pursuant to Section 5.d. of the Plan. Shares
delivered to or withheld by the Company in payment of the
Option exercise price shall be valued at the Fair Market Value
of the Common Stock on the day preceding the date of the
exercise of the Option.
c. Exercisability of Stock Option. Subject to Section 8, each
Option shall be exercisable in one or more installments as the
Committee may determine at the time of the grant. No Option
shall be exercisable after the expiration of ten years from
the date of grant of the Option, unless otherwise expressly
provided in such Option.
d. Death. If the retention by the Company or any Related Entity
of the services of any Eligible Non-Employee terminates
because of his death, the estate of such optionee, or a Person
who acquired the right to exercise such Option by bequest or
inheritance or by reason of the death of the optionee, shall
have the right to exercise such Option in accordance with its
terms, at any time and from time to time within 180 days after
the date of death unless a longer or shorter period is
expressly provided in such Option or established by the
Committee pursuant to Section 8 (but in no event after the
expiration date of such Option).
e. Disability. If the retention by the Company or any Related
Entity of the services of any Eligible Non-Employee
terminates because of his Disability, such optionee or his
legal representative shall have the right to exercise the
Option in accordance with its terms at any time and from time
to time within 180 days after the date of the optionee's
termination unless a longer or shorter period is expressly
provided in such Option or established by the Committee
pursuant to Section 8 (but not after the expiration of the
Option).
f. Termination for Cause; Voluntary Termination. If the
retention by the Company or any Related Entity of the services
of any Eligible Non-Employee is terminated (i) for Good Cause,
(ii) as a result of removal of the optionee from office as a
director of the Company or of any Related Entity for cause by
action of the stockholders of the Company or such Related
Entity in accordance with the by-laws of the Company or such
Related Entity, as applicable, and the corporate law of the
Jurisdiction of incorporation of the Company or such Related
Entity, or (iii) as a result of the voluntarily termination by
optionee of optionee's service without the consent of the
Company or any Related Entity, then such optionee shall
immediately forfeit his rights under his Option except as to
the shares of stock already purchased. The determination that
there exists Good Cause for termination shall be made by the
Option Committee (unless otherwise agreed to in writing by the
Company and the optionee).
g. Other Termination of Relationship. If the retention by the
Company or any Related Entity of the services of any Eligible
Non-Employee terminates for any reason other than those
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<PAGE> 7
specified in subsections 7(d), (e) or (f) above, such optionee
shall have the right to exercise his or its Option in
accordance with its terms within 30 days after the date of
such termination, unless a longer or shorter period is
expressly provided in such Option or established by the
Committee pursuant to Section 8 (but not after the expiration
date of the Option).
h. Ineligibility for Other Grants. Any Eligible Non-Employee who
receives an Option pursuant to this Section 7 shall be
ineligible to receive any Options under any other Section of
the Plan.
8. Change of Control; Sale of the Company.
If (i) a Change of Control or a Sale of the Company shall occur, (ii)
the Company shall enter into an agreement providing for a Change of Control or
a Sale of the Company, or (iii) any member of the HMC Group shall enter into an
agreement providing for a Sale of the Company, then the Committee may declare
any or all Options outstanding under the Plan to be exercisable in full at such
time or times as the Committee shall determine, notwithstanding the express
provisions of such Options. Each Option accelerated by the Committee pursuant
to the preceding sentence shall terminate, notwithstanding any express
provision thereof or any other provision of the Plan, on such date (not later
than the stated exercise date) as the Committee shall determine.
9. Purchase Option.
a. Except as otherwise expressly provided in any particular
Option, if (i) any optionee's employment (or, in the case of
any Option granted under Section 7, the optionee's
relationship) with the Company or a Related Entity terminates
for any reason at any time or (ii) a Change of Control occurs,
the Company (and/or its designees) shall have the option (the
"Purchase Option") to purchase, and if the option is
exercised, the optionee (or the optionee's executor or the
administrator of the optionee's estate, in the event of the
optionee's death, or the optionee's legal representative in
the event of the optionee's incapacity) (hereinafter,
collectively with such optionee, the "Grantor") shall sell to
the Company and/or its assignee(s), all or any portion (at the
Company's option) of the shares of Common Stock and/or Options
held by the Grantor (such shares of Common Stock and Options
collectively being referred to as the "Purchasable Shares").
b. The Company shall give notice in writing to the Grantor of the
exercise of the Purchase Option within one year from the date
of the termination of the optionee's employment or engagement
or such Change of Control. Such notice shall state the number
of Purchasable Shares to be purchased and the determination of
the Board of Directors of the Fair Market Value per share of
such Purchasable Shares. If no notice is given within the
time limit specified above, the Purchase Option shall
terminate.
c. The purchase price to be paid for the Purchasable Shares
purchased pursuant to the Purchase Option shall be, in the
case of any Common Stock, the Fair Market Value per share as
of the date of the notice of exercise of the Purchase Option
times the number of shares being purchased, and in the case of
any Option, the Fair Market Value per share times the number
of vested shares subject to such Option which are being
purchased, less the applicable per share Option exercise
price. The purchase price shall be paid in cash. The closing
of such purchase shall take place at the Company's principal
executive offices within ten days after the purchase price has
been determined. At such closing, the Grantor shall deliver
to the purchasers the certificates or instruments evidencing
the Purchasable Shares being purchased, duly endorsed (or
accompanied by duly executed stock powers) and otherwise in
good form
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<PAGE> 8
for delivery, against payment of the purchase price by check
of the purchasers). In the event that, notwithstanding the
foregoing, the Grantor shall have failed to obtain the release
of any pledge or other encumbrance on any Purchasable Shares
by the scheduled closing date, at the option of the
purchasers) the closing shall nevertheless occur on such
scheduled closing date, with the cash purchase price being
reduced to the extent of all unpaid indebtedness for which
such Purchasable Shares are then pledged or encumbered.
d. To assure the enforceability of the Company's rights under
this Section 9, each certificate or instrument representing
Common Stock or an Option held by him or it shall bear a
conspicuous legend in substantially the following form:
THE SHARES (REPRESENTED BY THIS CERTIFICATE] [ISSUABLE
PURSUANT TO THIS AGREEMENT] ARE SUBJECT TO AN OPTION TO
REPURCHASE PROVIDED UNDER THE PROVISIONS OF THE COMPANY'S 1996
STOCK OPTION PLAN AND A STOCK OPTION AGREEMENT ENTERED INTO
PURSUANT THERETO. A COPY OF SUCH OPTION PLAN AND OPTION
AGREEMENT ARE AVAILABLE UPON WRITTEN REQUEST TO THE COMPANY AT
ITS PRINCIPAL EXECUTIVE OFFICES.
The Company's rights under this Section 9 shall terminate upon the
consummation of a Qualifying Public Offering.
10. Adjustment of Shares.
Unless otherwise expressly provided in a particular Option, in the
event that, by reason of any merger, consolidation, combination, liquidation,
reorganization, recapitalization, stock dividend, stock split, split-up, split-
off, spin-off, combination of shares, exchange of shares or other like change
in capital structure of the Company (collectively, a "Reorganization"), the
Common Stock is substituted, combined, or changed into any cash, property, or
other securities, or the shares of Common Stock are changed into a greater or
lesser number of shares of Common Stock, the number and/or kind of shares
and/or interests subject to an Option and the per share price or value thereof
shall be appropriately adjusted by the Committee to give appropriate effect to
such Reorganization. Any fractional shares or interests resulting from such
adjustment shall be eliminated. Notwithstanding the foregoing, (i) each such
adjustment with respect to an Incentive Option shall comply with the rules of
Section 424(a) of the Code, and (ii) in no event shall any adjustment be made
which would render any Incentive Option granted hereunder other than an
"incentive stock option" for purposes of Section 422 of the Code.
In the event the Company is not the surviving entity of a
Reorganization and, following such Reorganization, any optionee will hold
Options issued pursuant to this Plan which have not been exercised, canceled,
or terminated in connection therewith, the Company shall cause such Options to
be assumed (or cancelled and replacement Options issued) by the surviving
entity or a Related Entity.
11. Assignment or Transfer.
a. Except as otherwise expressly provided in any Nonqualified
Option, no Option granted under the Plan or any rights or
interests therein shall be assignable or transferable by an
optionee except by will or the laws of descent and
distribution, and during the lifetime of an optionee, Options
granted to him or her hereunder shall be exercisable only by
the optionee or, in the event that a legal representative has
been appointed in connection with the Disability of an
optionee, such legal representative.
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<PAGE> 9
b. At least ninety (90) days prior to selling, pledging,
hypothecating, transferring or otherwise disposing
("Transfer") of any interest in Common Stock issued upon
exercise of an Option, the optionee proposing such Transfer
shall deliver a written notice (the "Sale Notice") to the
Company. The Sale Notice will disclose in reasonable detail
the identity of the prospective transferee(s) and the terms
and conditions of the proposed transfer. Such optionee (and
such optionee's transferees) shall not consummate any such
Transfer until ninety (90) days after the Sale Notice has been
delivered to the Company, unless the Company has notified such
optionee in writing that it will not exercise its rights under
this Section 11.b. (The date of the first to occur of such
events is referred to herein as the "Authorization Date").
The Company or its designee may elect to purchase all (but not
less than all) of the shares of Common Stock to be Transferred
upon the same terms and conditions as those set forth in the
Sale Notice ("Right of First Refusal") by delivering a written
notice of such election to such optionee within thirty (30)
days after the receipt of the Sale Notice by the Company (the
"Election Notice"). If the Company has not elected to
purchase all of the shares of Common Stock specified in the
Sale Notice, such optionee may Transfer the shares of Common
Stock to the prospective transferee(s) as specified in the
Sale Notice, at a price and on terms no more favorable to the
transferee(s) thereof than specified in the Sale Notice,
during the 90-day period immediately following the
Authorization Date. Any Option Shares not so transferred
within such 90-day period must be reoffered to the Company in
accordance with the provisions of this Section 11.b. The
Right of First Refusal will not apply with respect to
Transfers of such shares of Common Stock (i) by will or
pursuant to applicable laws of descent and distribution or
among the optionee's family group; provided that the
restrictions contained in this Section 11.b. will continue to
be applicable to the shares of Common Stock after any such
Transfer and provided further that the transferees of such
shares of Common Stock have agreed in writing to be bound by
the terms and provisions of this Plan and the applicable
Option Agreement as each may be amended from time to time. In
addition, upon any transfer to a member of the optionee's
family group, the optionee shall be required to give notice to
the Company and as a condition to such Transfer to a member of
the optionee's family group, the optionee will maintain all
voting control over all of the shares of Common Stock. The
optionee's, "family group" means the optionee's spouse and
lineal descendants (whether natural or adopted) and any trust
solely for the benefit of the optionee and/or the optionee's
spouse and/or lineal descendants. In addition, with the prior
approval of the Committee, notwithstanding the provisions of
this Section 11.b., an optionee may pledge such shares of
Common Stock creating a security interest therein; provided,
that the pledgee agrees in writing to be bound, and that such
shares of Common Stock remain bound, by the terms and
provisions of this Plan and the applicable Option Agreement,
as each may be amended from time to time. The rights and
obligations pursuant to this Section 11.b. hereof will
terminate upon the consummation of a Qualified Public
Offering.
To assure the enforceability of the Company's rights
under this Section 11.b., each certificate or instrument
representing Common Stock or an Option held by him or it shall
bear a conspicuous legend in substantially the following form:
THE SHARES [REPRESENTED BY THIS CERTIFICATE] [ISSUABLE
PURSUANT TO THIS AGREEMENT] ARE SUBJECT TO A RIGHT OF FIRST
REFUSAL PROVIDED UNDER THE COMPANY'S ROLLOVER STOCK OPTION
PLAN AND A STOCK OPTION AGREEMENT ENTERED INTO PURSUANT
THERETO. A COPY OF SUCH OPTION PLAN AND OPTION AGREEMENT ARE
AVAILABLE UPON WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL
EXECUTIVE OFFICES.
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<PAGE> 10
12. Compliance with Securities Laws.
The Company shall not in any event be obligated to file any
registration statement under the Securities Act or any applicable state
securities law to permit exercise of any option or to issue any Common Stock in
violation of the Securities Act or any applicable state securities law. Each
optionee (or, in the event of his death or, in the event a legal representative
has been appointed in connection with his Disability, the Person exercising the
Option) shall, as a condition to his right to exercise any Option, deliver to
the Company an agreement or certificate containing such representations,
warranties and covenants as the Company may deem necessary or appropriate to
ensure that the issuance of shares of Common Stock pursuant to such exercise is
not required to be registered under the Securities Act or any applicable state
securities law.
Certificates for shares of Common Stock, when issued, may have
substantially the following legend, or statements of other applicable
restrictions, endorsed thereon, and may not be immediately transferable:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAWS. THE SHARES MAY NOT BE OFFERED
FOR SALE, SOLD, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF
UNTIL THE HOLDER HEREOF PROVIDES EVIDENCE SATISFACTORY TO THE
ISSUER (WHICH, IN THE DISCRETION OF THE ISSUER, MAY INCLUDE AN
OPINION OF COUNSEL SATISFACTORY TO THE ISSUER) THAT SUCH
OFFER, SALE, PLEDGE, TRANSFER OR OTHER DISPOSITION WILL NOT
VIOLATE APPLICABLE FEDERAL OR STATE LAWS.
This legend shall not be required for shares of Common Stock issued
pursuant to an effective registration statement under the Securities Act and in
accordance with applicable state securities laws.
13. Withholding Taxes.
By acceptance of the Option, the optionee will be deemed to (i) agree
to reimburse the Company or Related Entity by which the optionee is employed
for any federal, state, or local taxes required by any government to be
withheld or otherwise deducted by such corporation in respect of the optionee's
exercise of all or a portion of the Option; (ii) authorize the Company or any
Related Entity by which the optionee is employed to withhold from any cash
compensation paid to the optionee or in the optionee's behalf, an amount
sufficient to discharge any federal, state, and local taxes imposed on the
Company, or the Related Entity by which the optionee is employed, and which
otherwise has not been reimbursed by the optionee, in respect of the optionee's
exercise of all or a portion of the Option; and (iii) agree that the Company
may, in its discretion, hold the stock certificate to which the optionee is
entitled upon exercise of the Option as security for the payment of the
aforementioned withholding tax liability, until cash sufficient to pay that
liability has been accumulated, and may, in its discretion, effect such
withholding by retaining shares issuable upon the exercise of the Option having
a Fair Market Value on the date of exercise which is equal to the amount to be
withheld.
14. Costs and Expenses.
The costs and expenses of administering the Plan shall be borne by the
Company and shall not be charged against any Option nor to any employee
receiving an Option.
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<PAGE> 11
15. Funding of Plan.
The Plan shall be unfunded. The Company shall not be required to make
any segregation of assets to assure the payment of any Option under the Plan.
16. Other Incentive Plans.
The adoption of the Plan does not preclude the adoption by appropriate
means of any other incentive plan for employees.
17. Effect on Employment.
Nothing contained in the Plan or any agreement related hereto or
referred to herein shall affect, or be construed as affecting, the terms of
employment of any Key Employee except to the extent specifically provided
herein or therein. Nothing contained in the Plan or any agreement related
hereto or referred to herein shall impose, or be construed as imposing, an
obligation on (i) the Company or any Related Entity to continue the employment
of any Key Employee, and (ii) any Key Employee to remain in the employ of the
Company or any Related Entity.
18. Definitions.
In addition to the terms specifically defined elsewhere in the Plan,
as used in the Plan, the following terms shall have the respective meanings
indicated:
a. "Affiliate" shall mean, as to any Person, a Person that
directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control
with, such Person.
b. "Authorization Date" shall have the meaning set forth in
Section 11.b. hereof.
c. "Board of Directors" shall have the meaning set forth in
Section 2 hereof.
d. "Change of Control" shall mean the first to occur of the
following events: (i) any sale, lease, exchange, or other
transfer (in one transaction or series of related
transactions) of all or substantially all of the assets of the
Company to any Person or group of related Persons for purposes
of Section 13(d) of the Exchange Act, other than one or more
members of the HMC Group, (ii) a majority of the Board of
Directors of the Company shall consist of Persons who are not
Continuing Directors; or (iii) the acquisition by any Person
or Group (other than one or more members of the HMC Group) of
the power, directly or indirectly, to vote or direct the
voting of securities having more than 50% of the ordinary
voting power for the election of directors of the Company.
e. "Code" shall have the meaning set forth in Section 1 hereof.
f. "Committee" shall have the meaning set forth in Section 2
hereof.
g. "Common Stock" shall have the meaning set forth in Section 3
hereof.
h. "Company" shall have the meaning set forth in Section 1
hereof.
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<PAGE> 12
i. "Continuing Director" shall mean, as of the date of
determination, any Person who (i) was a member of the Board of
Directors of the Company on the date of adoption of this Plan,
(ii) was nominated for election or elected to the Board of
Directors of the Company with the affirmative vote of a
majority of the Continuing Directors who were members of such
Board of Directors at the time of such nomination or election,
or (iii) is a member of the HMC Group.
j. "Designated Date" means the first date on which each of the
following conditions shall have been met: (i) the Company
shall have consummated a Qualifying Public Offering and (ii)
the Company shall have ceased to be an Equity Fund Company.
k. "Disability" shall mean permanent disability as defined under
the appropriate provisions of the long- term disability plan
maintained for the benefit of employees of the Company or any
Related Entity who are regularly employed on a salaried basis
unless another meaning shall be agreed to in writing by the
Committee and the optionee; Provided, however, that in the
case of an Incentive Option "disability" shall have the
meaning specified in Section 22(e)(3) of the Code.
l. "Election Notice" shall have the meaning set forth in Section
11.b. hereof.
m. "Eligible Non-Employee" shall have the meaning set forth in
Section 4 hereof.
n. "Equity Fund Company" means any Person in which one or more
Equity Fund Investment Vehicles own(s), directly or
indirectly, more than 10% of the fully-diluted common stock or
has an unrecovered investment of $1,000,000 or more, and each
Subsidiary thereof.
o. "Equity Fund Investment Vehicle" means HMTF/CH Holdings, L.P.,
Hicks, Muse, Tate & Furst Equity Fund II, L.P., Hicks, Muse,
Tate & Furst Equity Fund III, L.P., or any other similar
investment entity formed by Hicks, Muse, Tate & Furst
Incorporated.
p. "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
q. "Fair Market Value", shall, as it relates to the Common Stock,
mean the average of the high and low prices of such Common
Stock as reported on the principal national securities
exchange on which the shares of Common Stock are then listed
on the date specified herein, or if there were no sales on
such date, on the next preceding day on which there were
sales, or if such Common Stock is not listed on a national
securities exchange, the last reported bid price in the
over-the-counter market, or if such shares are not traded in
the over-the-counter market, the per share cash price for
which all of the outstanding Common Stock could be sold to a
willing purchaser in an arms length transaction (without
regard to minority discount, absence of liquidity, or transfer
restrictions imposed by any applicable law or agreement) at
the date of the event giving rise to a need for a
determination. Except as may be otherwise expressly provided
in a particular Option, Fair Market Value shall be determined
in good faith by the Committee.
r. "Good Cause", with respect to any Key Employee, shall mean
(unless another definition is agreed to in writing by the
Company and the optionee) termination by action of the Board
of Directors because of: (A) the optionee's conviction of, or
plea of nolo contendere to, a felony or a crime involving
moral turpitude; (B) the optionee's personal dishonesty,
incompetence, willful misconduct, willful violation of any
law, rule, or regulation (other than minor traffic
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<PAGE> 13
violations or similar offenses) or breach of fiduciary duty
which involves personal profit; (C) the optionee's commission
of material mismanagement in the conduct of his duties as
assigned to him by the Board of Directors or the optionee's
supervising officer or officers of the Company or any Related
Entity; (D) the optionee's willful failure to execute or
comply with the policies of the Company or any Related Entity
or his stated duties as established by the Board of Directors
or the optionee's supervising officer or officers of the
Company or any Related Entity, or the optionee's intentional
failure to perform the optionee's stated duties; (E) substance
abuse or addiction on the part of the optionee. "Good Cause",
with respect to any Eligible Non-Employee, shall mean (unless
another definition is agreed to in writing by the Company and
the optionee) termination by action of the Board of Directors
because of: (A) the optionee's conviction of, or plea of nolo
contendere to, a felony or a crime involving moral turpitude;
(B) the optionee's personal dishonesty, incompetence, willful
misconduct, willful violation of any law, rule, or regulation
(other than minor traffic violations or similar offenses) or
breach of fiduciary duty which involves personal profit; (C)
the optionee's commission of material mismanagement in
providing services to the Company or any Related Entity; (D)
the optionee's willful failure to comply with the policies of
the Company in providing services to the Company or any
Related Entity, or the optionee's intentional failure to
perform the services for which the optionee has been engaged;
(E) substance abuse or addiction on the part of the optionee;
or (F) the optionee's willfully making any material
misrepresentation or willfully omitting to disclose any
material fact to the board of directors of the Company or any
Related Entity with respect to the business of the Company or
any Related Entity. Notwithstanding the foregoing, in the
case of each optionee listed on Schedule A hereto, who as of
the effective date of the Plan, has an employment agreement
with the Company or any Related Entity that contains a
definition of "Good Cause" (or any similar definition), then
during the term of such employment agreement the definition
contained in such employment agreement shall be the applicable
definition of "Good Cause" under the Plan as to such optionee.
s. "Grantor" has the meaning set forth in Section 9 hereof.
t. "Hicks Muse Company" shall mean any Person in which the HMC
Group beneficially owns more than 25% of the fully-diluted
common stock or has an unrecovered investment of $1,000,000 or
more, and each Subsidiary thereof.
u. "HMC Group" shall mean Hicks, Muse, Tate & Furst Incorporated,
its Affiliates and their respective employees, officers, and
directors (and members of their respective families and trusts
for the primary benefit of such family members).
v. "Incentive Options" shall have the meaning set forth in
Section 6 hereof.
w. The term "included" when used herein shall mean "including,
but not limited to".
x. "Key Employee" shall have the meaning set forth in Section 4
hereof.
y. "Marketable Securities" shall mean securities (i) of a class
or series listed or traded on the New York Stock Exchange,
American Stock Exchange, or NASDAQ National Market and (ii)
which, as a matter of law, shall at the time of acquisition be
(or which at the date of acquisition are legally committed to
become within six months after the date of acquisition) freely
saleable in unlimited quantities by the HMC Group to the
public, either pursuant to an
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<PAGE> 14
effective registration statement under the Securities Act as
amended (including a current prospectus which is available for
delivery) or without the necessity of such registration.
z. "Non-Qualified Options" shall have the meaning set forth in
Section 6 hereof.
aa. "Options" shall have the meaning set forth in Section 1
hereof.
ab. "Person" shall have the meaning set forth in Section 4 hereof,
ac. "Plan" shall have the meaning set forth in Section 1 hereof.
ad. "Purchasable Shares" shall have the meaning set forth in
Section 9 hereof.
ae. "Purchase Option" shall have the meaning set forth in Section
9 hereof.
af. "Qualifying Public Offering" shall mean a firm commitment
underwritten public offering of Common Stock for cash where
the proceeds to the Company (prior to deducting any
underwriters' discounts and commissions) exceed $10 million
and the shares of Common Stock registered under the Securities
Act are listed on a national securities exchange.
ag. "Related Entities" shall have the meaning set forth in Section
1 hereof.
ah. "Reorganization" shall have the meaning set forth in Section
10 hereof.
ai. "Right of First Refusal" shall have the meaning set forth in
Section 11.b. hereof.
aj. "Rule 16b-3" shall mean Rule 16b-3, as amended, or other
applicable rules under Section 16(b) of the Exchange Act.
ak. "Sale of the Company" shall mean the first to occur of (i) any
sale, lease, exchange, or other transfer (in one transaction
or series of related transactions) of all or substantially all
of the assets of the Company to any Person or group of related
Persons for purposes of Section 13(d) of the Exchange Act,
other than one or more members of the HMC Group (a "Clause 1
Event"), (ii) the Company's ceasing to be a Hicks Muse Company
in a transaction or series of related transactions initiated
or agreed to by the HMC Group (other than the distribution by
one or more Equity Fund Investment Vehicles, following a
Qualifying Public Offering, of equity securities of the
Company to the investors in such Equity Fund Investment
Vehicle(s)) (a "Clause 2 Event"), or (iii) the consummation of
a transaction or series of related transactions initiated or
agreed to by the HMC Group pursuant to which the HMC Group
receives, in respect of its shares of Common Stock, cash
and/or Marketable Securities which have an aggregate value
equal to at least 75%; of the total value of all Common Stock
owned by the HMC Group immediately prior to such transaction,
as determined by the Board of Directors in good faith (a
"Clause 3 Event"); provided, however, that the occurrence of a
Clause 1 Event, a Clause 2 Event or a Clause 3 Event on any
date after the Designated Date shall not constitute a "Sale of
the Company".
al. "Sale Notice" shall have the meaning set forth in Section 11.b
hereof.
am. "Securities Act" shall mean the Securities Act of 1933, as
amended.
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<PAGE> 15
an. "Subsidiary" shall mean, with respect to any Person, any other
Person of which such first Person owns or has the power to
vote, directly or indirectly, securities representing a
majority of the votes ordinarily entitled to be cast for the
election of directors or other governing Persons.
ao. "Transfer" shall have the meaning set forth in Section 11.b.
hereof.
19. Amendment of Plan.
The Board of Directors shall have the right to amend, modify, suspend
or terminate the Plan at any time; provided, that no amendment shall be made
which shall increase the total number of shares of the Common Stock which may
be issued and sold pursuant to Options granted under the Plan or decrease the
minimum Option exercise price in the case of an Incentive Option, or modify the
provisions of the Plan relating to eligibility with respect to Incentive
Options unless such amendment is made by or with the approval of the
stockholders. The Board of Directors shall have the right to amend the Plan
and the Options outstanding thereunder, without the consent or joinder of any
optionee or other Person, in such manner as may be determined necessary or
appropriate by the Board of Directors in order to cause the Plan and the
Options outstanding thereunder (i) to qualify as "incentive stock options"
within the meaning of Section 422 of the Code, (ii) to comply with Rule 16b-3
(or any successor rule) under the Exchange Act (or any successor law) and the
regulations (including any temporary regulations) promulgated thereunder, or
(iii) to comply with Section 162(m) of the Code (or any successor section) and
the regulations (including any temporary regulations) promulgated thereunder.
Except as provided above, no amendment, modification, suspension or termination
of the Plan shall alter or impair any Options previously granted under the
Plan, without the consent of the holder thereof.
20. Effective Date.
The Plan shall become effective on the date on which it is approved by
the Board of Directors of the Company.
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<PAGE> 16
SCHEDULE "A"
NONE
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<PAGE> 1
EXHIBIT 10.8
INDEMNIFICATION AGREEMENT
This INDEMNIFICATION AGREEMENT (the "Agreement") is made and entered
into as of this 1st day of November, 1996, by and between International Home
Foods, Inc., a Delaware corporation (including any successors thereto, the
"Company"), and C. Dean Metropoulos ("Indemnitee").
RECITALS:
A. Competent and experienced persons are reluctant to serve or to
continue to serve corporations as directors, officers, or in other capacities
unless they are provided with adequate protection through insurance or
indemnification (or both) against claims and actions against them arising out
of their service to and activities on behalf of those corporations.
B. The current uncertainties relating to the availability of
adequate insurance for directors and officers have increased the difficulty for
corporations to attract and retain competent and experienced persons.
C. The Board of Directors of the Company (the "Board") has
determined that the continuation of present trends in litigation will make it
more difficult to attract and retain competent and experienced persons, that
this situation is detrimental to the best interests of the Company's
stockholders, and that the Company should act to assure its directors and
officers that there will be increased certainty of adequate protection in the
future.
D. It is reasonable, prudent, and necessary for the Company to
obligate itself contractually to indemnify its directors and officers to the
fullest extent permitted by applicable law in order to induce them to serve or
continue to serve the Company.
E. Indemnitee is willing to serve and continue to serve the
Company on the condition that he be indemnified to the fullest extent permitted
by law.
F. Concurrently with the execution of this Agreement, Indemnitee
is agreeing to serve or to continue to serve as a director or officer of the
Company.
AGREEMENTS:
NOW, THEREFORE, in consideration of the foregoing premises,
Indemnitee's agreement to serve or continue to serve as a director or officer
of the Company, and the covenants contained in this Agreement, the Company and
Indemnitee hereby covenant and agree as follows:
<PAGE> 2
1. Certain Definitions:
For purposes of this Agreement:
(a) Affiliate: shall mean any Person that directly, or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with the Person specified.
(b) Change of Control: shall mean the occurrence of any
of the following events:
(i) The acquisition after the date of this
Agreement by any individual, entity, or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) (a "Person") of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 50% or more of either (x) the
then outstanding shares of common stock of the Company (the "Outstanding
Company Common Stock") or (y) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); provided, however,
that for purposes of this paragraph (i), the following acquisitions shall not
constitute a Change of Control: (1) any acquisition directly from the Company
or any Subsidiary thereof, (2) any acquisition by the Company or any Subsidiary
thereof, (3) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any Subsidiary of the Company, (4)
any acquisition by any Affiliate of American Home Products Corporation or by
anyone or more members of the HMC Group, or (5) any acquisition by any entity
or its security holders pursuant to a transaction which complies with clauses
(A), (B), and (C) of paragraph (iii) below;
(ii) Individuals who, as of the date of this
Agreement, constitute the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date of this Agreement (a) who
is a member of the HMC Group or (y) whose election, or nomination for election
by the Company's stockholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board, shall in either case be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board; or
(iii) Consummation of a sale, lease, exchange, or
other disposition of all or substantially all of the assets of the Company
(including the capital stock or assets of its subsidiaries) to any Person,
other than one or more members of the HMC Group.
<PAGE> 3
(c) Claim: shall mean any threatened, pending, or
completed action, suit, or proceeding (including, without limitation,
securities laws actions, suits, and proceedings and also any cross claim or
counterclaim in any action, suit, or proceeding), whether civil, criminal,
arbitral, administrative, or investigative in nature, or any inquiry or
investigation (including discovery), whether conducted by the Company or any
other Person, that Indemnitee in good faith believes might lead to the
institution of any action, suit, or proceeding.
(d) Expenses: shall mean all costs, expenses (including
attorneys' and expert witnesses' fees), and obligations paid or incurred in
connection with investigating, defending (including affirmative defenses and
counterclaims), being a witness in, or participating in (including on appeal),
or preparing to defend, be a witness in, or participate in, any Claim relating
to any Indemnifiable Event.
(e) HMC Group: shall mean Hicks, Muse, Tate & Furst
Incorporated, its Affiliates and their respective employees, officers, and
directors (and members of their respective families and trusts for the primary
benefit of such family members).
(f) Indemnifiable Event: shall mean any actual or
alleged act, omission, statement, misstatement, event, or occurrence related to
the fact that Indemnitee is or was a director, officer, agent, or fiduciary of
the Company, or is or was serving at the request of the Company as a director,
officer, trustee, agent, or fiduciary of another corporation, partnership,
joint venture, employee benefit plan, trust, or other enterprise, or by reason
of any actual or alleged thing done or not done by Indemnitee in any such
capacity. For purposes of this Agreement, the Company agrees that Indemnitee's
service on behalf of or with respect to any Subsidiary or employee benefits
plan of the Company or any Subsidiary of the Company shall be deemed to be at
the request of the Company.
(g) Indemnifiable Liabilities: shall mean all Expenses
and all other liabilities, damages (including, without limitation, punitive,
exemplary, and the multiplied portion of any damages), judgments, payments,
fines, penalties, amounts paid in settlement, and awards paid or incurred that
arise out of, or in any way relate to, any Indemnifiable Event.
(h) Potential Change of Control: shall be deemed to have
occurred if (i) the Company enters into an agreement, the consummation of which
would result in the occurrence of a Change of Control; (ii) any Person
(including the Company) publicly announces an intention to take or to consider
taking actions that, if consummated, would constitute a Change of Control; or
(iii) the Board adopts a resolution to the effect that, for purposes of this
Agreement, a Potential Change of Control has occurred.
(i) Reviewing Party: shall mean (i) a member or members
of the Board who are not parties to the particular Claim for which Indemnitee
is seeking indemnification or (ii) if a Change
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<PAGE> 4
of Control has occurred and Indemnitee so requests, or if the members of the
Board so elect, or if all of the members of the Board are parties to such
Claim, Special Counsel.
(j) Special Counsel: shall mean special, independent
legal counsel selected by Indemnitee and approved by the Company (which
approval shall not be unreasonably withheld), and who has not otherwise
performed material services for the Company or for Indemnitee within the last
three years (other than as Special Counsel under this Agreement or similar
agreements).
(k) Subsidiary: shall mean, with respect to any Person,
any corporation or other entity of which a majority of the voting power of the
voting equity securities or equity interest is owned, directly or indirectly,
by that Person.
2. Indemnification and Expense Advancement.
(a) The Company shall indemnify Indemnitee and hold
Indemnitee harmless to the fullest extent permitted by law, as soon as
practicable but in any event no later than 30 days after written demand is
presented to the Company, from and against any and all Indemnifiable
Liabilities. Notwithstanding the foregoing, the obligations of the Company
under Section 2(a) shall be subject to the condition that the Reviewing Party
shall not have determined (in a written opinion, in any case in which Special
Counsel is involved) that Indemnitee is not permitted to be indemnified under
applicable law. Nothing contained in this Agreement shall require any
determination under this Section 2(a) to be made by the Reviewing Party prior
to the disposition or conclusion of the Claim against the Indemnitee.
(b) If so requested by Indemnitee, the Company shall
advance to Indemnitee all reasonable Expenses incurred by Indemnitee to the
fullest extent permitted by law (or, if applicable, reimburse Indemnitee for
any and all reasonable Expenses incurred by Indemnitee and previously paid by
Indemnitee) within ten business days after such request (an "Expense Advance").
The Company shall be obligated from time to time at the request of Indemnitee
to make or pay an Expense Advance in advance of the final disposition or
conclusion of any Claim. In connection with any request for an Expense Advance,
if requested by the Company, Indemnitee or Indemnitee's counsel shall submit an
affidavit stating that the Expenses to which the Expense Advances relate are
reasonable. Any dispute as to the reasonableness of any Expense shall not delay
an Expense Advance by the Company. If, when, and to the extent that the
Reviewing Party determines that (i) Indemnitee would not be permitted to be
indemnified with respect to a Claim under applicable law or (ii) the amount of
the Expense Advance was not reasonable, the Company shall be entitled to be
reimbursed by Indemnitee and Indemnitee hereby agrees to reimburse the Company
without interest (which agreement shall be an unsecured obligation of
Indemnitee) for (x) all related Expense Advances theretofore made or paid by
the Company in the event that it is determined that indemnification would not
be permitted or (y) the excessive portion of any Expense Advances in the event
that it is determined that such Expenses Advances were unreasonable, in either
case, if and to the extent such reimbursement is required by applicable law;
provided, however, that if Indemnitee has commenced
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<PAGE> 5
legal proceedings in a court of competent jurisdiction to secure a
determination that Indemnitee could be indemnified under applicable law, or
that the Expense Advances were reasonable, any determination made by the
Reviewing Party that Indemnitee would not be permitted to be indemnified under
applicable law or that the Expense Advances were unreasonable shall not be
binding, and the Company shall be obligated to continue to make Expense
Advances, until a final judicial determination is made with respect thereto (as
to which all rights of appeal therefrom have been exhausted or lapsed), which
determination shall be conclusive and binding. If there has been a Change of
Control, the Reviewing Party shall be Special Counsel, if Indemnitee so
requests. If there has been no determination by the Reviewing Party or if the
Reviewing Party determines that Indemnitee substantively is not permitted to be
indemnified in whole or part under applicable law or that any Expense Advances
were unreasonable, Indemnitee shall have the right to commence litigation in
any court in the states of Texas, New York or Delaware having subject matter
jurisdiction thereof and in which venue is proper seeking an initial
determination by the court or challenging any such determination by the
Reviewing Party or any aspect thereof, and the Company hereby consents to
service of process and to appear in any such proceeding. Any determination by
the Reviewing Party otherwise shall be conclusive and binding on the Company
and Indemnitee.
(c) Nothing in this Agreement, however, shall require the
Company to indemnify Indemnitee with respect to any Claim initiated by
Indemnitee, other than a Claim solely seeking enforcement of the Company's
indemnification obligations to Indemnitee or a Claim authorized by the Board.
3. Change of Control. The Company agrees that, if there is a
Potential Change in Control or a Change of Control and if Indemnitee requests
in writing that Special Counsel be the Reviewing Party, then Special Counsel
shall be the Reviewing Party. In such a case, the Company agrees not to
request or seek reimbursement from Indemnitee of any indemnification payment or
Expense Advances unless Special Counsel has rendered its written opinion to the
Company and Indemnitee that the Company was not or is not permitted under
applicable law to indemnify Indemnitee or that such Expense Advances were
unreasonable. However, if Indemnitee has commenced legal proceedings in a
court of competent jurisdiction to secure a determination that Indemnitee could
be indemnified under applicable law or that the Expense Advances were
reasonable, any determination made by Special Counsel that Indemnitee would not
be permitted to be indemnified under applicable law or that the Expense
Advances were unreasonable shall not be binding, and the Company shall be
obligated to continue to make Expense Advances, until a final judicial
determination is made with respect thereto (as to which all rights of appeal
therefore have been exhausted or lapsed), which determination shall be
conclusive and binding. The Company agrees to pay the reasonable fees of
Special Counsel and to indemnify Special Counsel against any and all expenses
(including attorneys' fees), claims, liabilities, and damages arising out of or
relating to this Agreement or Special Counsel's engagement pursuant hereto.
4. Establishment of Trust. In the event of a Potential Change of
Control or a Change of Control, the Company shall, upon written request by
Indemnitee, create a trust for the benefit of
-5-
<PAGE> 6
Indemnitee (the "Trust") and from time to time upon written request of
Indemnitee shall fund the Trust in an amount equal to all Indemnifiable
Liabilities reasonably anticipated at the time to be incurred in connection
with any Claim. The amount to be deposited in the Trust pursuant to the
foregoing funding obligation shall be determined by the Reviewing Party. The
terms of the Trust shall provide that, upon a Change of Control, (i) the Trust
shall not be revoked or the principal thereof invaded, without the written
consent of Indemnitee; (ii) the trustee of the Trust shall advance, within ten
business days of a request by Indemnitee, any and all reasonable Expenses to
Indemnitee (and Indemnitee hereby agrees to reimburse the Trust under the
circumstances in which Indemnitee would be required to reimburse the Company
for Expense Advances under this Agreement), any required determination
concerning the reasonableness of the Expenses to be made by the Reviewing
Party, (iii) the Trust shall continue to be funded by the Company in accordance
with the funding obligation set forth above; (iv) the trustee of the Trust
shall promptly pay to Indemnitee all amounts for which Indemnitee shall be
entitled to indemnification pursuant to this Agreement; and (v) all unexpended
funds in the Trust shall revert to the Company upon a final determination by
the Reviewing Party or a court of competent jurisdiction, as the case may be,
that Indemnitee has been fully indemnified under the terms of this Agreement.
The trustee of the Trust shall be chosen by Indemnitee, and shall be an
institution that is not affiliated with Indemnitee. Nothing in this Section 4
shall relieve the Company of any of its obligations under this Agreement.
5. Indemnification for Additional Expenses. The Company shall
indemnify Indemnitee against any and all costs and expenses (including
attorneys' and expert witnesses' fees) and, if requested by Indemnitee, shall
(within two business days of that request) advance those costs and expenses to
Indemnitee, that are incurred by Indemnitee if Indemnitee, whether by formal
proceedings or through demand and negotiation without formal proceedings: (a)
seeks to enforce Indemnitee's rights under this Agreement, (b) seeks to enforce
Indemnitee's rights to expense advancement or indemnification under any other
agreement or provision of the Company's Certificate of Incorporation (the
"Certificate of Incorporation") or Bylaws (the "Bylaws") now or hereafter in
effect relating to Claims for Indemnifiable Events, or (c) seeks recovery under
any directors' and officers' liability insurance policies maintained by the
Company, in each case regardless of whether Indemnitee ultimately prevails;
provided that a court of competent jurisdiction has not found Indemnitee's
claim for indemnification or expense advancements under the foregoing clauses
(a), (b) or (c) to be frivolous, presented for an improper purpose, without
evidentiary support, or otherwise sanctionable under Federal Rule of Civil
Procedure No. 11 or an analogous rule or law, and provided further, that if a
court makes such a finding, Indemnitee shall reimburse the Company for all
amounts previously advanced to Indemnitee pursuant to this Section 5. Subject
to the provisos contained in the preceding sentence, to the fullest extent
permitted by law, the Company waives any and all rights that it may have to
recover its costs and expenses from Indemnitee.
6. Partial Indemnity. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some, but not
all, of Indemnitee's Indemnifiable Liabilities, the Company shall indemnify
Indemnitee for the portion thereof to which Indemnitee is entitled.
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7. Contribution.
(a) Contribution Payment. To the extent the
indemnification provided for under any provision of this Agreement is
determined (in the manner hereinabove provided) not to be permitted under
applicable law, the Company, in lieu of indemnifying Indemnitee, shall, to the
extent permitted by law, contribute to the amount of any and all Indemnifiable
Liabilities incurred or paid by Indemnitee for which such indemnification is
not permitted. The amount the Company contributes shall be in such proportion
as is appropriate to reflect the relative fault of Indemnitee, on the one hand,
and of the Company and any and all other parties (including officers and
directors of the Company other than Indemnitee) who may be at fault
(collectively, including the Company, the "Third Parties"), on the other hand.
(b) Relative Fault. The relative fault of the Third
Parties and the Indemnitee shall be determined (i) by reference to the relative
fault of Indemnitee as determined by the court or other governmental agency or
(ii) to the extent such court or other governmental agency does not apportion
relative fault, by the Reviewing Party after giving effect to, among other
things, the relative intent, knowledge, access to information, and opportunity
to prevent or correct the relevant events, of each party, and other relevant
equitable considerations. The Company and Indemnitee agree that it would not be
just and equitable if contribution were determined by pro rata allocation or by
any other method of allocation that does take account of the equitable
considerations referred to in this Section 7(b).
8. Burden of Proof. In connection with any determination by the
Reviewing Party or otherwise as to whether Indemnitee is entitled to be
indemnified under any provision of this Agreement or to receive contribution
pursuant to Section 7 of this Agreement, to the extent permitted by law the
burden of proof shall be on the Company to establish that Indemnitee is not so
entitled.
9. No Presumption. For purposes of this Agreement, the
termination of any Claim by judgment, order, settlement (whether with or
without court approval), or conviction, or upon a plea of nolo contendere, or
its equivalent, or an entry of an order of probation prior to judgment shall
not create a presumption (other than any presumption arising as a matter of law
that the parties may not contractually agree to disregard) that Indemnitee did
not meet any particular standard of conduct or have any particular belief or
that a court has determined that indemnification is not permitted by applicable
law.
10. Non-exclusivity. The rights of Indemnitee hereunder shall be
in addition to any other rights Indemnitee may have under the Bylaws or
Certificate of Incorporation or the Delaware General Corporation Law or
otherwise. To the extent that a change in the Delaware General Corporation Law
(whether by statute or judicial decision) permits greater indemnification by
agreement than would be afforded currently under this Agreement, it is the
intent of the parties hereto that Indemnitee shall enjoy by this Agreement the
greater benefits so afforded by that change. Indemnitee's rights under this
Agreement shall not be diminished by any amendment to the
-7-
<PAGE> 8
Certificate of Incorporation or Bylaws, or of any other agreement or instrument
to which Indemnitee is not a party, and shall not diminish any other rights
that Indemnitee now or in the future has against the Company.
11. Liability Insurance. Except as otherwise agreed to by the
Company and Indemnitee in a written agreement, to the extent the Company
maintains an insurance policy or policies providing directors' and officers'
liability insurance, Indemnitee shall be covered by that policy or those
policies, in accordance with its or their terms, to the maximum extent of the
coverage available for any Company director or officer.
12. Period of Limitations. No action, lawsuit, or proceeding may
be brought against Indemnitee or Indemnitee's spouse, heirs, executors, or
personal or legal representatives, nor may any cause of action be asserted in
any such action, lawsuit, or proceeding, by or on behalf of the Company, after
the expiration of two years after the statute of limitations commences with
respect to Indemnitee's act or omission that gave rise to the action, lawsuit,
proceeding, or cause of action; provided, however, that, if any shorter period
of limitations is otherwise applicable to any such action, lawsuit, proceeding,
or cause of action, the shorter period shall govern.
13. Amendments. No supplement, modification, or amendment of this
Agreement shall be binding unless executed in writing by both of the parties
hereto. No waiver of any provision of this Agreement shall be effective unless
in a writing signed by the party granting the waiver. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provisions hereof (whether or not similar) nor shall that waiver
constitute a continuing waiver.
14. Other Sources. Indemnitee shall not be required to exercise
any rights that Indemnitee may have against any other Person (for example,
under an insurance policy) before Indemnitee enforces his rights under this
Agreement. However, to the extent the Company actually indemnifies Indemnitee
or advances him Expenses, the Company shall be subrogated to the rights of
Indemnitee and shall be entitled to enforce any such rights which Indemnitee
may have against third parties. Indemnitee shall assist the Company in
enforcing those rights if it pays his costs and expenses of doing so. If
Indemnitee is actually indemnified or advanced Expenses by any third party,
then, for so long as Indemnitee is not required to disgorge the amounts so
received, to that extent the Company shall be relieved of its obligation to
indemnify Indemnitee or advance Indemnitee Expenses.
15. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their
respective successors, assigns (including any direct or indirect successor by
merger or consolidation), spouses, heirs, and personal and legal
representatives. This Agreement shall continue in effect regardless of whether
Indemnitee continues to serve as an officer or director of the Company or
another enterprise at the Company's request.
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<PAGE> 9
16. Severability. If any provision of this Agreement is held to
be illegal, invalid, or unenforceable under present or future laws effective
during the term hereof, that provision shall be fully severable; this Agreement
shall be construed and enforced as if that illegal, invalid, or unenforceable
provision had never comprised a part hereof; and the remaining provisions shall
remain in full force and effect and shall not be affected by the illegal,
invalid, or unenforceable provision or by its severance from this Agreement.
Furthermore, in lieu of that illegal, invalid, or unenforceable provision,
there shall be added automatically as a part of this Agreement a provision as
similar in terms to the illegal, invalid, or unenforceable provision as may be
possible and be legal, valid, and enforceable.
17. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed in that state without giving
effect to the principles of conflicts of laws.
18. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
19. Notices. Whenever this Agreement requires or permits notice
to be given by one party to the other, such notice must be in writing to be
effective and shall be deemed delivered and received by the party to whom it is
sent upon actual receipt (by any means) of such notice. Receipt of a notice by
the Secretary of the Company shall be deemed receipt of such notice by the
Company.
20. Complete Agreement. This Agreement constitutes the complete
understanding and agreement among the parties with respect to the subject
matter hereof and supersedes all prior agreements and understandings between
the parties with respect to the subject matter hereof, other than any
indemnification rights that Indemnitee may enjoy under the Certificate of
Incorporation, the Bylaws, or the Delaware General Corporation Law.
21. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but in making proof
hereof it shall not be necessary to produce or account for more than one such
counterpart.
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<PAGE> 10
EXECUTED as of the date first written above.
INTERNATIONAL HOME FOODS, INC.
By: /s/ ANDREW S. ROSEN
-----------------------------------
Name: Andrew S. Rosen
Title: Vice President and
Assistant Secretary
INDEMNITEE
/s/ C. DEAN METROPOULOS
---------------------------------------
C. Dean Metropoulos
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<PAGE> 11
SCHEDULE
The following persons have entered into an indemnification agreement in
substantially the same form as the indemnification agreement of C. Dean
Metropoulos filed herewith:
Thomas O. Hicks
Michael J. Levitt
Kenneth J. Martin
Alan B. Menkes
Andrew S. Rosen
Charles W. Tate
<PAGE> 1
EXHIBIT 10.9
EXECUTION COPY
================================================================================
$770,000,000
CREDIT AGREEMENT
AMONG
INTERNATIONAL HOME FOODS, INC.,
AS BORROWER,
THE SEVERAL LENDERS
FROM TIME TO TIME PARTIES HERETO,
MORGAN STANLEY SENIOR FUNDING, INC.,
AS DOCUMENTATION AGENT,
BANKERS TRUST COMPANY,
AS SYNDICATION AGENT,
AND
THE CHASE MANHATTAN BANK,
AS ADMINISTRATIVE AGENT
DATED AS OF NOVEMBER 1, 1996
================================================================================
<PAGE> 2
TABLE OF CONTENTS
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SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.1 Term Loan Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.2 Procedure for Term Loan Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.3 Repayment of Term Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.4 Revolving Credit Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.5 Procedure for Revolving Credit Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.6 Swing Line Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.7 Procedure for Swing Line Borrowing; Refunding of Swing Line Loans . . . . . . . . . . . . . . . . . . . 25
2.8 Commitment Fees, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.9 Termination or Reduction of Revolving Credit Commitments . . . . . . . . . . . . . . . . . . . . . . . 27
2.10 Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.11 Mandatory Prepayments and Commitment Reductions . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.12 Conversion and Continuation Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.13 Minimum Amounts and Maximum Number of Eurodollar Tranches . . . . . . . . . . . . . . . . . . . . . . 29
2.14 Interest Rates and Payment Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.15 Computation of Interest and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.16 Inability to Determine Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.17 Pro Rata Treatment and Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.18 Requirements of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.19 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.20 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.21 Change of Lending Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.22 Replacement of Lenders under Certain Circumstances . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 3. LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.1 L/C Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.2 Procedure for Issuance of Letter of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.3 Commissions, Fees and Other Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.4 L/C Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.5 Reimbursement Obligation of the Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.6 Obligations Absolute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.7 Letter of Credit Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.8 Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 4. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.1 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.2 No Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.3 Corporate Existence; Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.4 Corporate Power; Authorization; Enforceable Obligations . . . . . . . . . . . . . . . . . . . . . . . . 39
4.5 No Legal Bar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
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4.6 No Material Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.7 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.8 Ownership of Property; Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.9 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.11 Federal Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.12 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.13 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.14 Investment Company Act; Other Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.15 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.16 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.17 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.18 Accuracy of Information, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.19 Security Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.20 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.21 Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.22 Regulation H . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 5. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.1 Conditions to Initial Extension of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.2 Conditions to Each Extension of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 6. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.1 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.2 Certificates; Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.3 Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
6.4 Conduct of Business and Maintenance of Existence, etc. . . . . . . . . . . . . . . . . . . . . . . . . 50
6.5 Maintenance of Property; Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
6.6 Inspection of Property; Books and Records; Discussions . . . . . . . . . . . . . . . . . . . . . . . . 50
6.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
6.8 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.9 Interest Rate Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.10 Additional Collateral, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 7. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.1 Financial Condition Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.2 Limitation on Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
7.3 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.4 Limitation on Fundamental Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
7.5 Limitation on Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
7.6 Limitation on Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
7.7 Limitation on Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
7.8 Limitation on Investments, Loans and Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.9 Limitation on Optional Payments and Modifications of Debt Instruments, etc. . . . . . . . . . . . . . 60
7.10 Limitation on Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
7.11 Limitation on Sales and Leasebacks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
7.12 Limitation on Changes in Fiscal Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.13 Limitation on Negative Pledge Clauses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
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7.14 Limitation on Lines of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.15 Limitation on Amendments to Acquisition Documents . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 8. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 9. THE AGENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
9.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
9.2 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
9.3 Exculpatory Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
9.4 Reliance by Administrative Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
9.5 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
9.6 Non-Reliance on Agents and Other Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
9.7 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
9.8 Agent in Its Individual Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
9.9 Successor Administrative Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
9.10 Authorization to Release Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
9.11 Documentation Agent and Syndication Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 10. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
10.1 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
10.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
10.3 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
10.4 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
10.5 Payment of Expenses and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
10.6 Successors and Assigns; Participations and Assignments . . . . . . . . . . . . . . . . . . . . . . . . 70
10.7 Adjustments; Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
10.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
10.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
10.10 Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
10.11 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
10.12 Submission To Jurisdiction; Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
10.13 Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
10.14 WAIVERS OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
10.15 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
</TABLE>
- iii -
<PAGE> 5
SCHEDULES:
<TABLE>
<S> <C>
1.1A Commitments
1.1B Mortgaged Property
4.4 Consents, Authorizations, Filings and Notices
4.15 Subsidiaries
4.19(a) UCC Filing Jurisdictions
4.19(b) Mortgage Filing Jurisdictions
7.2(e) Existing Indebtedness
7.3(f) Existing Liens
7.8(g) Existing Investments
7.10 Certain Fees
EXHIBITS:
A Form of Guarantee and Collateral Agreement
B Form of Compliance Certificate
C Form of Closing Certificate
D-1 Form of Mortgage -- Borrower
D-2 Form of Mortgage -- Subsidiary Guarantor
E Form of Assignment and Acceptance
F Form of Legal Opinion of Vinson & Elkins
G-1 Form of Term Note
G-2 Form of Revolving Credit Note
G-3 Form of Swing Line Note
</TABLE>
- iv -
<PAGE> 6
CREDIT AGREEMENT, dated as of November 1, 1996, among
INTERNATIONAL HOME FOODS, INC., a Delaware corporation (the "Borrower"), the
several banks and other financial institutions or entities from time to time
parties to this Agreement (the "Lenders"), MORGAN STANLEY SENIOR FUNDING, INC.,
as documentation agent (in such capacity, the "Documentation Agent"), BANKERS
TRUST COMPANY, as syndication agent (in such capacity, the "Syndication
Agent"), and THE CHASE MANHATTAN BANK, as administrative agent for the Lenders
hereunder.
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following
terms shall have the following meanings:
"ABR": for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greatest of (a) the
Prime Rate in effect on such day, (b) the Base CD Rate in effect on
such day plus 1% and (c) the Federal Funds Effective Rate in effect on
such day plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall
mean the rate of interest per annum publicly announced from time to
time by Chase as its prime rate in effect at its principal office in
New York City (the Prime Rate not being intended to be the lowest rate
of interest charged by Chase in connection with extensions of credit
to debtors); "Base CD Rate" shall mean the sum of (a) the product of
(i) the Three-Month Secondary CD Rate and (ii) a fraction, the
numerator of which is one and the denominator of which is one minus
the C/D Reserve Percentage and (b) the C/D Assessment Rate;
"Three-Month Secondary CD Rate" shall mean, for any day, the secondary
market rate for three-month certificates of deposit reported as being
in effect on such day (or, if such day shall not be a Business Day,
the next preceding Business Day) by the Board through the public
information telephone line of the Federal Reserve Bank of New York
(which rate will, under the current practices of the Board, be
published in Federal Reserve Statistical Release H.15(519) during the
week following such day), or, if such rate shall not be so reported on
such day or such next preceding Business Day, the average of the
secondary market quotations for three-month certificates of deposit of
major money center banks in New York City received at approximately
10:00 A.M., New York City time, on such day (or, if such day shall not
be a Business Day, on the next preceding Business Day) by the
Administrative Agent from three New York City negotiable certificate
of deposit dealers of recognized standing selected by it; and "Federal
Funds Effective Rate" shall mean, for any day, 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
on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for the day of such
transactions received by the Administrative Agent from three federal
funds brokers of recognized standing selected by it. Any change in
the ABR due to a change in the Prime Rate, the Base CD Rate or the
Federal Funds Effective Rate shall be effective as of the opening of
business on the effective day of such change in the Prime Rate, the
Base CD Rate or the Federal Funds Effective Rate, respectively.
"ABR Loans": Loans the rate of interest applicable to which
is based upon the ABR.
<PAGE> 7
2
"Acquisition Agreement": the Agreement of Sale and Plan of
Merger, dated as of September 5, 1996, among the Sellers, AH Food Co.,
the Buyer and the Merger Sub.
"Acquisitions": the collective reference to the AHP
Acquisition and the Heritage Acquisition.
"Adjustment Date": as defined in the Pricing Grid.
"Administrative Agent": Chase, together with its affiliates,
as the arranger of the Commitments and as the administrative agent for
the Lenders under this Agreement and the other Loan Documents,
together with any of its successors.
"Affiliate": as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is
under common control with, such Person. For purposes of this
definition, "control" of a Person means the power, directly or
indirectly, either to (a) vote 51% or more of the securities having
ordinary voting power for the election of directors (or persons
performing similar functions) of such Person or (b) direct or cause
the direction of the management and policies of such Person, whether
by contract or otherwise.
"Agents": the collective reference to the Administrative
Agent, the Syndication Agent and the Documentation Agent.
"Agreement": this Credit Agreement, as amended, supplemented
or otherwise modified from time to time.
"AH Food Co.": American Home Food Products, Inc., a Delaware
corporation.
"AHP": American Home Products Corporation, a Delaware
corporation.
"AHP Acquisition": as defined in Section 5.1(b).
"AHP Food Business": as defined in Section 5.1(b).
"AHP Holding": AHP Subsidiary Holding Corporation, a Delaware
corporation.
"Applicable Margin": for each Type of Loan, the rate per
annum set forth under the relevant column heading below:
<TABLE>
<CAPTION>
Eurodollar
ABR Loans Loans
--------- ----------
<S> <C> <C>
Tranche A Loans 1-1/2% 2-1/2%
Tranche B Term Loans 2% 3%
Tranche C Term Loans 2-1/2% 3-1/2%
</TABLE>
<PAGE> 8
3
; provided, that on and after the first Adjustment Date occurring
after the completion of four full fiscal quarters of the Borrower
after the Closing Date, the Applicable Margin with respect to Tranche
A Loans will be determined pursuant to the Pricing Grid.
"Application": an application, in such form (reasonably
acceptable to the Borrower) as the relevant Issuing Lender may specify
from time to time, requesting such Issuing Lender to open a Letter of
Credit.
"Asset Sale": any Disposition of Property other than (a) any
Disposition of Property permitted by any of clauses (a) through (h) of
Section 7.5 and (b) any Disposition of Property which, together with
any related Disposition of Property, yields gross proceeds to the
Borrower or any of its Subsidiaries (valued at the initial principal
amount thereof in the case of non-cash proceeds consisting of notes or
other debt securities and valued at fair market value in the case of
other non-cash proceeds) of less than $1,000,000, provided, that the
aggregate gross proceeds of Dispositions of Property excluded from the
definition of "Asset Sale" pursuant to this clause (b) shall not
exceed $5,000,000 in any fiscal year of the Borrower.
"Asset Swap": any substantially concurrent purchase and sale,
or exchange, of Property used or usable in the business of the
Borrower and its Subsidiaries.
"Assignee": as defined in Section 10.6(c).
"Assignor": as defined in Section 10.6(c).
"Available Revolving Credit Commitment": as to any Lender at
any time, an amount equal to (a) such Lender's Revolving Credit
Commitment minus (b) such Lender's Revolving Extensions of Credit;
provided, that in calculating any Lender's Revolving Extensions of
Credit for the purpose of determining such Lender's Available
Revolving Credit Commitment pursuant to Section 2.8(a), the aggregate
principal amount of Swing Line Loans then outstanding shall be deemed
to be zero.
"Board": the Board of Governors of the Federal Reserve System
of the United States (or any successor).
"Borrowing Date": any Business Day specified by the Borrower
as a date on which the Borrower requests the Lenders to make Loans
hereunder.
"Business": as defined in Section 4.17.
"Business Day": 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.
"Buyer": AHFP Holding Corporation, a Delaware corporation.
<PAGE> 9
4
"Canadian Subsidiary": any Subsidiary of the Borrower
organized under the laws of Canada (or any jurisdiction therein).
"Canadian Subsidiary Equivalent Outstandings": as defined in
Section 7.2(h).
"Capital Expenditures": for any period, with respect to any
Person, the aggregate of all expenditures by such Person and its
Subsidiaries for the acquisition or leasing (pursuant to a capital
lease) of fixed or capital assets or additions to equipment (including
replacements, capitalized repairs and improvements during such period)
which should be capitalized under GAAP on a consolidated balance sheet
of such Person and its Subsidiaries.
"Capital Lease Obligations": as to any Person, the
obligations of such Person to pay rent or other amounts under any
lease of (or other arrangement conveying the right to use) real or
personal property, or a combination thereof, which obligations are
required to be classified and accounted for as capital leases on a
balance sheet of such Person under GAAP and, for the purposes of this
Agreement, the amount of such obligations at any time shall be the
capitalized amount thereof at such time determined in accordance with
GAAP.
"Capital Stock": any and all shares, interests,
participations or other equivalents (however designated) of capital
stock of a corporation, any and all equivalent ownership interests in
a Person (other than a corporation) and any and all warrants, rights
or options to purchase any of the foregoing.
"Cash Equivalents": (a) marketable direct obligations issued
by, or unconditionally guaranteed by, the United States Government or
issued by any agency thereof and backed by the full faith and credit
of the United States, in each case maturing within one year from the
date of acquisition; (b) certificates of deposit, time deposits,
eurodollar time deposits or overnight bank deposits having maturities
of six months or less from the date of acquisition issued by any
Lender or by any commercial bank organized under the laws of the
United States of America or any state thereof having combined capital
and surplus of not less than $250,000,000; (c) commercial paper of an
issuer rated at least A-2 by Standard & Poor's Ratings Services or P-2
by Moody's Investors Service, Inc., or carrying an equivalent rating
by a nationally recognized rating agency, if both of the two named
rating agencies cease publishing ratings of commercial paper issuers
generally, and maturing within six months from the date of
acquisition; (d) money market accounts or funds with or issued by
Qualified Issuers; and (e) repurchase obligations with a term of not
more than 90 days for underlying securities of the types described in
clause (a) above entered into with any bank meeting the qualifications
specified in clause (b) above.
"C/D Assessment Rate": for any day as applied to any ABR
Loan, the annual assessment rate in effect on such day which is
payable by a member of the Bank Insurance Fund maintained by the
Federal Deposit Insurance Corporation (the "FDIC") classified as
well-capitalized and within supervisory subgroup "B" (or a comparable
successor assessment risk classification) within the meaning of 12
C.F.R. Part 327 (or any successor provision) to the FDIC (or any
successor)
<PAGE> 10
5
for the FDIC's (or such successor's) insuring time deposits at offices
of such institution in the United States.
"C/D Reserve Percentage": for any day as applied to any ABR
Loan, that percentage (expressed as a decimal) which is in effect on
such day, as prescribed by the Board, for determining the maximum
reserve requirement for a Depositary Institution (as defined in
Regulation D of the Board as in effect from time to time) in respect
of new non-personal time deposits in Dollars having a maturity of 30
days or more.
"Chase": The Chase Manhattan Bank.
"Closing Date": November 1, 1996.
"Code": the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral": all Property of the Loan Parties, now owned or
hereafter acquired, upon which a Lien is purported to be created by
any Security Document.
"Commitment": as to any Lender, the sum of the Tranche A Term
Loan Commitment, the Tranche B Term Loan Commitment, the Tranche C
Term Loan Commitment and the Revolving Credit Commitment of such
Lender.
"Commitment Fee Rate": 1/2 of 1% per annum; provided, that on
and after the first Adjustment Date occurring after the completion of
four full fiscal quarters of the Borrower after the Closing Date, the
Commitment Fee Rate will be determined pursuant to the Pricing Grid.
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Borrower within
the meaning of Section 4001 of ERISA or is part of a group which
includes the Borrower and which is treated as a single employer under
Section 414 of the Code.
"Compliance Certificate": a certificate duly executed by a
Responsible Officer substantially in the form of Exhibit B.
"Confidential Information Memorandum": the Confidential
Information Memorandum dated October 1996 and furnished to the
Lenders.
"Consolidated Current Assets": at a particular date, all
amounts (other than cash and Cash Equivalents) which would, in
conformity with GAAP, be set forth opposite the caption "total current
assets" (or any like caption) on a consolidated balance sheet of the
Borrower and its Subsidiaries at such date.
"Consolidated Current Liabilities": at a particular date, all
amounts which would, in conformity with GAAP, be set forth opposite
the caption "total current liabilities" (or any like
<PAGE> 11
6
caption) on a consolidated balance sheet of the Borrower and its
Subsidiaries at such date, but excluding (a) the current portion of
any Funded Debt of the Borrower and its Subsidiaries, (b) without
duplication of clause (a) above, all Indebtedness consisting of
Revolving Credit Loans or Swing Line Loans to the extent otherwise
included therein, (c) accrued interest expense and (d) accrued income
tax expense.
"Consolidated EBITDA": for any period, Consolidated Net
Income for such period plus, without duplication and to the extent
reflected as a charge in the statement of such Consolidated Net Income
for such period, the sum of (a) total income tax expense, (b) interest
expense, amortization or writeoff of debt discount and debt issuance
costs and commissions, discounts and other fees and charges associated
with Indebtedness (including the Loans), (c) depreciation and
amortization expense, (d) amortization of intangibles (including, but
not limited to, goodwill) and organization costs, (e) any
extraordinary expenses or losses (including, whether or not otherwise
includable as a separate item in the statement of such Consolidated
Net Income for such period, losses on sales of assets other than
inventory sold in the ordinary course of business) and (f) any other
non-cash charges, and minus, to the extent included in the statement
of such Consolidated Net Income for such period, the sum of (a)
interest income, (b) any extraordinary income or gains (including,
whether or not otherwise includable as a separate item in the
statement of such Consolidated Net Income for such period, gains on
the sales of assets other than inventory sold in the ordinary course
of business) and (c) any other non-cash income, all as determined on a
consolidated basis.
"Consolidated Fixed Charge Coverage Ratio": for any period,
the ratio of (a) (i) Consolidated EBITDA for such period less (ii) the
lesser of (x) the aggregate amount actually paid by the Borrower and
its Subsidiaries in cash during such period on account of Capital
Expenditures (excluding (1) the principal amount of Indebtedness
(other than Loans) incurred in connection with such expenditures and
(2) Capital Expenditures made pursuant to Section 7.7(b)) and (y) if
applicable, the Scheduled Capital Expenditure Amount for such period
to (b) Consolidated Fixed Charges for such period.
"Consolidated Fixed Charges": for any period, the sum
(without duplication) of (a) Consolidated Interest Expense for such
period, (b) Consolidated Tax Expense for such period and (c) scheduled
payments made during such period on account of principal of
Indebtedness of the Borrower or any of its Subsidiaries (including the
Term Loans).
"Consolidated Interest Coverage Ratio": for any period, the
ratio of (a) Consolidated EBITDA for such period to (b) Consolidated
Interest Expense for such period.
"Consolidated Interest Expense": for any period, total cash
interest expense (including that attributable to Capital Lease
Obligations), net of interest income, of the Borrower and its
Subsidiaries for such period with respect to all outstanding
Indebtedness of the Borrower and its Subsidiaries (including, without
limitation, all commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing
and net costs under Interest
<PAGE> 12
7
Rate Protection Agreements to the extent such net costs are allocable
to such period in accordance with GAAP).
"Consolidated Leverage Ratio": as at the last day of any
period, the ratio of (a) Consolidated Total Debt on such day to (b)
Consolidated EBITDA for such period.
"Consolidated Net Income": for any period, the consolidated
net income (or loss) of the Borrower and its Subsidiaries, determined
on a consolidated basis in accordance with GAAP; provided that there
shall be excluded therefrom the income (or deficit) of any Person
accrued prior to the date it becomes a Subsidiary of the Borrower or
is merged into or consolidated with the Borrower or any of its
Subsidiaries.
"Consolidated Tax Expense": for any period, provision for
cash income taxes made by the Borrower or any of its Subsidiaries for
such period on a consolidated basis.
"Consolidated Total Debt": at any date, the aggregate
principal amount of all Indebtedness, net of cash and Cash
Equivalents, of the Borrower and its Subsidiaries at such date,
determined on a consolidated basis in accordance with GAAP.
"Consolidated Working Capital": the excess of Consolidated
Current Assets over Consolidated Current Liabilities.
"Continuing Directors": the directors of the Borrower on the
Closing Date, after giving effect to the Acquisitions and the other
transactions contemplated hereby, and each other director, if, in each
case, such other director's nomination for election to the board of
directors of the Borrower is recommended by a majority of the then
Continuing Directors or such other director receives the vote of the
Permitted Investors in his or her election by the shareholders of the
Borrower.
"Contractual Obligation": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or
other undertaking to which such Person is a party or by which it or
any of its property is bound.
"Contributed Equity": (a) the proceeds of any capital
contribution made to the Borrower (or to a Parent and in turn
contributed to the Borrower) by any member of the Existing Investor
Group and (b) the proceeds of any private placement of Capital Stock
of the Borrower (or of a Parent and in turn contributed to the
Borrower) consummated after the Closing Date, provided, that the
aggregate amount of proceeds of sales of Capital Stock to Persons
other than members of the Existing Investor Group that may be included
in "Contributed Equity" pursuant to this clause (b) shall not exceed
$25,000,000 during the period from the Closing Date to the first
anniversary thereof and shall not exceed $50,000,000 during the term
of this Agreement. As used in this definition, (i) "Existing Investor
Group" refers to any Permitted Investor (other than any Parent), AHP
or any of its Affiliates or any Person that owns Capital Stock of the
Buyer on the Closing Date or that acquires Capital Stock of the Buyer
within 60 days after the Closing Date and (ii)
<PAGE> 13
8
"Parent" refers to the Buyer or any other direct or indirect holding
company parent of the Borrower.
"Default": any of the events specified in Section 8, whether
or not any requirement for the giving of notice, the lapse of time, or
both, has been satisfied.
"Disposition": with respect to any Property, any sale, lease,
sale and leaseback, assignment, conveyance, transfer or other
disposition thereof; and the terms "Dispose" and "Disposed of" shall
have correlative meanings.
"Dollars" and "$": lawful currency of the United States of
America.
"Domestic Subsidiary": any Subsidiary of the Borrower
organized under the laws of any jurisdiction within the United States
of America.
"ECF Percentage": 75%; provided, that, with respect to each
fiscal year of the Borrower ending on or after December 31, 1998, the
ECF Percentage shall be reduced to 50% if the Consolidated Leverage
Ratio as of the last day of such fiscal year is not greater than 4.50
to 1.0.
"Environmental Laws": any and all foreign, Federal, state,
local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, requirements of any Governmental Authority
or other Requirements of Law (including common law) regulating,
relating to or imposing liability or standards of conduct concerning
protection of human health or the environment, as now or may at any
time hereafter be in effect.
"Equity Financing Proceeds": any Contributed Equity used to
finance any Capital Expenditure made pursuant to Section 7.7(b) or any
investment made pursuant to Section 7.8(h).
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied
to a Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on
such day (including, without limitation, basic, supplemental, marginal
and emergency reserves under any regulations of the Board or other
Governmental Authority having jurisdiction with respect thereto)
dealing with reserve requirements prescribed for eurocurrency funding
(currently referred to as "Eurocurrency Liabilities" in Regulation D
of the Board) maintained by a member bank of the Federal Reserve
System.
"Eurodollar Base Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum
equal to the rate at which Chase is offered Dollar deposits at or
about 10:00 A.M., New York City time, two Business Days prior to the
beginning of such Interest Period in the interbank eurodollar market
where the eurodollar and foreign currency and exchange operations in
respect of its Eurodollar Loans are then being conducted for
<PAGE> 14
9
delivery on the first day of such Interest Period for the number of
days comprised therein and in an amount comparable to the amount of
its Eurodollar Loans to be outstanding during such Interest Period.
"Eurodollar Loans": Loans the rate of interest applicable to
which is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, a rate per annum
determined for such day in accordance with the following formula
(rounded upward to the nearest 1/100th of 1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Eurodollar Tranche": the collective reference to Eurodollar
Loans the then current Interest Periods with respect to all of which
begin on the same date and end on the same later date (whether or not
such Loans shall originally have been made on the same day).
"Event of Default": any of the events specified in Section 8,
provided that any requirement for the giving of notice, the lapse of
time, or both, has been satisfied.
"Excess Cash Flow": for any fiscal year of the Borrower, the
excess, if any, of (a) the sum, without duplication, of (i)
Consolidated EBITDA for such fiscal year, (ii) decreases in
Consolidated Working Capital for such fiscal year, (iii) the amount of
any refund received by the Borrower and its Subsidiaries during such
fiscal year on taxes paid by the Borrower and its Subsidiaries, (iv)
cash dividends, cash interest and other similar cash payments received
by the Borrower during such fiscal year in respect of investments to
the extent not included in Consolidated Net Income to determine
Consolidated EBITDA for such fiscal year, (v) any purchase price
adjustments paid to the Borrower during such fiscal year pursuant to
the Acquisition Agreement, and (vi) extraordinary cash gains to the
extent subtracted or otherwise not included in Consolidated Net Income
to determine Consolidated EBITDA for such fiscal year over (b) the
sum, without duplication, of (i) the aggregate amount actually paid by
the Borrower and its Subsidiaries in cash during such fiscal year on
account of Capital Expenditures (excluding (x) the principal amount of
Indebtedness incurred in connection with such expenditures and (y) any
such expenditures made pursuant to Section 7.7(b) except, in the case
of this clause (y), to the extent that the amounts used to make such
expenditures were included in determining Consolidated EBITDA for such
fiscal year), (ii) the aggregate amount of all prepayments of
Revolving Credit Loans and Swing Line Loans during such fiscal year to
the extent accompanying permanent optional reductions of the Revolving
Credit Commitments and all optional prepayments of the Term Loans
during such fiscal year, (iii) the aggregate amount of all regularly
scheduled principal payments of Funded Debt (including, without
limitation, the Term Loans) of the Borrower and its Subsidiaries made
during such fiscal year (other than in respect of any revolving credit
facility to the extent there is not an equivalent permanent reduction
in commitments thereunder), (iv) increases in Consolidated Working
Capital for such fiscal year, (v) cash interest expense of the
<PAGE> 15
10
Borrower and its Subsidiaries for such fiscal year, (vi) cash taxes
actually paid in such fiscal year or to be paid in the subsequent
fiscal year on account of such fiscal year to the extent added to
Consolidated Net Income to determine Consolidated EBITDA for such
fiscal year, (vii) the amount of all loans and advances made in such
fiscal year pursuant to Section 7.8(d) (net of any repayments of such
loans and advances made during such fiscal year), (viii) the amount of
all investments made in such fiscal year pursuant to Section 7.8(n),
(ix) the amount of all deposits required to be made by the Borrower or
any of its Subsidiaries during such fiscal year in connection with
investments made pursuant to Section 7.8(l) (net of any amounts
returned in respect of such deposits during such fiscal year), (x)
dividends paid by the Borrower during such fiscal year in accordance
with Section 7.6 to the extent not subtracted in the determination of
Consolidated Net Income of the Borrower for such fiscal year, (xi)
previously expensed royalty payments made during such fiscal year to
the extent not subtracted in the determination of Consolidated Net
Income of the Borrower for such fiscal year, (xii) any purchase price
adjustments paid by the Borrower during such fiscal year pursuant to
the Acquisition Agreement, and (xiii) extraordinary cash losses to the
extent added to Consolidated Net Income to determine Consolidated
EBITDA for such fiscal year.
"Excess Cash Flow Application Date": as defined in Section
2.11(c).
"Excluded Foreign Subsidiaries": any Foreign Subsidiary the
pledge of all of whose Capital Stock as Collateral would, in the good
faith judgment of the Borrower, result in adverse tax consequences to
the Borrower.
"Facility": each of (a) the Tranche A Term Loan Commitments
and the Tranche A Term Loans made thereunder (the "Tranche A Term Loan
Facility"), (b) the Tranche B Term Loan Commitments and the Tranche B
Term Loans made thereunder (the "Tranche B Term Loan Facility"), (c)
the Tranche C Term Loan Commitments and the Tranche C Term Loans made
thereunder (the "Tranche C Term Loan Facility") and (d) the Revolving
Credit Commitments and the extensions of credit made thereunder (the
"Revolving Credit Facility").
"Federal Funds Effective Rate": as defined in the definition
of "ABR".
"Foreign Subsidiary": any Subsidiary of the Borrower that is
not a Domestic Subsidiary.
"Funded Debt": as to any Person, all Indebtedness of such
Person that matures more than one year from the date of its creation
or matures within one year from such date but is renewable or
extendible, at the option of such Person, to a date more than one year
from such date or arises under a revolving credit or similar agreement
that obligates the lender or lenders to extend credit during a period
of more than one year from such date, including, without limitation,
all current maturities and current sinking fund payments in respect of
such Indebtedness whether or not required to be paid within one year
from the date of its creation and, in the case of the Borrower,
Indebtedness in respect of the Loans.
<PAGE> 16
11
"GAAP": generally accepted accounting principles in the
United States of America as in effect from time to time set forth in
the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and the
statements and pronouncements of the Financial Accounting Standards
Board and the rules and regulations of the Securities and Exchange
Commission, or in such other statements by such other entity as may be
in general use by significant segments of the accounting profession,
which are applicable to the circumstances of the Borrower as of the
date of determination, except that for purposes of Section 7.1, GAAP
shall be determined on the basis of such principles in effect on the
date hereof and consistent with those used in the preparation of the
audited financial statements of the AHP Food Business or Heritage, as
the case may be, in respect of the fiscal year ended December 31, 1995
delivered pursuant to Section 4.1(b). In the event that any
"Accounting Change" (as defined below) shall occur and such change
results in a change in the method of calculation of financial
covenants, standards or terms in this Agreement, then the Borrower and
the Administrative Agent agree to enter into negotiations in order to
amend such provisions of this Agreement so as to equitably reflect
such Accounting Changes with the desired result that the criteria for
evaluating the Borrower's financial condition shall be the same after
such Accounting Changes as if such Accounting Changes had not been
made. Until such time as such an amendment shall have been executed
and delivered by the Borrower, the Administrative Agent and the
Required Lenders, all financial covenants, standards and terms in this
Agreement shall continue to be calculated or construed as if such
Accounting Changes had not occurred. "Accounting Changes" refers to
changes in accounting principles required by the promulgation of any
rule, regulation, pronouncement or opinion by the Financial Accounting
Standards Board of the American Institute of Certified Public
Accountants or, if applicable, the Securities and Exchange Commission
(or successors thereto or agencies with similar functions).
"Governmental Authority": any nation or government, any state
or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guarantee and Collateral Agreement": the Guarantee and
Collateral Agreement to be executed and delivered by the Borrower and
each Subsidiary Guarantor, substantially in the form of Exhibit A, as
the same may be amended, supplemented or otherwise modified from time
to time.
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another
Person (including, without limitation, any bank under any letter of
credit) to induce the creation of which the guaranteeing person has
issued a reimbursement, counterindemnity or similar obligation, in
either case guaranteeing or in effect guaranteeing any Indebtedness,
leases, dividends or other obligations (the "primary obligations") of
any other third Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, any obligation
of the guaranteeing person, whether or not contingent, (i) to purchase
any such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds (1) for
the purchase or payment of any such primary obligation or (2) to
maintain working capital or equity capital of the primary obligor or
otherwise
<PAGE> 17
12
to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation or (iv)
otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; provided, however, that
the term Guarantee Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing
person shall be deemed to be the lower of (a) an amount equal to the
stated or determinable amount of the primary obligation in respect of
which such Guarantee Obligation is made and (b) the maximum amount for
which such guaranteeing person may be liable pursuant to the terms of
the instrument embodying such Guarantee Obligation, unless such
primary obligation and the maximum amount for which such guaranteeing
person may be liable are not stated or determinable, in which case the
amount of such Guarantee Obligation shall be such guaranteeing
person's maximum reasonably anticipated liability in respect thereof
as determined by the Borrower in good faith.
"Heritage": Heritage Brands Holdings, Inc., a Delaware
corporation.
"Heritage Acquisition": as defined in Section 5.1(b).
"Hicks Muse": Hicks, Muse, Tate & Furst Incorporated.
"HM Equity": as defined in Section 5.1(b).
"Incur": as defined in Section 7.2; and the term "Incurrence"
shall have a correlative meaning.
"Indebtedness": of any Person at any date, without
duplication, (a) all indebtedness of such Person for borrowed money,
(b) all obligations of such Person for the deferred purchase price of
property or services (other than current trade payables and accrued
expenses incurred in the ordinary course of such Person's business),
(c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all indebtedness created
or arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale
of such property), (e) all Capital Lease Obligations of such Person,
(f) all obligations of such Person, contingent or otherwise, as an
account party under acceptance, letter of credit or similar
facilities, (g) all Guarantee Obligations of such Person in respect of
obligations of the kind referred to in clauses (a) through (f) above
and (i) all obligations of the kind referred to in clauses (a) through
(g) above secured by (or for which the holder of such obligation has
an existing right, contingent or otherwise, to be secured by) any Lien
on property (including, without limitation, accounts and contract
rights) owned by such Person, whether or not such Person has assumed
or become liable for the payment of such obligation.
"Insolvency": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section
4245 of ERISA.
<PAGE> 18
13
"Insolvent": pertaining to a condition of Insolvency.
"Initial Public Offering": an underwritten public offering by
the Borrower of Capital Stock of the Borrower pursuant to a
registration statement filed with the Securities and Exchange
Commission in accordance with the Securities Act of 1933, as amended.
"Intellectual Property": as defined in Section 4.9.
"Interest Payment Date": (a) as to any ABR Loan, the last day
of each March, June, September and December to occur while such Loan
is outstanding, (b) as to any Eurodollar Loan having an Interest
Period of three months or less, the last day of such Interest Period,
(c) as to any Eurodollar Loan having an Interest Period longer than
three months, each day which is three months, or a whole multiple
thereof, after the first day of such Interest Period and the last day
of such Interest Period and (d) as to any Loan, the date of repayment
thereof at final stated maturity.
"Interest Period": as to any Eurodollar Loan, (a) initially,
the period commencing on the borrowing or conversion date, as the case
may be, with respect to such Eurodollar Loan and ending one, two,
three, six or (if available to all Lenders under the relevant
Facility) nine or twelve months thereafter, as selected by the
Borrower in its notice of borrowing or notice of conversion, as the
case may be, given with respect thereto; and (b) thereafter, each
period commencing on the last day of the next preceding Interest
Period applicable to such Eurodollar Loan and ending one, two, three,
six or (if available to all Lenders under the relevant Facility) nine
or twelve months thereafter, as selected by the Borrower by
irrevocable notice to the Administrative Agent not less than three
Business Days prior to the last day of the then current Interest
Period with respect thereto; provided that, all of the foregoing
provisions relating to Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a
day that is not a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless the result
of such extension would be to carry such Interest Period into
another calendar month in which event such Interest Period
shall end on the immediately preceding Business Day;
(ii) any Interest Period that would otherwise extend
beyond the Revolving Credit Termination Date or beyond the
date final payment is due on the Tranche A Term Loans, the
Tranche B Term Loans or the Tranche C Term Loans, as the case
may be, shall end on the Revolving Credit Termination Date or
such due date, as applicable;
(iii) any Interest Period that begins on the last
Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at
the end of such Interest Period) shall end on the last
Business Day of a calendar month; and
(iv) the Borrower shall select Interest Periods so as
not to require a payment or prepayment of any Eurodollar Loan
during an Interest Period for such Loan.
<PAGE> 19
14
"Interest Rate Protection Agreement": any interest rate
protection agreement, interest rate futures contract, interest rate
option, interest rate cap or other interest rate hedge arrangement, to
or under which the Borrower or any of its Subsidiaries is a party or a
beneficiary on the date hereof or becomes a party or a beneficiary
after the date hereof.
"Issuing Lender": Chase or any of its affiliates or, with the
approval of the Administrative Agent, any of the other Lenders which
chooses to be an Issuing Lender, in its capacity as issuer of any
Letter of Credit.
"L/C Commitment": $25,000,000.
"L/C Fee Payment Date": the last day of each March, June,
September and December and the last day of the Revolving Credit
Commitment Period.
"L/C Obligations": at any time, an amount equal to the sum of
(a) the aggregate then undrawn and unexpired amount of the then
outstanding Letters of Credit and (b) the aggregate amount of drawings
under Letters of Credit which have not then been reimbursed pursuant
to Section 3.5.
"L/C Participants": with respect to any Letter of Credit, the
collective reference to all the Revolving Credit Lenders other than
the Issuing Lender that issued such Letter of Credit.
"Letters of Credit": as defined in Section 3.1(a).
"Lien": any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge or
other security interest or any preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title
retention agreement and any capital lease having substantially the
same economic effect as any of the foregoing).
"Loan": any loan made by any Lender pursuant to this
Agreement.
"Loan Documents": this Agreement, the Security Documents and
the Notes.
"Loan Parties": the Borrower and each Subsidiary of the
Borrower which is a party to a Loan Document.
"Majority Facility Lenders": with respect to any Facility,
the holders of not less than 51% of the aggregate unpaid principal
amount of the Term Loans or the Total Revolving Extensions of Credit,
as the case may be, outstanding under such Facility (or, in the case
of the Revolving Credit Facility, prior to any termination of the
Revolving Credit Commitments, the holders of not less than 51% of the
aggregate Revolving Credit Commitments).
<PAGE> 20
15
"Majority Revolving Credit Facility Lenders": the Majority
Facility Lenders in respect of the Revolving Credit Facility.
"Material Adverse Effect": a material adverse effect on (a)
the business, assets, property, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole or (b)
the validity or enforceability of this Agreement or any of the other
Loan Documents or the rights or remedies of the Administrative Agent
or the Lenders hereunder or thereunder.
"Materials of Environmental Concern": any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum
products or any hazardous or toxic substances, materials or wastes,
defined or regulated as such in or under any Environmental Law,
including, without limitation, asbestos, polychlorinated biphenyls and
urea-formaldehyde insulation.
"Merger": as defined in Section 5.1(b).
"Merger Sub": AHFP Acquisition Corporation, a Delaware
corporation.
"Mortgaged Properties": the real properties listed on
Schedule 1.1B, as to which the Administrative Agent for the benefit of
the Lenders shall be granted a Lien pursuant to the Mortgages.
"Mortgages": each of the mortgages and deeds of trust made by
any Loan Party in favor of, or for the benefit of, the Administrative
Agent for the benefit of the Lenders, substantially in the form of
Exhibit D-1 or D-2, as the case may be (with such changes thereto as
shall be advisable under the law of the jurisdiction in which such
mortgage or deed of trust is to be recorded), as the same may be
amended, supplemented or otherwise modified from time to time.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds": (a) in connection with any Asset Sale or
any Recovery Event, the proceeds thereof in the form of cash and Cash
Equivalents (including any such proceeds received by way of deferred
payment of principal pursuant to a note or installment receivable or
purchase price adjustment receivable or otherwise, but only as and
when received) of such Asset Sale or Recovery Event, net of attorneys'
fees, accountants' fees, investment banking fees, survey costs, title
insurance premiums, amounts required to be applied to the repayment of
Indebtedness secured by a Lien expressly permitted hereunder on any
asset which is the subject of such Asset Sale or Recovery Event (other
than any Lien pursuant to a Security Document) and other customary
fees and expenses actually incurred in connection therewith, net of
taxes paid or reasonably estimated to be payable as a result thereof
(after taking into account any available tax credits or deductions and
any tax sharing arrangements) and net of purchase price adjustments
reasonably expected to be payable in connection therewith and (b) in
connection with any issuance or sale of equity securities or debt
securities or instruments or the incurrence of loans, the cash
proceeds received from such issuance or incurrence, net of attorneys'
fees, investment banking fees, accountants'
<PAGE> 21
16
fees, underwriting discounts and commissions and other customary fees
and expenses actually incurred in connection therewith, provided that,
with respect to any issuance or sale of debt securities or instruments
as described in this clause (b), to the extent that such cash proceeds
are used to refinance any Indebtedness permitted by this Agreement,
then such cash proceeds shall not constitute "Net Cash Proceeds" for
the purpose of this Agreement.
"Non-Excluded Taxes": as defined in Section 2.19(a).
"Non-U.S. Lender": as defined in Section 2.19(b).
"Notes": the collective reference to the Tranche A Term
Notes, the Tranche B Term Notes, the Tranche C Term Notes, the
Revolving Credit Notes and the Swing Line Note.
"Obligations": the unpaid principal of and interest on
(including, without limitation, interest accruing after the maturity
of the Loans and Reimbursement Obligations and interest accruing after
the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to the
Borrower, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) the Loans and all other
obligations and liabilities of the Borrower to the Administrative
Agent or to any Lender (or, in the case of Interest Rate Protection
Agreements, any affiliate of any Lender), whether direct or indirect,
absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection
with, this Agreement, any other Loan Document, the Letters of Credit,
any Interest Rate Protection Agreement entered into with any Lender or
any affiliate of any Lender or any other document made, delivered or
given in connection herewith or therewith, whether on account of
principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses (including, without limitation, all fees, charges and
disbursements of counsel to the Administrative Agent or to any Lender
that are required to be paid by the Borrower pursuant hereto) or
otherwise.
"Participant": as defined in Section 10.6(b).
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA (or any successor).
"Permitted Investors": the collective reference to Hicks Muse
and its Affiliates and principals.
"Permitted Issuance": (a) the issuance by the Borrower of
shares of Capital Stock as dividends on issued and outstanding Capital
Stock of the same class of the Borrower or pursuant to any dividend
reinvestment plan, (b) the issuance by the Borrower of options or
other equity securities of the Borrower to outside directors, members
of management or employees of the Borrower or any Subsidiary of the
Borrower, (c) the issuance of securities as interest or dividends on
pay-in-kind debt or preferred equity securities permitted hereunder
and under the Security Documents, and (d) the issuance to the Borrower
or any Subsidiary (or any director, with respect to directors'
qualifying shares) by any Subsidiary of the Borrower of any of its
Capital Stock, in
<PAGE> 22
17
each case with respect to this clause (d) to the extent such Capital
Stock is pledged to the Administrative Agent for the benefit of the
Lenders pursuant to the Guarantee and Collateral Agreement (provided,
that only 65% of the Capital Stock of an Excluded Foreign Subsidiary
is required to be so pledged).
"Person": an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, Governmental Authority or
other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which
is covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"Pricing Grid": the pricing grid attached hereto as Annex A.
"Prime Rate": as defined in the definition of "ABR".
"Pro Forma Balance Sheet": as defined in Section 4.1(a).
"Projections": as defined in Section 6.2(c).
"Properties": as defined in Section 4.17.
"Property": any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed and whether tangible
or intangible, including, without limitation, Capital Stock.
"Qualified Issuer": any commercial bank (a) which has capital
and surplus in excess of $250,000,000 and (b) the outstanding
long-term debt securities of which are rated at least A-2 by Standard
& Poor's Ratings Services or at least P-2 by Moody's Investors
Service, Inc., or carry an equivalent rating by a nationally
recognized rating agency if both of the two named rating agencies
cease publishing ratings of investments.
"Recovery Event": any settlement of or payment in respect of
any property insurance or casualty insurance claim or any condemnation
proceeding relating to any Property of the Borrower or any of its
Subsidiaries, excluding any such settlement or payment which, together
with any related settlement or payment, yields gross proceeds to the
Borrower or any of its Subsidiaries of less than $1,000,000.
"Refunded Swing Line Loans": as defined in Section 2.7.
"Refunding Date": as defined in Section 2.7.
"Register": as defined in Section 10.6(d).
<PAGE> 23
18
"Reimbursement Obligation": the obligation of the Borrower to
reimburse each Issuing Lender pursuant to Section 3.5 for amounts
drawn under Letters of Credit.
"Reinvestment Deferred Amount": with respect to any
Reinvestment Event, the aggregate Net Cash Proceeds received by the
Borrower or any of its Subsidiaries in connection therewith which are
not applied to prepay the Term Loans or reduce the Revolving Credit
Commitments pursuant to Section 2.11(b) as a result of the delivery of
a Reinvestment Notice.
"Reinvestment Event": any Asset Sale or Recovery Event in
respect of which the Borrower has delivered a Reinvestment Notice.
"Reinvestment Notice": a written notice executed by a
Responsible Officer stating that no Event of Default has occurred and
is continuing and that the Borrower (directly or indirectly through a
Subsidiary) intends and expects to use all or a specified portion of
the Net Cash Proceeds of an Asset Sale or Recovery Event to acquire
assets useful in its business.
"Reinvestment Prepayment Amount": with respect to any
Reinvestment Event, the Reinvestment Deferred Amount relating thereto
less any amount expended prior to the relevant Reinvestment Prepayment
Date to acquire assets useful in the Borrower's business.
"Reinvestment Prepayment Date": with respect to any
Reinvestment Event, the earlier of (a) the date occurring six months
after such Reinvestment Event and (b) the date on which the Borrower
shall have determined not to, or shall have otherwise ceased to,
acquire assets useful in the Borrower's business with all or any
portion of the relevant Reinvestment Deferred Amount.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty day
notice period is waived under the regulations issued pursuant to
Section 4043(b) of ERISA.
"Required Lenders": the holders of not less than 51% of (a)
until the Closing Date, the Commitments and (b) thereafter, the sum of
(i) the aggregate unpaid principal amount of the Term Loans and (ii)
the aggregate Revolving Credit Commitments or, if the Revolving Credit
Commitments have been terminated, the Total Revolving Extensions of
Credit.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation
(including, without limitation, Environmental Laws) or determination
of an arbitrator or a court or other Governmental Authority, in each
case applicable to or binding upon such Person or any of its property
or to which such Person or any of its property is subject.
<PAGE> 24
19
"Responsible Officer": the chief executive officer, the
president, any senior vice president, the chief financial officer or
the treasurer of the Borrower (including, in any event, any person who
is an officer of the Borrower and is named on the closing certificate
delivered by the Borrower on the Closing Date pursuant to Section
5.1(g) whether or not such person holds any of the foregoing
positions).
"Revolving Credit Commitment": as to any Lender, the
obligation of such Lender, if any, to make Revolving Credit Loans and
participate in Swing Line Loans and Letters of Credit, in an aggregate
principal and/or face amount not to exceed the amount set forth under
the heading "Revolving Credit Commitment" opposite such Lender's name
on Schedule 1.1A, as the same may be changed from time to time
pursuant to the terms hereof. The original aggregate amount of the
Revolving Credit Commitments is $100,000,000.
"Revolving Credit Commitment Period": the period from and
including the Closing Date to the Revolving Credit Termination Date.
"Revolving Credit Facility": as defined in the definition of
"Facility".
"Revolving Credit Lender": each Lender which has a Revolving
Credit Commitment or which has made Revolving Credit Loans.
"Revolving Credit Loans": as defined in Section 2.4.
"Revolving Credit Note": any promissory note of the Borrower
evidencing Revolving Credit Loans.
"Revolving Credit Percentage": as to any Revolving Credit
Lender at any time, the percentage which such Lender's Revolving
Credit Commitment then constitutes of the aggregate Revolving Credit
Commitments (or, at any time after the Revolving Credit Commitments
shall have expired or terminated, the percentage which the aggregate
principal amount of such Lender's Revolving Credit Loans then
outstanding constitutes of the aggregate principal amount of the
Revolving Credit Loans then outstanding).
"Revolving Credit Termination Date": the earlier of (a) the
Scheduled Revolving Credit Termination Date and (b) the date on which
the Tranche A Term Loans shall be paid in full.
"Revolving Extensions of Credit": as to any Revolving Credit
Lender at any time, an amount equal to the sum of (a) the aggregate
principal amount of all Revolving Credit Loans made by such Lender
then outstanding, (b) such Lender's Revolving Credit Percentage of the
L/C Obligations then outstanding and (c) such Lender's Revolving
Credit Percentage of the aggregate principal amount of Swing Line
Loans then outstanding.
"Scheduled Capital Expenditure Amount": in connection with
the calculation of the Consolidated Fixed Charge Coverage Ratio as at
the end of any period of four consecutive fiscal
<PAGE> 25
20
quarters of the Borrower ending on the last day of any fiscal quarter
set forth below, the amount set forth opposite such fiscal quarter:
<TABLE>
<CAPTION>
Fiscal Quarter Ending Amount
--------------------- ------
<S> <C>
December 31, 1997 to December 31, 1998 $35,000,000
March 31, 1999 $36,250,000
June 30, 1999 $37,500,000
September 30, 1999 $38,750,000
December 31, 1999 and thereafter $40,000,000
</TABLE>
"Scheduled Revolving Credit Termination Date": March 31,
2003.
"Security Documents": the collective reference to the
Guarantee and Collateral Agreement, the Mortgages and all other
security documents hereafter delivered to the Administrative Agent
granting a Lien on any Property of any Person to secure the
obligations and liabilities of any Loan Party under any Loan Document.
"Sellers": the collective reference to AHP and AHP Holding.
"Senior Subordinated Note Indenture": the Indenture entered
into by the Borrower and certain of its Subsidiaries in connection
with the issuance of the Senior Subordinated Notes, together with all
instruments and other agreements entered into by the Borrower or such
Subsidiaries in connection therewith, as the same may be amended,
supplemented or otherwise modified from time to time in accordance
with Section 7.9.
"Senior Subordinated Notes": the subordinated notes of the
Borrower issued on the Closing Date pursuant to the Senior
Subordinated Note Indenture.
"Single Employer Plan": any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"Solvent": when used with respect to any Person, means that,
as of any date of determination, (a) the fair value of the property of
such Person is greater than the total amount of liabilities,
including, without limitation, 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 is not about to engage in
business or a transaction, for which such Person's property would
constitute an unreasonably small capital.
"Specified Change of Control": a "Change of Control" as
defined in the Senior Subordinated Note Indenture.
<PAGE> 26
21
"Subsequent Purchase": as defined in Section 5.1(b).
"Subsidiary": as to any Person, a corporation, partnership,
limited liability company or other entity of which shares of stock or
other ownership interests having ordinary voting power (other than
stock or such other ownership interests having such power only by
reason of the happening of a contingency) to elect a majority of the
board of directors or other managers of such corporation, partnership
or other entity are at the time owned, or the management of which is
otherwise controlled, directly or indirectly through one or more
intermediaries, or both, by such Person. Unless otherwise qualified,
all references to a "Subsidiary" or to "Subsidiaries" in this
Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.
"Subsidiary Guarantor": each Subsidiary of the Borrower other
than any Excluded Foreign Subsidiary.
"Swing Line Commitment": the obligation of the Swing Line
Lender to make Swing Line Loans pursuant to Section 2.6 in an
aggregate principal amount at any one time outstanding not to exceed
$10,000,000.
"Swing Line Lender": as defined in Section 2.6.
"Swing Line Loans": as defined in Section 2.6.
"Swing Line Note": any promissory note of the Borrower
evidencing Swing Line Loans.
"Swing Line Participation Amount": as defined in Section 2.7.
"Term Loan Facilities": the collective reference to the
Tranche A Term Loan Facility, Tranche B Term Loan Facility and Tranche
C Term Loan Facility.
"Term Loan Lenders": the collective reference to the Tranche
A Term Loan Lenders, the Tranche B Term Loan Lenders and the Tranche C
Term Loan Lenders.
"Term Loans": the collective reference to the Tranche A Term
Loans, Tranche B Term Loans and Tranche C Term Loans.
"Test Period": any period of four consecutive fiscal quarters
of the Borrower (or, if less, the number of full fiscal quarters of
the Borrower subsequent to the Closing Date).
"Total Revolving Extensions of Credit": at any time, the
aggregate amount of the Revolving Extensions of Credit of the
Revolving Credit Lenders at such time.
"Tranche A Loans": the collective reference to the Tranche A
Term Loans, the Revolving Credit Loans and the Swing Line Loans.
<PAGE> 27
22
"Tranche A Term Loan": as defined in Section 2.1.
"Tranche A Term Loan Commitment": as to any Lender, the
obligation of such Lender, if any, to make a Tranche A Term Loan to
the Borrower hereunder in a principal amount not to exceed the amount
set forth under the heading "Tranche A Term Loan Commitment" opposite
such Lender's name on Schedule 1.1A. The original aggregate amount of
the Tranche A Term Loan Commitments is $300,000,000.
"Tranche A Term Loan Facility": as defined in the definition
of "Facility".
"Tranche A Term Loan Lender": each Lender which has a Tranche
A Term Loan Commitment or which has made a Tranche A Term Loan.
"Tranche A Term Loan Percentage": as to any Tranche A Term
Loan Lender at any time, the percentage which such Lender's Tranche A
Term Loan Commitment then constitutes of the aggregate Tranche A Term
Loan Commitments (or, at any time after the Closing Date, the
percentage which the principal amount of such Lender's Tranche A Term
Loan then outstanding constitutes of the aggregate principal amount of
the Tranche A Term Loans then outstanding).
"Tranche A Term Note": any promissory note of the Borrower
evidencing Tranche A Term Loans.
"Tranche B Term Loan": as defined in Section 2.1.
"Tranche B Term Loan Commitment": as to any Lender, the
obligation of such Lender, if any, to make a Tranche B Term Loan to
the Borrower hereunder in a principal amount not to exceed the amount
set forth under the heading "Tranche B Term Loan Commitment" opposite
such Lender's name on Schedule 1.1A. The original aggregate amount of
the Tranche B Term Loan Commitments is $200,000,000.
"Tranche B Term Loan Facility": as defined in the definition
of "Facility".
"Tranche B Term Loan Lender": each Lender which has a Tranche
B Term Loan Commitment or which has made a Tranche B Term Loan.
"Tranche B Term Loan Percentage": as to any Lender at any
time, the percentage which such Lender's Tranche B Term Loan
Commitment then constitutes of the aggregate Tranche B Term Loan
Commitments (or, at any time after the Closing Date, the percentage
which the principal amount of such Lender's Tranche B Term Loan then
outstanding constitutes of the aggregate principal amount of the
Tranche B Term Loans then outstanding).
"Tranche B Term Note": any promissory note of the Borrower
evidencing Tranche B Term Loans.
<PAGE> 28
23
"Tranche C Term Loan": as defined in Section 2.1.
"Tranche C Term Loan Commitment": as to any Lender, the
obligation of such Lender, if any, to make a Tranche C Term Loan to
the Borrower hereunder in a principal amount not to exceed the amount
set forth under the heading "Tranche C Term Loan Commitment" opposite
such Lender's name on Schedule 1.1A. The original aggregate amount of
the Tranche C Term Loan Commitments is $170,000,000.
"Tranche C Term Loan Facility": as defined in the definition
of "Facility".
"Tranche C Term Loan Lender": each Lender which has a Tranche
C Term Loan Commitment or which has made a Tranche C Term Loan.
"Tranche C Term Loan Percentage": as to any Lender at any
time, the percentage which such Lender's Tranche C Term Loan
Commitment then constitutes of the aggregate Tranche C Term Loan
Commitments (or, at any time after the Closing Date, the percentage
which the principal amount of such Lender's Tranche C Term Loan then
outstanding constitutes of the aggregate principal amount of the
Tranche C Term Loans then outstanding).
"Tranche C Term Note": any promissory note of the Borrower
evidencing Tranche C Term Loans.
"Transferee": as defined in Section 10.6(g).
"Type": as to any Loan, its nature as an ABR Loan or a
Eurodollar Loan.
"Unapplied Excess Cash Flow": any Excess Cash Flow that is
not required to be applied toward the prepayment of the Term Loans and
the reduction of the Revolving Credit Commitments pursuant to Section
2.11(c), as determined on each Excess Cash Flow Application Date in
respect of the immediately preceding fiscal year of the Borrower.
"Uniform Customs": the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, as the same may be revised from time to time.
"Wholly Owned Subsidiary": as to any Person, any other Person
all of the Capital Stock of which (other than directors' qualifying
shares required by law) is owned by such Person directly and/or
through other Wholly Owned Subsidiaries.
"Wholly Owned Subsidiary Guarantor": any Subsidiary Guarantor
that is a Wholly Owned Subsidiary of the Borrower.
<PAGE> 29
24
1.2 Other Definitional Provisions. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have the defined
meanings when used in the other Loan Documents or any certificate or other
document made or delivered pursuant hereto or thereto.
(b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms relating to the Borrower and its Subsidiaries not defined in
Section 1.1 and accounting terms partly defined in Section 1.1, to the extent
not defined, shall have the respective meanings given to them under GAAP;
provided that, if the Borrower notifies the Administrative Agent that the
Borrower requests an amendment to any provision hereof to eliminate the effect
of any change occurring after the date hereof in GAAP or in the application
thereof on the operation of such provision (or if the Administrative Agent
notifies the Borrower that the Required Lenders request an amendment to any
provision hereof for such purpose), regardless of whether any such notice is
given before or after such change in GAAP or in the application thereof, then
such provision shall be interpreted on the basis of GAAP as in effect and
applied immediately before such change shall have become effective until such
notice shall have been withdrawn or such provision amended in accordance
herewith.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Term Loan Commitments. Subject to the terms and
conditions hereof, (a) each Tranche A Term Loan Lender severally agrees to make
a term loan (a "Tranche A Term Loan") to the Borrower on the Closing Date in an
amount not to exceed the amount of the Tranche A Term Loan Commitment of such
Lender, (b) each Tranche B Term Loan Lender severally agrees to make a term
loan (a "Tranche B Term Loan") to the Borrower on the Closing Date in an amount
not to exceed the amount of the Tranche B Term Loan Commitment of such Lender
and (c) each Tranche C Term Loan Lender severally agrees to make a term loan (a
"Tranche C Term Loan") to the Borrower on the Closing Date in an amount not to
exceed the amount of the Tranche C Term Loan Commitment of such Lender. The
Term Loans may from time to time be Eurodollar Loans or ABR Loans, as
determined by the Borrower and notified to the Administrative Agent in
accordance with Sections 2.2 and 2.12.
2.2 Procedure for Term Loan Borrowing. The Borrower shall
give the Administrative Agent irrevocable notice (which notice must be received
by the Administrative Agent prior to 10:00 A.M., New York City time, one
Business Day prior to the anticipated Closing Date) requesting that the Term
Loan Lenders make the Term Loans on the Closing Date and specifying the amount
to be borrowed. The Term Loans made on the Closing Date shall initially be ABR
Loans. Upon receipt of such notice the Administrative Agent shall promptly
notify each Term Loan Lender thereof. Not later than 12:00 Noon, New York City
time, on the Closing Date each Term Loan Lender shall make available to the
<PAGE> 30
25
Administrative Agent at its office specified in Section 10.2 an amount in
immediately available funds equal to the Term Loan or Term Loans to be made by
such Lender. The Administrative Agent shall credit the account of the Borrower
on the books of such office of the Administrative Agent with the aggregate of
the amounts made available to the Administrative Agent by the Term Loan Lenders
in immediately available funds.
2.3 Repayment of Term Loans. (a) The Tranche A Term Loan of
each Tranche A Lender shall mature in 13 consecutive semi-annual installments,
commencing on March 31, 1997, each of which shall be in an amount equal to such
Lender's Tranche A Term Loan Percentage multiplied by the amount set forth
below opposite such installment:
<TABLE>
<CAPTION>
Installment Principal Amount
----------- ----------------
<S> <C>
March 31, 1997 $12,500,000
September 30, 1997 12,500,000
March 31, 1998 15,000,000
September 30, 1998 15,000,000
March 31, 1999 20,000,000
September 30, 1999 20,000,000
March 31, 2000 25,000,000
September 30, 2000 25,000,000
March 31, 2001 27,500,000
September 30, 2001 30,000,000
March 31, 2002 30,000,000
September 30, 2002 32,500,000
March 31, 2003 35,000,000
</TABLE>
(b) The Tranche B Term Loan of each Tranche B Lender shall
mature in 16 consecutive semi-annual installments, commencing on March 31,
1997, each of which shall be in an amount equal to such Lender's Tranche B Term
Loan Percentage multiplied by the amount set forth below opposite such
installment:
<TABLE>
<CAPTION>
Installment Principal Amount
----------- ----------------
<S> <C>
March 31, 1997 $ 250,000
September 30, 1997 250,000
March 31, 1998 250,000
September 30, 1998 250,000
March 31, 1999 250,000
September 30, 1999 250,000
March 31, 2000 250,000
September 30, 2000 250,000
March 31, 2001 250,000
September 30, 2001 250,000
</TABLE>
<PAGE> 31
26
<TABLE>
<S> <C>
March 31, 2002 250,000
September 30, 2002 250,000
March 31, 2003 250,000
September 30, 2003 26,750,000
March 31, 2004 85,000,000
September 30, 2004 85,000,000
</TABLE>
(c) The Tranche C Term Loan of each Tranche C Lender shall
mature in 18 consecutive semi-annual installments, commencing on March 31,
1997, each of which shall be in an amount equal to such Lender's Tranche C Term
Loan Percentage multiplied by the amount set forth below opposite such
installment:
<TABLE>
<CAPTION>
Installment Principal Amount
----------- ----------------
<S> <C>
March 31, 1997 $ 250,000
September 30, 1997 250,000
March 31, 1998 250,000
September 30, 1998 250,000
March 31, 1999 250,000
September 30, 1999 250,000
March 31, 2000 250,000
September 30, 2000 250,000
March 31, 2001 250,000
September 30, 2001 250,000
March 31, 2002 250,000
September 30, 2002 250,000
March 31, 2003 250,000
September 30, 2003 250,000
March 31, 2004 250,000
September 30, 2004 1,250,000
March 31, 2005 82,500,000
September 30, 2005 82,500,000
</TABLE>
2.4 Revolving Credit Commitments. (a) Subject to
the terms and conditions hereof, each Revolving Credit Lender severally agrees
to make revolving credit loans ("Revolving Credit Loans") to the Borrower from
time to time during the Revolving Credit Commitment Period in an aggregate
principal amount at any one time outstanding which, when added to such Lender's
Revolving Credit Percentage of the sum of (i) the L/C Obligations then
outstanding and (ii) the aggregate principal amount of the Swing Line Loans
then outstanding, does not exceed the amount of such Lender's Revolving Credit
Commitment. During the Revolving Credit Commitment Period the Borrower may use
the Revolving Credit Commitments by borrowing, prepaying the Revolving Credit
Loans in whole or in part, and reborrowing, all in accordance with the terms
and conditions hereof. The Revolving Credit Loans may from time to time be
Eurodollar Loans or ABR Loans, as determined by the Borrower and notified to
the Administrative Agent in accordance with Sections 2.5 and 2.12, provided
that no Revolving Credit Loan
<PAGE> 32
27
shall be made as a Eurodollar Loan after the day that is one month prior to the
Scheduled Revolving Credit Termination Date.
(b) The Borrower shall repay all outstanding Revolving Credit
Loans on the Revolving Credit Termination Date.
2.5 Procedure for Revolving Credit Borrowing. The Borrower
may borrow under the Revolving Credit Commitments during the Revolving Credit
Commitment Period on any Business Day, provided that the Borrower shall give
the Administrative Agent irrevocable notice (which notice must be received by
the Administrative Agent prior to 12:00 Noon, New York City time, (a) three
Business Days prior to the requested Borrowing Date, in the case of Eurodollar
Loans, or (b) one Business Day prior to the requested Borrowing Date, in the
case of ABR Loans), specifying (i) the amount and Type of Revolving Credit
Loans to be borrowed, (ii) the requested Borrowing Date and (iii) in the case
of Eurodollar Loans, the respective amounts of each such Type of Loan and the
respective lengths of the initial Interest Period therefor. Each borrowing
under the Revolving Credit Commitments shall be in an amount equal to (x) in
the case of ABR Loans, $1,000,000 or a whole multiple of $500,000 in excess
thereof (or, if the then aggregate Available Revolving Credit Commitments are
less than $1,000,000, such lesser amount) and (y) in the case of Eurodollar
Loans, $5,000,000 or a whole multiple of $1,000,000 in excess thereof;
provided, that the Swing Line Lender may request, on behalf of the Borrower,
borrowings under the Revolving Credit Commitments which are ABR Loans in other
amounts pursuant to Section 2.7. Upon receipt of any such notice from the
Borrower, the Administrative Agent shall promptly notify each Revolving Credit
Lender thereof. Each Revolving Credit Lender will make the amount of its pro
rata share of each borrowing available to the Administrative Agent for the
account of the Borrower at the office of the Administrative Agent specified in
Section 10.2 prior to 12:00 Noon, New York City time, on the Borrowing Date
requested by the Borrower in funds immediately available to the Administrative
Agent. Such borrowing will then be made available to the Borrower by the
Administrative Agent crediting the account of the Borrower on the books of such
office with the aggregate of the amounts made available to the Administrative
Agent by the Revolving Credit Lenders and in like funds as received by the
Administrative Agent.
2.6 Swing Line Commitment. (a) Subject to the terms and
conditions hereof, Chase (in such capacity, the "Swing Line Lender") agrees to
make a portion of the credit otherwise available to the Borrower under the
Revolving Credit Commitments from time to time during the Revolving Credit
Commitment Period by making swing line loans ("Swing Line Loans") to the
Borrower; provided that (i) the aggregate principal amount of Swing Line Loans
outstanding at any time shall not exceed the Swing Line Commitment then in
effect (notwithstanding that the Swing Line Loans outstanding at any time, when
aggregated with the Swing Line Lender's other outstanding Revolving Credit
Loans hereunder, may exceed the Swing Line Commitment then in effect) and (ii)
the Borrower shall not request, and the Swing Line Lender shall not make, any
Swing Line Loan if, after giving effect to the making of such Swing Line Loan,
the aggregate amount of the Available Revolving Credit Commitments would be
less than zero. During the Revolving Credit Commitment Period, the Borrower
may use the Swing Line Commitment by borrowing, repaying and reborrowing, all
in accordance with the terms and conditions hereof. Swing Line Loans shall be
ABR Loans only.
<PAGE> 33
28
(b) The Borrower shall repay all outstanding Swing Line Loans
on the Revolving Credit Termination Date.
2.7 Procedure for Swing Line Borrowing; Refunding of Swing
Line Loans. (a) Whenever the Borrower desires that the Swing Line Lender make
Swing Line Loans it shall give the Swing Line Lender irrevocable telephonic
notice confirmed promptly in writing (which telephonic notice must be received
by the Swing Line Lender not later than 1:00 P.M., New York City time, on the
proposed Borrowing Date), specifying (i) the amount to be borrowed and (ii) the
requested Borrowing Date (which shall be a Business Day during the Revolving
Credit Commitment Period). Each borrowing under the Swing Line Commitment
shall be in an amount equal to $250,000 or a whole multiple of $100,000 in
excess thereof. Not later than 3:00 P.M., New York City time, on the Borrowing
Date specified in a notice in respect of Swing Line Loans, the Swing Line
Lender shall make available to the Administrative Agent at its office specified
in Section 10.2 an amount in immediately available funds equal to the amount of
the Swing Line Loan to be made by the Swing Line Lender. The Administrative
Agent shall make the proceeds of such Swing Line Loan available to the Borrower
on such Borrowing Date by depositing such proceeds in the account of the
Borrower with the Administrative Agent on such Borrowing Date in immediately
available funds.
(b) The Swing Line Lender, at any time and from time to time
in its sole and absolute discretion may, on behalf of the Borrower (which
hereby irrevocably directs the Swing Line Lender to act on its behalf), on one
Business Day's notice given by the Swing Line Lender no later than 12:00 Noon,
New York City time, request each Revolving Credit Lender to make, and each
Revolving Credit Lender hereby agrees to make, a Revolving Credit Loan, in an
amount equal to such Revolving Credit Lender's Revolving Credit Percentage of
the aggregate amount of the Swing Line Loans (the "Refunded Swing Line Loans")
outstanding on the date of such notice, to repay the Swing Line Lender. Each
Revolving Credit Lender shall make the amount of such Revolving Credit Loan
available to the Administrative Agent at its office set forth in Section 10.2
in immediately available funds, not later than 10:00 A.M., New York City time,
one Business Day after the date of such notice. The proceeds of such Revolving
Credit Loans shall be immediately applied by the Swing Line Lender to repay the
Refunded Swing Line Loans. The Borrower irrevocably authorizes the Swing Line
Lender to charge the Borrower's accounts with the Administrative Agent (up to
the amount available in each such account) in order to immediately pay the
amount of such Refunded Swing Line Loans to the extent amounts received from
the Revolving Credit Lenders are not sufficient to repay in full such Refunded
Swing Line Loans.
(c) If prior to the time a Revolving Credit Loan would have
otherwise been made pursuant to Section 2.7(b), one of the events described in
Section 8(f) shall have occurred and be continuing with respect to the Borrower
or if for any other reason, as determined by the Swing Line Lender in its sole
discretion, Revolving Credit Loans may not be made as contemplated by Section
2.7(b), each Revolving Credit Lender shall, on the date such Revolving Credit
Loan was to have been made pursuant to the notice referred to in Section 2.7(b)
(the "Refunding Date"), purchase for cash an undivided participating interest
in an amount equal to (i) its Revolving Credit Percentage times (ii) the
aggregate principal amount of Swing Line Loans then outstanding which were to
have been repaid with such Revolving Credit Loans (the "Swing Line
Participation Amount").
<PAGE> 34
29
(d) Whenever, at any time after the Swing Line Lender has
received from any Revolving Credit Lender such Lender's Swing Line
Participation Amount, the Swing Line Lender receives any payment on account of
the Swing Line Loans, the Swing Line Lender will distribute to such Lender its
Swing Line Participation Amount (appropriately adjusted, in the case of
interest payments, to reflect the period of time during which such Lender's
participating interest was outstanding and funded and, in the case of principal
and interest payments, to reflect such Lender's pro rata portion of such
payment if such payment is not sufficient to pay the principal of and interest
on all Swing Line Loans then due); provided, however, that in the event that
such payment received by the Swing Line Lender is required to be returned, such
Revolving Credit Lender will return to the Swing Line Lender any portion
thereof previously distributed to it by the Swing Line Lender.
(e) Each Revolving Credit Lender's obligation to make the
Loans referred to in Section 2.7(b) and to purchase participating interests
pursuant to Section 2.7(c) shall be absolute and unconditional and shall not be
affected by any circumstance, including, without limitation, (i) any setoff,
counterclaim, recoupment, defense or other right which such Revolving Credit
Lender or the Borrower may have against the Swing Line Lender, the Borrower or
any other Person for any reason whatsoever; (ii) the occurrence or continuance
of a Default or an Event of Default or the failure to satisfy any of the other
conditions specified in Section 5; (iii) any adverse change in the condition
(financial or otherwise) of the Borrower; (iv) any breach of this Agreement or
any other Loan Document by the Borrower, any other Loan Party or any other
Revolving Credit Lender; or (v) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing.
2.8 Commitment Fees, etc. (a) The Borrower agrees to pay to
the Administrative Agent for the account of each Revolving Credit Lender a
commitment fee for the period from and including the Closing Date to the last
day of the Revolving Credit Commitment Period, computed at the Commitment Fee
Rate on the average daily amount of the Available Revolving Credit Commitment
of such Lender during the period for which payment is made, payable quarterly
in arrears on the last day of each March, June, September and December and on
the Revolving Credit Termination Date, commencing on the first of such dates to
occur after the date hereof.
(b) The Borrower agrees to pay to the Administrative Agent
the fees in the amounts and on the dates previously agreed to in writing by the
Borrower and the Administrative Agent.
2.9 Termination or Reduction of Revolving Credit Commitments.
The Borrower shall have the right, upon not less than three Business Days'
notice to the Administrative Agent, to terminate the Revolving Credit
Commitments or, from time to time, to reduce the amount of the Revolving Credit
Commitments; provided that no such termination or reduction of Revolving Credit
Commitments shall be permitted if, after giving effect thereto and to any
prepayments of the Revolving Credit Loans and Swing Line Loans made on the
effective date thereof, the Total Revolving Extensions of Credit would exceed
the Revolving Credit Commitments then in effect. Any such reduction shall be
in an amount equal to $1,000,000, or a whole multiple thereof, and shall reduce
permanently the Revolving Credit Commitments then in effect. Upon receipt of
any notice pursuant to this Section 2.9, the Administrative Agent shall
promptly notify each Revolving Credit Lender of the contents thereof.
<PAGE> 35
30
2.10 Optional Prepayments. The Borrower may at any time and
from time to time prepay the Loans, in whole or in part, without premium or
penalty, upon irrevocable notice delivered to the Administrative Agent at least
three Business Days prior thereto in the case of Eurodollar Loans and at least
one Business Day prior thereto in the case of ABR Loans, which notice shall
specify the date and amount of prepayment and whether the prepayment is of
Eurodollar Loans, ABR Loans or a combination thereof, and, if of a combination
thereof, the amount allocable to each; provided, that if a Eurodollar Loan is
prepaid on any day other than the last day of the Interest Period applicable
thereto, the Borrower shall also pay any amounts owing pursuant to Section
2.20. Upon receipt of any such notice the Administrative Agent shall promptly
notify each relevant Lender thereof. If any such notice is given, the amount
specified in such notice shall be due and payable on the date specified
therein. Amounts prepaid on account of the Term Loans may not be reborrowed.
Partial prepayments of Eurodollar Loans shall be in an aggregate principal
amount of $1,000,000 or a whole multiple thereof. Partial prepayments of ABR
Loans (other than Swing Line Loans) shall be in an aggregate principal amount
of $500,000 or a whole multiple thereof. Partial prepayments of Swing Line
Loans shall be in an aggregate principal amount of $100,000 or a whole multiple
thereof.
2.11 Mandatory Prepayments and Commitment Reductions. (a)
If any Capital Stock or Indebtedness shall be issued or Incurred by the
Borrower or any of its Subsidiaries (excluding any Permitted Issuance and any
Incurrence of Indebtedness in accordance with Section 7.2 as in effect on the
date of this Agreement), an amount equal to 100% of the Net Cash Proceeds
thereof (excluding any Equity Financing Proceeds) shall be applied on the date
of such issuance or Incurrence toward the prepayment of the Term Loans and the
reduction of the Revolving Credit Commitments as set forth in Section 2.11(d).
(b) If on any date the Borrower or any of its Subsidiaries
shall receive Net Cash Proceeds from any Asset Sale or Recovery Event then,
unless a Reinvestment Notice shall be delivered in respect thereof, such Net
Cash Proceeds shall be applied, within five Business Days after such date,
toward the prepayment of the Term Loans and the reduction of the Revolving
Credit Commitments as set forth in Section 2.11(d); provided, that,
notwithstanding the foregoing, (i) the aggregate Net Cash Proceeds of Asset
Sales that may be excluded from the foregoing requirement in any fiscal year of
the Borrower pursuant to a Reinvestment Notice, when added to the aggregate
fair market value of Property Disposed of in connection with Asset Swaps during
such fiscal year, shall not exceed $20,000,000 and (ii) on each Reinvestment
Prepayment Date, an amount equal to the Reinvestment Prepayment Amount with
respect to the relevant Reinvestment Event shall be applied toward the
prepayment of the Term Loans and the reduction of the Revolving Credit
Commitments as set forth in Section 2.11(d).
(c) If, for any fiscal year of the Borrower commencing with
the fiscal year ending December 31, 1997, there shall be Excess Cash Flow, the
Borrower shall, on the relevant Excess Cash Flow Application Date, apply the
ECF Percentage of such Excess Cash Flow toward the prepayment of the Term Loans
and the reduction of the Revolving Credit Commitments as set forth in Section
2.11(d). Each such prepayment and commitment reduction shall be made on a date
(an "Excess Cash Flow Application Date") no later than five days after the
earlier of (i) the date on which the financial statements of the Borrower
referred to in Section 6.1(a), for the fiscal year with respect to which such
prepayment is made, are required to be delivered to the Lenders and (ii) the
date such financial statements are actually delivered.
<PAGE> 36
31
(d) Amounts to be applied in connection with prepayments and
Revolving Credit Commitment reductions made pursuant to this Section 2.11 shall
be applied, first, to the prepayment of the Term Loans and, second, to reduce
permanently the Revolving Credit Commitments. Any such reduction of the
Revolving Credit Commitments shall be accompanied by prepayment of the
Revolving Credit Loans and/or Swing Line Loans to the extent, if any, that the
Total Revolving Extensions of Credit exceed the amount of the aggregate
Revolving Credit Commitments as so reduced, provided that if the aggregate
principal amount of Revolving Credit Loans and Swing Line Loans then
outstanding is less than the amount of such excess (because L/C Obligations
constitute a portion thereof), the Borrower shall, to the extent of the balance
of such excess, replace outstanding Letters of Credit and/or deposit an amount
in cash in a cash collateral account established with the Administrative Agent
for the benefit of the Lenders on terms and conditions satisfactory to the
Administrative Agent. The application of any prepayment pursuant to this
Section 2.11 shall be made first to ABR Loans and second to Eurodollar Loans.
Amounts prepaid on account of the Term Loans may not be reborrowed.
2.12 Conversion and Continuation Options. (a) The Borrower
may elect from time to time to convert Eurodollar Loans to ABR Loans by giving
the Administrative Agent at least one Business Day's prior irrevocable notice
of such election, provided that any such conversion of Eurodollar Loans may
only be made on the last day of an Interest Period with respect thereto. The
Borrower may elect from time to time to convert ABR Loans to Eurodollar Loans
by giving the Administrative Agent at least three Business Days' prior
irrevocable notice of such election (which notice shall specify the length of
the initial Interest Period therefor), provided that no ABR Loan under a
particular Facility may be converted into a Eurodollar Loan (i) when any Event
of Default has occurred and is continuing and the Administrative Agent or the
Majority Facility Lenders in respect of such Facility have determined in its or
their sole discretion not to permit such conversions or (ii) after the date
that is one month prior to the final scheduled termination or maturity date of
such Facility. Upon receipt of any such notice the Administrative Agent shall
promptly notify each relevant Lender thereof.
(b) Any Eurodollar Loan may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Borrower giving irrevocable notice to the Administrative Agent, in accordance
with the applicable provisions of the term "Interest Period" set forth in
Section 1.1, of the length of the next Interest Period to be applicable to such
Loans, provided that no Eurodollar Loan under a particular Facility may be
continued as such (i) when any Event of Default has occurred and is continuing
and the Administrative Agent has or the Majority Facility Lenders in respect of
such Facility have determined in its or their sole discretion not to permit
such continuations or (ii) after the date that is one month prior to the final
scheduled termination or maturity date of such Facility, and provided, further,
that if the Borrower shall fail to give any required notice as described above
in this paragraph or if such continuation is not permitted pursuant to the
preceding proviso such Loans shall be automatically converted to ABR Loans on
the last day of such then expiring Interest Period. Upon receipt of any such
notice the Administrative Agent shall promptly notify each relevant Lender
thereof.
2.13 Minimum Amounts and Maximum Number of Eurodollar
Tranches. Notwithstanding anything to the contrary in this Agreement, all
borrowings, conversions, continuations and optional prepayments of Eurodollar
Loans hereunder and all selections of Interest Periods hereunder shall be in
such amounts and be made pursuant to such elections so that, after giving
effect thereto, (a) the aggregate
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principal amount of the Eurodollar Loans comprising each Eurodollar Tranche
shall be equal to $5,000,000 or a whole multiple of $1,000,000 in excess
thereof, (b) no more than six Eurodollar Tranches under a particular Facility
shall be outstanding at any one time and (c) no more than sixteen Eurodollar
Tranches in the aggregate shall be outstanding at any one time.
2.14 Interest Rates and Payment Dates. (a) Each Eurodollar
Loan shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for such
day plus the Applicable Margin.
(b) Each ABR Loan shall bear interest at a rate per annum
equal to the ABR plus the Applicable Margin.
(c) (i) If all or a portion of the principal amount of any
Loan or Reimbursement Obligation shall not be paid when due (whether at the
stated maturity, by acceleration or otherwise), all outstanding Loans and
Reimbursement Obligations (whether or not overdue) shall bear interest at a
rate per annum which is equal to (x) in the case of the Loans, the rate that
would otherwise be applicable thereto pursuant to the foregoing provisions of
this Section 2.14 plus 2% or (y) in the case of Reimbursement Obligations, the
rate applicable to ABR Loans under the Revolving Credit Facility plus 2%, and
(ii) if all or a portion of any interest payable on any Loan or Reimbursement
Obligation or any commitment fee or other amount payable hereunder shall not be
paid when due (whether at the stated maturity, by acceleration or otherwise),
such overdue amount shall bear interest at a rate per annum equal to the rate
applicable to ABR Loans under the relevant Facility plus 2% (or, in the case of
any such other amounts that do not relate to a particular Facility, the rate
applicable to ABR Loans under the Revolving Credit Facility plus 2%), in each
case, with respect to clauses (i) and (ii) above, from the date of such
non-payment until such amount is paid in full (as well after as before
judgment).
(d) Interest shall be payable in arrears on each Interest
Payment Date, provided that interest accruing pursuant to paragraph (c) of this
Section 2.14 shall be payable from time to time on demand.
2.15 Computation of Interest and Fees. (a) Interest, fees
and commissions payable pursuant hereto shall be calculated on the basis of a
360-day year for the actual days elapsed, except that, with respect to ABR
Loans the rate of interest on which is calculated on the basis of the Prime
Rate, the interest thereon shall be calculated on the basis of a 365- (or 366-,
as the case may be) day year for the actual days elapsed. The Administrative
Agent shall as soon as practicable notify the Borrower and the relevant Lenders
of each determination of a Eurodollar Rate. Any change in the interest rate on
a Loan resulting from a change in the ABR or the Eurocurrency Reserve
Requirements shall become effective as of the opening of business on the day on
which such change becomes effective. The Administrative Agent shall as soon as
practicable notify the Borrower and the relevant Lenders of the effective date
and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the
Administrative Agent pursuant to any provision of this Agreement shall be
conclusive and binding on the Borrower and the Lenders in the absence of
manifest error. The Administrative Agent shall, at the request of the
Borrower, deliver to the
<PAGE> 38
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Borrower a statement showing the quotations used by the Administrative Agent in
determining any interest rate applicable to any Eurodollar Loan.
2.16 Inability to Determine Interest Rate. If prior to the
first day of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that,
by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for
such Interest Period, or
(b) the Administrative Agent shall have received notice from
the Majority Facility Lenders in respect of the relevant Facility that
the Eurodollar Rate determined or to be determined for such Interest
Period will not adequately and fairly reflect the cost to such Lenders
(as conclusively certified by such Lenders) of making or maintaining
their affected Loans during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to
the Borrower and the relevant Lenders as soon as practicable thereafter. If
such notice is given (x) any Eurodollar Loans under the relevant Facility
requested to be made on the first day of such Interest Period shall be made as
ABR Loans, (y) any Loans under the relevant Facility that were to have been
converted on the first day of such Interest Period to Eurodollar Loans shall be
continued as ABR Loans and (z) any outstanding Eurodollar Loans under the
relevant Facility shall be converted to ABR Loans on the last day of the
Interest Period applicable thereto. Until such notice has been withdrawn by
the Administrative Agent, no further Eurodollar Loans under the relevant
Facility shall be made or continued as such, nor shall the Borrower have the
right to convert Loans under the relevant Facility to Eurodollar Loans.
2.17 Pro Rata Treatment and Payments. (a) Each borrowing by
the Borrower from the Lenders hereunder, each payment by the Borrower on
account of any commitment fee and any reduction of the Commitments of the
Lenders shall be made, with regard to the applicable Facility, pro rata
according to the respective Tranche A Term Loan Percentages, Tranche B Term
Loan Percentages, Tranche C Term Loan Percentages or Revolving Credit
Percentages, as the case may be, of the relevant Lenders.
(b) Each payment (including each prepayment) by the Borrower
on account of principal of and interest on the Term Loans shall be made pro
rata according to the respective outstanding principal amounts of the Term
Loans then held by the Term Loan Lenders. The amount of each principal payment
of the Term Loans shall be applied to reduce the then remaining installments of
the Tranche A Term Loans, Tranche B Term Loans and Tranche C Term Loans, pro
rata based upon the then remaining number of installments thereof, after giving
effect to all prior reductions thereto (i.e., each then remaining installment
of the Tranche A Term Loans, Tranche B Term Loans or Tranche C Term Loans, as
the case may be, shall be reduced by an amount equal to the aggregate amount to
be applied to the Tranche A Term Loans, Tranche B Term Loans or Tranche C Term
Loans, as the case may be, divided by the number of the then remaining
installments for such Tranche A Term Loans, Tranche B Term Loans or Tranche C
Term Loans); provided, that if the amount to be so applied to any installment
would exceed the then remaining amount of such installment, then an amount
equal to such excess shall be applied to the next
<PAGE> 39
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succeeding installment after giving effect to all prior reductions thereto
(including the amount of prepayments theretofore allocated pursuant to the
preceding portion of this sentence). Notwithstanding the foregoing, the first
$40,000,000 of optional prepayments of the Term Loans shall be applied to such
installments of the Term Loans as the Borrower shall elect (other than
scheduled installments of the Tranche B Term Loans prior to September 30, 2003
and scheduled installments of the Tranche C Term Loans prior to March 31,
2005).
(c) Each payment (including each prepayment) by the Borrower
on account of principal of and interest on the Revolving Credit Loans shall be
made pro rata according to the respective outstanding principal amounts of the
Revolving Credit Loans then held by the Revolving Credit Lenders.
(d) All payments (including prepayments) to be made by the
Borrower hereunder, whether on account of principal, interest, fees or
otherwise, shall be made without setoff or counterclaim and shall be made prior
to 12:00 Noon, New York City time, on the due date thereof to the
Administrative Agent, for the account of the Lenders, at the Administrative
Agent's office specified in Section 10.2, in Dollars and in immediately
available funds. The Administrative Agent shall distribute such payments to
the Lenders promptly upon receipt in like funds as received. If any payment
hereunder becomes due and payable on a day other than a Business Day, such
payment shall be extended to the next succeeding Business Day (except, in the
case of Eurodollar Loans, as otherwise provided in clause (i) of the definition
of "Interest Period"). In the case of any extension of any payment of
principal pursuant to the preceding sentence, interest thereon shall be payable
at the then applicable rate during such extension.
(e) Unless the Administrative Agent shall have been notified
in writing by any Lender prior to a borrowing that such Lender will not make
the amount that would constitute its share of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the
Administrative Agent may, in reliance upon such assumption, make available to
the Borrower a corresponding amount. If such amount is not made available to
the Administrative Agent by the required time on the Borrowing Date therefor,
such Lender shall pay to the Administrative Agent, on demand, such amount with
interest thereon at a rate equal to the daily average Federal Funds Effective
Rate for the period until such Lender makes such amount immediately available
to the Administrative Agent. A certificate of the Administrative Agent
submitted to any Lender with respect to any amounts owing under this Section
2.17(e) shall be conclusive in the absence of manifest error. If such Lender's
share of such borrowing is not made available to the Administrative Agent by
such Lender within three Business Days of such Borrowing Date, the
Administrative Agent shall also be entitled to recover such amount with
interest thereon at the rate per annum applicable to ABR Loans under the
relevant Facility, on demand, from the Borrower.
2.18 Requirements of Law. (a) If the adoption of or any
change in any Requirement of Law or in the interpretation or application
thereof or compliance by any Lender with any request or directive (whether or
not having the force of law) from any central bank or other Governmental
Authority made subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind
whatsoever with respect to this Agreement, any Letter of Credit, any
Application or any Eurodollar Loan made by it, or change
<PAGE> 40
35
the basis of taxation of payments to such Lender in respect thereof
(except for Non-Excluded Taxes covered by Section 2.19, the
establishment of a tax based on the overall net income of such Lender
and changes in the rate of tax on the overall net income of such
Lender);
(ii) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, deposits or other liabilities in or for the
account of, advances, loans or other extensions of credit by, or any
other acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the Eurodollar Rate
hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting
into, continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit, or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrower shall promptly pay such Lender,
upon its demand, any additional amounts necessary to compensate such Lender for
such increased cost or reduced amount receivable. If any Lender becomes
entitled to claim any additional amounts pursuant to this Section 2.18, it
shall promptly (and in any event no later than 90 days after such Lender
becomes entitled to make such claim) notify the Borrower (with a copy to the
Administrative Agent) of the event by reason of which it has become so
entitled. If the Borrower notifies the Administrative Agent within five
Business Days after any Lender notifies the Borrower of any increased cost
pursuant to the foregoing provisions of this Section 2.18(a), the Borrower may
convert all Eurodollar Loans of such Lender then outstanding into ABR Loans in
accordance with Section 2.12 and shall, additionally, reimburse such Lender for
any cost in accordance with Section 2.20.
(b) If any Lender shall have determined that the adoption of
or any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder or under or in respect of any Letter
of Credit to a level below that which such Lender or such corporation could
have achieved but for such adoption, change or compliance (taking into
consideration such Lender's or such corporation's policies with respect to
capital adequacy) by an amount deemed by such Lender to be material, then from
time to time, after submission by such Lender to the Borrower (with a copy to
the Administrative Agent) of a written request therefor, the Borrower shall pay
to such Lender such additional amount or amounts as will compensate such Lender
or such corporation for such reduction; provided that the Borrower shall not be
required to compensate a Lender pursuant to this paragraph for any amounts
incurred more than six months prior to the date that such Lender notifies the
Borrower of such Lender's intention to claim compensation therefor; and
provided further that, if the circumstances giving rise to such claim have a
retroactive effect, then such six-month period shall be extended to include the
period of such retroactive effect.
<PAGE> 41
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(c) A certificate as to any additional amounts payable
pursuant to this Section 2.18, showing in reasonable detail the calculation
thereof and certifying that it is generally charging such costs to other
similarly situated borrowers under similar credit facilities, submitted by any
Lender to the Borrower (with a copy to the Administrative Agent), shall be
conclusive in the absence of manifest error, provided that the determination of
such amounts shall be made in good faith in a manner generally consistent with
such Lender's standard practices. The obligations of the Borrower pursuant to
this Section 2.18 shall survive the termination of this Agreement and the
payment of the Loans and all other amounts payable hereunder for a period of
nine months thereafter.
2.19 Taxes. (a) All payments made by the Borrower under
this Agreement shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding net income taxes and franchise taxes (imposed
in lieu of net income taxes) imposed on the Administrative Agent or any Lender
as a result of a present or former connection between the Administrative Agent
or such Lender 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 enforced, this Agreement or any other Loan Document). If any
such non-excluded taxes, levies, imposts, duties, charges, fees, deductions or
withholdings ("Non-Excluded Taxes") are required to be withheld from any
amounts payable to the Administrative Agent or any Lender hereunder, the
amounts so payable to the Administrative Agent or such Lender shall be
increased to the extent necessary to yield to the Administrative Agent or such
Lender (after payment of all Non-Excluded Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this
Agreement, 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 of America or a state thereof to the extent such
Lender's compliance with the requirements of Section 2.19(b) at the time such
Lender becomes a party to this Agreement fails to establish a complete
exemption from such withholding. Whenever any Non-Excluded Taxes are payable
by the Borrower, as promptly as possible thereafter the Borrower shall send to
the Administrative Agent for its own account or for the account of such Lender,
as the case may be, a certified copy of an original official receipt received
by the Borrower showing payment thereof. If the Borrower fails to pay any
Non-Excluded Taxes when due to the appropriate taxing authority or fails to
remit to the Administrative Agent the required receipts or other required
documentary evidence, the Borrower shall indemnify the Administrative Agent and
the Lenders for any incremental taxes, interest or penalties that may become
payable by the Administrative Agent or any Lender as a result of any such
failure. The agreements in this Section 2.19 shall survive the termination of
this Agreement and the payment of the Loans and all other amounts payable
hereunder for a period of nine months thereafter.
(b) Each Lender (or Transferee) that is not (i) a citizen or
resident of the United States of America, (ii) a corporation, partnership or
other entity created or organized in or under the laws of the United States of
America (or any jurisdiction thereof), or (iii) an estate or trust that is
subject to federal income taxation regardless of the source of its income
(each, a "Non-U.S. Lender") shall deliver to the Borrower and the
Administrative Agent (or, in the case of a Participant, to the Lender from
which the related participation shall have been purchased) two copies of either
U.S. Internal Revenue Service Form
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1001 or Form 4224, or, in the case of a Non-U.S. Lender claiming exemption from
U.S. federal withholding tax under Section 871(h) or 881(c) of the Code with
respect to payments of "portfolio interest", a Form W-8, or any subsequent
versions thereof or successors thereto (and, if such Non-U.S. Lender delivers a
Form W-8, an annual certificate representing, under penalty of perjury, that
such Non-U.S. Lender is not a "bank" for purposes of Section 881(c) of the
Code, is not a 10-percent shareholder (within the meaning of Section
871(h)(3)(B) of the Code) of the Borrower and is not a controlled foreign
corporation related to the Borrower (within the meaning of Section 864(d)(4) of
the Code)), properly completed and duly executed by such Non-U.S. Lender
claiming complete exemption from, or a reduced rate of, U.S. federal
withholding tax on all payments by the Borrower under this Agreement and the
other Loan Documents. Such forms shall be delivered by each Non-U.S. Lender on
or before the date it becomes a party to this Agreement (or, in the case of any
Participant, on or before the date such Participant purchases the related
participation). In addition, each Non-U.S. Lender shall deliver such forms on
or before the expiration or obsolescence and promptly upon the invalidity of
any form previously delivered by such Non-U.S. Lender and after the occurrence
of any event requiring a change in the most recently provided form and, if
necessary, obtain any extensions of time reasonably requested by the Borrower
of the Administrative Agent for filing and completing such forms. Each
Non-U.S. Lender agrees, to the extent legally entitled to do so, upon
reasonable request by the Borrower, to provide to the Borrower (for the benefit
of the Borrower and the Administrative Agent) such other forms as may be
reasonably required in order to establish the legal entitlement of such Lender
to an exemption from withholding with respect to payments of interest under
this Agreement or the other Loan Documents, provided that in determining the
reasonableness of such a request, such Lender shall be entitled to consider the
cost of complying with such request (to the extent unreimbursed by the
Borrower) that would be imposed on such Lender. Each Non-U.S. Lender shall
promptly notify the Borrower at any time it determines that it is no longer in
a position to provide any previously delivered certificate to the Borrower (or
any other form of certification adopted by the U.S. taxing authorities for such
purpose). Notwithstanding any other provision of this Section 2.19(b), a
Non-U.S. Lender shall not be required to deliver any form pursuant to this
Section 2.19(b) that such Non-U.S. Lender is not legally able to deliver.
2.20 Indemnity. The Borrower agrees to indemnify each Lender
and to hold each Lender harmless from any loss (excluding loss of profit) or
expense which such Lender may sustain or incur as a consequence of (a) default
by the Borrower in making a borrowing of, conversion into or continuation of
Eurodollar Loans after the Borrower has given a notice requesting the same in
accordance with the provisions of this Agreement, (b) default by the Borrower
in making any prepayment after the Borrower has given a notice thereof in
accordance with the provisions of this Agreement or (c) the making of a
prepayment of Eurodollar Loans on a day which is not the last day of an
Interest Period with respect thereto. Such indemnification may include an
amount equal to the excess, if any, of (i) the amount of interest which would
have accrued on the amount so prepaid, or not so borrowed, converted or
continued, for the period from the date of such prepayment or of such failure
to borrow, convert or continue to the last day of such Interest Period (or, in
the case of a failure to borrow, convert or continue, the Interest Period that
would have commenced on the date of such failure) in each case at the
applicable rate of interest for such Loans provided for herein (excluding,
however, the Applicable Margin included therein, if any) over (ii) the amount
of interest (as reasonably determined by such Lender) which would have accrued
to such Lender on such amount by placing such amount on deposit for a
comparable period with leading banks in the interbank eurodollar market. A
certificate as to any amounts payable pursuant to this
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Section 2.20, showing in reasonable detail the calculation thereof, submitted
to the Borrower by any Lender shall be conclusive in the absence of manifest
error. This covenant shall survive the termination of this Agreement and the
payment of the Loans and all other amounts payable hereunder for a period of
nine months thereafter.
2.21 Change of Lending Office. Each Lender agrees that, upon
the occurrence of any event giving rise to the operation of Section 2.18 or
2.19(a) with respect to such Lender, it will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Loans affected by such event with the
object of avoiding the consequences of such event; provided, that such
designation is made on terms that, in the sole judgment of such Lender, cause
such Lender and its lending office(s) to suffer no economic, legal or
regulatory disadvantage, and provided, further, that nothing in this Section
2.21 shall affect or postpone any of the obligations of any Borrower or the
rights of any Lender pursuant to Section 2.18 or 2.19(a).
2.22 Replacement of Lenders under Certain Circumstances. The
Borrower shall be permitted to replace any Lender which (a) requests
reimbursement for amounts owing pursuant to Section 2.18 or 2.19 or (b)
defaults in its obligation to make Loans hereunder, with a replacement
financial institution; provided that (i) such replacement does not conflict
with any Requirement of Law, (ii) no Event of Default shall have occurred and
be continuing at the time of such replacement, (iii) prior to any such
replacement, such Lender shall have taken no action under Section 2.21 so as to
eliminate the continued need for payment of amounts owing pursuant to Section
2.18 or 2.19, (iv) the Borrower shall repay (or the replacement financial
institution shall purchase, at par) all Loans and other amounts (including
accrued interest and fees) owing to such replaced Lender on or prior to the
date of replacement, (v) the Borrower shall be liable to such replaced Lender
under Section 2.20 if any Eurodollar Loan owing to such replaced Lender shall
be prepaid (or purchased) other than on the last day of the Interest Period
relating thereto, (vi) the replacement financial institution, if not already a
Lender, shall be reasonably satisfactory to the Administrative Agent, (vii) the
replaced Lender shall be obligated to make such replacement in accordance with
the provisions of Section 10.6, (viii) until such time as such replacement
shall be consummated, the Borrower shall pay all additional amounts (if any)
required pursuant to Section 2.18 or 2.19, as the case may be, and (ix) any
such replacement shall not be deemed to be a waiver of any rights which the
Borrower, the Administrative Agent or any other Lender shall have against the
replaced Lender.
SECTION 3. LETTERS OF CREDIT
3.1 L/C Commitment. (a) Subject to the terms and conditions
hereof, each Issuing Lender, in reliance on the agreements of the other
Revolving Credit Lenders set forth in Section 3.4(a), agrees to issue letters
of credit ("Letters of Credit") for the account of the Borrower on any Business
Day during the Revolving Credit Commitment Period in such form as may be
approved from time to time by such Issuing Lender; provided that no Issuing
Lender shall have any obligation to issue any Letter of Credit if, after giving
effect to such issuance, (i) the L/C Obligations would exceed the L/C
Commitment or (ii) the aggregate amount of the Available Revolving Credit
Commitments would be less than zero. Each Letter of Credit shall (i) be
denominated in Dollars and (ii) expire no later than the earlier of (x) the
first anniversary of its date of issuance and (y) the date which is five
Business Days prior to the Scheduled Revolving Credit Termination Date,
provided that any Letter of Credit with a one-year term may provide
<PAGE> 44
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for the renewal thereof for additional one-year periods (which shall in no
event extend beyond the date referred to in clause (y) above).
(b) Each Letter of Credit shall be subject to the Uniform
Customs and, to the extent not inconsistent therewith, the laws of the State of
New York.
(c) No Issuing Lender shall at any time be obligated to issue
any Letter of Credit hereunder if such issuance would conflict with, or cause
such Issuing Lender or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
3.2 Procedure for Issuance of Letter of Credit. The Borrower
may from time to time request that an Issuing Lender issue a Letter of Credit
by delivering to such Issuing Lender at its address for notices specified
herein an Application therefor, completed to the satisfaction of such Issuing
Lender, and such other certificates, documents and other papers and information
as such Issuing Lender may reasonably request. Upon receipt of any
Application, the relevant Issuing Lender will process such Application and the
certificates, documents and other papers and information delivered to it in
connection therewith in accordance with its customary procedures and shall
promptly issue the Letter of Credit requested thereby (but in no event shall
any Issuing Lender be required to issue any Letter of Credit earlier than three
Business Days after its receipt of the Application therefor and all such other
certificates, documents and other papers and information relating thereto) by
issuing the original of such Letter of Credit to the beneficiary thereof or as
otherwise may be agreed to by the relevant Issuing Lender and the Borrower.
The relevant Issuing Lender shall furnish a copy of such Letter of Credit to
the Borrower promptly following the issuance thereof. The relevant Issuing
Lender shall promptly furnish to the Administrative Agent notice of the
issuance of each Letter of Credit (including the amount thereof). The
Administrative Agent will furnish to the Revolving Credit Lenders (a) prompt
notice of the issuance of each standby Letter of Credit and (b) a monthly
report setting forth for the relevant month the total aggregate daily amount
available to be drawn under commercial Letters of Credit that were outstanding
during such month.
3.3 Commissions, Fees and Other Charges. (a) The Borrower
will pay to the Administrative Agent, for the account of each Revolving Credit
Lender, a commission on all outstanding Letters of Credit at a per annum rate
equal to the Applicable Margin then in effect with respect to Eurodollar Loans
under the Revolving Credit Facility minus the fronting fee referred to below,
shared ratably among the Revolving Credit Lenders and payable quarterly in
arrears on each L/C Fee Payment Date after the issuance date. In addition, the
Borrower shall pay to each Issuing Lender for its own account a fronting fee of
1/4 of 1% per annum in respect of each Letter of Credit issued by such Issuing
Lender, payable quarterly in arrears on each L/C Fee Payment Date after the
Issuance Date.
(b) In addition to the foregoing fees and commissions, the
Borrower shall pay or reimburse the relevant Issuing Lender for such normal and
customary costs and expenses as are incurred or charged by such Issuing Lender
in issuing, negotiating, effecting payment under, amending or otherwise
administering any Letter of Credit.
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3.4 L/C Participations. (a) Each Issuing Lender irrevocably
agrees to grant and hereby grants to each L/C Participant, and, to induce each
Issuing Lender to issue Letters of Credit hereunder, each L/C Participant
irrevocably agrees to accept and purchase and hereby accepts and purchases from
the relevant Issuing Lender, on the terms and conditions hereinafter stated,
for such L/C Participant's own account and risk an undivided interest equal to
such L/C Participant's Revolving Credit Percentage in such Issuing Lender's
obligations and rights under each Letter of Credit issued by such Issuing
Lender and the amount of each draft paid by such Issuing Lender thereunder.
Each L/C Participant unconditionally and irrevocably agrees with each Issuing
Lender that, if a draft is paid under any Letter of Credit issued by such
Issuing Lender for which such Issuing Lender is not reimbursed in full by the
Borrower in accordance with the terms of this Agreement, such L/C Participant
shall pay to such Issuing Lender upon demand an amount equal to such L/C
Participant's Revolving Credit Percentage of the amount of such draft, or any
part thereof, which is not so reimbursed.
(b) If any amount required to be paid by any L/C Participant
to any Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed
portion of any payment made by such Issuing Lender under any Letter of Credit
is paid to such Issuing Lender within three Business Days after the date such
payment is due, such L/C Participant shall pay to such Issuing Lender on demand
an amount equal to the product of (i) such amount, times (ii) the daily average
Federal Funds Effective Rate during the period from and including the date such
payment is required to the date on which such payment is immediately available
to such Issuing Lender, times (iii) a fraction the numerator of which is the
number of days that elapse during such period and the denominator of which is
360. If any such amount required to be paid by any L/C Participant pursuant to
Section 3.4(a) is not made available to such Issuing Lender by such L/C
Participant within three Business Days after the date such payment is due, such
Issuing Lender shall be entitled to recover from such L/C Participant, on
demand, such amount with interest thereon calculated from such due date at the
rate per annum applicable to ABR Loans under the Revolving Credit Facility. A
certificate of the relevant Issuing Lender submitted to any L/C Participant
with respect to any amounts owing under this Section shall be conclusive in the
absence of manifest error.
(c) Whenever, at any time after an Issuing Lender has made
payment under any Letter of Credit and has received from any L/C Participant
its pro rata share of such payment in accordance with Section 3.4(a), such
Issuing Lender receives any payment related to such Letter of Credit (whether
directly from the Borrower or otherwise, including proceeds of collateral
applied thereto by such Issuing Lender), or any payment of interest on account
thereof, such Issuing Lender will distribute to such L/C Participant its pro
rata share thereof; provided, however, that in the event that any such payment
received by such Issuing Lender shall be required to be returned by such
Issuing Lender, such L/C Participant shall return to such Issuing Lender the
portion thereof previously distributed by such Issuing Lender to it.
3.5 Reimbursement Obligation of the Borrower. The Borrower
agrees to reimburse each Issuing Lender on each date on which such Issuing
Lender notifies the Borrower of the date and amount of a draft presented under
any Letter of Credit and paid by such Issuing Lender for the amount of (a) such
draft so paid and (b) any taxes, fees, charges or other costs or expenses
incurred by such Issuing Lender in connection with such payment. Each such
payment shall be made to such Issuing Lender in lawful money of the United
States of America and in immediately available funds. Interest shall be
payable on any and all amounts remaining unpaid by the Borrower under this
Section from the date such amounts
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become payable (whether at stated maturity, by acceleration or otherwise) until
payment in full at the rate set forth in Section 2.14(c). Each drawing under
any Letter of Credit shall (unless an event of the type described in clause (i)
or (ii) of Section 8(f) shall have occurred and be continuing with respect to
the Borrower, in which case the procedures specified in Section 3.4 for funding
by L/C Participants shall apply) constitute a request by the Borrower to the
Administrative Agent for a borrowing pursuant to Section 2.5 of ABR Loans (or,
at the option of the Administrative Agent and the Swing Line Lender in their
sole discretion, a borrowing pursuant to Section 2.7 of Swing Line Loans) in
the amount of such drawing. The Borrowing Date with respect to such borrowing
shall be the date of payment of the relevant draft.
3.6 Obligations Absolute. The Borrower's obligations under
this Section 3 shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to
payment which the Borrower may have or have had against any Issuing Lender
(except to the extent resulting from the gross negligence or willful misconduct
of such Issuing Lender), any beneficiary of a Letter of Credit or any other
Person. The Borrower also agrees with each Issuing Lender that, subject to the
last sentence of this Section 3.6, no Issuing Lender shall be responsible for,
and the Borrower's Reimbursement Obligations under Section 3.5 shall not be
affected by, among other things, the validity or genuineness of documents or of
any endorsements thereon, even though such documents shall in fact prove to be
invalid, fraudulent or forged, or any dispute between or among the Borrower and
any beneficiary of any Letter of Credit or any other party to which such Letter
of Credit may be transferred or any claims whatsoever of the Borrower against
any beneficiary of such Letter of Credit or any such transferee. No Issuing
Lender shall be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors,
omissions or delays in transmission found by a final and nonappealable decision
of a court of competent jurisdiction to have resulted from the gross negligence
or willful misconduct of the Issuing Lender that issued such Letter of Credit.
The Borrower agrees that any action taken or omitted by any Issuing Lender
under or in connection with any Letter of Credit or the related drafts or
documents, if done in the absence of gross negligence or willful misconduct and
in accordance with the standards or care specified in the Uniform Commercial
Code of the State of New York, shall be binding on the Borrower and shall not
result in any liability of any Issuing Lender to the Borrower.
3.7 Letter of Credit Payments. If any draft shall be
presented for payment under any Letter of Credit, the relevant Issuing Lender
shall promptly notify the Borrower of the date and amount thereof. The
responsibility of each Issuing Lender to the Borrower in connection with any
draft presented for payment under any Letter of Credit issued by it shall, in
addition to any payment obligation expressly provided for in such Letter of
Credit, be limited to determining that the documents (including each draft)
delivered under such Letter of Credit in connection with such presentment are
substantially in conformity with such Letter of Credit.
3.8 Applications. To the extent that any provision of any
Application related to any Letter of Credit is inconsistent with the provisions
of this Section 3, the provisions of this Section 3 shall apply.
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SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter
into this Agreement and to make the Loans and issue or participate in the
Letters of Credit, the Borrower hereby represents and warrants to the
Administrative Agent and each Lender that:
4.1 Financial Condition. (a) The unaudited pro forma
consolidated balance sheet of the Borrower and its consolidated Subsidiaries as
at September 30, 1996 (including the notes thereto) (the "Pro Forma Balance
Sheet"), copies of which have heretofore been furnished to each Lender, has
been prepared giving effect (as if such events had occurred on such date) to
(i) the consummation of the Acquisitions, (ii) the Loans to be made and the
Senior Subordinated Notes to be issued on the Closing Date and the use of
proceeds thereof and (iii) the payment of fees and expenses in connection with
the foregoing. The Pro Forma Balance Sheet presents fairly on a pro forma
basis the financial position of the Borrower and its consolidated Subsidiaries
as at September 30, 1996 and is based upon good faith estimates and assumptions
believed by management of the Borrower to be reasonable at the time made,
assuming that the events specified in the preceding sentence had actually
occurred at such date.
(b) The audited consolidated balance sheets of the AHP Food
Business as at December 31, 1994 and December 31, 1995, and the related
consolidated statements of income and of cash flows for the fiscal years ended
on such dates, reported on by and accompanied by an unqualified report from
Arthur Andersen LLP, present fairly the consolidated financial condition of the
AHP Food Business as at such date, and the consolidated results of its
operations and its consolidated cash flows for the respective fiscal years then
ended. The audited consolidated balance sheet of Heritage and its consolidated
Subsidiaries as at December 31, 1995, and the related consolidated statements
of income and of cash flows for the fiscal years ended on such dates, reported
on by and accompanied by an unqualified report from Coopers & Lybrand L.L.P.,
present fairly the consolidated financial condition of Heritage and its
consolidated Subsidiaries as at such date, and the consolidated results of
their operations and their consolidated cash flows for the fiscal year then
ended. The unaudited consolidated balance sheet of the AHP Food Business as at
September 30, 1996, and the related unaudited consolidated statements of income
and cash flows for the nine-month period ended on such date, present fairly the
consolidated financial condition of the AHP Food Business as at such date, and
the consolidated results of its operations and its consolidated cash flows for
the nine-month period then ended (subject to normal year-end audit
adjustments). The unaudited consolidated balance sheets of Heritage and its
consolidated Subsidiaries as at September 30, 1996, and the related unaudited
consolidated statements of income and cash flows for the nine-month period
ended on such date, present fairly the consolidated financial condition of
Heritage and its consolidated Subsidiaries as at such date, and the
consolidated results of their operations and their consolidated cash flows for
the nine-month period then ended (subject to normal year-end audit
adjustments). All such financial statements, including the related schedules
and notes thereto, have been prepared in accordance with GAAP applied
consistently throughout the periods involved (except as approved by the
relevant firm of accountants and disclosed therein). The most recent balance
sheets referred to above reflect, as required by GAAP, with respect to the AHP
Food Business or Heritage, as the case may be, any material Guarantee
Obligations, contingent liabilities and liabilities for taxes, and any
long-term leases and unusual forward or long-term commitments, including,
without limitation, any interest rate or foreign currency swap or exchange
transaction or other obligation in respect of derivatives, in each case as of
the date of such
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43
balance sheets. During the period from September 30, 1996 to and including the
date hereof there has been no sale, transfer or other disposition by the AHP
Food Business or Heritage of any material part of its business or Property
(other than in connection with the Acquisitions).
4.2 No Change. Since December 31, 1995 there has been no
development or event which has had or could reasonably be expected to have a
Material Adverse Effect.
4.3 Corporate Existence; Compliance with Law. Each of the
Borrower and each of its Subsidiaries (a) is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization,
(b) has the corporate power and authority, and the legal right, to own and
operate its property, to lease the property it operates as lessee and to
conduct the business in which it is currently engaged, (c) is duly qualified as
a foreign corporation and in good standing under the laws of each jurisdiction
where its ownership, lease or operation of property or the conduct of its
business requires such qualification and (d) is in compliance with all
Requirements of Law except to the extent that the failure to comply therewith
could not, in the aggregate, reasonably be expected to have a Material Adverse
Effect.
4.4 Corporate Power; Authorization; Enforceable Obligations.
Each Loan Party has the corporate power and authority, and the legal right, to
make, deliver and perform the Loan Documents to which it is a party and, in the
case of the Borrower, to borrow and obtain other extensions of credit
hereunder. Each Loan Party has taken all necessary corporate action to
authorize the execution, delivery and performance of the Loan Documents to
which it is a party and, in the case of the Borrower, to authorize the
borrowings and other extensions of credit on the terms and conditions of this
Agreement. No consent or authorization of, filing with, notice to or other act
by or in respect of, any Governmental Authority or any other Person is required
in connection with the Acquisitions and the borrowings and other extensions of
credit hereunder or with the execution, delivery, performance, validity or
enforceability of this Agreement or any of the other Loan Documents, except (i)
consents, authorizations, filings and notices described in Schedule 4.4, which
consents, authorizations, filings and notices have been obtained or made and
are in full force and effect, (ii) consents under immaterial Contractual
Obligations relating to limitations on the assignability thereof and (iii) the
filings referred to in Section 4.19(b). Each Loan Document has been duly
executed and delivered on behalf of each Loan Party party thereto. This
Agreement constitutes, and each other Loan Document upon execution will
constitute, a legal, valid and binding obligation of each Loan Party party
thereto, enforceable against each such Loan Party in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
4.5 No Legal Bar. The execution, delivery and performance of
this Agreement and the other Loan Documents, the issuance of Letters of Credit,
the borrowings hereunder and the use of the proceeds thereof will not violate
any Requirement of Law or any material Contractual Obligation of the Borrower
or any of its Subsidiaries and will not result in, or require, the creation or
imposition of any Lien on any of their respective properties or revenues
pursuant to any Requirement of Law or any such Contractual Obligation (other
than the Liens created by the Security Documents). No Requirement of Law or
Contractual Obligation applicable to the Borrower or any of its Subsidiaries
could reasonably be expected to have a Material Adverse Effect.
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44
4.6 No Material Litigation. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the knowledge of the Borrower, threatened by or against the Borrower or any
of its Subsidiaries or against any of their respective properties or revenues
(a) with respect to any of the Loan Documents or any of the transactions
contemplated hereby or thereby, or (b) which could reasonably be expected to
have a Material Adverse Effect.
4.7 No Default. Neither the Borrower nor any of its
Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect which could reasonably be expected to have a
Material Adverse Effect. No Default or Event of Default has occurred and is
continuing.
4.8 Ownership of Property; Liens. Each of the Borrower and
each of its Subsidiaries has title in fee simple to, or a valid leasehold
interest in, all its real property, and good title to, or a valid leasehold
interest in, all its other property, and none of such property is subject to
any Lien except as permitted by Section 7.3.
4.9 Intellectual Property. Each of the Borrower and each of
its Subsidiaries owns (subject only to the recording of conveyance and
assignment documentation in the U.S. Patent and Trademark Office and other
applicable jurisdictions, which recording shall be completed promptly after the
Closing Date), or is licensed to use, all trademarks, tradenames, service
marks, copyrights, technology, know-how and processes ("Intellectual Property")
necessary for the conduct of its business as currently conducted. Except as,
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect, (a) no claim has been asserted and is pending by any Person challenging
or questioning the use of any Intellectual Property or the validity of any
Intellectual Property (nor does the Borrower know of any valid basis for any
such claim) and (b) the use of Intellectual Property by the Borrower and its
Subsidiaries does not infringe on the rights of, and no Intellectual Property
of the Borrower or any of its Subsidiaries is being infringed upon by, any
Person.
4.10 Taxes. Each of the Borrower and each of its
Subsidiaries has filed or caused to be filed all Federal and all material state
and other material tax returns which are required to be filed and has paid all
taxes shown to be due and payable on said returns or on any assessments made
against it or any of its property and all other taxes, fees or other charges
imposed on it or any of its property by any Governmental Authority (other than
any taxes, fees or other charges the amount or validity of which are currently
being contested in good faith by appropriate proceedings and with respect to
which reserves in conformity with GAAP have been provided on the books of the
Borrower or its Subsidiaries, as the case may be); and no tax Lien has been
filed, and, to the knowledge of the Borrower, no material claim is being
asserted, with respect to any such tax, fee or other charge.
4.11 Federal Regulations. No Letters of Credit and no part
of the proceeds of any Loans will be used for "purchasing" or "carrying" any
"margin stock" within the respective meanings of each of the quoted terms under
Regulation G or Regulation U of the Board as now and from time to time
hereafter in effect or for any purpose which violates the provisions of the
Regulations of the Board. If requested by any Lender or the Administrative
Agent, the Borrower will furnish to the Administrative Agent and each Lender a
statement to the foregoing effect in conformity with the requirements of FR
Form G-3 or FR Form U-1 referred to in said Regulation G or Regulation U, as
the case may be.
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45
4.12 Labor Matters. There are no strikes or other labor
disputes against the Borrower or any of its Subsidiaries pending or, to the
knowledge of the Borrower, threatened that (individually or in the aggregate)
could reasonably be expected to have a Material Adverse Effect. Hours worked
by and payment made to employees of the Borrower and its Subsidiaries have not
been in violation of the Fair Labor Standards Act or any other applicable
Requirement of Law dealing with such matters that (individually or in the
aggregate) could reasonably be expected to have a Material Adverse Effect. All
payments due from the Borrower or any of its Subsidiaries on account of
employee health and welfare insurance that (individually or in the aggregate)
could reasonably be expected to have a Material Adverse Effect if not paid have
been paid or accrued as a liability on the books of the Borrower or the
relevant Subsidiary.
4.13 ERISA. Neither a Reportable Event nor an "accumulated
funding deficiency" (within the meaning of Section 412 of the Code or Section
302 of ERISA) has occurred during the five-year period prior to the date on
which this representation is made or deemed made with respect to any Plan, and
each Plan has complied in all material respects with the applicable provisions
of ERISA and the Code. No termination of a Single Employer Plan has occurred,
and no Lien in favor of the PBGC or a Plan has arisen, during such five-year
period. The present value of all accrued benefits under each Single Employer
Plan (based on those assumptions used to fund such Plans) did not, as of the
last annual valuation date prior to the date on which this representation is
made or deemed made, exceed the value of the assets of such Plan allocable to
such accrued benefits by a material amount. Neither the Borrower nor any
Commonly Controlled Entity has had a complete or partial withdrawal from any
Multiemployer Plan that could reasonably be expected to have a Material Adverse
Effect, and neither the Borrower nor any Commonly Controlled Entity would
become subject to any liability under ERISA that could reasonably be expected
to have a Material Adverse Effect if the Borrower or any such Commonly
Controlled Entity were to withdraw completely from all Multiemployer Plans as
of the valuation date most closely preceding the date on which this
representation is made or deemed made. No such Multiemployer Plan is in
Reorganization or Insolvent.
4.14 Investment Company Act; Other Regulations. No Loan
Party is an "investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
No Loan Party is subject to regulation under any Requirement of Law (other than
Regulation X of the Board) which limits its ability to incur Indebtedness.
4.15 Subsidiaries. The Subsidiaries listed on Schedule 4.15
constitute all the Subsidiaries of the Borrower at the date hereof.
4.16 Use of Proceeds. The proceeds of the Term Loans shall
be used to finance a portion of the Acquisitions and to pay related fees and
expenses. The proceeds of the Revolving Credit Loans and the Swing Line Loans
shall be used for general corporate purposes. The Letters of Credit shall be
used for general corporate purposes.
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46
4.17 Environmental Matters. Except as, in the aggregate,
could not reasonably be expected to have a Material Adverse Effect:
(a) the facilities and properties owned, leased or operated
by the Borrower or any of its Subsidiaries (the "Properties") do not
contain, and have not previously contained, any Materials of
Environmental Concern in amounts or concentrations or under
circumstances which (i) constitute or constituted a violation of, or
(ii) could give rise to liability under, any Environmental Law;
(b) the Properties and all operations at the Properties are
in compliance, and have in the last five years been in compliance,
with all applicable Environmental Laws, and there is no contamination
at, under or about the Properties or violation of any Environmental
Law with respect to the Properties or the business operated by the
Borrower or any of its Subsidiaries (the "Business");
(c) neither the Borrower nor any of its Subsidiaries has
assumed any liability of any other Person under Environmental Laws;
(d) neither the Borrower nor any of its Subsidiaries has
received or is aware of any notice of violation, alleged violation,
non-compliance, liability or potential liability regarding
environmental matters or compliance with Environmental Laws with
regard to any of the Properties or the Business, nor does the Borrower
have knowledge or reason to believe that any such notice will be
received or is being threatened;
(e) Materials of Environmental Concern have not been
transported or disposed of from the Properties in violation of, or in
a manner or to a location which could give rise to liability under,
any Environmental Law, nor have any Materials of Environmental Concern
been generated, treated, stored or disposed of at, on or under any of
the Properties in violation of, or in a manner that could give rise to
liability under, any applicable Environmental Law;
(f) no judicial proceeding or governmental or administrative
action is pending or, to the knowledge of the Borrower, threatened,
under any Environmental Law to which the Borrower or any Subsidiary is
or will be named as a party with respect to the Properties or the
Business, nor are there any consent decrees or other decrees, consent
orders, administrative orders or other orders, or other administrative
or judicial requirements outstanding under any Environmental Law with
respect to the Properties or the Business; and
(g) there has been no release or threat of release of
Materials of Environmental Concern at or from the Properties, or
arising from or related to the operations of the Borrower or any
Subsidiary in connection with the Properties or otherwise in
connection with the Business, in violation of or in amounts or in a
manner that could give rise to liability under Environmental Laws.
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4.18 Accuracy of Information, etc. No statement or
information contained in this Agreement, any other Loan Document, the
Confidential Information Memorandum or any other document, certificate or
statement furnished to the Administrative Agent or the Lenders, or any of them,
by or on behalf of any Loan Party for use in connection with the transactions
contemplated by this Agreement or the other Loan Documents, contained as of the
date such statement, information, document or certificate was so furnished (or,
in the case of the Confidential Information Memorandum, as of the Closing
Date), any untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements contained herein or therein not
misleading. The projections and pro forma financial information and other
estimates and opinions contained in the materials referenced above are based
upon good faith estimates and assumptions believed by management of the
Borrower to be reasonable at the time made, it being recognized by the Lenders
that such financial information as it relates to future events is not to be
viewed as fact and that actual results during the period or periods covered by
such financial information may differ from the projected results set forth
therein by a material amount. As of the date hereof, the representations and
warranties of the Buyer and the Merger Sub and, to the best knowledge of the
Borrower, the Sellers and AH Food Co. in the Acquisition Agreement are true and
correct in all material respects. There is no fact known to any Loan Party
that could reasonably be expected to have a Material Adverse Effect that has
not been expressly disclosed herein, in the other Loan Documents, in the
Confidential Information Memorandum or in any other documents, certificates and
statements furnished to the Administrative Agent and the Lenders for use in
connection with the transactions contemplated hereby and by the other Loan
Documents.
4.19 Security Documents. (a) The Guarantee and Collateral
Agreement is effective to create in favor of the Administrative Agent, for the
benefit of the Lenders, a legal, valid and enforceable security interest in the
Collateral described therein and proceeds thereof. In the case of the Pledged
Stock described in the Guarantee and Collateral Agreement, when stock
certificates representing such Pledged Stock are delivered to the
Administrative Agent, and in the case of the other Collateral described in the
Guarantee and Collateral Agreement, when financing statements in appropriate
form are filed in the offices specified on Schedule 4.19(a), the Guarantee and
Collateral Agreement shall constitute a fully perfected Lien on, and security
interest in, all right, title and interest of the Loan Parties in such
Collateral and the proceeds thereof, as security for the Obligations (as
defined in the Guarantee and Collateral Agreement), in each case prior and
superior in right to any other Person subject, except in the case of such
Pledged Stock, to Liens permitted by paragraphs (a) through (f) of Section 7.3.
(b) Each of the Mortgages is effective to create in favor of
the Administrative Agent, for the benefit of the Lenders, a legal, valid and
enforceable Lien on the Mortgaged Properties described therein and proceeds
thereof, and when the Mortgages are filed in the offices specified on Schedule
4.19(b), each Mortgage shall constitute a fully perfected Lien on, and security
interest in, all right, title and interest of the Loan Parties in the Mortgaged
Properties and the proceeds thereof, as security for the Obligations (as
defined in the relevant Mortgage), in each case prior and superior in right to
any other Person, subject to Liens permitted by paragraphs (a) through (f) of
Section 7.3.
4.20 Solvency. Each Loan Party is, and after giving effect
to the Acquisitions and the incurrence of all Indebtedness and obligations
being incurred in connection herewith and therewith will be, Solvent.
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4.21 Senior Indebtedness. The Obligations constitute "Senior
Indebtedness" of the Borrower under and as defined in the Senior Subordinated
Note Indenture. The obligations of each Subsidiary Guarantor under the
Guarantee and Collateral Agreement constitute "Guarantor Senior Indebtedness"
of such Subsidiary Guarantor under and as defined in the Senior Subordinated
Note Indenture.
4.22 Regulation H. No Mortgage encumbers improved real
property which is located in an area that has been identified by the Secretary
of Housing and Urban Development as an area having special flood hazards and in
which flood insurance has been made available under the National Flood
Insurance Act of 1968.
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Initial Extension of Credit. The agreement
of each Lender to make the initial extension of credit requested to be made by
it is subject to the satisfaction, prior to or concurrently with the making of
such extension of credit on the Closing Date, of the following conditions
precedent:
(a) Loan Documents. The Administrative Agent shall have
received (i) this Agreement, executed and delivered by a duly
authorized officer of the Borrower, (ii) the Guarantee and Collateral
Agreement, executed and delivered by a duly authorized officer of the
Borrower and each Subsidiary Guarantor, (iii) each of the Mortgages,
executed and delivered by a duly authorized officer of each party
thereto, and (iv) for the account of each relevant Lender, Notes
conforming to the requirements hereof and executed and delivered by a
duly authorized officer of the Borrower.
(b) Acquisitions, HM Equity, Senior Subordinated Notes, etc.
The following transactions shall have been consummated, in each case
on terms and conditions reasonably satisfactory to the Lenders:
(i) Merger Sub shall have merged (the "Merger") with
and into AH Food Co. (with AH Food Co. being the surviving
corporation); AH Food Co. shall have changed its name to
International Home Foods, Inc.; at the time of the Merger and
after giving effect to certain related transactions referred
to below, the Borrower and its Subsidiaries shall conduct a
business (the "AHP Food Business") that manufactures, markets
and sells specialty foods products and, immediately prior to
such transactions, was conducted by AH Food Co., the Sellers
and their affiliates; certain Subsidiaries and other assets of
the Sellers and their affiliates included in the AHP Food
Business shall either have been transferred to AH Food Co.
immediately prior to the Merger or purchased by the Borrower
(any such purchase, a "Subsequent Purchase") immediately after
the Merger, as contemplated by the Acquisition Agreement; in
conjunction with the Merger, the Buyer shall have paid
consideration to the Sellers, the Borrower shall have redeemed
shares of common stock of the Borrower held by the Sellers and
the Borrower shall have paid to the Sellers the purchase price
for any Subsequent Purchase, with the aggregate amount
expended (the "AHP Purchase Price") by the Buyer and the
Borrower in connection with
<PAGE> 54
49
such transactions, together with the value of the shares of
common stock of the Borrower held by the Sellers after giving
effect to the Merger (valued on the same basis as the HM
Equity) being equal to not more than $1,275,000,000, subject
to adjustment as provided in the Acquisition Agreement; and
after giving effect to the foregoing transactions, 80% of the
common stock of the Borrower shall be owned by the Buyer and
20% of the common stock of the Borrower shall be owned by the
Sellers (all of the foregoing transactions, collectively, the
"AHP Acquisition");
(ii) the Borrower shall have acquired (the "Heritage
Acquisition") at least 75% of the capital stock of Heritage
for a purchase price (the "Heritage Purchase Price")
(including repayment of assumed Indebtedness of Heritage) of
not more than $70,000,000 and all Indebtedness of Heritage
outstanding immediately prior to the Heritage Acquisition
shall have been paid in full;
(iii) (x) the Buyer shall have received at least
$264,000,000 from the proceeds of equity (the "HM Equity")
issued by the Buyer to funds managed by Hicks Muse and other
investors satisfactory to the Lenders, and such proceeds shall
have been applied to finance a portion of the AHP Purchase
Price and the Heritage Purchase Price; and (y) the value of
the shares of common stock of the Borrower held by the Sellers
after giving effect to the AHP Acquisition (valued at a price
per share by reference to the HM Equity) shall be at least
$66,000,000; provided, that a portion of the amount referred
to in clause (x) above may be funded with the proceeds of
unsecured loans to the Buyer; and
(iv) the Borrower shall have received at least
$400,000,000 in gross cash proceeds from the issuance of the
Senior Subordinated Notes.
(c) Pro Forma Balance Sheet; Financial Statements. The
Lenders shall have received (i) the Pro Forma Balance Sheet, (ii)
audited consolidated financial statements of the AHP Food Business for
the 1994 and 1995 fiscal years and audited financial statements of
Heritage for the 1995 fiscal year and (iii) unaudited interim
consolidated financial statements of the AHP Food Business and
Heritage for each fiscal month and quarterly period ended subsequent
to the date of the latest applicable financial statements delivered
pursuant to clause (ii) of this paragraph as to which such financial
statements are available, and such financial statements shall not, in
the reasonable judgment of the Lenders, reflect any material adverse
change in the consolidated financial condition of the AHP Food
Business or Heritage, as the case may be, as reflected in the
financial statements or projections contained in the Confidential
Information Memorandum
(d) Lien Searches. The Administrative Agent shall have
received the results of a recent lien search in each of the
jurisdictions where assets of the Loan Parties are located, and such
search shall reveal no liens on any of the assets of the Borrower or
its Subsidiaries except for liens permitted by Section 7.3.
<PAGE> 55
50
(e) Environmental Audit. The Administrative Agent shall have
received an environmental audit with respect to the real properties of
the Borrower and its Subsidiaries specified by the Administrative
Agent.
(f) Expenses. The Administrative Agent shall have received
satisfactory evidence that the fees and expenses to be incurred in
connection with the Acquisitions and the financing thereof shall not
exceed $55,000,000.
(g) Closing Certificate. The Administrative Agent shall have
received, with a counterpart for each Lender, a certificate of each
Loan Party, dated the Closing Date, substantially in the form of
Exhibit C, with appropriate insertions and attachments.
(h) Legal Opinions. The Administrative Agent shall have
received the following executed legal opinions:
(i) the legal opinion of Vinson & Elkins,
counsel to the Borrower and its Subsidiaries, substantially in
the form of Exhibit F; and
(ii) the legal opinion of local counsel in each
of California, Pennsylvania and Ontario.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative
Agent may reasonably require.
(i) Pledged Stock; Stock Powers. The Administrative Agent
shall have received the certificates representing the shares of
Capital Stock pledged pursuant to the Guarantee and Collateral
Agreement, together with an undated stock power for each such
certificate executed in blank by a duly authorized officer of the
pledgor thereof.
(j) Filings, Registrations and Recordings. Each document
(including, without limitation, any Uniform Commercial Code financing
statement) required by the Security Documents or under law or
reasonably requested by the Administrative Agent to be filed,
registered or recorded in order to create in favor of the
Administrative Agent, for the benefit of the Lenders, a perfected Lien
on the Collateral described therein, prior and superior in right to
any other Person (other than with respect to Liens expressly permitted
by Section 7.3), shall be in proper form for filing, registration or
recordation.
(k) Mortgages, etc. (i) The Administrative Agent shall have
received a Mortgage with respect to each Mortgaged Property, executed
and delivered by a duly authorized officer of each party thereto.
(ii) If reasonably requested by the Administrative Agent, the
Administrative Agent shall have received, and the title insurance
company issuing the policy referred to in Section 5.1(m)(iii) (the
"Title Insurance Company") shall have received, maps or plats of an
as-built survey of the
<PAGE> 56
51
sites of the Mortgaged Properties certified to the Administrative
Agent and the Title Insurance Company in a manner satisfactory to
them, dated a date satisfactory to the Administrative Agent and the
Title Insurance Company by an independent professional licensed land
surveyor reasonably satisfactory to the Administrative Agent and the
Title Insurance Company, which maps or plats and the surveys on
which they are based shall be made in accordance with the Minimum
Standard Detail Requirements for Land Title Surveys jointly established
and adopted by the American Land Title Association and the American
Congress on Surveying and Mapping in 1992, and, without limiting the
generality of the foregoing, there shall be surveyed and shown on
such maps, plats or surveys the following: (A) the locations on such
sites of all the buildings, structures and other improvements and
the established building setback lines; (B) the lines of streets
abutting the sites and width thereof; (C) all access and other
easements appurtenant to the sites; (D) all roadways, paths, driveways,
easements, encroachments and overhanging projections and similar
encumbrances affecting the site, whether recorded, apparent from a
physical inspection of the sites or otherwise known to the surveyor;
(E) any encroachments on any adjoining property by the building
structures and improvements on the sites; (F) if the site is
described as being on a filed map, a legend relating the survey
to said map; and (G) the flood zone designations, if any, in which the
Mortgaged Properties are located; provided, that any of the foregoing
items so requested by the Administrative Agent may be delivered
after the Closing Date subject to compliance with Section 6.10(e).
(iii) The Administrative Agent shall have received in respect
of each Mortgaged Property a mortgagee's title insurance policy (or
policies) or marked up unconditional binder for such insurance. Each
such policy shall (A) be in an amount reasonably satisfactory to the
Administrative Agent; (B) be issued at ordinary rates; (C) insure that
the Mortgage insured thereby creates a valid first Lien on such
Mortgaged Property free and clear of all defects and encumbrances,
except as disclosed therein; (D) name the Administrative Agent for the
benefit of the Lenders as the insured thereunder; (E) be in the form
of ALTA Loan Policy - 1970 (Amended 10/17/70 and 10/17/84) (or
equivalent policies) to the extent available in the applicable
jurisdictions; (F) contain such endorsements and affirmative coverage
as the Administrative Agent may reasonably request to the extent
available in the applicable jurisdictions; and (G) be issued by title
companies satisfactory to the Administrative Agent (including any such
title companies acting as co-insurers or reinsurers, at the option of
the Administrative Agent). The Administrative Agent shall have
received evidence satisfactory to it that all premiums in respect of
each such policy, all charges for mortgage recording tax, and all
related expenses, if any, have been paid.
(iv) If reasonably requested by the Administrative Agent, the
Administrative Agent shall have received (A) a policy of flood
insurance which (1) covers any parcel of improved real property which
is encumbered by any Mortgage, (2) is written in an amount not less
than the outstanding principal amount of the indebtedness secured by
such Mortgage which is reasonably allocable to such real property or
the maximum limit of coverage made available with respect to the
particular type of property under the National Flood Insurance Act of
1968, whichever is less, and (3) has a term ending not later than the
maturity of the Indebtedness secured by such Mortgage and (B)
confirmation that the Borrower has received the notice required
pursuant to Section 208(e)(3) of Regulation H of the Board; provided,
that any of the foregoing items so requested by
<PAGE> 57
52
the Administrative Agent may be delivered after the Closing Date
subject to compliance with Section 6.10(e).
(v) The Administrative Agent shall have received a copy of
all recorded documents referred to, or listed as exceptions to title,
in the title policy or policies referred to in Section 5.1(k)(iii) and
a copy of all other material documents affecting the Mortgaged
Properties.
(l) Solvency Opinion. The Administrative Agent shall have
received a solvency opinion from Corporate Valuation Advisors, Inc.
(m) Insurance. The Administrative Agent shall have received
insurance certificates satisfying the requirements of the Guarantee
and Collateral Agreement and the Mortgages.
5.2 Conditions to Each Extension of Credit. The agreement of
each Lender to make any extension of credit requested to be made by it on any
date (including, without limitation, its initial extension of credit) is
subject to the satisfaction of the following conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by any Loan Party in or pursuant
to the Loan Documents shall be true and correct in all material
respects on and as of such date as if made on and as of such date.
(b) No Default. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the
extensions of credit requested to be made on such date.
(c) Revolving Credit Facility. In the case of any extension
of credit under the Revolving Credit Facility, after giving effect
thereto, the sum of the Total Revolving Extensions of Credit and the
Canadian Subsidiary Equivalent Outstandings shall not exceed
$100,000,000.
Each borrowing by and issuance of a Letter of Credit on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date of such extension of credit that the conditions contained in this
Section 5.2 have been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments
remain in effect, any Letter of Credit remains outstanding or any Loan or other
amount is owing to any Lender or the Administrative Agent hereunder, the
Borrower shall and shall cause each of its Subsidiaries to:
6.1 Financial Statements. Furnish to the Administrative
Agent (with sufficient copies for each Lender, which shall in turn be promptly
distributed by the Administrative Agent to the Lenders):
(a) as soon as available, but in any event within 95 days
after the end of each fiscal year of the Borrower, a copy of the
audited consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as at the end of such year and the related
audited consolidated statements
<PAGE> 58
53
of income and of cash flows for such year, setting forth in each case
in comparative form the figures for the previous year, reported on
without a "going concern" or like qualification or exception, or
qualification arising out of the scope of the audit, by independent
certified public accountants of nationally recognized standing;
(b) as soon as available, but in any event not later than 45
days after the end of each of the first three quarterly periods of
each fiscal year of the Borrower, the unaudited consolidated balance
sheet of the Borrower and its consolidated Subsidiaries as at the end
of such quarter and the related unaudited consolidated statements of
income and of cash flows for such quarter and the portion of the
fiscal year through the end of such quarter, setting forth in each
case in comparative form the figures for the previous year, certified
by a Responsible Officer as being fairly stated in all material
respects (subject to normal year-end audit adjustments); and
(c) as soon as available, but in any event not later than 30
days after the end of each month occurring during each fiscal year of
the Borrower (other than the third, sixth, ninth and twelfth such
month), the unaudited consolidated balance sheet of the Borrower and
its Subsidiaries as at the end of such month and the related unaudited
consolidated statements of income and of cash flows for such month and
the portion of the fiscal year through the end of such month, setting
forth in each case in comparative form the figures for the previous
year, certified by a Responsible Officer as being fairly stated in all
material respects (subject to normal year-end audit adjustments).
All such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
6.2 Certificates; Other Information. Furnish to the
Administrative Agent (with sufficient copies for each Lender, which shall in
turn be promptly distributed by the Administrative Agent to the Lenders) or, in
the case of clause (f), to the relevant Lender:
(a) concurrently with the delivery of the financial
statements referred to in Section 6.1(a), a certificate of the
independent certified public accountants reporting on such financial
statements stating that in making the examination necessary therefor
no knowledge was obtained of any Default or Event of Default, except
as specified in such certificate;
(b) concurrently with the delivery of any financial
statements pursuant to Section 6.1, (i) a certificate of a Responsible
Officer stating that, to the best of such Responsible Officer's
knowledge, each Loan Party during such period has observed or
performed all of its covenants and other agreements, and satisfied
every condition, contained in this Agreement and the other Loan
Documents to which it is a party to be observed, performed or
satisfied by it, and that such Responsible Officer has obtained no
knowledge of any Default or Event of Default except as specified in
such certificate and (ii) in the case of quarterly or annual financial
statements, (x) a Compliance Certificate containing all information
necessary for determining compliance by the Borrower and its
Subsidiaries with the provisions of this Agreement referred to therein
as of the
<PAGE> 59
54
last day of the relevant fiscal quarter or fiscal year and (y) to the
extent not previously disclosed to the Administrative Agent, a listing
of any state or province within the United States or Canada where any
Loan Party keeps inventory or equipment and of any Intellectual
Property arising under the laws of the United States or Canada (or any
jurisdiction therein) acquired by any Loan Party since the date of the
most recent list delivered pursuant to this clause (y) (or, in the
case of the first such list so delivered, since the Closing Date);
(c) as soon as available, and in any event no later than 45
days after the end of each fiscal year of the Borrower, a detailed
consolidated budget for the following fiscal year (including a
projected consolidated balance sheet of the Borrower and its
Subsidiaries as of the end of the following fiscal year, and the
related consolidated statements of projected cash flow, projected
changes in financial position and projected income), and, as soon as
available, significant revisions, if any, of such budget and
projections with respect to such fiscal year (collectively, the
"Projections"), which Projections shall in each case be accompanied by
a certificate of a Responsible Officer stating that such Projections
are based upon good faith estimates and assumptions believed by
management of the Borrower to be reasonable at the time made, it being
recognized by the Lenders that such financial information as it
relates to future events is not to be viewed as fact and that actual
results during the period or periods covered by such financial
information may differ from the projected results set forth therein by
a material amount;
(d) within 45 days after the end of each fiscal quarter of
the Borrower, a narrative discussion and analysis of the financial
condition and results of operations of the Borrower and its
Subsidiaries for such fiscal quarter and for the period from the
beginning of the then current fiscal year to the end of such fiscal
quarter, as compared to the portion of the Projections covering such
periods and to the comparable periods of the previous year;
(e) within five days after the same are sent, copies of all
financial statements and reports which the Borrower sends to the
holders of any class of its debt securities or public equity
securities and within five days after the same are filed, copies of
all financial statements and reports which the Borrower may make to,
or file with, the Securities and Exchange Commission or any successor
or analogous Governmental Authority; and
(f) promptly, such additional financial and other information
as any Lender may from time to time reasonably request.
6.3 Payment of Obligations. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all its material obligations of whatever nature, except where the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and reserves in conformity with GAAP with respect thereto have been
provided on the books of the Borrower or its Subsidiaries, as the case may be.
6.4 Conduct of Business and Maintenance of Existence, etc.
(a) (i) Continue to engage in business of the same general type as now
conducted by it, (ii) preserve, renew and keep in full force and effect its
corporate existence and (iii) take all reasonable action to maintain all
rights, privileges and
<PAGE> 60
55
franchises necessary or desirable in the normal conduct of its business,
except, in each case, as otherwise permitted by Section 7.4 and except, in the
case of clause (iii) above, to the extent that failure to do so could not
reasonably be expected to have a Material Adverse Effect; and (b) comply with
all Contractual Obligations and Requirements of Law except to the extent that
failure to comply therewith could not, in the aggregate, reasonably be expected
to have a Material Adverse Effect.
6.5 Maintenance of Property; Insurance. (a) Keep all
property useful and necessary in its business in good working order and
condition, ordinary wear and tear excepted and (b) maintain with financially
sound and reputable insurance companies insurance on all its property in at
least such amounts and against at least such risks (but including in any event
public liability, product liability and business interruption) as are usually
insured against in the same general area by companies engaged in the same or a
similar business.
6.6 Inspection of Property; Books and Records; Discussions.
(a) Keep proper books of records and account in which full, true and correct
entries in conformity with GAAP and all Requirements of Law shall be made of
all dealings and transactions in relation to its business and activities and
(b) upon reasonable prior notice and at any reasonable time, permit
representatives of the Administrative Agent or any Lender to visit and inspect
any of its properties and examine and, if reasonably requested, make copies of
its contracts, books and records and to discuss the business, operations,
properties and financial and other condition of the Borrower and its
Subsidiaries with officers and employees of the Borrower and its Subsidiaries
and with its independent certified public accountants; provided that the
Administrative Agent or such Lender shall notify the Borrower prior to any
contact with such accountants and give the Borrower the opportunity to
participate in such discussions.
6.7 Notices. Promptly give notice to the Administrative
Agent and each Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries or (ii)
litigation, investigation or proceeding which may exist at any time
between the Borrower or any of its Subsidiaries and any Governmental
Authority and which has a reasonable likelihood of being adversely
determined, which in either case, if not cured or if adversely
determined, as the case may be, could reasonably be expected to have a
Material Adverse Effect;
(c) any litigation or proceeding affecting the Borrower or
any of its Subsidiaries in which the amount involved is $10,000,000 or
more and not covered by insurance or in which injunctive or similar
relief is sought;
(d) the following events, as soon as possible and in any
event within 30 days after the Borrower knows or has reason to know
thereof: (i) the occurrence of any Reportable Event with respect to
any Plan, a failure to make any required contribution to a Plan, the
creation of any Lien in favor of the PBGC or a Plan or any withdrawal
from, or the termination, Reorganization or Insolvency of, any
Multiemployer Plan or (ii) the institution of proceedings or the
taking of any
<PAGE> 61
56
other action by the PBGC or the Borrower or any Commonly Controlled
Entity or any Multiemployer Plan with respect to the withdrawal from,
or the termination, Reorganization or Insolvency of, any Plan; and
(e) any development or event which has had or could
reasonably be expected to have a Material Adverse Effect.
Each notice pursuant to this Section 6.7 shall be accompanied by a statement of
a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action the Borrower or the relevant Subsidiary
proposes to take with respect thereto.
6.8 Environmental Laws. (a) Except as could not reasonably
be expected to have a Material Adverse Effect, comply with, and ensure
compliance by all tenants and subtenants, if any, with, all applicable
Environmental Laws, and obtain and comply with and maintain, and ensure that
all tenants and subtenants obtain and comply with and maintain, any and all
licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws.
(b) Conduct and complete all investigations, studies,
sampling and testing, and all remedial, removal and other actions required
under Environmental Laws and promptly comply in all material respects with all
lawful orders and directives of all Governmental Authorities regarding
Environmental Laws.
6.9 Interest Rate Protection. In the case of the Borrower,
within 90 days after the Closing Date, enter into Interest Rate Protection
Agreements to the extent necessary to provide that at least 50% of the
aggregate principal amount of the Senior Subordinated Notes and the Term Loans
is subject to either a fixed interest rate or interest rate protection for a
period of not less than one year (provided, that in the event that the term
thereof shall be less than two years, such Interest Rate Protection Agreements
shall be extended or replaced no later than the expiration of such term, with
the term of such extended or replacement Interest Rate Protection Agreements
ending no earlier than the second anniversary of the date on which the original
Interest Rate Protection Agreements were entered into), which Interest Rate
Protection Agreements shall in each case have terms and conditions reasonably
satisfactory to the Administrative Agent.
6.10 Additional Collateral, etc. (a) With respect to any
Property acquired after the Closing Date by the Borrower or any of its
Subsidiaries (other than (x) any Property described in paragraph (b), (c) or
(d) below and (y) any Property subject to a Lien expressly permitted by Section
7.3(g)) as to which the Administrative Agent, for the benefit of the Lenders,
does not have a perfected Lien, promptly (i) execute and deliver to the
Administrative Agent such amendments to the Guarantee and Collateral Agreement
or such other documents as the Administrative Agent deems necessary or
advisable in order to grant to the Administrative Agent, for the benefit of the
Lenders, a security interest in such Property and (ii) take all actions
necessary or advisable to grant to the Administrative Agent, for the benefit of
the Lenders, a perfected first priority security interest in such Property,
including without limitation, the filing of Uniform Commercial Code financing
statements in such jurisdictions as may be required by the
<PAGE> 62
57
Guarantee and Collateral Agreement or by law or as may be reasonably requested
by the Administrative Agent.
(b) With respect to any fee interest in any real estate
which, together with any related parcel of real estate not yet subject to a
Mortgage, has a value (determined inclusive of any improvements thereof) of at
least $5,000,000 acquired after the Closing Date by the Borrower or any of its
Subsidiaries (other than any such real estate subject to a Lien expressly
permitted by Section 7.3(g)), promptly (i) execute and deliver a first priority
mortgage or deed of trust (subject only to Liens permitted by Section 7.3) in
favor of the Administrative Agent, for the benefit of the Lenders, covering
such real estate, in form and substance reasonably satisfactory to the
Administrative Agent, (ii) if reasonably requested by the Administrative Agent,
provide the Lenders with (x) title and extended coverage insurance covering
such real estate in an amount at least equal to the purchase price of such real
estate (or such other amount as shall be reasonably specified by the
Administrative Agent) as well as a current ALTA survey thereof, together with a
surveyor's certificate and (y) any consents or estoppels reasonably deemed
necessary or advisable by the Administrative Agent in connection with such
mortgage or deed of trust, each of the foregoing in form and substance
reasonably satisfactory to the Administrative Agent and (iii) if reasonably
requested by the Administrative Agent, deliver to the Administrative Agent
legal opinions relating to the matters described above, which opinions shall be
in form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.
(c) With respect to any new Subsidiary (other than an
Excluded Foreign Subsidiary) created or acquired after the Closing Date (which,
for the purposes of this paragraph (c), shall include any existing Subsidiary
that ceases to be an Excluded Foreign Subsidiary) by the Borrower or any of its
Subsidiaries, promptly (i) execute and deliver to the Administrative Agent such
amendments to the Guarantee and Collateral Agreement as the Administrative
Agent deems necessary or advisable in order to grant to the Administrative
Agent, for the benefit of the Lenders, a perfected first priority security
interest in the Capital Stock of such new Subsidiary which is owned by the
Borrower or any of its Subsidiaries, (ii) deliver to the Administrative Agent
the certificates representing such Capital Stock, together with undated stock
powers, in blank, executed and delivered by a duly authorized officer of the
Borrower or such Subsidiary, as the case may be, (iii) cause such new
Subsidiary (A) to become a party to the Guarantee and Collateral Agreement and
(B) to take such actions necessary or advisable to grant to the Administrative
Agent for the benefit of the Lenders a perfected first priority security
interest in the Collateral described in the Guarantee and Collateral Agreement
with respect to such new Subsidiary, including, without limitation, the filing
of Uniform Commercial Code financing statements in such jurisdictions as may be
required by the Guarantee and Collateral Agreement or by law or as may be
reasonably requested by the Administrative Agent, and (iv) if reasonably
requested by the Administrative Agent, deliver to the Administrative Agent
legal opinions relating to the matters described above, which opinions shall be
in form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.
(d) With respect to any new Excluded Foreign Subsidiary
created or acquired after the Closing Date by the Borrower or any of its
Subsidiaries, promptly (i) execute and deliver to the Administrative Agent such
amendments to the Guarantee and Collateral Agreement as the Administrative
Agent deems necessary or advisable in order to grant to the Administrative
Agent, for the benefit of the
<PAGE> 63
58
Lenders, a perfected first priority security interest in the Capital Stock of
such new Subsidiary which is owned by the Borrower or any of its Subsidiaries
(provided that in no event shall more than 65% of the total outstanding Capital
Stock of any such new Subsidiary be required to be so pledged), (ii) deliver to
the Administrative Agent the certificates representing such Capital Stock,
together with undated stock powers, in blank, executed and delivered by a duly
authorized officer of the Borrower or such Subsidiary, as the case may be and
(iii) if reasonably requested by the Administrative Agent, deliver to the
Administrative Agent legal opinions relating to the matters described above,
which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Administrative Agent.
(e) Within 60 days after the Closing Date, deliver any items
requested by the Administrative Agent pursuant to Sections 5.1(k)(ii) and
5.1(k)(iv) and not delivered on the Closing Date, together with, in the case of
surveys, such endorsements to the title insurance policies referred to in
Section 5.1(k)(iii) relating to the matters disclosed in such surveys as may be
reasonably requested by the Administrative Agent. In the case of the Borrower,
within 30 days after the Closing Date, acquire that portion of the capital
stock of Heritage not acquired by the Borrower on the Closing Date.
SECTION 7. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments
remain in effect, any Letter of Credit remains outstanding or any Loan or other
amount is owing to any Lender or the Administrative Agent hereunder, the
Borrower shall not, and shall not permit any of its Subsidiaries to, directly
or indirectly:
7.1 Financial Condition Covenants.
(a) Consolidated Leverage Ratio. Permit the Consolidated
Leverage Ratio as at the last day of any Test Period ending with any fiscal
quarter set forth below to exceed the ratio set forth below opposite such
fiscal quarter:
<TABLE>
<CAPTION>
Fiscal Quarter Ending Consolidated Leverage Ratio
--------------------- ---------------------------
<S> <C>
3/31/97-12/31/97 6.50 to 1.0
3/31/98-6/30/98 6.40 to 1.0
9/30/98 6.20 to 1.0
12/31/98 6.10 to 1.0
3/31/99 5.95 to 1.0
6/30/99 5.90 to 1.0
9/30/99 5.80 to 1.0
12/31/99 5.70 to 1.0
3/31/00 5.60 to 1.0
6/30/00 5.50 to 1.0
9/30/00 5.40 to 1.0
12/31/00 5.30 to 1.0
3/31/01-6/30/01 5.00 to 1.0
</TABLE>
<PAGE> 64
59
<TABLE>
<CAPTION>
Fiscal Quarter Ending Consolidated Leverage Ratio
--------------------- ---------------------------
<S> <C>
9/30/01-12/31/01 4.90 to 1.0
3/31/02-6/30/02 4.60 to 1.0
9/30/02-12/31/02 4.40 to 1.0
3/31/03 4.30 to 1.0
6/30/03 4.20 to 1.0
9/30/03 4.10 to 1.0
12/31/03 and thereafter 4.00 to 1.0
</TABLE>
(b) Consolidated Interest Coverage Ratio. Permit the
Consolidated Interest Coverage Ratio for any Test Period ending with any fiscal
quarter set forth below to be less than the ratio set forth below opposite such
fiscal quarter:
<TABLE>
<CAPTION>
Fiscal Quarter Consolidated Interest
Ending Coverage Ratio
-------------- ---------------------
<S> <C>
3/31/97-3/31/98 1.50 to 1.0
6/30/98-12/31/98 1.55 to 1.0
3/31/99-12/31/99 1.60 to 1.0
3/31/00-6/30/00 1.70 to 1.0
9/30/00-12/31/00 1.75 to 1.0
3/31/01-6/30/01 1.80 to 1.0
9/30/01-12/31/01 1.90 to 1.0
3/31/02-6/30/02 2.00 to 1.0
9/30/02-12/31/02 2.10 to 1.0
3/31/03-9/30/03 2.20 to 1.0
12/31/03 and 2.30 to 1.0
thereafter
</TABLE>
(c) Consolidated Fixed Charge Coverage Ratio. Permit the
Consolidated Fixed Charge Coverage Ratio for any Test Period ending with any
fiscal quarter set forth below to be less than the ratio set forth below
opposite such fiscal quarter:
<TABLE>
<CAPTION>
Fiscal Quarter Consolidated Interest
Ending Coverage Ratio
-------------- ---------------------
<S> <C>
3/31/97-12/31/00 1.00 to 1.0
3/31/01-12/31/03 1.05 to 1.0
3/31/04 and thereafter 1.10 to 1.0
</TABLE>
<PAGE> 65
60
Notwithstanding anything to the contrary herein, (i) for the purposes of
determining the Consolidated Leverage Ratio, the Consolidated Interest Coverage
Ratio and the Consolidated Fixed Charge Coverage Ratio pursuant to this Section
7.1 for the Test Periods ending March 31, 1997, June 30, 1997 and September 30,
1997, (i) Consolidated EBITDA for the relevant Test Period shall be deemed to
equal actual Consolidated EBITDA for such Test Period plus $151,500,000,
$102,600,000 and $47,100,000, respectively; (ii) Consolidated Interest Expense
for the relevant Test Period shall be deemed to equal actual Consolidated
Interest Expense for such Test Period multiplied by 4, 2 and 4/3, respectively,
(iii) Consolidated Tax Expense for the relevant Test Period shall be deemed to
equal actual Consolidated Tax Expense for such Test Period multiplied by 4, 2
and 4/3, respectively, (iv) scheduled payments payable during the relevant Test
Period on account of principal of Indebtedness shall be appropriately
annualized (e.g., the aggregate amount of the principal installments of the
Term Loans due on March 31, 1997 shall be multiplied by 2 for the purposes of
determining the Consolidated Fixed Charge Coverage Ratio for the Test Periods
ending March 31, 1997 and June 30, 1997), and (v) Capital Expenditures for the
relevant Test Period shall be deemed to equal actual Capital Expenditures for
such Test Period plus $11,000,000, $7,400,000 and $3,700,000, respectively.
7.2 Limitation on Indebtedness. Create, incur, assume or
suffer to exist (in each case, to "Incur") any Indebtedness, except:
(a) Indebtedness of any Loan Party pursuant to any Loan
Document;
(b) Indebtedness of the Borrower to any Subsidiary and of any
Wholly Owned Subsidiary Guarantor to the Borrower or any other
Subsidiary;
(c) purchase money Indebtedness and Indebtedness secured by
Liens permitted by Section 7.3(g), provided, that the aggregate amount
of Indebtedness incurred pursuant to this Section 7.2(c) shall not
exceed $25,000,000 at any one time outstanding;
(d) Capital Lease Obligations, provided, that the aggregate
principal amount of Capital Lease Obligations incurred pursuant to
this Section 7.2(d) in any fiscal year of the Borrower, when added to
the aggregate amount of other Capital Expenditures made during such
fiscal year pursuant to Section 7.7(a), shall not exceed the amount
permitted to be expended during such fiscal year pursuant to Section
7.7(a);
(e) Indebtedness outstanding on the date hereof and listed on
Schedule 7.2(e) and any refinancings, refundings, renewals or
extensions thereof (without any increase in the principal amount
thereof);
(f) guarantees made in the ordinary course of business by the
Borrower or any of its Subsidiaries of obligations of any Wholly Owned
Subsidiary Guarantor;
(g) (i) Indebtedness of the Borrower in respect of the Senior
Subordinated Notes in an aggregate principal amount not to exceed
$400,000,000 and (ii) Guarantee Obligations of any Subsidiary
Guarantor in respect of such Indebtedness;
<PAGE> 66
61
(h) Indebtedness of any Canadian Subsidiary incurred for
working capital purposes in the ordinary course of business, provided
that (i) the U.S.$ equivalent (determined in good faith by the
Borrower) of the aggregate outstanding principal amount thereof (the
"Canadian Subsidiary Equivalent Outstandings") shall not exceed
$10,000,000 at any one time and (ii) on the date of any incurrence
thereof, after giving effect thereto, the sum of the Canadian
Subsidiary Equivalent Outstandings and the Total Revolving Extensions
of Credit shall not exceed $100,000,000;
(i) at any time after the Revolving Credit Commitments shall
have been terminated (other than pursuant to Section 8), Indebtedness
in respect of unsecured revolving lines of credit in an aggregate
outstanding principal amount not exceeding $60,000,000 at any one
time; and
(j) additional Indebtedness of the Borrower or any of its
Subsidiaries in an aggregate principal amount (for the Borrower and
all Subsidiaries) not to exceed $25,000,000 at any one time
outstanding.
7.3 Limitation on Liens. Create, incur, assume or suffer to
exist any Lien upon any of its Property or revenues, whether now owned or
hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested
in good faith by appropriate proceedings, provided that adequate
reserves with respect thereto are maintained on the books of the
Borrower or its Subsidiaries, as the case may be, in conformity with
GAAP (or, in the case of Foreign Subsidiaries, generally accepted
accounting principles in effect from time to time in their respective
jurisdictions of incorporation);
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business which are not overdue for a period of more than 30 days or
which are being contested in good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security
legislation;
(d) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory
obligations, insurance contracts, surety and appeal bonds, performance
bonds and other obligations of a like nature incurred in the ordinary
course of business;
(e) easements, rights-of-way, restrictions, covenants, minor
exceptions to title and other similar encumbrances (i) incurred in the
ordinary course of business which, in the aggregate, are not
substantial in amount and which do not in any case materially detract
from the value of the property subject thereto or materially interfere
with the ordinary conduct of the business of the Borrower or any of
its Subsidiaries or (ii) which are set forth in the "marked up"
commitments for title insurance delivered to the Administrative Agent
on the Closing Date;
<PAGE> 67
62
(f) Liens in existence on the date hereof listed on Schedule
7.3(f), securing Indebtedness permitted by Section 7.2(e), provided
that no such Lien is spread to cover any additional property after the
Closing Date and that the amount of Indebtedness secured thereby is
not increased;
(g) (i) Liens securing Indebtedness of the Borrower or any of
its Subsidiaries incurred to finance the acquisition of fixed or
capital assets (provided that (x) such Liens shall be created
substantially simultaneously with the acquisition of such fixed or
capital assets, (y) such Liens do not at any time encumber any
property other than the property financed by such Indebtedness and (z)
the amount of Indebtedness secured thereby is not increased) and (ii)
Liens existing on any property or asset at the time of acquisition
thereof by the Borrower or any Subsidiary or existing on any property
or asset of any Person that becomes a Subsidiary after the date hereof
at the time such Person becomes a Subsidiary (provided that (x) such
Lien is not created in contemplation of or in connection with such
acquisition or such Person becoming a Subsidiary, as the case may be,
(y) such Lien shall not apply to any other property or assets of the
Borrower or any of its Subsidiaries and (z) such Lien shall secure
only those obligations which it secures on the date of such
acquisition or the date such Person becomes a Subsidiary, as the case
may be);
(h) Liens created pursuant to the Security Documents;
(i) any interest or title of a lessor under any lease entered
into by the Borrower or any of its Subsidiaries in the ordinary course
of its business and covering only the assets so leased;
(j) any obligations or duties affecting any of the Property
of the Borrower or its Subsidiaries to any municipality or public
authority with respect to any franchise, grant, license or permit
which do not materially impair the use of such Property for the
purposes for which it is held;
(k) with respect to Property located in Canada, reservations,
limitations, provisos and conditions in any original grant from the
Crown or any freehold lessor of any Property of the Borrower or any of
its Subsidiaries;
(l) Liens encumbering inventory and accounts receivable of a
Canadian Subsidiary securing Indebtedness of such Canadian Subsidiary
incurred pursuant to Section 7.2(h);
(m) Liens imposed by operation of law with respect to any
judgments or orders not constituting an Event of Default; and
(n) Liens not otherwise permitted by this Section 7.3 so long
as neither (i) the aggregate outstanding principal amount of the
obligations secured thereby nor (ii) the aggregate fair market value
(determined as of the date such Lien is incurred) of the assets
subject thereto exceeds (as to the Borrower and all Subsidiaries)
$5,000,000 at any one time.
7.4 Limitation on Fundamental Changes. Enter into any
merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself
(or suffer any liquidation or dissolution), or Dispose
<PAGE> 68
63
of all or substantially all of its property, business or assets, or make any
material change in its present method of conducting business, except:
(a) any Subsidiary of the Borrower may be merged or
consolidated with or into the Borrower (provided that the Borrower
shall be the continuing or surviving corporation) or with or into any
Wholly Owned Subsidiary Guarantor (provided that the Wholly Owned
Subsidiary Guarantor shall be the continuing or surviving
corporation); and
(b) any Subsidiary of the Borrower may sell, lease, transfer
or otherwise dispose of any or all of its assets (upon voluntary
liquidation or otherwise) to the Borrower or any Wholly Owned
Subsidiary Guarantor.
7.5 Limitation on Sale of Assets. Dispose of any of its
property, business or assets (including, without limitation, receivables and
leasehold interests), whether now owned or hereafter acquired, or, in the case
of any Subsidiary, issue or sell any shares of such Subsidiary's Capital Stock
to any Person, except:
(a) the Disposition of obsolete or worn out property in the
ordinary course of business;
(b) the Disposition of inventory in the ordinary course of
business;
(c) Dispositions permitted by Section 7.4(b);
(d) the sale or issuance of any Subsidiary's Capital Stock to
the Borrower or any Wholly Owned Subsidiary Guarantor;
(e) transfers resulting from any casualty or condemnation of
property or assets;
(f) licenses or sublicenses of intellectual property and
general intangibles and licenses, leases or subleases of other
property in the ordinary course of business and which do not
materially interfere with the business of the Borrower and its
Subsidiaries;
(g) any consignment arrangements or similar arrangements for
the sale of assets in the ordinary course of business;
(h) the sale or discount of overdue accounts receivable
arising in the ordinary course of business, but only in connection
with the compromise or collection thereof; and
(i) the Disposition of other assets having a fair market
value not to exceed $25,000,000 in the aggregate for any fiscal year
of the Borrower, provided, that (i) except in the case of an Asset
Swap, at least 75% of the consideration received by the Borrower and
its Subsidiaries in connection with each such Disposition shall be in
the form of cash or Cash Equivalents and (ii) the aggregate fair
market value of Property Disposed of in connection with Asset Swaps
during any fiscal year of the Borrower, when added to the aggregate
Net Cash Proceeds of Asset Sales
<PAGE> 69
64
excluded from the requirements of Section 2.11(b) during such fiscal
year pursuant to a Reinvestment Notice, shall not exceed $20,000,000.
7.6 Limitation on Dividends. Declare or pay any dividend
(other than dividends payable solely in common stock of the Person making such
dividend) on, or make any payment on account of, or set apart assets for a
sinking or other analogous fund for, the purchase, redemption, defeasance,
retirement or other acquisition of, any shares of any class of Capital Stock of
the Borrower or any Subsidiary or any warrants or options to purchase any such
Capital Stock, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash
or property or in obligations of the Borrower or any Subsidiary (collectively,
"Restricted Payments"), except that:
(a) any Subsidiary may make Restricted Payments to the
Borrower or any Wholly Owned Subsidiary Guarantor;
(b) Permitted Issuances may be made; and
(c) so long as no Default or Event of Default shall have
occurred and be continuing, the Borrower may (i) purchase the
Borrower's common stock or common stock options from present or former
officers or employees of the Borrower or any Subsidiary upon the
death, disability or termination of employment of such officer or
employee, provided, that the aggregate amount of payments under this
clause (i) during the term of this Agreement shall not exceed
$15,000,000 net of any proceeds received by the Borrower in connection
with resales of any common stock or common stock options so purchased
and (ii) pay management fees to Hicks Muse and its Affiliates
expressly permitted by Section 7.10.
7.7 Limitation on Capital Expenditures. Make or commit to
make (by way of the acquisition of securities of a Person or otherwise) any
Capital Expenditure, except (a) Capital Expenditures of the Borrower and its
Subsidiaries in the ordinary course of business not exceeding $35,000,000 in
any fiscal year of the Borrower ending on or prior to December 31, 1998 or
$40,000,000 in any subsequent fiscal year; provided, that (i) up to $15,000,000
of any such amount referred to above, if not so expended in the fiscal year for
which it is permitted, may be carried over for expenditure in the next
succeeding fiscal year and (ii) Capital Expenditures made pursuant to this
clause (a) during any fiscal year shall be deemed made, first, in respect of
amounts carried over from the prior fiscal year pursuant to subclause (i) above
and, second, in respect of amounts permitted for such fiscal year as provided
above and (b) Capital Expenditures made pursuant to an Asset Swap or with the
proceeds of any Reinvestment Deferred Amount, any Unapplied Excess Cash Flow or
any Contributed Equity.
7.8 Limitation on Investments, Loans and Advances. Make any
advance, loan, extension of credit (by way of guaranty or otherwise) or capital
contribution to, or purchase any stock, bonds, notes, debentures or other
securities of or any assets constituting a business unit of, or make any other
investment in, any Person, except:
(a) extensions of trade credit in the ordinary course of
business;
<PAGE> 70
65
(b) investments in Cash Equivalents;
(c) Guarantee Obligations permitted by Section 7.2;
(d) loans and advances to employees of the Borrower or its
Subsidiaries in the ordinary course of business (including, without
limitation, for travel, entertainment and relocation expenses) in an
aggregate amount for the Borrower and its Subsidiaries not to exceed
$5,000,000 at any one time outstanding;
(e) the Acquisitions;
(f) investments by the Borrower or any of its Subsidiaries in
the Borrower or any Wholly Owned Subsidiary Guarantor;
(g) loans, advances or investments in existence on the
Closing Date and listed on Schedule 7.8(g), and extensions, renewals,
modifications or restatements or replacements thereof, provided that
no such extension, renewal, modification or restatement shall (i)
increase the amount of the original loan, advance or investment, or
(ii) adversely affect the interests of the Lenders with respect to
such original loan, advance or investment or the interests of the
Lenders under this Agreement or any other Loan Document in any
respect;
(h) investments made by the Borrower or any of its
Subsidiaries with the proceeds of any Reinvestment Deferred Amount or
any Unapplied Excess Cash Flow;
(i) investments made by the Borrower or any of its
Subsidiaries pursuant to an Asset Swap or with the proceeds of any
Contributed Equity, so long as, after giving pro forma effect thereto
(as certified to the Administrative Agent by a Responsible Officer
prior to consummation of such investment), no Default or Event of
Default shall have occurred and be continuing (including, without
limitation, pursuant to Section 7.1); and
(j) Investments constituting Capital Expenditures permitted
by Section 7.7;
(k) promissory notes and other similar non-cash consideration
received by the Borrower and its Subsidiaries in connection with the
Dispositions permitted by Section 7.5;
(l) Investments consisting of Interest Rate Protection
Agreements and commodity and currency hedging arrangements entered
into in the ordinary course of business of the Borrower or any of its
Subsidiaries and not for purposes of speculation;
(m) Investments (including debt obligations and Capital
Stock) received in connection with the bankruptcy or reorganization of
suppliers and customers and in settlement of delinquent obligations
of, and other disputes with, customers and suppliers arising in the
ordinary course of business; and
<PAGE> 71
66
(n) in addition to investments otherwise expressly permitted
by this Section 7.8, investments by the Borrower or any of its
Subsidiaries in an aggregate amount (valued at cost) not to exceed
$30,000,000 at any one time outstanding, so long as, after giving pro
forma effect thereto (as certified to the Administrative Agent by a
Responsible Officer prior to consummation of such investment, in the
case of any single investment in excess of $15,000,000), no Default or
Event of Default shall have occurred and be continuing (including,
without limitation, pursuant to Section 7.1).
7.9 Limitation on Optional Payments and Modifications of Debt
Instruments, etc. (a) Make or offer to make any optional payment, prepayment,
repurchase or redemption of or otherwise defease or segregate funds with
respect to the Senior Subordinated Notes, (b) amend, modify, waive or otherwise
change, or consent or agree to any amendment, modification, waiver or other
change to, any of the terms of the Senior Subordinated Notes or the Senior
Subordinated Note Indenture (other than any such amendment, modification,
waiver or other change which (i) would extend the maturity or reduce the amount
of any payment of principal thereof or which would reduce the rate or extend
the date for payment of interest thereon and (ii) does not involve the payment
of a consent fee) or (c) designate any Indebtedness as "Designated Senior
Indebtedness" for the purposes of the Senior Subordinated Note Indenture.
7.10 Limitation on Transactions with Affiliates. Enter into
any transaction, including, without limitation, any purchase, sale, lease or
exchange of Property or the rendering of any service, with any Affiliate (other
than the Borrower or any Wholly Owned Subsidiary Guarantor) unless such
transaction is (a) otherwise permitted under this Agreement, (b) in the
ordinary course of business of the Borrower or such Subsidiary, as the case may
be, and (c) upon fair and reasonable terms no less favorable to the Borrower or
such Subsidiary, as the case may be, than it would obtain in a comparable arm's
length transaction with a Person which is not an Affiliate. Notwithstanding
the foregoing, the Borrower and its Subsidiaries may pay to Hicks Muse and its
Affiliates fees and expenses, as set forth on Schedule 7.10, pursuant to a
monitoring and oversight agreement and a financial advisory agreement, in each
case approved by the board of directors of the Borrower.
7.11 Limitation on Sales and Leasebacks. Enter into any
arrangement with any Person providing for the leasing by the Borrower or any
Subsidiary of real or personal property which has been or is to be sold or
transferred by the Borrower or such Subsidiary to such 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 such
Subsidiary.
7.12 Limitation on Changes in Fiscal Periods. Permit the
fiscal year of the Borrower to end on a day other than December 31 or change
the Borrower's method of determining fiscal quarters.
7.13 Limitation on Negative Pledge Clauses. Enter into with
any Person, or suffer to exist, any agreement, other than (a) this Agreement
and the other Loan Documents, (b) the Senior Subordinated Note Indenture and
(c) in the case of clause (i) below only, any agreements governing any purchase
money Liens or Capital Lease Obligations otherwise permitted hereby (in which
case, any prohibition or limitation shall only be effective against the assets
financed thereby), which prohibits or limits the ability of the Borrower or any
of its Subsidiaries to (i) create, incur, assume or suffer to exist any
<PAGE> 72
67
Lien upon any of its Property or revenues, whether now owned or hereafter
acquired, or (ii) pay dividends or make other distributions, or pay any
Indebtedness owed, to the Borrower or any of its Subsidiaries.
7.14 Limitation on Lines of Business. Enter into any
business, either directly or through any Subsidiary, except for those
businesses in which the Borrower and its Subsidiaries are engaged on the date
of this Agreement or which are reasonably related thereto.
7.15 Limitation on Amendments to Acquisition Documents. (a)
Amend, supplement or otherwise modify (pursuant to a waiver or otherwise) the
terms and conditions of the indemnities furnished to the Borrower or any of its
Subsidiaries pursuant to the Acquisition Agreement or any other document
delivered by the Sellers or any of their affiliates in connection therewith
such that after giving effect thereto such indemnities shall be materially less
favorable to the interests of the Loan Parties or the Lenders with respect
thereto or (b) otherwise amend, supplement or otherwise modify the terms and
conditions of the Acquisition Agreement or any such other documents except to
the extent that any such amendment, supplement or modification could not
reasonably be expected to have a Material Adverse Effect.
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan
or Reimbursement Obligation when due in accordance with the terms
hereof; or the Borrower shall fail to pay any interest on any Loan or
Reimbursement Obligation, or any other amount payable hereunder or
under any other Loan Document, within five days after any such
interest or other amount becomes due in accordance with the terms
hereof; or
(b) Any representation or warranty made or deemed made by any
Loan Party herein or in any other Loan Document or which is contained
in any certificate, document or financial or other statement furnished
by it at any time under or in connection with this Agreement or any
such other Loan Document shall prove to have been inaccurate in any
material respect on or as of the date made or deemed made; or
(c) (i) any Loan Party shall default in the observance or
performance of any agreement contained in clause (i) or (ii) of
Section 6.4(a) (with respect to the Borrower only), Section 6.7(a) or
Section 7 of this Agreement or Section 5.5 or 5.7(b) of the Guarantee
and Collateral Agreement or (ii) an "Event of Default" under and as
defined in any Mortgage shall have occurred and be continuing; or
(d) any Loan Party shall default in the observance or
performance of any other agreement contained in this Agreement or any
other Loan Document (other than as provided in paragraphs (a) through
(c) of this Section), and such default shall continue unremedied for a
period of 30 days after notice from the Administrative Agent or the
Required Lenders; or
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68
(e) The Borrower or any of its Subsidiaries shall (i) default
in making any payment of any principal of or interest on any
Indebtedness (including, without limitation, any Guarantee Obligation,
but excluding the Loans, Reimbursement Obligations and Guarantee
Obligations pursuant to the Guarantee and Collateral Agreement) beyond
the period of grace, if any, provided in the instrument or agreement
under which such Indebtedness was created; or (ii) default in the
observance or performance of any other agreement or condition relating
to any such Indebtedness or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or beneficiary of
such Indebtedness (or a trustee or agent on behalf of such holder or
beneficiary) to cause, with the giving of notice if required, such
Indebtedness to become due prior to its stated maturity or (in the
case of any such Indebtedness constituting a Guarantee Obligation) to
become payable; provided, that a default, event or condition described
in clause (i) or (ii) of this paragraph (e) shall not at any time
constitute an Event of Default under this Agreement unless, at such
time, one or more defaults, events or conditions (without duplication
as to the same item of Indebtedness) of the type described in clauses
(i) and (ii) of this paragraph (e) shall have occurred and be
continuing with respect to Indebtedness the outstanding principal
amount of which exceeds in the aggregate $10,000,000; or
(f) (i) The Borrower or any of its Subsidiaries shall
commence any case, proceeding or other action (A) under any existing
or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking
to have an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
winding-up, liquidation, dissolution, composition or other relief with
respect to it or its debts, or (B) seeking appointment of a receiver,
trustee, custodian, conservator or other similar official for it or
for all or any substantial part of its assets, or the Borrower or any
of its Subsidiaries shall make a general assignment for the benefit of
its creditors; or (ii) there shall be commenced against the Borrower
or any of its Subsidiaries any case, proceeding or other action of a
nature referred to in clause (i) above which (A) results in the entry
of an order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for a period of 60 days;
or (iii) there shall be commenced against the Borrower or any of its
Subsidiaries any case, proceeding or other action seeking issuance of
a warrant of attachment, execution, distraint or similar process
against all or any substantial part of its assets which results in the
entry of an order for any such relief which shall not have been
vacated, discharged, or stayed or bonded pending appeal within 60 days
from the entry thereof; or (iv) the Borrower or any of its
Subsidiaries shall take any action in furtherance of, or indicating
its consent to, approval of, or acquiescence in, any of the acts set
forth in clause (i), (ii), or (iii) above; or (v) the Borrower or any
of its Subsidiaries shall generally not, or shall be unable to, or
shall admit in writing its inability to, pay its debts as they become
due; or
(g) (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of
the Code) involving any Plan, (ii) any "accumulated funding
deficiency" (as defined in Section 302 of ERISA), whether or not
waived, shall exist with respect to any Plan or any Lien in favor of
the PBGC or a Plan shall arise on the assets of the Borrower or any
Commonly Controlled Entity, (iii) a Reportable Event shall occur with
respect to, or
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proceedings shall commence to have a trustee appointed (or a trustee
shall be appointed) to administer, or to terminate, any Single
Employer Plan, which Reportable Event or commencement of proceedings
or appointment of a trustee is, in the reasonable opinion of the
Required Lenders, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (v) the Borrower or any
Commonly Controlled Entity shall, or in the reasonable opinion of the
Required Lenders is likely to, incur any liability in connection with
a withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan or (vi) any other event or condition shall occur or
exist with respect to a Plan; and in each case in clauses (i) through
(vi) above, such event or condition, together with all other such
events or conditions, if any, could reasonably be expected to have a
Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against
the Borrower or any of its Subsidiaries involving in the aggregate a
liability (not paid or fully covered by insurance as to which the
relevant insurance company has acknowledged coverage) of $10,000,000
or more, and all such judgments or decrees shall not have been
vacated, discharged, stayed or bonded pending appeal within 30 days
from the entry thereof; or
(i) Any Loan Document shall, at any time, cease to be in full
force and effect (unless released by the Administrative Agent at the
direction of the Required Lenders or all Lenders (to the extent
required by Section 10.1) or as otherwise permitted under this
Agreement or the other Loan Documents) or shall be declared null and
void (and, if such invalidity is such so as to be amenable to cure
without materially disadvantaging the position of the Administrative
Agent and the Lenders thereunder, the relevant Loan Party shall have
failed to cure such invalidity within 30 days after notice from the
Administrative Agent or such shorter time period as is specified by
the Administrative Agent in such notice and is reasonable in the
circumstances), or the validity or enforceability thereof shall be
contested by any Loan Party, or any of the Liens intended to be
created by any Security Document shall cease to be or shall not be a
valid and perfected Lien having the priority contemplated thereby
(and, if such invalidity is such so as to be amenable to cure without
materially disadvantaging the position of the Administrative Agent and
the Lenders as secured parties thereunder, the relevant Loan Party
shall have failed to cure such invalidity within 30 days after notice
from the Administrative Agent or such shorter time period as specified
by the Administrative Agent in such notice and is reasonable in the
circumstances); or
(j) (i) The Permitted Investors shall cease to have the
power, directly or indirectly, to vote or direct the voting of
securities having a majority of the ordinary voting power for the
election of directors of the Borrower, provided that the occurrence of
the foregoing event shall not be deemed an Event of Default if (A) at
any time prior to the consummation of an Initial Public Offering, (1)
the Permitted Investors otherwise have the right to designate (and do
so designate) a majority of the board of directors of the Borrower or
(2) the Permitted Investors and their employees, directors and
officers (the "HM Group") own of record and beneficially an amount of
common stock of the Borrower equal to at least 50% of the amount of
common stock of the Borrower (adjusted for stock splits, stock
dividends and other similar events on an equitable basis) owned by the
HM Group of record and beneficially as of the Closing Date and such
ownership by
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the HM Group represents the largest single block of voting securities
of the Borrower held by any "person" or "group" for purposes of
Section 13(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or (B) at any time after the consummation of an
Initial Public Offering, (1) no "person" or "group" (as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act), excluding the
Permitted Investors, shall become the "beneficial owner" (as defined
in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or
indirectly, of more than the greater of (x) 15% of the then
outstanding voting stock of the Borrower and (y) the percentage of the
then outstanding voting stock of the Borrower owned by the Permitted
Investors and (2) the board of directors of the Borrower shall consist
of a majority of Continuing Directors; or (ii) a Specified Change of
Control shall occur; or
(k) The Senior Subordinated Notes or the guarantees thereof
shall cease, for any reason, to be validly subordinated to the
Obligations or the obligations of the Subsidiary Guarantors under the
Guarantee and Collateral Agreement, as the case may be, as provided in
the Senior Subordinated Note Indenture, or any Loan Party, any
Affiliate of any Loan Party, the trustee in respect of the Senior
Subordinated Notes or the holders of at least 25% in aggregate
principal amount of the Senior Subordinated Notes shall so assert;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower,
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under
this Agreement and the other Loan Documents (including, without limitation, all
amounts of L/C Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents required
thereunder) shall immediately become due and payable, and (B) if such event is
any other Event of Default, either or both of the following actions may be
taken: (i) with the consent of the Majority Revolving Credit Facility Lenders,
the Administrative Agent may, or upon the request of the Majority Revolving
Credit Facility Lenders, the Administrative Agent shall, by notice to the
Borrower declare the Revolving Credit Commitments to be terminated forthwith,
whereupon the Revolving Credit Commitments shall immediately terminate; and
(ii) with the consent of the Required Lenders, the Administrative Agent may, or
upon the request of the Required Lenders, the Administrative Agent shall, by
notice to the Borrower, declare the Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement and the other Loan
Documents (including, without limitation, all amounts of L/C Obligations,
whether or not the beneficiaries of the then outstanding Letters of Credit
shall have presented the documents required thereunder) to be due and payable
forthwith, whereupon the same shall immediately become due and payable. With
respect to all Letters of Credit with respect to which presentment for honor
shall not have occurred at the time of an acceleration pursuant to this
paragraph, the Borrower shall at such time deposit in a cash collateral account
opened by the Administrative Agent an amount equal to the aggregate then
undrawn and unexpired amount of such Letters of Credit. Amounts held in such
cash collateral account shall be applied by the Administrative Agent to the
payment of drafts drawn under such Letters of Credit, and the unused portion
thereof after all such Letters of Credit shall have expired or been fully drawn
upon, if any, shall be applied to repay other obligations of the Borrower
hereunder and under the other Loan Documents. After all such Letters of Credit
shall have expired or been fully drawn upon, all Reimbursement Obligations
shall have been satisfied and all other obligations of the Borrower hereunder
and under the other Loan Documents shall have been paid in full, the balance,
if any,
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in such cash collateral account shall be returned to the Borrower (or such
other Person as may be lawfully entitled thereto). Except as otherwise
expressly provided above in this Section 8, the Borrower waives presentment,
demand, protest or other notice of any kind.
SECTION 9. THE AGENTS
9.1 Appointment. Each Lender hereby irrevocably designates
and appoints the Administrative Agent as the agent of such Lender under this
Agreement and the other Loan Documents, and each Lender irrevocably authorizes
the Administrative Agent, in such capacity, to take such action on its behalf
under the provisions of this Agreement and the other Loan Documents and to
exercise such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary elsewhere in this
Agreement, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent.
9.2 Delegation of Duties. The Administrative Agent may
execute any of its duties under this Agreement and the other Loan Documents by
or through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agents
or attorneys in-fact selected by it with reasonable care.
9.3 Exculpatory Provisions. Neither any Agent nor any of
their respective officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except to the extent that any of the foregoing are found
by a final and nonappealable decision of a court of competent jurisdiction to
have resulted from its or such Person's own gross negligence or willful
misconduct) or (ii) responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by any Loan Party or
any officer thereof contained in this Agreement or any other Loan Document or
in any certificate, report, statement or other document referred to or provided
for in, or received by the Agents under or in connection with, this Agreement
or any other Loan Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document or for any failure of any Loan Party a party thereto to perform its
obligations hereunder or thereunder. The Agents shall not be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of any Loan Party.
9.4 Reliance by Administrative Agent. The Administrative
Agent shall be entitled to rely, and shall be fully protected in relying, upon
any instrument, writing, resolution, notice, consent, certificate, affidavit,
letter, telecopy, telex or teletype message, statement, order or other document
or conversation believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person or
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72
Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Borrower), independent accountants and other experts
selected by the Administrative Agent. The Administrative Agent may deem and
treat the payee of any Note as the owner thereof for all purposes unless a
written notice of assignment, negotiation or transfer thereof shall have been
filed with the Administrative Agent. The Administrative Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Loan Document unless it shall first receive such advice or concurrence of
the Required Lenders (or, if so specified by this Agreement, all Lenders) as it
deems appropriate or it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense which may be incurred by it
by reason of taking or continuing to take any such action. The Administrative
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement and the other Loan Documents in accordance with a
request of the Required Lenders (or, if so specified by this Agreement, all
Lenders), and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders and all future holders of the
Loans.
9.5 Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless the Administrative Agent has received notice from a
Lender or the Borrower referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of default". In the
event that the Administrative Agent receives such a notice, the Administrative
Agent shall give notice thereof to the Lenders. The Administrative Agent shall
take such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders (or, if so specified by this
Agreement, all Lenders); provided that unless and until the Administrative
Agent shall have received such directions, the Administrative Agent may (but
shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Default or Event of Default as it shall deem
advisable in the best interests of the Lenders.
9.6 Non-Reliance on Agents and Other Lenders. Each Lender
expressly acknowledges that neither the Agents nor any of their respective
officers, directors, employees, agents, attorneys-in-fact or affiliates have
made any representations or warranties to it and that no act by any Agent
hereafter taken, including any review of the affairs of a Loan Party or any
affiliate of a Loan Party, shall be deemed to constitute any representation or
warranty by any Agent to any Lender. Each Lender represents to the Agents that
it has, independently and without reliance upon any Agent or any other Lender,
and based on such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties and
their affiliates and made its own decision to make its Loans hereunder and
enter into this Agreement. Each Lender also represents that it will,
independently and without reliance upon any Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Loan Parties and their affiliates. Except for notices,
reports and other documents expressly required to be furnished to the Lenders
by the Administrative Agent hereunder, the Administrative Agent shall not have
any duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, condition (financial
or otherwise), prospects or creditworthiness of any
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73
Loan Party or any affiliate of a Loan Party which may come into the possession
of the Administrative Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates.
9.7 Indemnification. The Lenders agree to indemnify each
Agent in its capacity as such (to the extent not reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), ratably according to
their respective Revolving Credit Percentages, Tranche A Term Loan Percentages,
Tranche B Term Loan Percentages and Tranche C Term Loan Percentages in effect
on the date on which indemnification is sought under this Section 9.7 (or, if
indemnification is sought after the date upon which the Commitments shall have
terminated and the Loans shall have been paid in full, ratably in accordance
with such Percentages immediately prior to such date), from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever which may at any
time (including, without limitation, at any time following the payment of the
Loans) be imposed on, incurred by or asserted against such Agent in any way
relating to or arising out of, the Commitments, this Agreement, any of the
other Loan Documents or any documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby or any action taken
or omitted by such Agent under or in connection with any of the foregoing;
provided that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements which are found by a final and
nonappealable decision of a court of competent jurisdiction to have resulted
from such Agent's gross negligence or willful misconduct. The agreements in
this Section 9.7 shall survive the payment of the Loans and all other amounts
payable hereunder.
9.8 Agent in Its Individual Capacity. Each Agent and its
affiliates may make loans to, accept deposits from and generally engage in any
kind of business with any Loan Party as though such Agent were not an Agent.
With respect to its Loans made or renewed by it and with respect to any Letter
of Credit issued or participated in by it, each Agent shall have the same
rights and powers under this Agreement and the other Loan Documents as any
Lender and may exercise the same as though it were not an Agent, and the terms
"Lender" and "Lenders" shall include each Agent in its individual capacity.
9.9 Successor Administrative Agent. The Administrative Agent
may resign as Administrative Agent upon 30 days' notice to the Lenders. If the
Administrative Agent shall resign as Administrative Agent under this Agreement
and the other Loan Documents, then the Required Lenders shall appoint from
among the Lenders a successor agent for the Lenders, which successor agent
shall be approved by the Borrower (which approval shall not be unreasonably
withheld or delayed), whereupon such successor agent shall succeed to the
rights, powers and duties of the Administrative Agent, and the term
"Administrative Agent" shall mean such successor agent effective upon such
appointment and approval, and the former Administrative Agent's rights, powers
and duties as Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Loans. After any retiring
Administrative Agent's resignation as Administrative Agent, the provisions of
this Section 9 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Administrative Agent under this Agreement and the
other Loan Documents.
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9.10 Authorization to Release Liens. The Administrative
Agent is hereby irrevocably authorized by each of the Lenders to release any
Lien covering any Property of the Borrower or any of its Subsidiaries that is
the subject of a Disposition which is permitted by this Agreement or which has
been consented to in accordance with Section 10.1.
9.11 Documentation Agent and Syndication Agent. Neither the
Documentation Agent nor the Syndication Agent shall have any duties or
responsibilities hereunder in its capacity as such.
SECTION 10. MISCELLANEOUS
10.1 Amendments and Waivers. Neither this Agreement, any
other Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
Section 10.1. The Required Lenders and each Loan Party party to the relevant
Loan Documents may, or, with the written consent of the Required Lenders, the
Administrative Agent and each Loan Party party to the relevant Loan Document
may, from time to time, (a) enter into written amendments, supplements or
modifications hereto and to the other Loan Documents for the purpose of adding
any provisions to this Agreement or the other Loan Documents or changing in any
manner the rights of the Lenders or of the Loan Parties hereunder or thereunder
or (b) waive, on such terms and conditions as the Required Lenders or the
Administrative Agent, as the case may be, may specify in such instrument, any
of the requirements of this Agreement or the other Loan Documents or any
Default or Event of Default and its consequences; provided, however, that no
such waiver and no such amendment, supplement or modification shall (i) forgive
the principal amount or extend the final scheduled date of maturity of any
Loan, extend the scheduled date of any amortization payment in respect of any
Term Loan, reduce the stated rate of any interest, fee or letter of credit
commission payable hereunder or extend the scheduled date of any payment
thereof, or increase the amount or extend the expiration date of any Lender's
Revolving Credit Commitment, in each case without the consent of each Lender
directly affected thereby; (ii) amend, modify or waive any provision of this
Section 10.1 or reduce any percentage specified in the definition of Required
Lenders, consent to the assignment or transfer by the Borrower of any of its
rights and obligations under this Agreement and the other Loan Documents,
release all or substantially all of the Collateral or release all or
substantially all of the Subsidiary Guarantors from their obligations under the
Guarantee and Collateral Agreement, in each case without the written consent of
all Lenders; (iii) amend, modify or waive any condition precedent to any
extension of credit under the Revolving Credit Facility set forth in Section
5.2 without the written consent of the Majority Revolving Credit Facility
Lenders; (iv) change the allocation of payments among the Term Loan Facilities
specified in Section 2.17(b) or the allocation of payments between the Term
Loan Facilities and the Revolving Credit Facility pursuant to Section 2.11(d),
in each case without the consent of the Majority Facility Lenders in respect of
each Facility adversely affected thereby; (v) reduce the percentage specified
in the definition of Majority Facility Lenders without the written consent of
all Lenders under each affected Facility; (vi) amend, modify or waive any
provision of Section 9 without the written consent of the Administrative Agent;
(vii) amend, modify or waive any provision of Section 2.6 or 2.7 without the
written consent of the Swing Line Lender; or (viii) amend, modify or waive any
provision of Section 3 without the written consent of each affected Issuing
Lender. Any such waiver and any such amendment, supplement or modification
shall apply equally to each of the Lenders and shall be binding upon the Loan
Parties, the Lenders, the Administrative Agent and all future holders of the
Loans. In the case of any waiver, the Loan Parties, the Lenders and the
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Administrative Agent shall be restored to their former position and rights
hereunder and under the other Loan Documents, and any Default or Event of
Default waived shall be deemed to be cured and not continuing; but no such
waiver shall extend to any subsequent or other Default or Event of Default, or
impair any right consequent thereon.
10.2 Notices. All notices, requests and demands to or upon
the respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or three Business Days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice,
when received, addressed as follows in the case of the Borrower and the
Administrative Agent, and as set forth in an administrative questionnaire
delivered to the Administrative Agent in the case of the Lenders, or to such
other address as may be hereafter notified by the respective parties hereto:
The Borrower: International Home Foods, Inc.
Five Giralda Farms
Madison, New Jersey 07940
Attention: Kenneth J. Martin
Telecopy: 201-660-5934
Attention: Lynn Misericordia
Telecopy: 201-660-7171
with copies to: Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attention: Lawrence D. Stuart, Jr.
Telecopy: 214-740-7313
Hicks, Muse, Tate & Furst Incorporated
1325 Avenue of the Americas, 25th Floor
New York, New York 10019
Attention: Alan B. Menkes
Andrew S. Rosen
Telecopy: 212-424-1450
The Administrative Agent: Chase Agency Services
140 East 45th Street
New York, New York 10017
Attention: Sandra Miklave
Telecopy: 212-622-0002
with a copy to: The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
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Attention: Karen Sharf
Telecopy: 212-270-5659
provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders shall not be effective until received.
10.3 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Administrative Agent or any
Lender, any right, remedy, power or privilege hereunder or under the other Loan
Documents shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power
or privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
10.4 Survival of Representations and Warranties. All
representations and warranties made hereunder, in the other Loan Documents and
in any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the making of the Loans hereunder.
10.5 Payment of Expenses and Taxes. The Borrower agrees (a)
to pay or reimburse the Administrative Agent for all its reasonable
out-of-pocket costs and expenses incurred in connection with the development,
preparation and execution of, and any amendment, supplement or modification to,
this Agreement and the other Loan Documents and any other documents prepared in
connection herewith or therewith, and the consummation and administration of
the transactions contemplated hereby and thereby, including, without
limitation, the reasonable fees and disbursements of counsel to the
Administrative Agent, (b) to pay or reimburse each Lender and the
Administrative Agent for all its reasonable costs and expenses incurred in
connection with the enforcement or preservation of any rights under this
Agreement, the other Loan Documents and any such other documents, including,
without limitation, the reasonable fees and disbursements of counsel (including
the allocated fees and expenses of in-house counsel) to each Lender and of
counsel to the Administrative Agent, (c) to pay, indemnify, and hold harmless
each Lender and the Administrative Agent from and against any and all recording
and filing fees and any and all liabilities with respect to, or resulting from
any delay in paying, stamp, excise and other taxes, if any, which may be
payable or determined to be payable in connection with the execution and
delivery of, or consummation or administration of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, this Agreement, the other Loan Documents and
any such other documents, and (d) to pay, indemnify and hold harmless each
Lender and the Administrative Agent and their respective officers, directors,
trustees, professional advisors, employees, affiliates, agents and controlling
persons (each, an "indemnitee") from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement, the other Loan Documents and any such other documents, including,
without limitation, any of the foregoing relating to the use of proceeds of the
Loans or the violation of, noncompliance with or liability under, any
Environmental Law applicable to the operations of the Borrower any of its
Subsidiaries or any of the Properties (all the foregoing in this clause
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(d), collectively, the "indemnified liabilities"), provided, that the Borrower
shall have no obligation hereunder to any indemnitee with respect to
indemnified liabilities to the extent such indemnified liabilities are found by
a final and nonappealable decision of a court of competent jurisdiction to have
resulted from the gross negligence or willful misconduct of such indemnitee.
The agreements in this Section 10.5 shall survive repayment of the Loans and
all other amounts payable hereunder.
10.6 Successors and Assigns; Participations and Assignments.
(a) This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Lenders, the Administrative Agent, all future holders of the
Loans and their respective successors and assigns, except that the Borrower may
not assign or transfer any of its rights or obligations under this Agreement
without the prior written consent of each Lender.
(b) Any Lender may, without the consent of the Borrower, in
accordance with applicable law, at any time sell to one or more banks,
financial institutions or other entities (each, a "Participant") participating
interests in any Loan owing to such Lender, any Commitment of such Lender or
any other interest of such Lender hereunder and under the other Loan Documents.
In the event of any such sale by a Lender of a participating interest to a
Participant, such Lender's obligations under this Agreement to the other
parties to this Agreement shall remain unchanged, such Lender shall remain
solely responsible for the performance thereof, such Lender shall remain the
holder of any such Loan for all purposes under this Agreement and the other
Loan Documents, and the Borrower 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 the other Loan Documents. In
no event shall any Participant under any such participation have any right to
approve any amendment or waiver of any provision of any Loan Document, or any
consent to any departure by any Loan Party therefrom, except to the extent that
such amendment, waiver or consent would reduce the principal of, or interest
on, the Loans or any fees payable hereunder, or postpone the date of the final
maturity of the Loans, in each case to the extent subject to such
participation. The Borrower agrees that if amounts outstanding under this
Agreement and the Loans are due or unpaid, or shall have been declared or shall
have become due and payable upon the occurrence of an Event of Default, each
Participant shall, to the maximum extent permitted by applicable law, be deemed
to have the right of setoff in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement, provided that, in purchasing such participating interest, such
Participant shall be deemed to have agreed to share with the Lenders the
proceeds thereof as provided in Section 10.7(a) as fully as if it were a Lender
hereunder. The Borrower also agrees that each Participant shall be entitled to
the benefits of Sections 2.18, 2.19 and 2.20 with respect to its participation
in the Commitments and the Loans outstanding from time to time as if it were a
Lender; provided that, in the case of Section 2.19, such Participant shall have
complied with the requirements of said Section and provided, further, that no
Participant shall be entitled to receive any greater amount pursuant to any
such Section than the transferor Lender would have been entitled to receive in
respect of the amount of the participation transferred by such transferor
Lender to such Participant had no such transfer occurred.
(c) Any Lender (an "Assignor") may, in accordance with
applicable law, at any time and from time to time assign to any Lender or any
affiliate thereof or, with the consent of the Borrower and the Administrative
Agent (which, in each case, shall not be unreasonably withheld or delayed), to
an
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additional bank, financial institution or other entity (an "Assignee") all or
any part of its rights and obligations under this Agreement pursuant to an
Assignment and Acceptance, substantially in the form of Exhibit E, executed by
such Assignee and such Assignor (and, in the case of an Assignee that is not
then a Lender or an affiliate thereof, by the Borrower and the Administrative
Agent) and delivered to the Administrative Agent for its acceptance and
recording in the Register; provided that no such assignment to an Assignee
(other than any Lender or any affiliate thereof) shall be in an aggregate
principal amount of less than $5,000,000 (other than in the case of an
assignment of all of a Lender's interests under this Agreement), unless
otherwise agreed by the Borrower and the Administrative Agent. Any such
assignment need not be ratable as among the Facilities. Upon such execution,
delivery, acceptance and recording, from and after the effective date
determined pursuant to such Assignment and Acceptance, (x) the Assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender
hereunder with a Commitment and/or Loans as set forth therein, and (y) the
Assignor thereunder shall, to the extent provided in such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all of an Assignor's rights and
obligations under this Agreement, such assigning Lender shall cease to be a
party hereto). Notwithstanding any provision of this Section 10.6, the consent
of the Borrower shall not be required, and, unless requested by the Assignee
and/or the Assignor, new Notes shall not be required to be executed and
delivered by the Borrower, for any assignment which occurs at any time when any
of the events described in Section 8(f) shall have occurred and be continuing.
(d) The Administrative Agent shall maintain at its address
referred to in Section 10.2 a copy of each Assignment and Acceptance delivered
to it and a register (the "Register") for the recordation of the names and
addresses of the Lenders and the Commitments of, and the principal amount of
the Loans owing to, each Lender from time to time. The entries in the Register
shall be conclusive, in the absence of manifest error, and the Borrower, each
other Loan Party, the Administrative Agent and the Lenders shall treat each
Person whose name is recorded in the Register as the owner of the Loan recorded
therein for all purposes of this Agreement. Any assignment of any Loan or
other obligation hereunder (whether or not evidenced by a Note) shall be
effective only upon appropriate entries with respect thereto being made in the
Register.
(e) Upon its receipt of an Assignment and Acceptance executed
by an Assignor and an Assignee (and, in the case of an Assignee that is not
then a Lender or an affiliate thereof, by the Borrower and the Administrative
Agent) together with payment to the Administrative Agent of a registration and
processing fee of $4,000, the Administrative Agent shall (i) promptly accept
such Assignment and Acceptance and (ii) record the information contained
therein in the Register on the effective date determined pursuant thereto.
(f) The Loans made by each Lender shall be evidenced by a
Note issued by the Borrower, substantially in the form of Exhibit G-1, G-2 or
G-3, as the case may be, payable to the order of such Lender. Each Lender is
hereby authorized to record, on the schedule annexed to and constituting a part
of the relevant Note, information regarding the relevant Loans made by such
Lender, and any such recordation shall constitute prima facie evidence of the
accuracy of the information so recorded, provided that the failure to make any
such recordation or any error in such recordation shall not affect the
Borrower's obligations hereunder or under any Note. On or prior to the
effective date of an Assignment
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79
and Acceptance, the Borrower, at its own expense, shall execute and deliver to
the Administrative Agent, in exchange for the relevant Notes, new Notes to the
order of the Assignee and, if applicable, the Assignor. Such new Notes shall
be dated the Closing Date and shall otherwise be in the form of the Notes
replaced thereby.
(g) The Borrower authorizes each Lender to disclose to any
Participant or Assignee (each, a "Transferee") and any prospective Transferee
any and all financial information concerning the Loan Parties and their
respective affiliates which has been delivered to such Lender by or on behalf
of any Loan Party pursuant to this Agreement or any other Loan Document or
which has been delivered to such Lender by or on behalf any Loan Party in
connection with such Lender's credit evaluation of the Loan Parties and their
respective affiliates, under the condition that such Transferee or prospective
Transferee shall previously have agreed to be bound by the provisions of
Section 10.15.
(h) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this Section 10.6 concerning assignments of
Loans and Notes relate only to absolute assignments and that such provisions do
not prohibit assignments creating security interests, including, without
limitation, any pledge or assignment by a Lender of any Loan or Note to any
Federal Reserve Bank in accordance with applicable law.
10.7 Adjustments; Set-off. (a) Except to the extent that
this Agreement provides for payments to be allocated to the Lenders under a
particular Facility, if any Lender (a "Benefitted Lender") shall at any time
receive any payment of all or part of its Loans or the Reimbursement
Obligations owing to it, or interest thereon, or receive any collateral in
respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to
events or proceedings of the nature referred to in Section 8(f), or otherwise),
in a greater proportion than any such payment to or collateral received by any
other Lender, if any, in respect of such other Lender's Loans or the
Reimbursement Obligations owing to such other Lender, or interest thereon, such
Benefitted Lender shall purchase for cash from the other Lenders a
participating interest in such portion of each such other Lender's Loans and/or
of the Reimbursement Obligations owing to each such other Lender, or shall
provide such other Lenders with the benefits of any such collateral, or the
proceeds thereof, as shall be necessary to cause such Benefitted Lender to
share the excess payment or benefits of such collateral or proceeds ratably
with each of the Lenders; provided, however, that if all or any portion of such
excess payment or benefits is thereafter recovered from such Benefitted Lender,
such purchase shall be rescinded, and the purchase price and benefits returned,
to the extent of such recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, without prior notice to the
Borrower, any such notice being expressly waived by the Borrower to the extent
permitted by applicable law, upon any amount becoming due and payable by the
Borrower hereunder (whether at the stated maturity, by acceleration or
otherwise) to set off and appropriate and apply against such amount any and all
deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Lender or any branch or agency
thereof to or for the credit or the account of the Borrower. Each Lender
agrees promptly to notify the Borrower and the Administrative Agent after any
such setoff and
<PAGE> 85
80
application made by such Lender, provided that the failure to give such notice
shall not affect the validity of such setoff and application.
10.8 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts
(including by telecopy), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. A set of the copies of this
Agreement signed by all the parties shall be lodged with the Borrower and the
Administrative Agent.
10.9 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.10 Integration. This Agreement and the other Loan
Documents represent the entire agreement of the Borrower, the Administrative
Agent and the Lenders with respect to the subject matter hereof and thereof,
and there are no promises, undertakings, representations or warranties by the
Administrative Agent or any Lender relative to subject matter hereof or thereof
not expressly set forth or referred to herein or in the other Loan Documents.
10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.12 Submission To Jurisdiction; Waivers. The Borrower
hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action
or proceeding relating to this Agreement and the other Loan Documents
to which it is a party, or for recognition and enforcement of any
judgment in respect thereof, to the non-exclusive general jurisdiction
of the Courts of the State of New York, the courts of the United
States of America for the Southern District of New York, and appellate
courts from any thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to the Borrower at its address set forth in Section 10.2 or
at such other address of which the Administrative Agent shall have
been notified pursuant thereto;
<PAGE> 86
81
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or
proceeding referred to in this Section 10.12 any special, exemplary,
punitive or consequential damages.
10.13 Acknowledgements. The Borrower hereby acknowledges
that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents;
(b) neither the Administrative Agent nor any Lender has any
fiduciary relationship with or duty to the Borrower arising out of or
in connection with this Agreement or any of the other Loan Documents,
and the relationship between Administrative Agent and Lenders, on one
hand, and the Borrower, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Lenders or among the Borrower and the
Lenders.
10.14 WAIVERS OF JURY TRIAL. THE BORROWER, THE
ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
<PAGE> 87
82
10.15 Confidentiality. Each Lender agrees to keep
information obtained by it pursuant hereto and the other Loan Documents
identified as confidential in writing at the time of delivery confidential in
accordance with such Lender's customary practices and agrees that it will only
use such information in connection with the transactions contemplated by this
Agreement and not disclose any of such information other than (a) to such
Lender's employees, representatives, directors, attorneys, auditors, agents,
professional advisors, trustees or affiliates who are advised of the
confidential nature of such information, (b) to the extent such information
presently is or hereafter becomes available to such Lender on a
non-confidential basis from any source or such information that is in the
public domain at the time of disclosure, (c) to the extent disclosure is
required by law (including applicable securities laws), regulation, subpoena or
judicial order or process (provided that notice of such requirement or order
shall be promptly furnished to the Borrower unless such notice is legally
prohibited) or requested or required by bank, securities, insurance or
investment company regulations or auditors or any administrative body or
commission to whose jurisdiction such Lender may be subject, (d) to any rating
agency to the extent required in connection with any rating to be assigned to
such Lender, (e) to Transferees or prospective Transferees who agree to be
bound by the provisions of this Section 10.15, (f) to the extent required in
connection with any litigation between any Loan Party and any Lender with
respect to the Loans or this Agreement and the other Loan Documents or (g) with
the Borrower's prior written consent. The agreements in this Section 10.15
shall survive repayment of the Loans and all other amounts payable hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
INTERNATIONAL HOME FOODS, INC.
By: /s/ ANDREW S. ROSEN
-----------------------------------
Name: Andrew S. Rosen
Title:
THE CHASE MANHATTAN BANK, as
Administrative Agent and as a Lender
By: /s/ KAREN SHARF
-----------------------------------
Name: Karen Sharf
Title: Vice President
<PAGE> 88
83
BANKERS TRUST COMPANY, as
Syndication Agent and as a Lender
By: /s/ GINA S. THOMPSON
-----------------------------------
Name: Gina S. Thompson
Title: Vice President
MORGAN STANLEY SENIOR FUNDING, INC., as
Documentation Agent and as a Lender
By: /s/ R. SMITH
-----------------------------------
Name: R. Smith
Title: Managing Director
ALLSTATE LIFE INSURANCE COMPANY
By: /s/
-----------------------------------
Name:
Its Authorized Signatory
By: /s/
-----------------------------------
Name:
Its Authorized Signatory
ALLSTATE INSURANCE COMPANY
By: /s/
-----------------------------------
Name:
Its Authorized Signatory
By: /s/
-----------------------------------
Name:
Its Authorized Signatory
<PAGE> 89
84
BANK OF HAWAII
By: /s/ SUSAN MCCARTHY
-----------------------------------
Name: Susan McCarthy
Title: Assistant Vice President
THE BANK OF NEW YORK
By: /s/ DANIEL L. BLACK
-----------------------------------
Name: Daniel L. Black
Title: Senior Vice President
BANK OF TOKYO-MITSUBISHI TRUST COMPANY
By: /s/ PAUL P. MALECKI
-----------------------------------
Name: Paul P. Malecki
Title: Vice President
BANQUE FRANCAISE DU COMMERCE EXTERIEUR
By: /s/ PETER KARL HARRIS
-----------------------------------
Name: Peter Karl Harris
Title: Vice President
By: /s/ WILLIAM C. MAIER
-----------------------------------
Name: William C. Maier
Title: Vice President--Group Manager
BARCLAYS BANK PLC
By: /s/ ARMINDA YOUSE-WARDE
-----------------------------------
Name: Arminda Youse-Warde
Title: Director
BT NIM
By:
-----------------------------------
<PAGE> 90
85
Name:
Title:
CAISSE NATIONALE DE CREDIT AGRICOLE
By: /s/ CRAIG WELCH
-----------------------------------
Name: Craig Welch
Title: First Vice President
CHL HIGH YIELD LOAN PORTFOLIO
(a unit of The Chase Manhattan Bank)
By: /s/ RICHARD W. STEWART
-----------------------------------
Name: Richard W. Stewart
Title: Vice President
CITICORP USA
By: /s/ JOHN H. REXFORD
-----------------------------------
Name: John H. Rexford
Title: Vice President
CREDIT LYONNAIS, New York Branch
By: /s/ Attila Koc
-----------------------------------
Name: Attila Koc
Title: Vice President
CRESCENT CAPITAL CORP.
By:
-----------------------------------
Name:
Title:
<PAGE> 91
86
THE DAI-ICHI KANGYO BANK, LTD.
By: /s/ MICHAEL R. WELLINGTON
-----------------------------------
Name: Michael R. Wellington
Title: Assistant Vice President
DRESDNER BANK AG, New York and
Grand Cayman Branches
By: /s/ RICHARD W. CONROY
-----------------------------------
Name: Richard W. Conroy
Title: Vice President
By: /s/ NICHOLAS KALOGEROPOULOS
-----------------------------------
Name: Nicholas Kalogeropoulos
Title: Assistant Treasurer
THE EQUITABLE LIFE ASSURANCE SOCIETY OF
THE UNITED STATES
By: /s/ JOEL SEREBRANSKY
-----------------------------------
Name: Joel Serebransky
Title: Investment Officer
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ JEFFREY LUBATKIN
-----------------------------------
Name: Jeffrey Lubatkin
Title: Assistant Vice President
<PAGE> 92
87
THE FIRST NATIONAL BANK OF BOSTON
By: /s/
-----------------------------------
Name:
Title:
FIRST SOURCE FINANCIAL LLP
By: First Source Financial, Inc.,
its Agent/Manager
By: /s/ ROBERT M. COSEO
-----------------------------------
Name: Robert M. Coseo
Title: Senior Vice President
THE FUJI BANK, LTD.
By: /s/ TEIJI TERAMOTO
-----------------------------------
Name: Teiji Teramoto
Title: Vice President & Manager
GIROCREDIT BANK
By: /s/ ANCA TRIFAN
-----------------------------------
Name: Anca Trifan
Title: Vice President
GOLDMAN SACHS CREDIT PARTNERS L.P.
By: /s/ EDWARD C. FORST
-----------------------------------
Name: Edward C. Forst
Title: Authorized Signatory
<PAGE> 93
88
HARRIS TRUST AND SAVINGS
By: /s/ MARY L. BURKE
-----------------------------------
Name: Mary L. Burke
Title: Vice President
HELLER FINANCIAL, INC.
By: /s/ CHRISTINA M. RASHID
-----------------------------------
Name: Christina M. Rashid
Title: Vice President
IMPERIAL BANK
By: /s/ RAY VADALMA
-----------------------------------
Name: Ray Vadalma
Title: Senior Vice President
THE INDUSTRIAL BANK OF JAPAN, LIMITED
By: /s/ JUNRI ODA
-----------------------------------
Name: Junri Oda
Title: Senior Vice President
ING CAPITAL ADVISORS, INC., as Agent
for Bank Syndication Account
By: /s/ MICHAEL D. HATLEY
-----------------------------------
Name: Michael D. Hatley
Title: Vice President &
Portfolio Manager
<PAGE> 94
89
CONTINENTAL CASUALTY COMPANY
By: /s/ LEW H. NATHAN
-----------------------------------
Name: Lew H. Nathan
Title: Group Vice President
and Treasurer
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, New York Branch
By: /s/ SHUICHI TAJIMA
-----------------------------------
Name: Shuichi Tajima
Title: Deputy General Manager
MARINE MIDLAND BANK
By: /s/ J B LYONS
-----------------------------------
Name: J B Lyons
Title: Senior Vice President
MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY
By: /s/ JOHN B. JOYCE
-----------------------------------
Name: John B. Joyce
Title: Managing Director
MERRILL LYNCH SENIOR FLOATING RATE
FUND, INC.
By: /s/ ANTHONY R. CLEMENTE
-----------------------------------
Name: Anthony R. Clemente
Title: Authorized Signatory
<PAGE> 95
90
SENIOR HIGH INCOME PORTFOLIO, INC.
By: /s/ ANTHONY R. CLEMENTE
-----------------------------------
Name: Anthony R. Clemente
Title: Authorized Signatory
THE MITSUBISHI TRUST AND BANKING
CORPORATION
By: /s/ PATRICIA LORET DE MOLA
-----------------------------------
Name: Patricia Loret de Mola
Title: Senior Vice President
NATIONAL CITY BANK
By: /s/ JOSEPH D. ROBISON
-----------------------------------
Name: Joseph D. Robison
Title: Vice President
NATIONAL WESTMINISTER BANK PLC
By: /s/ MARY PRICE
-----------------------------------
Name: Mary Price
Title: Vice President
NATIONSBANK, N.A.
By: /s/ CHRIS BARTON
-----------------------------------
Name: Chris Barton
Title: Vice President
<PAGE> 96
91
THE NIPPON CREDIT BANK, LTD.
By: /s/ CLIFFORD ABRAMSKY
-----------------------------------
Name: Clifford Abramsky
Title: Senior Manager
OAK HILL SECURITIES FUND, L.P.
By: Oak Hill Securities GenPar, L.P.
its General Partner
By: Oak Hill Securities MGP, Inc.
its General Partner
By: /s/ SCOTT KRASE
-----------------------------------
Name: Scott Krase
Title: Vice President
ORIX USA CORPORATION
By: /s/ HIROYUKI MIYAUCHI
-----------------------------------
Name: Hiroyuki Miyauchi
Title: Senior Vice President
PNC BANK, N.A.
By: /s/ TOM COLWELL
-----------------------------------
Name: Tom Colwell
Title: Vice President
PPM AMERICA, INC., as attorney in fact,
on behalf of Jackson National Life
Insurance Company
By: /s/ M. DIRE
-----------------------------------
Name: M. Dire
Title: Vice President
<PAGE> 97
92
PRIME INCOME TRUST
By: /s/ RAFAEL SCOLARI
-----------------------------------
Name: Rafael Scolari
Title: Vice President
Portfolio Manager
PROTECTIVE LIFE INSURANCE COMPANY
By: /s/ MARK K. OKADA CFA
-----------------------------------
Name: Mark K. Okada CFA
Title: Executive Vice President
Protective Asset
Management, L.L.C.
RABOBANK NEDERLAND (NEW YORK)
By: /s/ JOANNA M. SOLONSKI
-----------------------------------
Name: Joanna M. Solonski
Title: Vice President
THE SANWA BANK LIMITED
By: /s/ CHRISTIAN KAMBOUR
-----------------------------------
Name: Christian Kambour
Title: Assistant Vice President
SOCIETE GENERALE, Southwest Agency
By: /s/ CHRISTOPHER SPELTZ
-----------------------------------
Name: Christopher Speltz
Title: Vice President
<PAGE> 98
93
THE SUMITOMO BANK LIMITED
By: /s/
-----------------------------------
Name:
Title:
SUMITOMO TRUST & BANKING CO., LTD.,
NEW YORK BRANCH
By: /s/ SURAJ P. BHATIA
-----------------------------------
Name: Suraj P. Bhatia
Title: Senior Vice President
Manager, Corporate
Finance Department
THE TRAVELERS INSURANCE COMPANY
By: /s/ JORDAN M. STITZER
-----------------------------------
Name: Jordan M. Stitzer
Title: Vice President
UNITED STATES NATIONAL BANK OF OREGON
By: /s/ DOUGLAS A. RICH
-----------------------------------
Name: Douglas A. Rich
Title: Vice President
KZH HOLDING CORPORATION
By: /s/ ANDREW J. TAYLOR
-----------------------------------
Name: Andrew J. Taylor
Title: Authorized Agent
TCW Asset Management Company
as Attorney-in-Fact for
Integon Life Insurance Corporation
By: /s/ JUSTIN L. DRISCOLL
-----------------------------------
Name: Justin L. Driscoll
Title: Vice President
<PAGE> 99
94
TCW Asset Management Company
as Attorney-in-Fact for
United Companies Life Insurance Company
By: /s/ JUSTIN L. DRISCOLL
-----------------------------------
Name: Justin L. Driscoll
Title: Vice President
<PAGE> 100
95
Annex A
PRICING GRID FOR TRANCHE A LOANS AND COMMITMENT FEES
<TABLE>
<CAPTION>
Applicable Margin Applicable Margin Commitment
Consolidated Leverage Ratio for Eurodollar Loans for ABR Loans Fee Rate
--------------------------- --------------------- ------------------- ----------
<S> <C> <C> <C>
Greater than or equal to 2.50% 1.50% 0.500%
4.50 to 1.0
Greater than or equal to 2.25% 1.25% 0.500%
4.00 to 1.0 and
less than 4.50 to 1.0
Greater than or equal to 3.50 to 1.0 2.00% 1.00% 0.375%
and less than 4.00 to 1.0
Greater than or equal to 3.00 to 1.0 1.75% 0.75% 0.375%
and less than 3.50 to 1.0
Less than 3.00 to 1.0 1.50% 0.50% 0.375%
</TABLE>
Changes in the Applicable Margin with respect to Tranche A Loans or in the
Commitment Fee Rate resulting from changes in the Consolidated Leverage Ratio
shall become effective on the date (the "Adjustment Date") on which financial
statements are delivered to the Lenders pursuant to Section 6.1 (but in any
event not later than the 45th day after the end of each of the first three
quarterly periods of each fiscal year or the 95th day after the end of each
fiscal year, as the case may be) and shall remain in effect until the next
change to be effected pursuant to this paragraph. If any financial statements
referred to above are not delivered within the time periods specified above,
then, until such financial statements are delivered, the Consolidated Leverage
Ratio as at the end of the fiscal period that would have been covered thereby
shall for the purposes of this definition be deemed to be greater than 4.50 to
1. Each determination of the Consolidated Leverage Ratio pursuant to this
paragraph shall be made with respect to the period of four consecutive fiscal
quarters of the Borrower ending at the end of the period covered by the
relevant financial statements.
<PAGE> 101
<TABLE>
<CAPTION>
Schedule 1.1A
-------------
TERM LOAN COMMITMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
Revolving Credit
Lender Commitment Tranche A Tranche B Tranche C
====================================================================================================================================
<S> <C> <C> <C> <C>
THE CHASE MANHATTAN BANK $4,625,000.00 $13,875,000.00 $83,243,243.23 $70,756,756.77
- ------------------------------------------------------------------------------------------------------------------------------------
BANKERS TRUST COMPANY $4,250,000.00 $12,750,000.00 $ 5,405,405.41 $ 4,594,494.59
- ------------------------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY SENIOR FUNDING, INC. $4,000,000.00 $12,000,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
ALLSTATE INSURANCE COMPANY $ 4,054,054.05 $ 3,445,945.94
- ------------------------------------------------------------------------------------------------------------------------------------
ALLSTATE LIFE INSURANCE COMPANY $ 4,054,054.06 $ 3,445,945.95
- ------------------------------------------------------------------------------------------------------------------------------------
BANK OF HAWAII $2,000,000.00 $ 6,000,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
THE BANK OF NEW YORK $3,125,000.00 $ 9,375,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
BANK OF TOKYO-MITSUBISHI TRUST
COMPANY $3,125,000.00 $ 9,375,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
BANQUE FRANCAISE DU COMMERCE
EXTERIEUR $3,125,000.00 $ 9,375,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
BARCLAYS BANK PLC $3,125,000.00 $ 9,375,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
CAISSE NATIONALE DE CREDIT
AGRICOLE $2,000,000.00 $ 6,000,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
CHL HIGH YIELD LOAN PORTFOLIO $ 5,405,405.41 $ 4,594,594.59
- ------------------------------------------------------------------------------------------------------------------------------------
CITICORP USA $3,125,000.00 $ 9,375,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 102
2
<TABLE>
<CAPTION>
TERM LOAN COMMITMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
Revolving Credit
Lender Commitment Tranche A Tranche B Tranche C
====================================================================================================================================
<S> <C> <C> <C> <C>
CONTINENTAL CASUALTY COMPANY $ 5,405,405.41 $ 4,594,594.59
- ------------------------------------------------------------------------------------------------------------------------------------
CREDIT LYONNAIS, NEW YORK BRANCH $3,125,000.00 $ 9,375,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
THE DAI-ICHI KANGYO BANK, LTD. $2,000,000.00 $ 6,000,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
DRESDNER BANK, AG, NEW YORK AND
GRAND CAYMAN BRANCHES $3,125,000.00 $ 9,375,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES $ 8,108,108.11 $ 6,891,891.89
- ------------------------------------------------------------------------------------------------------------------------------------
THE FIRST NATIONAL BANK OF BOSTON $3,125,000.00 $ 9,375,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
THE FIRST NATIONAL BANK OF CHICAGO $3,125,000.00 $ 9,375,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
FIRST SOURCE FINANCIAL LLP $2,000,000.00 $ 6,000,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
THE FUJI BANK, LTD. $3,125,000.00 $ 9,375,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
GIROCREDIT BANK $2,000,000.00 $ 6,000,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS CREDIT PARTNERS L.P. $2,000,000.00 $ 6,000,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
HARRIS TRUST AND SAVINGS $2,000,000.00 $ 6,000,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
HELLER FINANCIAL, INC. $2,000,000.00 $ 6,000,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
IMPERIAL BANK $2,000,000.00 $ 6,000,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 103
3
<TABLE>
<CAPTION>
TERM LOAN COMMITMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
Revolving Credit
Lender Commitment Tranche A Tranche B Tranche C
====================================================================================================================================
<S> <C> <C> <C> <C>
THE INDUSTRIAL BANK OF JAPAN,
LIMITED $2,000,000.00 $6,000,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
ING CAPITAL ADVISORS, INC. $8,108,108.11 $6,891,891.89
- ------------------------------------------------------------------------------------------------------------------------------------
JACKSON NATIONAL LIFE INSURANCE
COMPANY $8,108,108.11 $6,891,891.89
- ------------------------------------------------------------------------------------------------------------------------------------
KZH HOLDING CORPORATION $8,108,108.11 $6,891,891.89
- ------------------------------------------------------------------------------------------------------------------------------------
THE LONG-TERM CREDIT BANK OF
JAPAN, LIMITED, NEW YORK BRANCH $3,125,000.00 $9,375,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
MARINE MIDLAND BANK $3,125,000.00 $9,375,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY $8,108,108.11 $6,891,891.89
- ------------------------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH SENIOR FLOATING
RATE FUND, INC. $8,108,108.11 $6,891,891.89
- ------------------------------------------------------------------------------------------------------------------------------------
SENIOR HIGH INCOME PORTFOLIO, INC. $1,081,081.08 $ 918,918.92
- ------------------------------------------------------------------------------------------------------------------------------------
THE MITSUBISHI TRUST AND BANKING
CORPORATION $3,125,000.00 $9,375,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
NATIONAL CITY BANK $2,000,000.00 $6,000,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 104
4
<TABLE>
<CAPTION>
TERM LOAN COMMITMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
Revolving Credit
Lender Commitment Tranche A Tranche B Tranche C
====================================================================================================================================
<S> <C> <C> <C> <C>
NATIONAL WESTMINSTER BANK PLC $3,125,000.00 $9,375,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
NATIONSBANK, N.A. $3,125,000.00 $9,375,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
THE NIPPON CREDIT BANK, LTD. $2,000,000.00 $6,000,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
OAK HILL SECURITIES FUND, L.P. $12,972,972.97 $11,027,027.03
- ------------------------------------------------------------------------------------------------------------------------------------
ORIX USA CORPORATION $ 2,702,702.70 $ 2,297,297.30
- ------------------------------------------------------------------------------------------------------------------------------------
PNC BANK, N.A. $2,000,000.00 $6,000,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
PRIME INCOME TRUST $ 8,108,108.11 $ 6,891,891.89
- ------------------------------------------------------------------------------------------------------------------------------------
PROTECTIVE LIFE INSURANCE COMPANY $ 8,108,108.11 $ 6,891,891.89
- ------------------------------------------------------------------------------------------------------------------------------------
RABOBANK NEDERLAND (NEW YORK) $2,000,000.00 $6,000,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
THE SANWA BANK LIMITED $2,000,000.00 $6,000,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
SOCIETE GENERALE $3,125,000.00 $9,375,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
THE SUMITOMO BANK LIMITED $3,125,000.00 $9,375,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
THE SUMITOMO TRUST & BANKING CO.,
LTD., NEW YORK BRANCH $2,000,000.00 $6,000,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 105
5
<TABLE>
<CAPTION>
TERM LOAN COMMITMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
Revolving Credit
Lender Commitment Tranche A Tranche B Tranche C
====================================================================================================================================
<S> <C> <C> <C> <C>
TCW ASSET MANAGEMENT COMPANY $1,351,351.35 $1,148,648.65
(INTEGON LIFE INSURANCE
CORPORATION)
- ------------------------------------------------------------------------------------------------------------------------------------
TCW ASSET MANAGEMENT COMPANY $1,351,351.35 $1,148,648.65
(UNITED COMPANIES LIFE INSURANCE
COMPANY)
- ------------------------------------------------------------------------------------------------------------------------------------
THE TRAVELERS INSURANCE COMPANY $8,108,108.11 $6,891,891.89
- ------------------------------------------------------------------------------------------------------------------------------------
UNITED STATES NATIONAL BANK OF
OREGON $2,000,000.00 $6,000,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 106
EXHIBIT A
================================================================================
FORM OF
GUARANTEE AND COLLATERAL AGREEMENT
MADE BY
INTERNATIONAL HOME FOODS, INC.
AND CERTAIN OF ITS SUBSIDIARIES
IN FAVOR OF
THE CHASE MANHATTAN BANK,
AS ADMINISTRATIVE AGENT
DATED AS OF NOVEMBER 1, 1996
================================================================================
<PAGE> 107
Table of contents
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SECTION 1. DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2. GUARANTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1 Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2 Right of Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3 No Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.4 Amendments, etc. with respect to the Borrower Obligations . . . . . . . . . . . . . . . . . . . . . . . 6
2.5 Guarantee Absolute and Unconditional . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.6 Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.7 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3. GRANT OF SECURITY INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 4. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.1 Representations in Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.2 Title; No Other Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.3 Perfected First Priority Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.4 Chief Executive Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.5 Inventory and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.6 Farm Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.7 Pledged Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.8 Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.9 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 5. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.1 Covenants in Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.2 Delivery of Instruments and Chattel Paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.3 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.4 Maintenance of Perfected Security Interest; Further Documentation . . . . . . . . . . . . . . . . . . . 10
5.5 Changes in Locations, Name, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.6 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.7 Pledged Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.8 Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.9 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 6. REMEDIAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.1 Certain Matters Relating to Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.2 Communications with Obligors; Grantors Remain Liable . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.3 Pledged Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.4 Proceeds to be Turned Over To Administrative Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.5 Application of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.6 Code and Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.7 Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
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6.8 Waiver; Deficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7. THE ADMINISTRATIVE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.1 Administrative Agent's Appointment as Attorney-in-Fact, etc . . . . . . . . . . . . . . . . . . . . . . 18
7.2 Duty of Administrative Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.3 Execution of Financing Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.4 Authority of Administrative Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 8. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.1 Amendments in Writing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.3 No Waiver by Course of Conduct; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.4 Enforcement Expenses; Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.5 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.6 Set-Off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.9 Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.10 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.11 Submission To Jurisdiction; Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.12 Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.13 WAIVERS OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.14 Section Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.15 Additional Grantors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.16 Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
</TABLE>
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<PAGE> 109
GUARANTEE AND COLLATERAL AGREEMENT, dated as of November 1,
1996, made by each of the signatories hereto (together with any other entity
that may become a party hereto as provided herein, the "Grantors"), in favor of
THE CHASE MANHATTAN BANK, as Administrative Agent (in such capacity, the
"Administrative Agent") for the banks and other financial institutions or
entities (the "Lenders") from time to time parties to the Credit Agreement,
dated as of November 1, 1996 (as amended, supplemented or otherwise modified
from time to time, the "Credit Agreement"), among INTERNATIONAL HOME FOODS,
INC., a Delaware corporation (the "Borrower"), the Lenders and the
Administrative Agent.
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lenders have
severally agreed to make extensions of credit to the Borrower upon the terms
and subject to the conditions set forth therein;
WHEREAS, the Borrower is a member of an affiliated group of
companies that includes each other Grantor;
WHEREAS, the proceeds of the extensions of credit under the
Credit Agreement will be used in part to enable the Borrower to make valuable
transfers to one or more of the other Grantors in connection with the operation
of their respective businesses;
WHEREAS, the Borrower and the other Grantors are engaged in
related businesses, and each Grantor will derive substantial direct and
indirect benefit from the making of the extensions of credit under the Credit
Agreement; and
WHEREAS, it is a condition precedent to the obligation of the
Lenders to make their respective extensions of credit to the Borrower under the
Credit Agreement that the Grantors shall have executed and delivered this
Agreement to the Administrative Agent for the ratable benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce
the Administrative Agent and the Lenders to enter into the Credit Agreement and
to induce the Lenders to make their respective extensions of credit to the
Borrower thereunder, each Grantor hereby agrees with the Administrative Agent,
for the ratable benefit of the Lenders, as follows:
SECTION 1. DEFINED TERMS
1.1 Definitions. (a) Unless otherwise defined herein, terms
defined in the Credit Agreement and used herein shall have the meanings given
to them in the Credit Agreement, and the following terms which are defined in
the Uniform Commercial Code in effect in the State of New York on the date
hereof are used herein as so defined: Accounts, Chattel Paper, Documents,
Equipment, Farm Products, Instruments and Inventory.
(b) The following terms shall have the following meanings:
<PAGE> 110
2
"Agreement": this Guarantee and Collateral Agreement, as the
same may be amended, supplemented or otherwise modified from time to
time.
"Borrower Obligations": the collective reference to the
unpaid principal of and interest on the Loans and Reimbursement
Obligations and all other obligations and liabilities of the Borrower
(including, without limitation, interest accruing at the then
applicable rate provided in the Credit Agreement after the maturity of
the Loans and Reimbursement Obligations and interest accruing at the
then applicable rate provided in the Credit Agreement after the filing
of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower, whether
or not a claim for post-filing or post- petition interest is allowed
in such proceeding) to the Administrative Agent or any Lender (or, in
the case of any Interest Rate Protection Agreement referred to below,
any affiliate of any Lender), whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, the
Credit Agreement, this Agreement, the other Loan Documents, any Letter
of Credit or any Interest Rate Protection Agreement entered into by
the Borrower with any Lender (or any affiliate of any Lender) or any
other document made, delivered or given in connection therewith, in
each case whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and disbursements of counsel
to the Administrative Agent or to the Lenders that are required to be
paid by the Borrower pursuant to the terms of any of the foregoing
agreements).
"Code": the Uniform Commercial Code as from time to time in
effect in the State of New York.
"Collateral": as defined in Section 3.
"Collateral Account": any collateral account established by
the Administrative Agent as provided in Section 6.1 or 6.4.
"Copyrights": (i) all copyrights, in the United States or any
other country, whether registered or unregistered, or published or
unpublished (including, without limitation, those listed in Schedule
6), all registrations and recordings thereof, and all applications in
connection therewith, including, without limitation, all
registrations, recordings and applications in the United States
Copyright Office, and (ii) the right to obtain all renewals thereof.
"Copyright Licenses": any written agreement naming any
Grantor as licensor or licensee (including, without limitation, those
listed in Schedule 6), granting any right under any Copyright,
including, without limitation, the grant of rights to manufacture,
distribute, exploit and sell materials derived from any Copyright.
"General Intangibles": all "general intangibles" as such term
is defined in Section 9-106 of the Uniform Commercial Code in effect
in the State of New York on the date hereof and, in any event,
including, without limitation, with respect to any Grantor, all
contracts, agreements, instruments and indentures in any form, and
portions thereof, to which such Grantor is a party or under which such
Grantor has any right, title or interest or to which such Grantor or
any property of such Grantor is subject, as the same may from time to
time be amended, supplemented or otherwise modified, including,
without limitation, (i) all rights of
<PAGE> 111
3
such Grantor to receive moneys due and to become due to it thereunder
or in connection therewith, (ii) all rights of such Grantor to damages
arising thereunder and (iii) all rights of such Grantor to perform and
to exercise all remedies thereunder, in each case to the extent the
grant by such Grantor of a security interest pursuant to this
Agreement in its right, title and interest in such contract,
agreement, instrument or indenture is not prohibited by such contract,
agreement, instrument or indenture without the consent of any other
party thereto, would not give any other party to such contract,
agreement, instrument or indenture the right to terminate its
obligations thereunder, or is permitted with consent if all necessary
consents to such grant of a security interest have been obtained from
the other parties thereto (it being understood that the foregoing
shall not be deemed to obligate such Grantor to obtain such consents);
provided, that the foregoing limitation shall not affect, limit,
restrict or impair the grant by such Grantor of a security interest
pursuant to this Agreement in any Receivable or any money or other
amounts due or to become due under any such contract, agreement,
instrument or indenture.
"Guarantor Obligations": with respect to any Guarantor, the
collective reference to (i) the Borrower Obligations and (ii) all
obligations and liabilities of such Guarantor which may arise under or
in connection with this Agreement or any other Loan Document to which
such Guarantor is a party, in each case whether on account of
guarantee obligations, reimbursement obligations, fees, indemnities,
costs, expenses or otherwise (including, without limitation, all fees
and disbursements of counsel to the Administrative Agent or to the
Lenders that are required to be paid by such Guarantor pursuant to the
terms of this Agreement or any other Loan Document).
"Guarantors": the collective reference to each Grantor other
than the Borrower.
"Intellectual Property": all rights, priorities and
privileges provided under U.S., multinational and foreign law relating
to intellectual property, including without limitation, the
Copyrights, the Copyright Licenses, the Patents, the Patent Licenses,
the Trademarks and the Trademark Licenses, and all rights to sue at
law or in equity for any infringement or other impairment thereof,
including the right to receive all proceeds and damages therefrom.
"Issuers": the collective reference to each issuer of a
Pledged Security.
"Obligations": (i) in the case of the Borrower, the Borrower
Obligations, and (ii) in the case of each Guarantor, its Guarantor
Obligations.
"Patents": (i) all letters patent of the United States or any
other country and all reissues and extensions thereof, including,
without limitation, any of the foregoing referred to in Schedule 6,
(ii) all applications for letters patent of the United States or any
other country and all divisions, continuations and
continuations-in-part thereof, including, without limitation, any of
the foregoing referred to in Schedule 6, and (iii) all rights to
obtain any reissues or extensions of the foregoing.
"Patent License": all agreements, whether written or oral,
providing for the grant by or to any Grantor of any right to
manufacture, use or sell any invention covered in whole or in part by
a Patent, including, without limitation, any of the foregoing referred
to in Schedule 6.
<PAGE> 112
4
"Pledged Notes": all promissory notes issued to or held by
any Grantor (other than promissory notes issued in connection with
extensions of trade credit by any Grantor in the ordinary course of
business).
"Pledged Securities": the collective reference to the Pledged
Notes and the Pledged Stock.
"Pledged Stock": the shares of Capital Stock listed on
Schedule 2, together with any other shares, stock certificates,
options or rights of any nature whatsoever in respect of the Capital
Stock of any Person that may be issued or granted to, or held by, any
Grantor while this Agreement is in effect (provided that in no event
shall more than 65% of the total outstanding Capital Stock of any
Excluded Foreign Subsidiary be required to be pledged hereunder).
"Proceeds": all "proceeds" as such term is defined in Section
9-306(1) of the Uniform Commercial Code in effect in the State of New
York on the date hereof and, in any event, shall include, without
limitation, all dividends or other income from the Pledged Securities,
collections thereon or distributions or payments with respect thereto.
"Receivable": any right to payment for goods sold or leased
or for services rendered, whether or not such right is evidenced by an
Instrument or Chattel Paper and whether or not it has been earned by
performance (including, without limitation, any Account).
"Securities Act": the Securities Act of 1933, as amended.
"Trademarks": (i) all trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade
styles, service marks, logos and other source or business identifiers,
and all goodwill associated therewith, now existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all
applications in connection therewith, whether in the United States
Patent and Trademark Office or in any similar office or agency of the
United States, any State thereof or any other country or any political
subdivision thereof, or otherwise, and all common-law rights related
thereto, including, without limitation, any of the foregoing referred
to in Schedule 6, and (ii) the right to obtain all renewals thereof.
"Trademark License": any agreement, whether written or oral,
providing for the grant by or to any Grantor of any right to use any
Trademark, including, without limitation, any of the foregoing
referred to in Schedule 6.
"Undelivered Instruments": as defined in Section 4.8.
1.2 Other Definitional Provisions. (a) The words "hereof,"
"herein", "hereto" and "hereunder" and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and Section and Schedule references are
to this Agreement unless otherwise specified.
(b) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
<PAGE> 113
5
(c) Where the context requires, terms relating to the
Collateral or any part thereof, when used in relation to a Grantor, shall refer
to such Grantor's Collateral or the relevant part thereof.
(d) For the purposes of Sections 4 and 5, each reference to
Collateral or to any relevant type or item of Property constituting Collateral
shall be deemed to exclude (i) tangible Property that is not located in either
the United States (including its possessions) or Canada and (ii) Intellectual
Property rights, privileges and priorities that arise under Requirements of Law
other than those of the United States, Canada or any state, province or other
jurisdiction thereof.
SECTION 2. GUARANTEE
2.1 Guarantee. (a) Each of the Guarantors hereby, jointly
and severally, unconditionally and irrevocably, guarantees to the
Administrative Agent, for the ratable benefit of the Lenders and their
respective successors, indorsees, transferees and assigns, the prompt and
complete payment and performance by the Borrower when due (whether at the
stated maturity, by acceleration or otherwise) of the Borrower Obligations.
(b) Anything herein or in any other Loan Document to the
contrary notwithstanding, the maximum liability of each Guarantor hereunder and
under the other Loan Documents shall in no event exceed the amount which can be
guaranteed by such Guarantor under applicable federal and state laws relating
to the insolvency of debtors (after giving effect to the right of contribution
established in Section 2.2).
(c) Each Guarantor agrees that the Borrower Obligations may
at any time and from time to time exceed the amount of the liability of such
Guarantor hereunder without impairing the guarantee contained in this Section 2
or affecting the rights and remedies of the Administrative Agent or any Lender
hereunder.
(d) The guarantee contained in this Section 2 shall remain in
full force and effect until all the Borrower Obligations and the obligations of
each Guarantor under the guarantee contained in this Section 2 shall have been
satisfied by payment in full, no Letter of Credit shall be outstanding and the
Commitments shall be terminated, notwithstanding that from time to time during
the term of the Credit Agreement the Borrower may be free from any Borrower
Obligations.
(e) No payment made by the Borrower, any of the Guarantors,
any other guarantor or any other Person or received or collected by the
Administrative Agent or any Lender from the Borrower, any of the Guarantors,
any other guarantor or any other Person by virtue of any action or proceeding
or any set-off or appropriation or application at any time or from time to time
in reduction of or in payment of the Borrower Obligations shall be deemed to
modify, reduce, release or otherwise affect the liability of any Guarantor
hereunder which shall, notwithstanding any such payment (other than any payment
made by such Guarantor in respect of the Borrower Obligations or any payment
received or collected from such Guarantor in respect of the Borrower
Obligations), remain liable for the Borrower Obligations up to the maximum
liability of such Guarantor hereunder until, subject to Section 2.6, the
Borrower Obligations are paid in full, no Letter of Credit shall be outstanding
and the Commitments are terminated.
2.2 Right of Contribution. Each Guarantor hereby agrees that
to the extent that a Guarantor shall have paid more than its proportionate
share of any payment made hereunder, such
<PAGE> 114
6
Guarantor shall be entitled to seek and receive contribution from and against
any other Guarantor hereunder which has not paid its proportionate share of
such payment. Each Guarantor's right of contribution shall be subject to the
terms and conditions of Section 2.3. The provisions of this Section 2.2 shall
in no respect limit the obligations and liabilities of any Guarantor to the
Administrative Agent and the Lenders, and each Guarantor shall remain liable to
the Administrative Agent and the Lenders for the full amount guaranteed by such
Guarantor hereunder.
2.3 No Subrogation. Notwithstanding any payment made by any
Guarantor hereunder or any set-off or application of funds of any Guarantor by
the Administrative Agent or any Lender, no Guarantor shall be entitled to be
subrogated to any of the rights of the Administrative Agent or any Lender
against the Borrower or any other Guarantor or any collateral security or
guarantee or right of offset held by the Administrative Agent or any Lender for
the payment of the Borrower Obligations, nor shall any Guarantor seek or be
entitled to seek any contribution or reimbursement from the Borrower or any
other Guarantor in respect of payments made by such Guarantor hereunder, until
all amounts owing to the Administrative Agent and the Lenders by the Borrower
on account of the Borrower Obligations are paid in full, no Letter of Credit
shall be outstanding and the Commitments are terminated. If any amount shall
be paid to any Guarantor on account of such subrogation rights at any time when
all of the Borrower Obligations shall not have been paid in full, such amount
shall be held by such Guarantor in trust for the Administrative Agent and the
Lenders, segregated from other funds of such Guarantor, and shall, forthwith
upon receipt by such Guarantor, be turned over to the Administrative Agent in
the exact form received by such Guarantor (duly indorsed by such Guarantor to
the Administrative Agent, if required), to be applied against the Borrower
Obligations, whether matured or unmatured, in such order as the Administrative
Agent may determine.
2.4 Amendments, etc. with respect to the Borrower
Obligations. Each Guarantor shall remain obligated hereunder notwithstanding
that, without any reservation of rights against any Guarantor and without
notice to or further assent by any Guarantor, any demand for payment of any of
the Borrower Obligations made by the Administrative Agent or any Lender may be
rescinded by the Administrative Agent or such Lender and any of the Borrower
Obligations continued, and the Borrower Obligations, or the liability of any
other Person upon or for any part thereof, or any collateral security or
guarantee therefor or right of offset with respect thereto, may, from time to
time, in whole or in part, be renewed, extended, amended, modified,
accelerated, compromised, waived, surrendered or released by the Administrative
Agent or any Lender, and the Credit Agreement and the other Loan Documents and
any other documents executed and delivered in connection therewith may be
amended, modified, supplemented or terminated, in whole or in part, as the
Administrative Agent (or the Required Lenders or all Lenders, as the case may
be) may deem advisable from time to time, and any collateral security,
guarantee or right of offset at any time held by the Administrative Agent or
any Lender for the payment of the Borrower Obligations may be sold, exchanged,
waived, surrendered or released. Neither the Administrative Agent nor any
Lender shall have any obligation to protect, secure, perfect or insure any Lien
at any time held by it as security for the Borrower Obligations or for the
guarantee contained in this Section 2 or any property subject thereto.
2.5 Guarantee Absolute and Unconditional. Each Guarantor
waives any and all notice of the creation, renewal, extension or accrual of any
of the Borrower Obligations and notice of or proof of reliance by the
Administrative Agent or any Lender upon the guarantee contained in this Section
2 or acceptance of the guarantee contained in this Section 2; the Borrower
Obligations, and any of them, shall conclusively be deemed to have been
created, contracted or incurred, or renewed, extended, amended or waived, in
reliance upon the guarantee contained in this Section 2; and all dealings
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between the Borrower and any of the Guarantors, on the one hand, and the
Administrative Agent and the Lenders, on the other hand, likewise shall be
conclusively presumed to have been had or consummated in reliance upon the
guarantee contained in this Section 2. Each Guarantor waives diligence,
presentment, protest, demand for payment and notice of default or nonpayment to
or upon the Borrower or any of the Guarantors with respect to the Borrower
Obligations. Each Guarantor understands and agrees that the guarantee
contained in this Section 2 shall be construed as a continuing, absolute and
unconditional guarantee of payment without regard to (a) the validity or
enforceability of the Credit Agreement or any other Loan Document, any of the
Borrower Obligations or any other collateral security therefor or guarantee or
right of offset with respect thereto at any time or from time to time held by
the Administrative Agent or any Lender, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance) which may at any
time be available to or be asserted by the Borrower or any other Person against
the Administrative Agent or any Lender, or (c) any other circumstance
whatsoever (with or without notice to or knowledge of the Borrower or such
Guarantor) which constitutes, or might be construed to constitute, an equitable
or legal discharge of the Borrower for the Borrower Obligations, or of such
Guarantor under the guarantee contained in this Section 2, in bankruptcy or in
any other instance. When making any demand hereunder or otherwise pursuing its
rights and remedies hereunder against any Guarantor, the Administrative Agent
or any Lender may, but shall be under no obligation to, make a similar demand
on or otherwise pursue such rights and remedies as it may have against the
Borrower, any other Guarantor or any other Person or against any collateral
security or guarantee for the Borrower Obligations or any right of offset with
respect thereto, and any failure by the Administrative Agent or any Lender to
make any such demand, to pursue such other rights or remedies or to collect any
payments from the Borrower, any other Guarantor or any other Person or to
realize upon any such collateral security or guarantee or to exercise any such
right of offset, or any release of the Borrower, any other Guarantor or any
other Person or any such collateral security, guarantee or right of offset,
shall not relieve any Guarantor of any obligation or liability hereunder, and
shall not impair or affect the rights and remedies, whether express, implied or
available as a matter of law, of the Administrative Agent or any Lender against
any Guarantor. For the purposes hereof "demand" shall include the commencement
and continuance of any legal proceedings.
2.6 Reinstatement. The guarantee contained in this Section 2
shall continue to be effective, or be reinstated, as the case may be, if at any
time payment, or any part thereof, of any of the Borrower Obligations is
rescinded or must otherwise be restored or returned by the Administrative Agent
or any Lender upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Borrower or any Guarantor, or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, the Borrower or any Guarantor or any substantial part of its
property, or otherwise, all as though such payments had not been made.
2.7 Payments. Each Guarantor hereby guarantees that payments
hereunder will be paid to the Administrative Agent without set-off or
counterclaim in Dollars at the office of the Administrative Agent located at
270 Park Avenue, New York, New York 10017.
SECTION 3. GRANT OF SECURITY INTEREST
Each Grantor hereby assigns and transfers to the
Administrative Agent, and hereby grants to the Administrative Agent, for the
ratable benefit of the Lenders, a security interest in, all of the following
property now owned or at any time hereafter acquired by such Grantor or in
which such Grantor now has or at any time in the future may acquire any right,
title or interest (collectively, the
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"Collateral"), as collateral security for the prompt and complete payment and
performance when due (whether at the stated maturity, by acceleration or
otherwise) of such Grantor's Obligations:
(a) all Accounts;
(b) all Chattel Paper;
(c) all Documents;
(d) all Equipment;
(e) all General Intangibles;
(f) all Instruments;
(g) all Intellectual Property;
(h) all Inventory;
(i) all Pledged Securities;
(j) all books and records pertaining to the Collateral; and
(k) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing and all collateral security
and guarantees given by any Person with respect to any of the
foregoing.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter
into the Credit Agreement and to induce the Lenders to make their respective
extensions of credit to the Borrower thereunder, each Grantor hereby represents
and warrants to the Administrative Agent and each Lender that:
4.1 Representations in Credit Agreement. In the case of each
Guarantor, the representations and warranties set forth in Section 4 of the
Credit Agreement as they relate to such Guarantor or to the Loan Documents to
which such Guarantor is a party, each of which is hereby incorporated herein by
reference, are true and correct, and the Administrative Agent and each Lender
shall be entitled to rely on each of them as if they were fully set forth
herein.
4.2 Title; No Other Liens. Except for the security interest
granted to the Administrative Agent for the ratable benefit of the Lenders
pursuant to this Agreement and the other Liens expressly permitted to exist on
the Collateral by the Credit Agreement, such Grantor owns each item of the
Collateral free and clear of any and all Liens or claims of others. No
financing statement or other public notice with respect to all or any part of
the Collateral is on file or of record in any public office, except such as
have been filed in favor of the Administrative Agent, for the ratable benefit
of the Lenders, pursuant to this Agreement or as are expressly permitted by the
Credit Agreement.
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4.3 Perfected First Priority Liens. The security interests
granted pursuant to this Agreement (a) upon completion of the filings and other
actions specified on Schedule 3 (which, in the case of all filings and other
documents referred to on said Schedule, have been delivered to the
Administrative Agent in completed and duly executed form) will constitute valid
perfected security interests in all of the Collateral in favor of the
Administrative Agent, for the ratable benefit of the Lenders, as collateral
security for such Grantor's Obligations, enforceable in accordance with the
terms hereof against all creditors of such Grantor and any Persons purporting
to purchase any Collateral from such Grantor and (b) are prior to all other
Liens on the Collateral in existence on the date hereof except for unrecorded
Liens expressly permitted by the Credit Agreement which have priority over the
Liens on the Collateral by operation of law.
4.4 Chief Executive Office. On the date hereof, such
Grantor's jurisdiction of organization and the location of such Grantor's chief
executive office or sole place of business are specified on Schedule 4.
4.5 Inventory and Equipment. On the date hereof, the
Inventory and the Equipment (other than mobile goods) are kept at the locations
listed on Schedule 5.
4.6 Farm Products. None of the Collateral constitutes, or is
the Proceeds of, Farm Products.
4.7 Pledged Securities. (a) The shares of Pledged Stock
pledged by such Grantor hereunder constitute all the issued and outstanding
shares of all classes of the Capital Stock of each Issuer owned by such
Grantor, or, in the case of any Issuer that is an Excluded Foreign Subsidiary,
the percentage of such shares specified on Schedule 2.
(b) All the shares of the Pledged Stock have been duly and
validly issued and are fully paid and nonassessable.
(c) Each of the Pledged Notes constitutes the legal, valid
and binding obligation of the obligor with respect thereto, enforceable 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.
(d) Such Grantor is the record and beneficial owner of, and
has good and marketable title to, the Pledged Securities pledged by it
hereunder, free of any and all Liens or options in favor of, or claims of, any
other Person, except the security interest created by this Agreement.
4.8 Receivables. The aggregate of all amounts payable to the
Grantors under or in connection with any Receivable that is evidenced by any
Instrument or Chattel Paper which has not been delivered to the Administrative
Agent (collectively, "Undelivered Instruments") does not exceed $1,000,000.
4.9 Intellectual Property. (a) Schedule 6 lists all
Intellectual Property owned or licensed by such Grantor in its own name on the
date hereof.
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10
(b) To the best of such Grantor's knowledge, all material
Intellectual Property is on the date hereof valid, subsisting, unexpired,
enforceable, has not been abandoned, and does not infringe the Intellectual
Property rights of a third party.
(c) Except as set forth in Schedule 6, none of the material
Intellectual Property is on the date hereof the subject of any licensing or
franchise agreement pursuant to which such Grantor is the licensor or
franchisor.
(d) No holding, decision or judgment has been rendered by any
Governmental Authority which would limit, cancel or question the validity of,
or such Grantor's rights in, any Intellectual Property in any respect that
could reasonably be expected to have a Material Adverse Effect.
(e) No action or proceeding is pending or, to the knowledge
of such Grantor, threatened on the date hereof seeking to limit, cancel or
question the validity, or such Grantor's ownership, of any Intellectual
Property which, if adversely determined, would have a Material Adverse Effect.
SECTION 5. COVENANTS
Each Grantor covenants and agrees with the Administrative
Agent and the Lenders that, from and after the date of this Agreement until the
Obligations shall have been paid in full, no Letter of Credit shall be
outstanding and the Commitments shall have terminated:
5.1 Covenants in Credit Agreement. In the case of each
Guarantor, such Guarantor shall take, or shall refrain from taking, as the case
may be, each action that is necessary to be taken or not taken, as the case may
be, so that no Default or Event of Default is caused by the failure to take
such action or to refrain from taking such action by such Guarantor or any of
its Subsidiaries.
5.2 Delivery of Instruments and Chattel Paper. If the
aggregate of all amounts payable to the Grantors pursuant to Undelivered
Instruments shall exceed $1,000,000, such Undelivered Instruments, to the
extent necessary to eliminate such excess, shall be immediately delivered to
the Administrative Agent, duly indorsed in a manner satisfactory to the
Administrative Agent, to be held as Collateral pursuant to this Agreement.
5.3 Insurance. Each Grantor shall cause each casualty
insurance policy maintained by it to (a) provide that no cancellation, material
reduction in amount or material change in coverage thereof shall be effective
until at least 30 days after receipt by the Administrative Agent of written
notice thereof, (b) name the Administrative Agent as insured party or loss
payee, (c) if reasonably requested by the Administrative Agent, include a
breach of warranty clause and (d) be reasonably satisfactory in all other
respects to the Administrative Agent.
5.4 Maintenance of Perfected Security Interest; Further
Documentation. (a) Such Grantor shall maintain the security interest created
by this Agreement as a perfected security interest having at least the priority
described in Section 4.3 and shall defend such security interest against the
claims and demands of all Persons whomsoever.
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(b) Such Grantor will furnish to the Administrative Agent and
the Lenders from time to time 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.
(c) At any time and from time to time, upon the written
request of the Administrative Agent, and at the sole expense of such Grantor,
such Grantor will promptly and duly execute, deliver and/or have recorded with
appropriate agencies such further instruments and documents and take such
further actions as the Administrative Agent may reasonably request for the
purpose of obtaining or preserving the full benefits of this Agreement and of
the rights and powers herein granted, including, without limitation, the filing
of any financing or continuation statements under the Uniform Commercial Code
(or other similar laws) in effect in any jurisdiction with respect to the
security interests created hereby.
5.5 Changes in Locations, Name, etc. Such Grantor will not,
except upon 15 days' prior written notice to the Administrative Agent and
delivery to the Administrative Agent of all additional executed financing
statements and other documents reasonably requested by the Administrative Agent
to maintain the validity, perfection and priority of the security interests
provided for herein:
(a) permit any of the Inventory or Equipment (other than (i)
immaterial Inventory and Equipment and (ii) Inventory and Equipment in
transit in the ordinary course of business) to be kept at a location
other than those listed on Schedule 5;
(b) change the location of its chief executive office or sole
place of business from that referred to in Section 4.4; or
(c) change its name, identity or corporate structure to such
an extent that any financing statement filed by the Administrative
Agent in connection with this Agreement would become misleading.
5.6 Notices. Such Grantor will advise the Administrative
Agent and the Lenders promptly, in reasonable detail, of any Lien (other than
security interests created hereby or Liens permitted under the Credit
Agreement) on any of the Collateral which would adversely affect the ability of
the Administrative Agent to exercise any of its remedies hereunder.
5.7 Pledged Securities. (a) If such Grantor shall become
entitled to receive or shall receive any stock certificate (including, without
limitation, any certificate representing a stock dividend or a distribution in
connection with any reclassification, increase or reduction of capital or any
certificate issued in connection with any reorganization), option or rights in
respect of the Capital Stock of any Issuer, whether in addition to, in
substitution of, as a conversion of, or in exchange for, any shares of the
Pledged Stock, or otherwise in respect thereof, such Grantor shall accept the
same as the agent of the Administrative Agent and the Lenders, hold the same in
trust for the Administrative Agent and the Lenders and deliver the same
forthwith to the Administrative Agent in the exact form received, duly indorsed
by such Grantor to the Administrative Agent, if required, together with an
undated stock power covering such certificate duly executed in blank by such
Grantor and with, if the Administrative Agent so requests, signature
guaranteed, to be held by the Administrative Agent, subject to the terms
hereof, as additional collateral security for the Obligations. If an Event of
Default shall have occurred
<PAGE> 120
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and be continuing, (i) any sums paid upon or in respect of the Pledged
Securities upon the liquidation or dissolution of any Issuer shall be paid over
to the Administrative Agent to be held by it hereunder as additional collateral
security for the Obligations and (ii) in case any distribution of capital shall
be made on or in respect of the Pledged Securities or any property shall be
distributed upon or with respect to the Pledged Securities pursuant to the
recapitalization or reclassification of the capital of any Issuer or pursuant
to the reorganization thereof, the property so distributed shall, unless
otherwise subject to a perfected security interest in favor of the
Administrative Agent, be delivered to the Administrative Agent to be held by it
hereunder as additional collateral security for the Obligations. If any sums
of money or property so paid or distributed in respect of the Pledged
Securities shall be received by such Grantor, such Grantor shall, until such
money or property is paid or delivered to the Administrative Agent, hold such
money or property in trust for the Lenders, segregated from other funds of such
Grantor, as additional collateral security for the Obligations.
Notwithstanding anything to the contrary contained herein, in no event shall
any Grantor be obligated to pledge more than 65% of the Capital Stock of any
Excluded Foreign Subsidiary.
(b) Without the prior written consent of the Administrative
Agent, such Grantor will not (i) vote to enable, or take any other action to
permit, any Issuer to issue any stock or other equity securities of any nature
(except to the extent such stock or other securities are pledged to the
Administrative Agent hereunder) or to issue any other securities convertible
into or granting the right to purchase or exchange for any stock or other
equity securities of any nature of any Issuer, (ii) sell, assign, transfer,
exchange, or otherwise dispose of, or grant any option with respect to, the
Pledged Securities or Proceeds thereof (except pursuant to a transaction
expressly permitted by the Credit Agreement), (iii) create, incur or permit to
exist any Lien or option in favor of, or any claim of any Person with respect
to, any of the Pledged Securities or Proceeds thereof, or any interest therein,
except for the security interests created by this Agreement or (iv) enter into
any agreement or undertaking restricting the right or ability of such Grantor
or the Administrative Agent to Dispose of any of the Pledged Securities or
Proceeds thereof (except, in the case of this clause (iv), in connection with a
Disposition expressly permitted by the Credit Agreement).
(c) In the case of each Grantor which is an Issuer, such
Issuer agrees that (i) it will be bound by the terms of this Agreement relating
to the Pledged Securities issued by it and will comply with such terms insofar
as such terms are applicable to it, (ii) it will notify the Administrative
Agent promptly in writing of the occurrence of any of the events described in
Section 5.7(a) with respect to the Pledged Securities issued by it and (iii)
the terms of Sections 6.3(c) and 6.7 shall apply to it, mutatis mutandis, with
respect to all actions that may be required of it pursuant to Section 6.3(c) or
6.7 with respect to the Pledged Securities issued by it.
5.8 Receivables. (a) Other than in the ordinary course of
business, such Grantor will not (i) grant any extension of the time of payment
of any Receivable, (ii) compromise or settle any Receivable for less than the
full amount thereof, (iii) release, wholly or partially, any Person liable for
the payment of any Receivable, (iv) allow any credit or discount whatsoever on
any Receivable or (v) amend, supplement or modify any Receivable in any manner
that could adversely affect the value thereof.
(b) If at any time the aggregate amount owing to the Grantors
on all Accounts as to which a Governmental Authority is an obligor exceeds 5%
of the aggregate amount owing to the Grantors on all Accounts, the Borrower
shall so notify the Administrative Agent and, if requested by the
Administrative Agent, at the Grantors' sole cost and expense, from and after
the date on which such
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aggregate amount first exceeds such percentage, deliver to the Administrative
Agent such assignments, notices of assignment and other documents or
information as shall be necessary or otherwise reasonably requested by the
Administrative Agent to permit the assignment hereunder of all Accounts as to
which a Governmental Authority is an obligor pursuant to all applicable
Requirements of Law (including, without limitation, the Assignment of Claims
Act of 1940, as amended).
5.9 Intellectual Property. (a) Such Grantor (either itself
or through licensees) will (i) continue to use each material Trademark on each
and every trademark class of goods applicable to its current line as reflected
in its then-current catalogs, brochures and price lists in order to maintain
such Trademark in full force free from any claim of abandonment for non-use,
(ii) maintain as in the past the quality of products and services offered under
such Trademark, (iii) use such Trademark with all notices and legends required
by applicable law or regulations, and (iv) not (and not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act whereby such
Trademark may become invalidated or impaired in any way.
(b) Such Grantor (either itself or through licensees) will
not do any act, or omit to do any act, whereby any material Patent may become
forfeited, abandoned or dedicated to the public.
(c) Such Grantor (either itself or through licensees) will
not (and will not permit any licensee or sublicensee thereof to) do any act or
knowingly omit to do any act whereby any material portion of the Copyrights may
become invalidated or otherwise impaired. Such Grantor will not (either itself
or through licensees) do any act whereby any material portion of the Copyrights
may fall into the public domain.
(d) Such Grantor (either itself or through licensees) will
not do any act that knowingly uses a material Intellectual Property to infringe
the Intellectual Property rights of a third party.
(e) Such Grantor will notify the Administrative Agent and the
Lenders immediately if it knows, or has reason to know, that any application or
registration relating to any material Patent, Copyright or Trademark may become
abandoned or dedicated to the public, or of any adverse determination or
development (including, without limitation, the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office, the U.S. Copyright Office or any court or tribunal in any
country) regarding such Grantor's ownership of, or the validity of, any
material Intellectual Property or such Grantor's right to register the same or
to own and maintain the same.
(f) Whenever such Grantor, either by itself or through any
agent, employee, licensee or designee, shall file an application for any Patent
or Trademark with the United States Patent and Trademark Office or any
Copyright in the U.S. Copyright Office or any similar office or agency in any
other country or any political subdivision thereof, such Grantor shall report
such filing to the Administrative Agent within five Business Days after the
last day of the fiscal quarter in which such filing occurs. Upon request of
the Administrative Agent, such Grantor shall execute and deliver, and have
recorded, any and all agreements, instruments, documents, and papers as the
Administrative Agent may reasonably request to evidence the Administrative
Agent's security interest in any Copyright, Patent or Trademark and the
goodwill and general intangibles of such Grantor relating thereto or
represented thereby.
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(g) Such Grantor will take all reasonable and necessary
steps, including, without limitation, in any proceeding before the United
States Patent and Trademark Office, the U.S. Copyright Office or any similar
office or agency in any other country or any political subdivision thereof, to
maintain each registration of the material Intellectual Property, including,
without limitation, filing of applications for renewal, affidavits of use and
affidavits of incontestability.
(h) In the event that any material Intellectual Property is
infringed, misappropriated or diluted by a third party, such Grantor shall (i)
take such actions as such Grantor shall reasonably deem appropriate under the
circumstances to protect such Intellectual Property and (ii) if such
Intellectual Property is of material economic value, promptly notify the
Administrative Agent and the Lenders after it learns thereof.
SECTION 6. REMEDIAL PROVISIONS
6.1 Certain Matters Relating to Receivables. (a) The
Administrative Agent shall have the right to make test verifications of the
Receivables in any manner and through any medium that it reasonably considers
advisable, and each Grantor shall furnish all such assistance and information
as the Administrative Agent may reasonably require in connection with such test
verifications. At any time while an Event of Default shall have occurred and
be continuing, upon the Administrative Agent's request and at the expense of
the relevant Grantor, such Grantor shall cause independent public accountants
or others satisfactory to the Administrative Agent to furnish to the
Administrative Agent reports showing reconciliations, aging and test
verifications of, and trial balances for, the Receivables.
(b) The Administrative Agent hereby authorizes each Grantor
to collect such Grantor's Receivables, and the Administrative Agent may curtail
or terminate said authority at any time after the occurrence and during the
continuance of an Event of Default. If required by the Administrative Agent at
any time after the occurrence and during the continuance of an Event of
Default, any payments of Receivables, when collected by any Grantor, (i) shall
be forthwith (and, in any event, within two Business Days) deposited by such
Grantor in the exact form received, duly indorsed by such Grantor to the
Administrative Agent if required, in a Collateral Account maintained under the
sole dominion and control of the Administrative Agent, subject to withdrawal by
the Administrative Agent for the account of the Lenders only as provided in
Section 6.5, and (ii) until so turned over, shall be held by such Grantor in
trust for the Administrative Agent and the Lenders, segregated from other funds
of such Grantor. Each such deposit of Proceeds of Receivables shall be
accompanied by a report identifying in reasonable detail the nature and source
of the payments included in the deposit.
(c) At the Administrative Agent's request, each Grantor shall
deliver to the Administrative Agent, and have recorded, all original and other
documents evidencing, and relating to, the agreements and transactions which
gave rise to the then existing Receivables, including, without limitation, all
original orders, invoices and shipping receipts.
6.2 Communications with Obligors; Grantors Remain Liable.
(a) The Administrative Agent in its own name or in the name of others may at
any time after the occurrence and during the continuance of an Event of Default
communicate with obligors under the Receivables to verify with them to the
Administrative Agent's reasonable satisfaction the existence, amount and terms
of any Receivables.
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(b) Upon the request of the Administrative Agent at any time
after the occurrence and during the continuance of an Event of Default, each
Grantor shall notify obligors on the Receivables that the Receivables have been
assigned to the Administrative Agent for the ratable benefit of the Lenders and
that payments in respect thereof shall be made directly to the Administrative
Agent.
(c) Anything herein to the contrary notwithstanding, each
Grantor shall remain liable under each of the Receivables to observe and
perform all the conditions and obligations to be observed and performed by it
thereunder, all in accordance with the terms of any agreement giving rise
thereto. Neither the Administrative Agent nor any Lender shall have any
obligation or liability under any Receivable (or any agreement giving rise
thereto) by reason of or arising out of this Agreement or the receipt by the
Administrative Agent or any Lender of any payment relating thereto, nor shall
the Administrative Agent or any Lender be obligated in any manner to perform
any of the obligations of any Grantor under or pursuant to any Receivable (or
any agreement giving rise thereto) to make any payment, to make any inquiry as
to the nature or the sufficiency of any payment received by it or as to the
sufficiency of any performance by any party thereunder, to present or file any
claim, to take any action to enforce any performance or to collect the payment
of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.
6.3 Pledged Stock. (a) Unless an Event of Default shall
have occurred and be continuing and the Administrative Agent shall have given
notice to the relevant Grantor of the Administrative Agent's intent to exercise
its corresponding rights pursuant to Section 6.3(b), each Grantor shall be
permitted to receive all cash dividends paid in respect of the Pledged Stock
and all payments made in respect of the Pledged Notes, in each case paid in the
normal course of business of the relevant Issuer, to the extent permitted in
the Credit Agreement, and to exercise all voting and corporate rights with
respect to the Pledged Securities; provided, however, that no vote shall be
cast or corporate right exercised or other action taken which, in the
Administrative Agent's reasonable judgment, would impair the Collateral or
which would be inconsistent with or result in any violation of any provision of
the Credit Agreement, this Agreement or any other Loan Document.
(b) If an Event of Default shall occur and be continuing and
the Administrative Agent shall give notice of its intent to exercise such
rights to the relevant Grantor or Grantors, (i) the Administrative Agent shall
have the right to receive any and all cash dividends, payments or other
Proceeds paid in respect of the Pledged Securities and make application thereof
to the Obligations in such order as the Administrative Agent may determine, and
(ii) any or all of the Pledged Securities shall be registered in the name of
the Administrative Agent or its nominee, and the Administrative Agent or its
nominee may thereafter exercise (x) all voting, corporate and other rights
pertaining to such Pledged Securities at any meeting of shareholders of the
relevant Issuer or Issuers or otherwise and (y) any and all rights of
conversion, exchange and subscription and any other rights, privileges or
options pertaining to such Pledged Securities as if it were the absolute owner
thereof (including, without limitation, the right to exchange at its discretion
any and all of the Pledged Securities upon the merger, consolidation,
reorganization, recapitalization or other fundamental change in the corporate
structure of any Issuer, or upon the exercise by any Grantor or the
Administrative Agent of any right, privilege or option pertaining to such
Pledged Securities, and in connection therewith, the right to deposit and
deliver any and all of the Pledged Securities with any committee, depositary,
transfer agent, registrar or other designated agency upon such terms and
conditions as the Administrative Agent may determine), all without liability
except to account for property actually received by it, but the Administrative
Agent shall have no duty to any Grantor to exercise any such right, privilege
or option and shall not be responsible for any failure to do so or delay in so
doing.
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(c) Each Grantor hereby authorizes and instructs each Issuer
of any Pledged Securities pledged by such Grantor hereunder to (i) comply with
any instruction received by it from the Administrative Agent in writing that
(x) states that an Event of Default has occurred and is continuing and (y) is
otherwise in accordance with the terms of this Agreement, without any other or
further instructions from such Grantor, and each Grantor agrees that each
Issuer shall be fully protected in so complying, and (ii) unless otherwise
expressly permitted hereby, pay any dividends or other payments with respect to
the Pledged Securities directly to the Administrative Agent.
6.4 Proceeds to be Turned Over To Administrative Agent. In
addition to the rights of the Administrative Agent and the Lenders specified in
Section 6.1 with respect to payments of Receivables, if an Event of Default
shall occur and be continuing, all Proceeds received by any Grantor consisting
of cash, checks and other near-cash items shall be held by such Grantor in
trust for the Administrative Agent and the Lenders, segregated from other funds
of such Grantor, and shall, forthwith upon receipt by such Grantor, be turned
over to the Administrative Agent in the exact form received by such Grantor
(duly indorsed by such Grantor to the Administrative Agent, if required). All
Proceeds received by the Administrative Agent hereunder shall be held by the
Administrative Agent in a Collateral Account maintained under its sole dominion
and control. All Proceeds while held by the Administrative Agent in a
Collateral Account (or by such Grantor in trust for the Administrative Agent
and the Lenders) shall continue to be held as collateral security for all the
Obligations and shall not constitute payment thereof until applied as provided
in Section 6.5.
6.5 Application of Proceeds. At any time after the
occurrence and during the continuance of an Event of Default, at the
Administrative Agent's election, the Administrative Agent may apply all or any
part of Proceeds held in any Collateral Account in payment of the Obligations
in such order as the Administrative Agent may elect, and any part of such funds
which the Administrative Agent elects not so to apply and deems not required as
collateral security for the Obligations shall be paid over from time to time by
the Administrative Agent to the Borrower or to whomsoever may be lawfully
entitled to receive the same. Any balance of such Proceeds remaining after the
Obligations shall have been paid in full, no Letters of Credit shall be
outstanding and the Commitments shall have terminated shall be paid over to the
Borrower or to whomsoever may be lawfully entitled to receive the same.
6.6 Code and Other Remedies. If an Event of Default shall
occur and be continuing, the Administrative Agent, on behalf of the Lenders,
may exercise, in addition to all other rights and remedies granted to them in
this Agreement and in any other instrument or agreement securing, evidencing or
relating to the Obligations, all rights and remedies of a secured party under
the Code or any other applicable law. Without limiting the generality of the
foregoing, the Administrative Agent, without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind (except any
notice required by law referred to below) to or upon any Grantor or any other
Person (all and each of which demands, defenses, advertisements and notices are
hereby waived), may in such circumstances forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, lease, assign, give option or options to purchase, or otherwise
dispose of and deliver the Collateral or any part thereof (or contract to do
any of the foregoing), in one or more parcels at public or private sale or
sales, at any exchange, broker's board or office of the Administrative Agent or
any Lender or elsewhere upon such terms and conditions as it may deem advisable
and at such prices as it may deem best, for cash or on credit or for future
delivery without assumption of any credit risk. The Administrative Agent or
any Lender shall have the right upon any such public sale or sales, and, to the
extent permitted by law, upon any such private sale or sales, to
<PAGE> 125
17
purchase the whole or any part of the Collateral so sold, free of any right or
equity of redemption in any Grantor, which right or equity is hereby waived and
released. Each Grantor further agrees, at the Administrative Agent's request,
to assemble the Collateral and make it available to the Administrative Agent at
places which the Administrative Agent shall reasonably select, whether at such
Grantor's premises or elsewhere. The Administrative Agent shall apply the net
proceeds of any action taken by it pursuant to this Section 6.6, after
deducting all reasonable costs and expenses of every kind incurred in
connection therewith or incidental to the care or safekeeping of any of the
Collateral or in any way relating to the Collateral or the rights of the
Administrative Agent and the Lenders hereunder, including, without limitation,
reasonable attorneys' fees and disbursements, to the payment in whole or in
part of the Obligations, in such order as the Administrative Agent may elect,
and only after such application and after the payment by the Administrative
Agent of any other amount required by any provision of law, including, without
limitation, Section 9-504(1)(c) of the Code, need the Administrative Agent
account for the surplus, if any, to any Grantor. To the extent permitted by
applicable law, each Grantor waives all claims, damages and demands it may
acquire against the Administrative Agent or any Lender arising out of the
exercise by them of any rights hereunder. If any notice of a proposed sale or
other disposition of Collateral shall be required by law, such notice shall be
deemed reasonable and proper if given at least 10 days before such sale or
other disposition.
6.7 Registration Rights. (a) If the Administrative Agent
shall determine to exercise its right to sell any or all of the Pledged Stock
pursuant to Section 6.6, and if in the opinion of the Administrative Agent it
is necessary or advisable to have the Pledged Stock, or that portion thereof to
be sold, registered under the provisions of the Securities Act, the relevant
Grantor will cause the Issuer thereof to (i) execute and deliver, and cause the
directors and officers of such Issuer to execute and deliver, all such
instruments and documents, and do or cause to be done all such other acts as
may be, in the opinion of the Administrative Agent, necessary or advisable to
register the Pledged Stock, or that portion thereof to be sold, under the
provisions of the Securities Act, (ii) use its best efforts to cause the
registration statement relating thereto to become effective and to remain
effective for a period of one year from the date of the first public offering
of the Pledged Stock, or that portion thereof to be sold, and (iii) make all
amendments thereto and/or 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. Each Grantor agrees to
cause such Issuer to comply with the provisions of the securities or "Blue Sky"
laws of any and all jurisdictions which the Administrative Agent shall
designate and to make available to its security holders, as soon as
practicable, an earnings statement (which need not be audited) which will
satisfy the provisions of Section 11(a) of the Securities Act.
(b) Each Grantor recognizes that the Administrative Agent may
be unable to effect a public sale of any or all the Pledged Stock, by reason of
certain prohibitions contained in the Securities Act and applicable state
securities laws or otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers which will be obliged
to agree, among other things, to acquire such securities for their own account
for investment and not with a view to the distribution or resale thereof. Each
Grantor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner. The
Administrative Agent shall be under no obligation to delay a sale of any of the
Pledged Stock for the period of time necessary to permit the Issuer thereof to
register such securities for public sale under the Securities Act, or under
applicable state securities laws, even if such Issuer would agree to do so.
<PAGE> 126
18
(c) Each Grantor agrees to use its best efforts to do or
cause to be done all such other acts as may be necessary to make such sale or
sales of all or any portion of the Pledged Stock pursuant to this Section 6.7
valid and binding and in compliance with any and all other applicable
Requirements of Law. Each Grantor further agrees that a breach of any of the
covenants contained in this Section 6.7 will cause irreparable injury to the
Administrative Agent and the Lenders, that the Administrative Agent and the
Lenders have no adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this Section 6.7 shall
be specifically enforceable against such Grantor, and such Grantor hereby
waives and agrees not to assert any defenses against an action for specific
performance of such covenants except for a defense that no Event of Default has
occurred under the Credit Agreement.
6.8 Waiver; Deficiency. Each Grantor waives and agrees not
to assert any rights or privileges which it may acquire under Section 9-112 of
the Code. Each Grantor shall remain liable for any deficiency if the proceeds
of any sale or other disposition of the Collateral are insufficient to pay its
Obligations and the fees and disbursements of any attorneys employed by the
Administrative Agent or any Lender to collect such deficiency.
SECTION 7. THE ADMINISTRATIVE AGENT
7.1 Administrative Agent's Appointment as Attorney-in-Fact,
etc. (a) Each Grantor hereby irrevocably constitutes and appoints the
Administrative Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of such Grantor and in the name of
such Grantor or in its own name, for the purpose of carrying out the terms of
this Agreement, to take any and all appropriate action and to execute any and
all documents and instruments which may be necessary or desirable to accomplish
the purposes of this Agreement, and, without limiting the generality of the
foregoing, each Grantor hereby gives the Administrative Agent the power and
right, on behalf of such Grantor, without notice to or assent by such Grantor,
to do any or all of the following:
(i) in the name of such Grantor or its own name, or
otherwise, take possession of and indorse and collect any checks,
drafts, notes, acceptances or other instruments for the payment of
moneys due under any Receivable or with respect to any other
Collateral and file any claim or take any other action or proceeding
in any court of law or equity or otherwise deemed appropriate by the
Administrative Agent for the purpose of collecting any and all such
moneys due under any Receivable or with respect to any other
Collateral whenever payable;
(ii) in the case of any Copyright, Patent or Trademark,
execute, deliver and have recorded, any and all agreements,
instruments, documents and papers as the Administrative Agent may
request to evidence the Administrative Agent's and the Lenders'
security interest in such Copyright, Patent or Trademark and the
goodwill and general intangibles of such Grantor relating thereto or
represented thereby;
(iii) pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, effect any repairs or any insurance
called for by the terms of this Agreement and pay all or any part of
the premiums therefor and the costs thereof;
<PAGE> 127
19
(iv) execute, in connection with any sale provided for in
Section 6.6 or 6.7, any indorsements, assignments or other instruments
of conveyance or transfer with respect to the Collateral; and
(v) (1) direct any party liable for any payment under any of
the Collateral to make payment of any and all moneys due or to become
due thereunder directly to the Administrative Agent or as the
Administrative Agent shall direct; (2) ask or demand for, collect, and
receive payment of and receipt for, any and all moneys, claims and
other amounts due or to become due at any time in respect of or
arising out of any Collateral; (3) sign and indorse any invoices,
freight or express bills, bills of lading, storage or warehouse
receipts, drafts against debtors, assignments, verifications, notices
and other documents in connection with any of the Collateral; (4)
commence and prosecute any suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to collect the
Collateral or any portion thereof and to enforce any other right in
respect of any Collateral; (5) defend any suit, action or proceeding
brought against such Grantor with respect to any Collateral; (6)
settle, compromise or adjust any such suit, action or proceeding and,
in connection therewith, give such discharges or releases as the
Administrative Agent may deem appropriate; (7) assign any Copyright,
Patent or Trademark (along with the goodwill of the business to which
any such Copyright, Patent or Trademark pertains), throughout the
world for such term or terms, on such conditions, and in such manner,
as the Administrative Agent shall in its sole discretion determine;
and (8) generally, sell, transfer, pledge and make any agreement with
respect to or otherwise deal with any of the Collateral as fully and
completely as though the Administrative Agent were the absolute owner
thereof for all purposes, and do, at the Administrative Agent's option
and such Grantor's expense, at any time, or from time to time, all
acts and things which the Administrative Agent deems necessary to
protect, preserve or realize upon the Collateral and the
Administrative Agent's and the Lenders' security interests therein and
to effect the intent of this Agreement, all as fully and effectively
as such Grantor might do.
Anything in this Section 7.1(a) to the contrary notwithstanding, the
Administrative Agent agrees that it will not exercise any rights under the
power of attorney provided for in this Section 7.1(a) unless an Event of
Default shall have occurred and be continuing.
(b) If any Grantor fails to perform or comply with any of its
agreements contained herein, the Administrative Agent, at its option, but
without any obligation so to do, may perform or comply, or otherwise cause
performance or compliance, with such agreement.
(c) The expenses of the Administrative Agent incurred in
connection with actions undertaken as provided in this Section 7.1, together
with interest thereon at a rate per annum equal to the rate per annum at which
interest would then be payable under the Credit Agreement on past due Tranche A
Loans that are ABR Loans, from the date of payment by the Administrative Agent
to the date reimbursed by the relevant Grantor, shall be payable by such
Grantor to the Administrative Agent on demand.
(d) Each Grantor hereby ratifies all that said attorneys
shall lawfully do or cause to be done by virtue hereof. All powers,
authorizations and agencies contained in this Agreement are coupled with an
interest and are irrevocable until this Agreement is terminated and the
security interests created hereby are released.
<PAGE> 128
20
7.2 Duty of Administrative Agent. The Administrative Agent's
sole duty with respect to the custody, safekeeping and physical preservation of
the Collateral in its possession, under Section 9-207 of the Code or otherwise,
shall be to deal with it in the same manner as the Administrative Agent deals
with similar property for its own account. Neither the Administrative Agent,
any Lender nor any of their respective officers, directors, employees or agents
shall be liable for failure to demand, collect or realize upon any of the
Collateral or for any delay in doing so or shall be under any obligation to
sell or otherwise dispose of any Collateral upon the request of any Grantor or
any other Person or to take any other action whatsoever with regard to the
Collateral or any part thereof. The powers conferred on the Administrative
Agent and the Lenders hereunder are solely to protect the Administrative
Agent's and the Lenders' interests in the Collateral and shall not impose any
duty upon the Administrative Agent or any Lender to exercise any such powers.
The Administrative Agent and the Lenders shall be accountable only for amounts
that they actually receive as a result of the exercise of such powers, and
neither they nor any of their officers, directors, employees or agents shall be
responsible to any Grantor for any act or failure to act hereunder, except for
their own gross negligence or willful misconduct.
7.3 Execution of Financing Statements. Pursuant to Section
9-402 of the Code and any other applicable law, each Grantor authorizes the
Administrative Agent to file or record financing statements and other filing or
recording documents or instruments with respect to the Collateral without the
signature of such Grantor in such form and in such offices as the
Administrative Agent reasonably determines appropriate to perfect the security
interests of the Administrative Agent under this Agreement. A photographic or
other reproduction of this Agreement shall be sufficient as a financing
statement or other filing or recording document or instrument for filing or
recording in any jurisdiction.
7.4 Authority of Administrative Agent. Each Grantor
acknowledges that the rights and responsibilities of the Administrative Agent
under this Agreement with respect to any action taken by the Administrative
Agent or the exercise or non-exercise by the Administrative Agent of any
option, voting right, request, judgment or other right or remedy provided for
herein or resulting or arising out of this Agreement shall, as between the
Administrative Agent and the Lenders, be governed by the Credit Agreement and
by such other agreements with respect thereto as may exist from time to time
among them, but, as between the Administrative Agent and the Grantors, the
Administrative Agent shall be conclusively presumed to be acting as agent for
the Lenders with full and valid authority so to act or refrain from acting, and
no Grantor shall be under any obligation, or entitlement, to make any inquiry
respecting such authority.
SECTION 8. MISCELLANEOUS
8.1 Amendments in Writing. None of the terms or provisions
of this Agreement may be waived, amended, supplemented or otherwise modified
except in accordance with Section 10.1 of the Credit Agreement.
8.2 Notices. All notices, requests and demands to or upon
the Administrative Agent or any Grantor hereunder shall be effected in the
manner provided for in Section 10.2 of the Credit Agreement; provided that any
such notice, request or demand to or upon any Guarantor shall be addressed to
such Guarantor at its notice address set forth on Schedule 1.
<PAGE> 129
21
8.3 No Waiver by Course of Conduct; Cumulative Remedies.
Neither the Administrative Agent nor any Lender shall by any act (except by a
written instrument pursuant to Section 8.1), delay, indulgence, omission or
otherwise be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Default or Event of Default. No failure to exercise, nor any
delay in exercising, on the part of the Administrative Agent or any Lender, any
right, power or privilege hereunder shall operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. A waiver by the Administrative Agent or any Lender
of any right or remedy hereunder on any one occasion shall not be construed as
a bar to any right or remedy which the Administrative Agent or such Lender
would otherwise have on any future occasion. The rights and remedies herein
provided are cumulative, may be exercised singly or concurrently and are not
exclusive of any other rights or remedies provided by law.
8.4 Enforcement Expenses; Indemnification. (a) Each
Guarantor agrees to pay or reimburse each Lender and the Administrative Agent
for all its costs and expenses incurred in collecting against such Guarantor
under the guarantee contained in Section 2 or otherwise enforcing or preserving
any rights under this Agreement and the other Loan Documents to which such
Guarantor is a party, including, without limitation, the reasonable fees and
disbursements of counsel (including the allocated fees and expenses of in-house
counsel) to each Lender and of counsel to the Administrative Agent.
(b) Each Guarantor agrees to pay, and to save the
Administrative Agent and the Lenders harmless from, any and all liabilities
with respect to, or resulting from any delay in paying, any and all stamp,
excise, sales or other taxes which may be payable or determined to be payable
with respect to any of the Collateral or in connection with any of the
transactions contemplated by this Agreement.
(c) Each Guarantor agrees to pay, and to save the
Administrative Agent and the Lenders harmless from, any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement to the same extent the Borrower would be required to do so pursuant
to Section 10.5 of the Credit Agreement.
(d) The agreements in this Section 8.4 shall survive
repayment of the Obligations and all other amounts payable under the Credit
Agreement and the other Loan Documents.
8.5 Successors and Assigns. This Agreement shall be binding
upon the successors and assigns of each Grantor and shall inure to the benefit
of the Administrative Agent and the Lenders and their successors and assigns;
provided that no Grantor may assign, transfer or delegate any of its rights or
obligations under this Agreement without the prior written consent of the
Administrative Agent.
8.6 Set-Off. In addition to any rights and remedies of the
Administrative Agent and the Lenders provided by law, the Administrative Agent
and each Lender shall have the right, without prior notice to any Grantor, any
such notice being expressly waived by each Grantor to the extent permitted by
applicable law, upon any amount becoming due and payable by any Grantor
hereunder (whether at the stated maturity, by acceleration or otherwise) to set
off and appropriate and apply against such amount any and all deposits (general
or special, time or demand, provisional or final), in any currency, and any
other credits, indebtedness or claims, in any currency, in each case whether
<PAGE> 130
22
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Lender or any branch or agency thereof to or for the
credit or the account of such Grantor. The Administrative Agent and each
Lender agrees promptly to notify the relevant Grantor and (if applicable) the
Administrative Agent after any such setoff and application made by the
Administrative Agent or such Lender, provided that the failure to give such
notice shall not affect the validity of such setoff and application.
8.7 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts
(including by telecopy), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. A set of the copies of this
Agreement signed by all the parties shall be lodged with the Borrower and the
Administrative Agent.
8.8 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.9 Integration. This Agreement and the other Loan Documents
represent the entire agreement of the Grantors, the Administrative Agent and
the Lenders with respect to the subject matter hereof and thereof, and there
are no promises, undertakings, representations or warranties by the
Administrative Agent or any Lender relative to subject matter hereof and
thereof not expressly set forth or referred to herein or in the other Loan
Documents.
8.10 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
8.11 Submission To Jurisdiction; Waivers. Each Grantor
hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action
or proceeding relating to this Agreement and the other Loan Documents
to which it is a party, or for recognition and enforcement of any
judgment in respect thereof, to the non-exclusive general jurisdiction
of the Courts of the State of New York, the courts of the United
States of America for the Southern District of New York, and appellate
courts from any thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to such Grantor at its address referred to in Section 8.2 or
at such other address of which the Administrative Agent shall have
been notified pursuant thereto;
<PAGE> 131
23
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or
proceeding referred to in this Section 8.11 any special, exemplary,
punitive or consequential damages.
8.12 Acknowledgements. Each Grantor hereby acknowledges
that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents;
(b) neither the Administrative Agent nor any Lender has any
fiduciary relationship with or duty to any Grantor arising out of or
in connection with this Agreement or any of the other Loan Documents,
and the relationship between Administrative Agent and Lenders, on one
hand, and the Grantors, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Lenders or among the Grantors and the
Lenders.
8.13 WAIVERS OF JURY TRIAL. EACH GRANTOR, THE ADMINISTRATIVE
AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY
JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
8.14 Section Headings. The Section headings used in this
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation
hereof.
8.15 Additional Grantors. Each Subsidiary of the Borrower
that is required to become a party to this Agreement pursuant to Section 6.10
of the Credit Agreement shall become a Grantor for all purposes of this
Agreement upon execution and delivery by such Subsidiary of an Assumption
Agreement in the form of Annex 1 hereto.
8.16 Releases. (a) At such time as the Loans, the
Reimbursement Obligations and the other Obligations shall have been paid in
full, the Commitments have been terminated and no Letters of Credit shall be
outstanding, the Collateral shall be released from the Liens created hereby,
and this Agreement and all obligations (other than those expressly stated to
survive such termination) of the Administrative Agent and each Grantor
hereunder shall terminate, all without delivery of any instrument or
performance of any act by any party, and all rights to the Collateral shall
revert to the Grantors. At the request and sole expense of any Grantor
following any such termination, the Administrative Agent shall deliver to such
Grantor any Collateral held by the Administrative Agent hereunder, and execute
and deliver to such Grantor such documents as such Grantor shall reasonably
request to evidence such termination.
<PAGE> 132
24
(b) If any of the Collateral shall be sold, transferred or
otherwise disposed of by any Grantor in a transaction permitted by the Credit
Agreement, then the Administrative Agent, at the request and sole expense of
such Grantor, shall execute and deliver to such Grantor all releases or other
documents reasonably necessary or desirable for the release of the Liens
created hereby on such Collateral. At the request and sole expense of the
Borrower, a Guarantor shall be released from its obligations hereunder in the
event that all the Capital Stock of such Guarantor shall be sold, transferred
or otherwise disposed of in a transaction permitted by the Credit Agreement.
IN WITNESS WHEREOF, each of the undersigned has caused this
Guarantee and Collateral Agreement to be duly executed and delivered as of the
date first above written.
INTERNATIONAL HOME FOODS, INC.
By:
----------------------------
Title:
AMERICAN HOME FOODS, INC.
By:
----------------------------
Title:
LUCK'S INC.
By:
----------------------------
Title:
M. POLANER, INC.
By:
----------------------------
Title:
HERITAGE BRANDS HOLDINGS, INC.
By:
----------------------------
Title:
<PAGE> 133
25
HERITAGE BRANDS, INC.
By:
----------------------------
Title:
CAMPFIRE, INC.
By:
----------------------------
Title:
<PAGE> 134
Schedule 1
NOTICE ADDRESSES OF GUARANTORS
<PAGE> 135
Schedule 2
DESCRIPTION OF PLEDGED STOCK
<TABLE>
<CAPTION>
Issuer Class of Stock Stock Certificate No. No. of Shares
------ -------------- --------------------- -------------
<S> <C> <C> <C>
American Home Foods, Inc.
Luck's Inc.
M. Polaner, Inc.
Heritage Brands Holdings, Inc.
Heritage Brands, Inc.
Campfire, Inc.
Canadian Home Products Limited
</TABLE>
<PAGE> 136
Schedule 3
FILINGS AND OTHER ACTIONS
REQUIRED TO PERFECT SECURITY INTERESTS
Uniform Commercial Code Filings
[List each office where a financing statement is to be filed]
Copyright, Patent and Trademark Filings
[List all filings]
Actions with respect to Pledged Stock
<PAGE> 137
Schedule 4
LOCATION OF JURISDICTION OF ORGANIZATION
AND CHIEF EXECUTIVE OFFICE
<TABLE>
<CAPTION>
Grantor Jurisdiction of Organization Chief Executive Office
- ------- ---------------------------- ----------------------
<S> <C> <C>
International Home Foods, Inc.
American Home Foods, Inc.
Luck's Inc.
M. Polaner, Inc.
Heritage Brands Holdings, Inc.
Heritage Brands, Inc.
Campfire, Inc.
</TABLE>
<PAGE> 138
Schedule 5
LOCATION OF INVENTORY AND EQUIPMENT
<TABLE>
<CAPTION>
Grantor Locations
------- ---------
<S> <C>
International Home Foods, Inc.
American Home Foods, Inc.
Luck's Inc.
M. Polaner, Inc.
Heritage Brands Holdings, Inc.
Heritage Brands, Inc.
Campfire, Inc.
</TABLE>
<PAGE> 139
Schedule 6
COPYRIGHTS AND COPYRIGHT LICENSES
PATENTS AND PATENT LICENSES
TRADEMARKS AND TRADEMARK LICENSES
<PAGE> 140
ACKNOWLEDGEMENT AND CONSENT
The undersigned hereby acknowledges receipt of a copy of the Guarantee
and Collateral Agreement dated as of November 1, 1996 (the "Agreement"), made
by the Grantors parties thereto for the benefit of The Chase Manhattan Bank, as
Administrative Agent. The undersigned agrees for the benefit of the
Administrative Agent and the Lenders as follows:
1. The undersigned will be bound by the terms of the Agreement and
will comply with such terms insofar as such terms are applicable to the
undersigned.
2. The undersigned will notify the Administrative Agent promptly in
writing of the occurrence of any of the events described in Section 5.7(a) of
the Agreement.
3. The terms of Sections 6.3(a) and 6.7 of the Agreement shall apply
to it, mutatis mutandis, with respect to all actions that may be required of it
pursuant to Section 6.3(a) or 6.7 of the Agreement.
CANADIAN HOME PRODUCTS LIMITED
By:
---------------------------
Title:
Address for Notices:
<PAGE> 141
Annex 1 to
Guarantee and Collateral Agreement
ASSUMPTION AGREEMENT, dated as of ________________, 199_, made
by ______________________________, a ______________ corporation (the
"Additional Grantor"), in favor of THE CHASE MANHATTAN BANK, as Administrative
Agent (in such capacity, the "Administrative Agent") for the banks and other
financial institutions (the "Lenders") parties to the Credit Agreement referred
to below. All capitalized terms not defined herein shall have the meaning
ascribed to them in such Credit Agreement.
W I T N E S S E T H :
WHEREAS, International Home Foods, Inc. (the "Borrower"), the
Lenders and the Administrative Agent have entered into a Credit Agreement,
dated as of November 1, 1996 (as amended, supplemented or otherwise modified
from time to time, the "Credit Agreement");
WHEREAS, in connection with the Credit Agreement, the Borrower
and certain of its affiliates (other than the Additional Grantor) have entered
into the Guarantee and Collateral Agreement, dated as of November 1, 1996 (as
amended, supplemented or otherwise modified from time to time, the "Guarantee
and Collateral Agreement") in favor of the Administrative Agent for the benefit
of the Lenders;
WHEREAS, the Credit Agreement requires the Additional Grantor
to become a party to the Guarantee and Collateral Agreement; and
WHEREAS, the Additional Grantor has agreed to execute and
deliver this Assumption Agreement in order to become a party to the Guarantee
and Collateral Agreement;
NOW, THEREFORE, IT IS AGREED:
1. Guarantee and Collateral Agreement. By executing and
delivering this Assumption Agreement, the Additional Grantor, as provided in
Section 8.15 of the Guarantee and Collateral Agreement, hereby becomes a party
to the Guarantee and Collateral Agreement as a Grantor thereunder with the same
force and effect as if originally named therein as a Grantor and, without
limiting the generality of the foregoing, hereby expressly assumes all
obligations and liabilities of a Grantor thereunder. The information set forth
in Annex 1-A hereto is hereby added to the information set forth in Schedules
____________* to the Guarantee and Collateral Agreement. The Additional
Grantor hereby represents and warrants that each of the representations and
warranties contained in Section 3 of the Guarantee and Collateral Agreement is
true and correct on and as the date hereof (after giving effect to this
Assumption Agreement) as if made on and as of such date.
__________________________________
* Refer to each Schedule which needs to be supplemented.
<PAGE> 142
2
2. GOVERNING LAW. THIS ASSUMPTION AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK.
IN WITNESS WHEREOF, the undersigned has caused this Assumption
Agreement to be duly executed and delivered as of the date first above written.
[ADDITIONAL GRANTOR]
By:
-----------------------------------
Name:
Title:
<PAGE> 143
EXHIBIT B TO THE
CREDIT AGREEMENT
FORM OF COMPLIANCE CERTIFICATE
To: The Lenders Parties to the
Credit Agreement Described Below
This Compliance Certificate is furnished pursuant to Section
6.2(b) of the Credit Agreement, dated as of November 1, 1996, among
International Home Foods, Inc. (the "Borrower"), the Lenders party thereto,
Morgan Stanley Senior Funding, Inc., as Documentation Agent, Bankers Trust
Company, as Syndication Agent, and The Chase Manhattan Bank, as Administrative
Agent (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"). Unless otherwise defined herein, the terms used in this
Compliance Certificate have the meanings ascribed thereto in the Credit
Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected _________________ of the Borrower;
2. I have reviewed the terms of the Credit Agreement and I
have made, or have caused to be made under my supervision, a detailed review of
the financial condition of the Borrower and its Subsidiaries for the accounting
period covered by the attached financial statements;
3. Except as set forth below, to the best of my knowledge,
each of the Borrower and each of its Subsidiaries during the accounting period
covered by the attached financial statements observed or performed all of its
covenants and other agreements contained in the Credit Agreement and the other
Loan Documents to which it is a party to be observed or performed by it; and
the examinations described in paragraph 2 did not disclose, and I have no
knowledge of, the existence of any condition or event which constitutes a
Default or an Event of Default during or at the end of such accounting period
or as of the date of this Certificate, except as set forth below; and
4. Schedule I attached hereto sets forth financial data and
computations evidencing the Borrower's compliance with certain covenants of the
Credit Agreement, all of which data and computations are true, complete and
correct.
Described below are the exceptions, if any, to paragraph 3,
listing, in detail, the nature of the condition or event, the period during
which it has existed and the action which the Borrower or the relevant
Subsidiary has taken, is taking, or proposes to take with respect to each such
condition or event:
________________________________________________________________________________
<PAGE> 144
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
The foregoing certifications, together with the computations
set forth in Schedule I hereto and the financial statements delivered with this
Certificate in support thereof, are made and delivered in my capacity described
in paragraph 1 above for and on behalf of the Borrower this _____ day of
________________, 19__.
INTERNATIONAL HOME FOODS, INC.
By
-----------------------------
Name:
Title:
<PAGE> 145
SCHEDULE I TO COMPLIANCE CERTIFICATE
Schedule of Compliance as of ___________ __,
19__ with Sections 7.1(a), (b), (c) and 7.7 of
the Credit Agreement
(All calculations for trailing four
quarters except as otherwise required by the
Credit Agreement)
<TABLE>
<S> <C>
Section 7.1(a) Consolidated Leverage Ratio.
- -------------------------------------------
Consolidated Leverage:
(a) Consolidated Total Debt outstanding _____
Consolidated EBITDA:
Consolidated Net Income _____
plus income tax expense _____
plus interest expense
plus amortization or writeoff of debt
discount and debt issuance costs
and commissions and other fees
and charges associated with
Indebtedness (including the Loans) _____
plus depreciation expense _____
plus amortization expense _____
plus amortization of intangibles
(including, but not limited to,
goodwill) and organization costs _____
plus any extraordinary or non-ordinary course
expenses or losses _____
plus any other noncash charges _____
minus to the extent included in this
statement of the Consolidated Net Income
for such period the sum of:
(i) interest income _____
(ii) any extraordinary or non-ordinary course
income or gains and _____
(iii) any other noncash income _____
(b) Consolidated EBITDA: _____
</TABLE>
<PAGE> 146
2
<TABLE>
<S> <C>
CONSOLIDATED LEVERAGE RATIO (a)/(b) _____
Must be less than or equal to: [Insert from Table]
Section 7.1(b) Consolidated Interest Coverage Ratio.
The ratio of
(a) Consolidated EBITDA _____
to
(b) (i) Total cash interest
expense (including that
attributable to Capital Lease
Obligations and all commissions,
discounts and other fees and
charges owed with respect to
letters of credit and bankers'
acceptance financing and net
costs under Interest Rate
Protection Agreements to the
extent such net costs are
allocable to such period in
accordance with GAAP) _____
minus
(ii) Total cash interest
income _____
CONSOLIDATED INTEREST EXPENSE _____
CONSOLIDATED INTEREST COVERAGE
RATIO (a)/(b) _____
Must be greater than or equal to: [Insert from Table]
</TABLE>
<PAGE> 147
3
<TABLE>
<S> <C>
Section 7.1(c) Consolidated Fixed Charge Coverage Ratio.
- --------------------------------------------------------
The ratio of
Consolidated EBITDA _____
minus the lesser of:
(i) Capital Expenditures of the Borrower
and its Subsidiaries (excluding
(x) the principal amount of
Indebtedness (other than Loans) incurred
in connection with such expenditures
and (y) Capital Expenditures made pursuant
to Section 7.7(b) of the Credit Agreement) _____
(ii) if applicable, the Scheduled Capital
Expenditure Amount _____
(a) NUMERATOR _____
to
the sum (without duplication) of:
(a) Consolidated Interest Expense
for such period _____
(b) provision for cash income
taxes paid by the Borrower or
any of its Subsidiaries on a
consolidated basis in respect
of such period _____
(c) scheduled payments made during
such period on account of
principal of Indebtedness of the
</TABLE>
<PAGE> 148
4
<TABLE>
<S> <C>
Borrower or any of its
Subsidiaries (including the
Term Loans) _____
(b) DENOMINATOR _____
CONSOLIDATED FIXED CHARGE COVERAGE
RATIO (a)/(b) _____
Must be greater than or equal to: [Insert from Table]
Section 7.7 Capital Expenditures.
Capital Expenditures of the Borrower
and the other Subsidiaries as of the
date hereof with respect to the
current fiscal year _____
CAPITAL EXPENDITURES _____
Must be less than or equal to:
$35,000,000 (for fiscal years
ended on or prior to December 31, 1998) $35,000,000
$40,000,000 (for fiscal years ended
after December 31, 1998) $40,000,000
plus up to $15,000,000 of the unutilized
portion of the basket carried over from
preceding fiscal year _____
plus Reinvestment Deferred Amount _____
plus Unapplied Excess Cash Flow _____
plus Contributed Equity _____
TOTAL PERMITTED CAPITAL EXPENDITURES _____
</TABLE>
<PAGE> 149
Exhibit C to the
Credit Agreement
FORM OF CLOSING CERTIFICATE
[NAME OF LOAN PARTY]
Pursuant to Section 5.1(g) of the Credit Agreement, dated as
of November 1, 1996 (the "Credit Agreement"; terms defined therein being used
herein as therein defined), among International Home Foods, Inc., the Lenders
parties thereto, Morgan Stanley Senior Funding, Inc., as Documentation Agent,
Bankers Trust Company, as Syndication Agent, and The Chase Manhattan Bank, as
Administrative Agent, the undersigned ___________________ of ____________ (the
"Certifying Loan Party") hereby certifies as follows:
i. The representations and warranties of the Certifying
Loan Party set forth in each of the Loan Documents to which it is a
party or which are contained in any certificate furnished by or on
behalf of the Certifying Loan Party pursuant to or in connection with
any of the Loan Documents to which it is a party are true and correct
in all material respects on and as of the date hereof with the same
effect as if made on the date hereof;
ii. No Default or Event of Default has occurred and is
continuing as of the date hereof or after giving effect to the Loans
to be made on the date hereof and/or the issuance of any Letters of
Credit to be issued on the date hereof;
iii. ___________ is and at all times since ___ __, 199_
has been, the duly elected and qualified [Assistant] Secretary of the
Certifying Loan Party and the signature set forth for such officer
below is such officer's true and genuine signature;
and the undersigned [Assistant] Secretary of the Certifying Loan Party
certifies as follows:
iv. There are no liquidation or dissolution proceedings
pending or to my knowledge threatened against the Certifying Loan
Party, nor has any other event occurred adversely affecting or
threatening the continued corporate existence of the Certifying Loan
Party after the date hereof;
v. The Certifying Loan Party is a corporation duly
incorporated, validly existing and in good standing under the laws of
the jurisdiction of its organization;
vi. Attached hereto as Annex 1 is a correct and complete
copy of resolutions duly adopted by the Board of Directors of the
Certifying Loan Party on _____________ __, 199_ authorizing (i) the
execution, delivery and performance of the Loan Documents to which it
is a party and (ii) the transactions contemplated by the Loan
Documents to which it is a party;
<PAGE> 150
such resolutions have not in any way been amended, modified, revoked
or rescinded and have been in full force and effect since their
adoption to and including the date hereof and are now in full force
and effect; such resolutions are the only corporate proceedings of the
Certifying Loan Party now in force relating to or affecting the
matters referred to therein; attached hereto as Annex 2 is a correct
and complete copy of the By-Laws of the Certifying Loan Party as in
effect at all times since __________ __, 199_ to and including the
date hereof, and such By-Laws have not been amended, repealed,
modified or restated; and attached hereto as Annex 3 is a correct and
complete copy of the Certificate of Incorporation of the Certifying
Loan Party as in effect at all times since _________ __, 199_ to and
including the date hereof, and such Certificate of Incorporation has
not been amended, repealed, modified or restated;
vii. The following Persons are now duly elected and
qualified officers of the Certifying Loan Party holding the offices
indicated next to their respective names below, and the signatures
appearing opposite their respective names below are the true and
genuine signatures of such officers, and each of such officers is duly
authorized to execute and deliver, on behalf of the Certifying Loan
Party, each of the Loan Documents to which it is a party and any
certificate or other document to be delivered by the Certifying Loan
Party pursuant to such Loan Documents:
<TABLE>
<CAPTION>
Name Office Signature
---- ------ ---------
<S> <C> <C>
- --------------- ----------------- --------------------
- --------------- ----------------- --------------------
- --------------- ----------------- --------------------
- --------------- ----------------- --------------------
</TABLE>
IN WITNESS WHEREOF, the undersigned have hereunto set our
names as of the date set forth below.
By: By:
------------------------------ -----------------------------------
Name: Name:
Title: Title: [Assistant] Secretary
Date: November 1, 1996
<PAGE> 151
Annex 1
Resolutions
<PAGE> 152
Annex 2
By-Laws
<PAGE> 153
Annex 3
Certificate of Incorporation
<PAGE> 154
EXHIBIT D-1
[Texas]
DEED OF TRUST AND SECURITY AGREEMENT
from
INTERNATIONAL HOME FOODS, INC., Grantor
to
GLENN D. KESSELHAUT, ESQ., Trustee
for the use and
benefit of
THE CHASE MANHATTAN BANK,
as Administrative Agent, Beneficiary
DATED AS OF OCTOBER __, 1996
After recording, please return to:
Simpson Thacher & Bartlett
a partnership which includes
professional corporations
425 Lexington Avenue
New York, New York 10017
ATTN: Amy Jedlicka, Esq.
<PAGE> 155
EXHIBIT D-1
[Texas]
FORM OF BORROWER
DEED OF TRUST AND SECURITY AGREEMENT
THIS DEED OF TRUST AND SECURITY AGREEMENT, dated as of October
__, 1996 is made by INTERNATIONAL HOME FOODS, INC. (formerly known as American
Home Food Products, Inc.), a Delaware corporation ("GRANTOR"), whose address is
Five Giralda Farms, Madison, New Jersey 07940 Attention: Kenneth J. Martin, to
GLENN D. KESSELHAUT, ESQ., an individual resident of the State of New York,
("TRUSTEE") having an address c/o Simpson Thacher & Bartlett, 425 Lexington
Avenue, New York, New York 10017-3954, for the use and benefit of THE CHASE
MANHATTAN BANK, a New York banking corporation ("CHASE"), as Administrative
Agent for the Lenders (as such terms are defined in the Credit Agreement
defined below; in such capacity, "BENEFICIARY", which term shall be deemed to
include the successors and assigns of the Administrative Agent), whose address
is c/o Chase Agency Services, 140 East 45th Street, New York, New York 10017
Attention: Sandra Miklave. References to this "DEED OF TRUST" shall mean this
instrument and any and all renewals, modifications, amendments, supplements,
extensions, consolidations, substitutions, spreaders and replacements of this
instrument.
Background
a. Grantor is the owner of the parcel(s) of real property
described on Schedule A attached (such real property, together with all of the
buildings, improvements, structures and fixtures now or subsequently located
thereon (the "IMPROVEMENTS"), being collectively referred to as the "REAL
ESTATE").
b. Grantor is a party to that certain Credit Agreement dated as
of even date herewith (as the same may be amended, supplemented, restated,
extended, replaced or otherwise modified from time to time, the "CREDIT
AGREEMENT") with Morgan Stanley Senior Funding, Inc., as Documentation Agent,
Bankers Trust Company, as Syndication Agent, Chase as Administrative Agent and
the several banks and other financial institutions or entities from time to
time parties thereto (the "LENDERS"). Capitalized terms not otherwise defined
herein shall have the meanings ascribed thereto in the Credit Agreement. In
the event of any conflict between the provisions of this Deed of Trust and the
provisions of the Credit Agreement, the applicable provisions of the Credit
Agreement shall govern and control. References in this Deed of Trust to the
"DEFAULT RATE" shall mean interest at a rate per annum equal to the ABR plus 2%
but in no event greater than the Highest Lawful Rate.
c. Pursuant to the terms of the Credit Agreement, (1) the Lenders
have agreed (a) to make certain Revolving Credit Loans to Grantor in an
aggregate principal amount at any one time outstanding not to exceed
$100,000,000.00 and (b) to make certain Term Loans defined in the Credit
Agreement as the Tranche A Term Loans, the Tranche B Term Loans and the Tranche
C Term Loans to Grantor in an aggregate principal amount not to exceed
$670,000,000.00, (2) the Swing Line Lender has
<PAGE> 156
2
agreed to make certain Swing Line Loans in an aggregate principal amount at any
one time outstanding not to exceed $10,000,000.00, and (3) Chase, in its
capacity as an Issuing Lender, has agreed to issue, and the other Lenders which
are L/C Participants have agreed to acquire participating interests in, Letters
of Credit for the account of Grantor; the sum of (i) the aggregate then undrawn
and unexpired amount of the then outstanding Letters of Credit and (ii) the
aggregate amount of drawings under the Letters of Credit which have not been
reimbursed pursuant to subsection 3.5 of the Credit Agreement shall not exceed
$25,000,000.00. The maximum aggregate principal amount of the Loans and the
L/C Obligations outstanding at any one time shall not exceed $770,000,000.00.
d. It is a condition precedent, among others, to the obligations
of the Lenders to make the Loans and the Issuing Lender to issue the Letters of
Credit that Grantor execute and deliver this Deed of Trust.
Granting Clauses
For good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantor agrees that to secure:
(a) (i) the repayment of the indebtedness evidenced by the
Notes, and (ii) all interest (including, without limitation, interest
accruing after the maturity of the Loans and interest accruing after
the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to Grantor
whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding) and fees, indemnities, costs, expenses
(including, without limitation, all reasonable fees and disbursements
of counsel to Beneficiary or to the Lenders that are required to be
paid by Grantor pursuant to the terms of the Credit Agreement or this
Deed of Trust) or otherwise payable thereon, (iii) payment of the
Reimbursement Obligation with respect to Letters of Credit pursuant to
the Credit Agreement, whether in respect of any drawings under any
Letters of Credit, fees, commissions, expenses or otherwise and (iv)
all obligations in respect of any Interest Rate Protection Agreement
with any Lender (the items set forth in clauses (i) through (iv) being
referred to collectively as the "INDEBTEDNESS"); and
(b) the performance of all covenants, agreements, obligations
and liabilities of Grantor (the "OBLIGATIONS") whether direct or
indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or in
connection with, the Credit Agreement, the Notes, this Deed of Trust,
any other document securing payment of the Indebtedness (the "SECURITY
DOCUMENTS") and any amendments, supplements, extensions, renewals,
restatements, replacements or modifications of any of the foregoing
(the Notes, the Security Documents and all other documents and
instruments from time to time evidencing, securing or guaranteeing the
payment of the Indebtedness or the performance of the Obligations, as
any of the same may be amended, supplemented, extended, renewed,
restated, replaced or modified from time to time, are collectively
referred to as the "LOAN DOCUMENTS");
<PAGE> 157
3
GRANTOR HEREBY CONVEYS TO TRUSTEE AND HEREBY GRANTS, ASSIGNS, TRANSFERS AND
SETS OVER TO TRUSTEE AND ALSO TO SUBSTITUTE TRUSTEE (AS DEFINED BELOW), IN
TRUST WITH POWER OF SALE FOR THE USE AND BENEFIT OF BENEFICIARY, AND GRANTS
BENEFICIARY AND TRUSTEE A SECURITY INTEREST IN (TO THE EXTENT ANY OF THE
FOLLOWING CONSTITUTES PERSONAL PROPERTY):
(A) the Real Estate;
(B) all the estate, right, title, claim or demand whatsoever
of Grantor, in possession or expectancy, in and to the Real Estate or
any part thereof;
(C) all right, title and interest of Grantor in, to and under
all easements, rights of way, gores of land, streets, ways, alleys,
passages, sewer rights, waters, water courses, water and riparian
rights, development rights, air rights, mineral rights and all
estates, rights, titles, interests, privileges, licenses, tenements,
hereditaments and appurtenances belonging, relating or appertaining to
the Real Estate, and any reversions, remainders, rents, issues,
profits and revenue thereof and all land lying in the bed of any
street, road or avenue, in front of or adjoining the Real Estate to
the center line thereof;
(D) all of the fixtures, chattels, business machines,
machinery, apparatus, equipment, furnishings, fittings and articles of
personal property of every kind and nature whatsoever, and all
appurtenances and additions thereto and substitutions or replacements
thereof (together with, in each case, attachments, components, parts
and accessories) currently owned or subsequently acquired by Grantor
and now or subsequently attached to, or contained in or used or usable
in any way in connection with any operation or letting of the Real
Estate, including but without limiting the generality of the
foregoing, all screens, awnings, shades, blinds, curtains, draperies,
artwork, carpets, rugs, storm doors and windows, furniture and
furnishings, heating, electrical, and mechanical equipment, lighting,
switchboards, plumbing, ventilating, air conditioning and air-cooling
apparatus, refrigerating, and incinerating equipment, escalators,
elevators, loading and unloading equipment and systems, stoves,
ranges, laundry equipment, cleaning systems (including window cleaning
apparatus), telephones, communication systems (including satellite
dishes and antennae), televisions, computers, sprinkler systems and
other fire prevention and extinguishing apparatus and materials,
security systems, motors, engines, machinery, pipes, pumps, tanks,
conduits, appliances, fittings and fixtures of every kind and
description (all of the foregoing in this paragraph (D) being referred
to as the "EQUIPMENT");
(E) all right, title and interest of Grantor in and to all
substitutes and replacements of, and all additions and improvements
to, the Real Estate and the Equipment, subsequently acquired by or
released to Grantor or constructed, assembled or placed by Grantor on
the Real Estate, immediately upon such acquisition, release,
construction, assembling or placement, including, without limitation,
any and all building materials whether stored at the Real Estate or
offsite, and, in each such case, without any further mortgage,
conveyance, assignment or other act by Grantor;
<PAGE> 158
4
(F) all right, title and interest of Grantor in, to and under
all leases, subleases, underlettings, concession agreements,
management agreements, licenses and other agreements relating to the
use or occupancy of the Real Estate or the Equipment or any part
thereof, now existing or subsequently entered into by Grantor and
whether written or oral and all guarantees of any of the foregoing
(collectively, as any of the foregoing may be amended, restated,
extended, renewed or modified from time to time, the "LEASES"), and
all rights of Grantor in respect of cash and securities deposited
thereunder and the right to receive and collect the revenues, income,
rents, issues and profits thereof, together with all other rents,
royalties, issues, profits, revenue, income and other benefits arising
from the use and enjoyment of the Trust Property (as defined below)
(collectively, the "RENTS");
(G) all trade names, trade marks, logos, copyrights, good
will and books and records relating to or used in connection with the
operation of the Real Estate or the Equipment or any part thereof;
all general intangibles related to the operation of the Improvements
now existing or hereafter arising;
(H) all unearned premiums under insurance policies now or
subsequently obtained by Grantor relating to the Real Estate or
Equipment and Grantor's interest in and to all proceeds of any such
insurance policies (including title insurance policies) including the
right to collect and receive such proceeds, subject to the provisions
relating to insurance generally set forth below; and all awards and
other compensation, including the interest payable thereon and the
right to collect and receive the same, made to the present or any
subsequent owner of the Real Estate or Equipment for the taking by
eminent domain, condemnation or otherwise, of all or any part of the
Real Estate or any easement or other right therein;
(I) all right, title and interest of Grantor in and to (i)
all contracts from time to time executed by Grantor or any manager or
agent on its behalf relating to the ownership, construction,
maintenance, repair, operation, occupancy, sale or financing of the
Real Estate or Equipment or any part thereof and all agreements
relating to the purchase or lease of any portion of the Real Estate or
any property which is adjacent or peripheral to the Real Estate,
together with the right to exercise such options and all leases of
Equipment (collectively, the "CONTRACTS"), (ii) all consents,
licenses, building permits, certificates of occupancy and other
governmental approvals relating to construction, completion,
occupancy, use or operation of the Real Estate or any part thereof
(collectively, the "PERMITS") and (iii) all drawings, plans,
specifications and similar or related items relating to the Real
Estate (collectively, the "PLANS");
(J) any and all monies now or subsequently on deposit for the
payment of real estate taxes or special assessments against the Real
Estate or for the payment of premiums on insurance policies covering
the foregoing property or otherwise on deposit with or held by
Beneficiary as provided in this Deed of Trust; all capital, operating,
reserve or similar accounts held by or on behalf of Grantor and
related to the operation of the Trust Property, whether now existing
or hereafter arising and all monies held in any of the foregoing
accounts and any certificates or instruments related to or evidencing
such accounts;
<PAGE> 159
5
(K) all accounts and revenues arising from the operation of
the Improvements including, without limitation, (i) any right to
payment now existing or hereafter arising for rental of hotel rooms or
other space or for goods sold or leased or for services rendered,
whether or not yet earned by performance, arising from the operation
of the Improvements or any other facility on the Trust Property and
(ii) all rights to payment from any consumer credit-charge card
organization or entity including, without limitation, payments arising
from the use of the American Express Card, the Visa Card, the Carte
Blanche Card, the Mastercard or any other credit card, including those
now existing or hereafter created, substitutions therefor, proceeds
thereof (whether cash or non-cash, movable or immovable, tangible or
intangible) received upon the sale, exchange, transfer, collection or
other disposition or substitution thereof and any and all of the
foregoing and proceeds therefrom; and
(L) all proceeds, both cash and noncash, of the foregoing;
(All of the foregoing property and rights and interests now
owned or held or subsequently acquired by Grantor and described in the
foregoing clauses (A) through (E) are collectively referred to as the
"PREMISES", and those described in the foregoing clauses (A) through (L) are
collectively referred to as the "TRUST PROPERTY").
TO HAVE AND TO HOLD the Trust Property and the rights and
privileges hereby granted unto Trustee, Substitute Trustee, their successors
and assigns for the uses and purposes set forth, until the Indebtedness is
fully paid and the Obligations fully performed. Notwithstanding anything to
the contrary set forth herein, the maximum aggregate principal amount secured
hereby shall not exceed $770,000,000.00. This Deed of Trust covers present and
future advances and re-advances, in the aggregate amount of the obligations
secured hereby, made by the Lenders for the benefit of Grantor and the lien of
such future advances and re-advances shall relate back to the date of this Deed
of Trust.
Terms and Conditions
Grantor further represents, warrants, covenants and agrees
with Trustee and Beneficiary as follows:
i. Warranty of Title. Grantor warrants that Grantor has
good title to the Real Estate in fee simple and good title to the rest of the
Trust Property, subject only to the matters that are set forth in Schedule B of
the title insurance policy or policies being issued to Beneficiary to insure
the lien of this Deed of Trust (the "PERMITTED EXCEPTIONS") and Grantor shall
warrant, defend and preserve such title and the rights granted by this Deed of
Trust with respect thereto against all claims of all persons and entities.
Grantor further warrants that it has the right to grant this Deed of Trust.
ii. Payment of Indebtedness. Grantor shall pay the
Indebtedness at the times and places and in the manner specified in the Notes
and shall perform all the Obligations.
<PAGE> 160
6
iii. Requirements. (a) Grantor shall promptly comply
with, or cause to be complied with, and conform to all present and future laws,
statutes, codes, ordinances, orders, judgments, decrees, rules, regulations and
requirements, and irrespective of the nature of the work to be done, of each of
the United States of America, any State and any municipality, local government
or other political subdivision thereof and any agency, department, bureau,
board, commission or other instrumentality of any of them, now existing or
subsequently created (collectively, "GOVERNMENTAL AUTHORITY") which has
jurisdiction over the Trust Property and all covenants, restrictions and
conditions now or later of record which may be applicable to any of the Trust
Property, or to the use, manner of use, occupancy, possession, operation,
maintenance, alteration, repair or reconstruction of any of the Trust Property,
except to the extent that the failure to comply therewith could not reasonably
be expected to have a Material Adverse Effect. All present and future laws,
statutes, codes, ordinances, orders, judgments, decrees, rules, regulations and
requirements of every Governmental Authority applicable to Grantor or to any of
the Trust Property and all covenants, restrictions, and conditions which now or
later may be applicable to any of the Trust Property are collectively referred
to as the "LEGAL REQUIREMENTS".
(b) From and after the date of this Deed of Trust, Grantor
shall not by act or omission permit any building or other improvement on any
premises not subject to this Deed of Trust to rely on the Premises or any part
thereof or any interest therein to fulfill any Legal Requirement, and Grantor
hereby assigns to Beneficiary any and all rights to give consent for all or any
portion of the Premises or any interest therein to be so used. Grantor shall
not by act or omission impair the integrity of any of the Real Estate so as to
constitute an illegal subdivision or to prohibit the Premises and Improvements
from being conveyed as one zoning or tax lot. Grantor represents that the
Premises are not part of a larger tract of land owned by Grantor or its
affiliates or otherwise considered as part of one zoning or tax lot, or, if
they are that any authorization or variance required for the subdivision of
such larger tract which a sale of the Premises would entail has been obtained
from all appropriate Governmental Authorities so that the Premises and
Improvements constitute one zoning or tax lot capable of being conveyed as
such. Any act or omission by Grantor which would result in a violation of any
of the provisions of this subsection shall be void.
iv. Payment of Taxes and Other Impositions. (a)
Promptly when due but in any event prior to delinquency, Grantor shall pay and
discharge all taxes of every kind and nature (including, without limitation,
all real and personal property, income, franchise, withholding, transfer,
gains, profits and gross receipts taxes), all charges for any easement or
agreement maintained for the benefit of any of the Trust Property, all general
and special assessments, levies, permits, inspection and license fees, all
water and sewer rents and charges and all other public charges even if
unforeseen or extraordinary, imposed upon or assessed against or which may
become a lien on any of the Trust Property, or arising in respect of the
occupancy, use or possession thereof, together with any penalties or interest
on any of the foregoing (all of the foregoing are collectively referred to as
the "IMPOSITIONS"). Upon request by Beneficiary, Grantor shall deliver to
Beneficiary (i) original or copies of receipted bills and cancelled checks
evidencing payment of such Imposition if it is a real estate tax or other
public charge and (ii) evidence reasonably acceptable to Beneficiary showing
the payment of any other such Imposition. If by law any Imposition, at
Grantor's option, may be paid in installments (whether or not interest shall
accrue on the unpaid balance of such
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Imposition), Grantor may elect to pay such Imposition in such installments and
shall be responsible for the payment of such installments with interest, if
any.
(b) Nothing herein shall affect any right or remedy of
Trustee or Beneficiary under this Deed of Trust or otherwise, without notice or
demand to Grantor, to pay any Imposition after the date such Imposition shall
have become due, and to add to the Indebtedness the amount so paid, together
with interest from the time of payment at the Default Rate. Beneficiary shall
give Grantor notice of its intent to pay any Impositions unless an Event of
Default has occurred and is continuing. Any sums paid by Trustee or
Beneficiary in discharge of any Impositions shall be (i) a charge on the
Premises secured hereby prior to any right or title to, interest in, or claim
upon the Premises subordinate to the lien of this Deed of Trust, and (ii)
payable on demand by Grantor to Trustee or Beneficiary, as the case may be,
together with interest at the Default Rate as set forth above.
(c) Grantor shall not claim, demand or be entitled to receive
any credit or credits toward the satisfaction of this Deed of Trust or on any
interest payable thereon for any taxes assessed against the Trust Property or
any part thereof, and shall not claim any deduction from the taxable value of
the Trust Property by reason of this Deed of Trust.
(d) Subject to the provisions of Section 6.3 of the Credit
Agreement, Grantor shall have the right before any delinquency occurs to
contest or object in good faith to the amount or validity of any Imposition by
appropriate legal proceedings, provided Grantor shall maintain adequate
reserves with respect thereto on its books in conformity with GAAP.
(e) Upon written notice to Grantor, Beneficiary after and
during the continuation of an Event of Default (as defined below) shall be
entitled to require Grantor to pay monthly in advance to Beneficiary the
equivalent of 1/12th of the estimated annual Impositions. Beneficiary may
commingle such funds with its own funds and Grantor shall not be entitled to
interest thereon. Any funds so collected by Beneficiary shall be used to pay
Impositions as they become due.
v. Insurance. (a) Grantor shall maintain or cause to
be maintained on all of the Premises:
(i) property insurance against loss or damage by fire,
lightning, windstorm, tornado, water damage, flood, earthquake and by
such other further risks and hazards as now are or subsequently may be
covered by an "all risk" policy or a fire policy covering "special"
causes of loss. The policy shall include building ordinance law
endorsements and the policy limits shall be automatically reinstated
after each loss;
(ii) comprehensive general liability insurance under a
policy including the "broad form CGL endorsement" (or which
incorporates the language of such endorsement), covering all claims
for personal injury, bodily injury or death, or property damage
occurring on, in or about the Premises in an amount not less than
$10,000,000 combined single limit with respect to injury and property
damage relating to any one occurrence plus such excess limits as
Beneficiary shall request from time to time;
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(iii) when and to the extent required by Beneficiary,
insurance against loss or damage by any other risk commonly insured
against by persons occupying or using like properties in the locality
or localities in which the Real Estate is situated;
(iv) insurance against rent loss, extra expense or
business interruption (and/or soft costs, in the case of new
construction), if applicable, in amounts satisfactory to Beneficiary,
but not less than one year's gross rent or gross income;
(v) during the course of any construction or repair of
Improvements, comprehensive general liability insurance under a policy
including the "broad form CGL endorsement" (or which incorporates the
language of such endorsement), (including coverage for elevators and
escalators, if any). The policy shall include coverage for
independent contractors and completed operations. The completed
operations coverage shall stay in effect for two years after
construction of any Improvements has been completed. The policy shall
provide coverage on an occurrence basis against claims for personal
injury, including, without limitation, bodily injury, death or
property damage occurring on, in or about the Premises and the
adjoining streets, sidewalks and passageways, such insurance to afford
immediate minimum protection to a limit of not less than that required
by Beneficiary with respect to personal injury, bodily injury or death
to any one or more persons or damage to property;
(vi) during the course of any construction or repair of
the Improvements, workers' compensation insurance (including
employer's liability insurance) for all employees of Grantor engaged
on or with respect to the Premises in such amounts as are reasonably
satisfactory to Beneficiary, but in no event less than the limits
established by law;
(vii) during the course of any construction, addition,
alteration or repair of the Improvements, builder's risk completed
value form insurance against "all risks of physical loss," including
collapse, water damage, flood and earthquake and transit coverage,
during construction or repairs of the Improvements, with deductible
approved by Beneficiary, in nonreporting form, covering the total
value of work performed and equipment, supplies and materials
furnished (with an appropriate limit for soft costs in the case of
construction);
(viii) boiler and machinery property insurance covering
pressure vessels, air tanks, boilers, machinery, pressure piping,
heating, air conditioning and elevator equipment and escalator
equipment, provided the Improvements contain equipment of such nature,
and insurance against rent, extra expense, business interruption and
soft costs, if applicable, arising from any such breakdown, in such
amounts as are reasonably satisfactory to Beneficiary but not less
than the lesser of $1,000,000 or 10% of the value of the Improvements;
(ix) if any portion of the Premises are located in an area
identified as a special flood hazard area by the Federal Emergency
Management Agency or other applicable agency, flood insurance in an
amount satisfactory to Beneficiary, but in no event less than the
maximum limit of coverage available under the National Flood Insurance
Act of 1968, as amended; and
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(x) such other insurance in such amounts as Beneficiary
may reasonably request from time to time.
Each insurance policy (other than flood insurance written under the National
Flood Insurance Act of 1968, as amended, in which case to the extent available)
shall (i) provide that it shall not be cancelled, non-renewed or materially
amended without 30 days' prior written notice to Beneficiary, and (ii) with
respect to all property insurance, provide for deductibles not to exceed
$100,000 or such greater amount as Beneficiary shall approve in writing,
contain a "Replacement Cost Endorsement" without any deduction made for
depreciation and with no co-insurance penalty (or attaching an agreed amount
endorsement satisfactory to Beneficiary), with loss payable solely to
Beneficiary (modified, if necessary, to provide that proceeds in the amount of
replacement cost may be retained by Beneficiary without the obligation to
rebuild) as its interest may appear, without contribution, under a "standard"
or "New York" mortgagee clause acceptable to Beneficiary and be written by
insurance companies having an A.M. Best Company, Inc. rating of A or higher and
a financial size category of not less than VI, or otherwise as approved by
Beneficiary. Liability insurance policies shall name Beneficiary (and Trustee,
if Trustee shall so request) as an additional insured and contain a waiver of
subrogation against Beneficiary (and Trustee, if Trustee shall so request); all
such policies shall indemnify and hold Beneficiary (and Trustee, if Trustee
shall so request) harmless from all liability claims occurring on, in or about
the Premises and the adjoining streets, sidewalks and passageways. The amounts
of each insurance policy and the form of each such policy shall at all times be
reasonably satisfactory to Beneficiary. Each policy shall expressly provide
that any proceeds which are payable to Beneficiary shall be paid by check
payable to the order of Beneficiary only and requiring the endorsement of
Beneficiary only. If any required insurance shall expire, be withdrawn, become
void by breach of any condition thereof by Grantor or by any lessee of any part
of the Trust Property or become void or unsafe by reason of the failure or
impairment of the capital of any insurer, or if for any other reason whatsoever
such insurance shall become unsatisfactory to Beneficiary in Beneficiary's
reasonable judgement, Grantor shall immediately obtain new or additional
insurance satisfactory to Beneficiary. Grantor shall not take out any separate
or additional insurance which is contributing in the event of loss unless it is
properly endorsed and otherwise satisfactory to Beneficiary in all respects.
(b) Grantor shall deliver to Beneficiary an original of each
insurance policy required to be maintained, or a certificate of such insurance
acceptable to Beneficiary, together with a copy of the declaration page for
each such policy. Grantor shall (i) pay as they become due all premiums for
such insurance, (ii) not later than 15 days prior to the expiration of each
policy to be furnished pursuant to the provisions of this Section, deliver a
renewed policy or policies, or duplicate original or originals thereof, marked
"premium paid," or accompanied by such other evidence of payment reasonably
satisfactory to Beneficiary with standard non-contributory mortgage clauses in
favor of and acceptable to Beneficiary. Upon request of Beneficiary, Grantor
shall cause its insurance underwriter or broker to certify to Beneficiary in
writing that all the requirements of this Deed of Trust governing insurance
have been satisfied.
(c) If Grantor is in default of its obligations to insure or
deliver any such prepaid policy or policies, then Beneficiary, at its option
and without notice, may effect such insurance from year to year,
<PAGE> 164
10
and pay the premium or premiums therefor, and Grantor shall pay to Beneficiary
on demand such premium or premiums so paid by Beneficiary with interest from
the time of payment at the Default Rate and the same shall be deemed to be
secured by this Deed of Trust and shall be collectible in the same manner as
the Indebtedness secured by this Deed of Trust.
(d) Grantor shall increase the amount of property insurance
required to equal 100% replacement cost pursuant to the provisions of this
Section at the time of each renewal of each policy (but not later than 12
months from the date of this Deed of Trust and each successive 12 month period
to occur thereafter) by using the F.W. Dodge Building Index to determine
whether there shall have been an increase in the replacement value since the
most recent adjustment and, if there shall have been such an increase, the
amount of insurance required shall be adjusted accordingly.
(e) Grantor promptly shall comply with and conform to (i) all
provisions of each such insurance policy, and (ii) all requirements of the
insurers applicable to Grantor or to any of the Trust Property or to the use,
manner of use, occupancy, possession, operation, maintenance, alteration or
repair of any of the Trust Property. Grantor shall not use or permit the use
of the Trust Property in any manner which would permit any insurer to cancel
any insurance policy or void coverage required to be maintained by this Deed of
Trust.
(f) (i) If the Trust Property, or any part thereof, shall be
destroyed or damaged by fire or any other casualty, whether insured or
uninsured, or in the event any claim is made against Grantor for any
personal injury, bodily injury or property damage incurred on or about
the Premises, Grantor shall give immediate notice thereof to
Beneficiary.
(ii) If the Trust Property is damaged by fire or other
casualty and the cost to repair such damage is greater than $1,000,000
but less than $10,000,000, then provided that no Event of Default
shall have occurred and be continuing, Grantor shall have the right to
adjust such loss, and the insurance proceeds relating to such loss may
be paid over to Grantor to be applied, at Grantor's election, either
(1) in accordance with Section 2.11 of the Credit Agreement or (2)
towards the repair and restoration of all such damage.
(iii) If the Trust Property is damaged by fire or other
casualty, and the cost to repair such damage is greater than
$10,000,000 but less than $15,000,000, then Grantor authorizes and
empowers Beneficiary, at Beneficiary's option and in Beneficiary's
sole discretion, as attorney-in-fact for Grantor, to make proof of
loss, to adjust and compromise any claim under any insurance policy,
to appear in and prosecute any action arising from any policy, to
collect and receive insurance proceeds and to deduct therefrom
Beneficiary's expenses incurred in the collection process. Each
insurance company concerned is hereby authorized and directed to make
payment for such loss directly to Beneficiary and Grantor hereby
designates Beneficiary as its attorney-in-fact for the purpose of
making any election required or permitted under any insurance policy
relating to repair or restoration. The insurance proceeds or any part
thereof received by Beneficiary may be applied by Beneficiary toward
reimbursement of all costs and expenses of Beneficiary in collecting
such proceeds, and the balance shall be advanced to Grantor for the
repair
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and restoration of the Trust Property in accordance with the
provisions of the Section of this Deed of Trust entitled
"Restoration". Grantor shall be obligated to use such proceeds to
restore or repair the Trust Property.
(iv) If the Trust Property is damaged by fire or other
casualty, and the cost to repair such damage exceeds $15,000,000, or
if an Event of Default shall have occurred and be continuing, then
Grantor authorizes and empowers Beneficiary, at Beneficiary's option
and in Beneficiary's sole discretion, as attorney-in-fact for Grantor,
to make proof of loss, to adjust and compromise any claim under any
insurance policy, to appear in and prosecute any action arising from
any policy, to collect and receive insurance proceeds and to deduct
therefrom Beneficiary's expenses incurred in the collection process.
Each insurance company concerned is hereby authorized and directed to
make payment for such loss directly to Beneficiary. Beneficiary shall
have the right to require Grantor to repair or restore the Trust
Property and Grantor hereby designates Beneficiary as its
attorney-in-fact for the purpose of making any election required or
permitted under any insurance policy relating to repair or
restoration. The insurance proceeds or any part thereof received by
Beneficiary may be applied by Beneficiary toward reimbursement of all
costs and expenses of Beneficiary in collecting such proceeds, and the
balance, may be applied, at Beneficiary's sole option and in its sole
and absolute discretion, to fulfill any other Obligation of Grantor,
towards the prepayment of the Term Loans and the reduction of the
Revolving Credit Commitments as set forth in Section 2.11(d), to the
restoration or repair of the property damaged (and if Grantor shall
require Beneficiary to repair or restore the Trust Property, such
balance shall be advanced to Grantor in accordance with the provisions
of the Section of this Deed of Trust entitled "Restoration") or
released to Grantor. In the event Beneficiary releases such proceeds
to Grantor, Grantor shall be obligated to use such proceeds to restore
or repair the Trust Property.
(g) In the event of foreclosure of this Deed of Trust or
other transfer of title to the Trust Property in extinguishment of the
Indebtedness, all right, title and interest of Grantor in and to any insurance
policies then in force shall pass to the purchaser or grantee and Grantor
hereby appoints Beneficiary its attorney-in-fact, in Grantor's name, to assign
and transfer all such policies and proceeds to such purchaser or grantee.
(h) Upon written notice to Grantor, Beneficiary after an
Event of Default shall be entitled to require Grantor to pay monthly in advance
to Beneficiary the equivalent of 1/12th of the estimated annual premiums due on
such insurance. Beneficiary may commingle such funds with its own funds and
Grantor shall not be entitled to interest thereon. Any funds so collected by
Beneficiary shall be used to pay insurance premiums as they become due.
(i) Grantor may maintain insurance required under this
Deed of Trust by means of one or more blanket insurance policies maintained by
Grantor; provided, however, that (A) any such policy shall specify, or Grantor
shall furnish to Beneficiary a written statement from the insurer so
specifying, the maximum amount of the total insurance afforded by such blanket
policy that is allocated to the Premises and the other Trust Property and any
sublimits in such blanket policy applicable to the Premises and the other Trust
Property, (B) each such blanket policy shall include an endorsement providing
that, in the event
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of a loss resulting from an insured peril, insurance proceeds shall be
allocated to the Trust Property in an amount equal to the coverages required to
be maintained by Grantor as provided above and (C) the protection afforded
under any such blanket policy shall be no less than that which would have been
afforded under a separate policy or policies relating only to the Trust
Property.
vi. Maintenance; No Alteration; Inspection; Utilities.
(a) Subject to the provisions of Section 6.5 of the Credit Agreement and
Section 5(f) of this Deed of Trust, (i) Grantor shall maintain or cause to be
maintained all the Improvements in good condition and repair, ordinary wear and
tear excepted and shall not commit or suffer any waste of the Improvements,
(ii) Grantor shall repair, restore, replace or rebuild promptly any part of
the Premises which may be damaged or destroyed by any casualty whatsoever and
(iii) the Improvements shall not be demolished in whole or in any material part
without the prior written consent of Beneficiary, which consent shall not be
unreasonably withheld.
(b) At any reasonable time and as often as may be reasonably
desired, Beneficiary and any persons authorized by Beneficiary shall have the
right to enter and inspect the Premises and the right to inspect all work done,
labor performed and materials furnished in and about the Improvements.
vii. Condemnation/Eminent Domain. Immediately upon
obtaining knowledge of the institution of any proceedings for the condemnation
of the Trust Property, or any portion thereof, Grantor will notify Beneficiary
of the pendency of such proceedings. Grantor authorizes Beneficiary, at
Beneficiary's option and in Beneficiary's reasonable discretion, as
attorney-in-fact for Grantor, to commence, appear in and prosecute, in
Beneficiary's or Grantor's name, any action or proceeding relating to any
condemnation of the Trust Property, or any portion thereof, and to settle or
compromise any claim in connection with such condemnation. If Beneficiary
elects not to participate in such condemnation proceeding, then Grantor shall,
at its expense, diligently prosecute any such proceeding and shall consult with
Beneficiary, its attorneys and experts and cooperate with them in any defense
of any such proceedings. All awards and proceeds of condemnation shall be
assigned to Beneficiary to be applied in the same manner as insurance proceeds,
as provided above, and Grantor agrees to execute any such assignments of all
such awards as Beneficiary may request.
viii. Restoration. If Beneficiary shall release funds to
Grantor for restoration of any of the Trust Property, then such restoration
shall be performed only in accordance with the following conditions:
(i) prior to the commencement of any restoration, the
plans and specifications for such restoration, and the budgeted costs,
shall be submitted to and approved by Beneficiary in its reasonable
discretion;
(ii) prior to making any advance of restoration funds,
Beneficiary shall be satisfied that the remaining restoration funds
are sufficient to complete the restoration and to pay all related
expenses, including interest on the Indebtedness and real estate taxes
on the Premises, during restoration;
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(iii) at the time of any disbursement of the restoration
funds, (A) no Default (as defined below) shall then exist, (B) no
mechanics' or materialmen's liens shall have been filed and remain
undischarged, except those discharged by the disbursement of the
requested restoration funds or which are being contested in good faith
by appropriate proceedings and for which Grantor has posted a bond in
the amount of the lien which is being contested and (C) a satisfactory
bring-down or continuation of title insurance on the Premises shall be
delivered to Beneficiary;
(iv) disbursements shall be made from time to time in an
amount not exceeding the cost of the work completed since the last
disbursement, upon receipt of satisfactory evidence of the stage of
completion and of performance of the work in a good and workmanlike
manner and in accordance with the contracts, plans and specifications
acceptable to Beneficiary;
(v) with respect to each advance of restoration funds,
Beneficiary may retain 10% of the amount of such advance as a holdback
until the restoration is fully completed;
(vi) the restoration funds shall bear no interest and may
be commingled with Beneficiary's other funds;
(vii) Beneficiary may impose such other conditions as are
customarily imposed by construction lenders; and
(viii) any restoration funds remaining shall be released to
Grantor so long as no Event of Default shall have occurred and be
continuing.
ix. Leases. Except as may be expressly permitted under
the Credit Agreement, Grantor shall not (i) execute an assignment or pledge of
any Lease relating to all or any portion of the Trust Property other than in
favor of Beneficiary, or (ii) without the prior written consent of Beneficiary,
execute or permit to exist any Lease of any of the Trust Property.
(ii) Grantor shall deliver to Beneficiary, within 10 days
after a request by Beneficiary, a written statement, certified by Grantor as
being true, correct and complete, containing the names of all lessees and other
occupants of the Trust Property, the terms of all Leases and the spaces
occupied and rentals payable thereunder, and a list of all Leases which are
then in default, including the nature and magnitude of the default; such
statement shall be accompanied by credit information with respect to the
lessees and such other information as Beneficiary may request.
(iii) All Leases entered into by Grantor after the date
hereof, if any, and all rights of any lessees thereunder shall be subject and
subordinate in all respects to the lien and provisions of this Deed of Trust
unless Beneficiary shall otherwise elect in writing.
(iv) In the event of the enforcement by Beneficiary of any
remedy under this Deed of Trust, the lessee under each Lease shall, if
requested by Beneficiary or any other person succeeding to the interest of
Beneficiary as a result of such enforcement, attorn to Beneficiary or to such
person and shall
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recognize Beneficiary or such successor in interest as lessor under the Lease
without change in the provisions thereof; provided however, that Beneficiary or
such successor in interest shall not be: (i) bound by any payment of an
installment of rent or additional rent which may have been made more than 30
days before the due date of such installment; (ii) bound by any amendment or
modification to the Lease made without the consent of Beneficiary or such
successor in interest; (iii) liable for any previous act or omission of Grantor
(or its predecessors in interest); (iv) responsible for any monies owing by
Grantor to the credit of such lessee or subject to any credits, offsets,
claims, counterclaims, demands or defenses which the lessee may have against
Grantor (or its predecessors in interest); (v) bound by any covenant to
undertake or complete any construction of the Premises or any portion thereof;
or (vi) obligated to make any payment to such lessee other than any security
deposit actually delivered to Beneficiary or such successor in interest. Each
lessee or other occupant, upon request by Beneficiary or such successor in
interest, shall execute and deliver an instrument or instruments confirming
such attornment. In addition, Grantor agrees that each Lease entered into
after the date of this Deed of Trust shall include language to the effect of
subsections (c) and (d) of this Section; provided that the provisions of such
subsections shall be self-operative and any failure of any Lease to include
such language shall not impair the binding effect of such provisions on any
lessee under such Lease.
x. Further Assurances/Estoppel Certificates. To further
assure Beneficiary's and Trustee's rights under this Deed of Trust, Grantor
agrees upon demand of Beneficiary or Trustee to do any act or execute any
additional documents (including, but not limited to, security agreements on any
personalty included or to be included in the Trust Property and a separate
assignment of each Lease in recordable form) as may be reasonably required by
Beneficiary or Trustee to confirm the rights or benefits conferred on
Beneficiary or Trustee by this Deed of Trust. Grantor, within 5 business days
after request, shall deliver, in form and substance satisfactory to
Beneficiary, a written statement, duly acknowledged, setting forth the amount
of the Indebtedness, and whether any offsets, claims, counterclaims or defenses
exist against the Indebtedness and certifying as to such other matters as
Beneficiary shall reasonably request.
xi. Beneficiary's Right to Perform. If Grantor fails to
perform any of the covenants or agreements of Grantor, Beneficiary or Trustee,
without waiving or releasing Grantor from any obligation or default under this
Deed of Trust, may, at any time (but shall be under no obligation to) pay or
perform the same after five (5) days' notice to Grantor, and the amount or cost
thereof, with interest at the Default Rate, shall immediately be due from
Grantor to Beneficiary or Trustee (as the case may be) and the same shall be
secured by this Deed of Trust and shall be an encumbrance on the Trust Property
prior to any right, title to, interest in or claim upon the Trust Property
attaching subsequent to the date of this Deed of Trust. No payment or advance
of money by Beneficiary or Trustee under this Section shall be deemed or
construed to cure Grantor's default or waive any right or remedy of Beneficiary
or Trustee.
xii. Grantor's Existence, etc. Grantor shall do all
things necessary to preserve and keep in full force and effect its existence,
franchises, rights and privileges under the laws of the state in which it was
formed and its right to own property and transact business in the State of
Texas. Grantor represents and warrants that Grantor is a duly organized and
validly existing corporation in good standing, and this Deed of Trust has been
executed by a duly authorized officer thereof. This Deed of Trust constitutes
the legal, valid and binding obligation of Grantor, enforceable against Grantor
in accordance with its terms,
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except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally.
xiii. Events of Default. The occurrence of any one or more
of the following events shall constitute an Event of Default hereunder:
(i) an Event of Default under the Credit Agreement; or
(ii) a failure to make payment of any other sums required
to be paid hereunder or under the Loan Documents (including, without
limitation, any Imposition) within the period required by specific
provision of this Deed of Trust or the relevant Loan Document or, if
no such period is so provided, by no later than three days after
written notice from Beneficiary; or
(iii) a failure (i) to keep in force the insurance required
by this Deed of Trust; or (ii) to comply with and conform to all
provisions and requirements of the insurance policies and the insurers
thereunder which affects Grantor's ability (A) to keep in force the
insurance required by this Deed of Trust or (B) to collect any
proceeds therefrom unless, provided that Grantor shall have given
Beneficiary prompt notice of such failure, Beneficiary shall
reasonably determine the aggregate amount of proceeds which would have
been collectable but for any such failure to be less than
$10,000,000.00; or (iii) to comply with any other material provisions
of this Deed of Trust regarding insurance; or
(iv) except for the lien of this Deed of Trust and the
Permitted Exceptions, if Grantor shall further mortgage, or otherwise
encumber the Trust Property or create or suffer to exist any lien,
charge or encumbrance on the Trust Property, or any part thereof,
whether superior or subordinate to the lien of this Deed of Trust and
whether recourse or non-recourse, except as may be expressly permitted
under the Credit Agreement; or
(v) except as may be expressly permitted under the Credit
Agreement, if Grantor shall sell, transfer, convey or assign all or
any portion of, or any interest in, the Trust Property.
xiv. Remedies. Upon the occurrence of any Event of
Default, in addition to any other rights and remedies Beneficiary may have
pursuant to the Loan Documents, or as provided by law, and without limitation:
(a) (1) if such event is an Event of Default specified in
clause (i) or (ii) of paragraph (f) of the Section of the Credit Agreement
entitled "Events of Default", automatically the Indebtedness (together with
accrued interest thereon) and all other amounts payable under the Notes, this
Deed of Trust and the other Security Documents immediately shall become due and
payable, and (2) if such event is any other Event of Default, by notice to
Grantor, Beneficiary may declare the Indebtedness (together with accrued
interest thereon) and all other amounts payable under the Notes, this Deed of
Trust and the other Security Documents to be immediately due and payable.
Except as expressly provided above in this Section, notice of intention to
accelerate, notice of acceleration, presentment, demand, protest and all other
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notices of any kind are hereby expressly waived. In addition, upon the
occurrence of any Event of Default, Beneficiary may immediately take such
action, without notice or demand, as it deems advisable to protect and enforce
its rights against Grantor and in and to the Trust Property, including, but not
limited to, the following actions, each of which may be pursued concurrently or
otherwise, at such time and in such manner as Beneficiary may determine, in its
sole discretion, without impairing or otherwise affecting the other rights and
remedies of Beneficiary:
(i) Beneficiary may direct Trustee to sell or offer for
sale the Trust Property in such portions, order and parcels as
Beneficiary may determine, with or without having first taken
possession of the same, to the highest bidder for cash at public
auction. Such sale shall be made at the courthouse of the County
wherein the Real Estate (or any of that portion thereof to be sold) is
situated (whether the parts or parcels thereof, if any, in different
counties are contiguous or not, and without the necessity of having
any personal property hereby mortgaged present at such sale) on the
first Tuesday of any month between the hours of 10:00 a.m. and 4:00
p.m. after posting a written or printed notice or notices of the
place, time and terms of the sale of the Trust Property for twenty-one
(21) days prior to the date of the sale at the courthouse door of the
county in which the sale is to be made and at the courthouse door of
any other county in which a portion of the Trust Property may be
situated and filing a copy of such notice(s) in the office of the
county clerk in each of such counties, and by serving written notice
of the proposed sale at least twenty-one (21) days preceding the date
of sale by certified mail on Grantor and on each debtor obligated to
pay the Indebtedness according to the records of the Beneficiary. It
is agreed that the posting and transmittal of notices may be performed
by the Trustee, Beneficiary, or by any person acting for them.
Applicable notices and the sale shall be accomplished by following the
procedures permitted or required by Tex. Prop. Code Ann. 51.002
(Vernon 1984), as same may be amended from time to time, relating to
the sale of real estate and/or by Chapter 9 of the Texas Uniform
Commercial Code relating to the sale of personal property collateral
after default by a debtor (as said Section and Chapter may now exist
or may hereafter be amended or succeeded), or by any other present or
subsequent articles or enactments relating to the same. Nothing
contained in this subsection (i) shall be construed to limit in any
way Trustee's rights to sell the Trust Property by private sale if,
and to the extent, that such private sale is permitted under the laws
of the State of Texas or by public or private sale after entry of
judgment by any court of competent jurisdiction ordering the same. At
any such sale (i) whether made under power herein contained, the
aforesaid 51.002, the Texas Uniform Commercial Code, any other legal
requirement or by virtue of any judicial procedure or any other legal
right, remedy or recourse, it shall not be necessary for Trustee to
have physically present, or to have constructive possession of, the
Trust Property (Grantor hereby covenanting and agreeing to deliver to
Trustee any portion of the Trust Property not actually or
constructively possessed by Trustee immediately upon demand by
Trustee), and the title to and right of possession of any such
property shall pass to the purchaser thereof as completely as if the
same had been actually present and delivered to purchaser at such
sale, (ii) each instrument of conveyance executed by Trustee shall
contain a special warranty of title, subject to Permitted
Encumbrances, binding upon Grantor, (iii) each and every recital
contained in any instrument of conveyance made by Trustee shall be
prima facie proof of the truth and accuracy of the matters recited
therein, including, without limitation, nonpayment of the
Indebtedness, advertisement and
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conduct of such sale in the manner provided herein and otherwise by
law and appointment of any successor Trustee hereunder, (iv) there
shall be a prima facie presumption that any and all prerequisites to
the validity thereof shall have been performed, (v) the receipt of
Trustee or of such other party or officer making the sale shall be a
sufficient discharge to the purchaser or purchasers for his or their
purchase money and no such purchaser or purchasers, or his or their
assigns or personal representatives, shall thereafter be obligated to
see to the application of such purchase money or be in any way
answerable for any loss, misapplication or nonapplication thereof,
(vi) to the fullest extent permitted by law, Grantor shall be
completely and irrevocably divested of all of its right, title,
interest, claim and demand whatsoever, either at law or in equity, in
and to the property sold and such sale shall be a perpetual bar, both
at law and in equity, against Grantor, and against any and all other
persons claiming or to claim the property sold or any part thereof,
by, through or under Grantor, and (vii) to the extent and under such
circumstances as are permitted by law, Beneficiary may be a purchaser
at any such sale;
(ii) Beneficiary may, to the extent permitted by
applicable law, (A) institute and maintain an action of judicial
foreclosure against all or any part of the Trust Property, (B)
institute and maintain an action on the Notes, or (C) take such other
action at law or in equity for the enforcement of this Deed of Trust
or any of the Loan Documents as the law may allow. Beneficiary may
proceed in any such action to final judgment and execution thereon for
all sums due hereunder, together with interest thereon at the Default
Rate and all costs of suit, including, without limitation, reasonable
attorneys' fees and disbursements. Interest at the Default Rate shall
be due on any judgment obtained by Beneficiary from the date of
judgment until actual payment is made of the full amount of the
judgment.
(iii) Beneficiary may personally, or by its agents,
attorneys and employees and without regard to the adequacy or
inadequacy of the Trust Property or any other collateral as security
for the Indebtedness and Obligations enter into and upon the Trust
Property and each and every part thereof and exclude Grantor and its
agents and employees therefrom without liability for trespass, damage
or otherwise (Grantor hereby agreeing to surrender possession of the
Trust Property to Beneficiary upon demand at any such time) and use,
operate, manage, maintain and control the Trust Property and every
part thereof. Following such entry and taking of possession,
Beneficiary shall be entitled, without limitation, (x) to lease all or
any part or parts of the Trust Property for such periods of time and
upon such conditions as Beneficiary may, in its discretion, deem
proper, (y) to enforce, cancel or modify any Lease and (z) generally
to execute, do and perform any other act, deed, matter or thing
concerning the Trust Property as Beneficiary shall deem appropriate as
fully as Grantor might do.
(b) Beneficiary, in any action to foreclose this Deed of
Trust in a judicial procedure or in connection with the exercise of any
non-judicial power of sale by Trustee, shall be entitled to the appointment of
a receiver. In case of a trustee's sale or foreclosure sale, the Real Estate
may be sold, at Beneficiary's election, in one parcel or in more than one
parcel and Beneficiary is specifically empowered (without being required to do
so, and in its sole and absolute discretion) to cause successive sales of
portions of the Trust Property to be held.
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18
(c) In the event of any breach of any of the covenants,
agreements, terms or conditions contained in this Deed of Trust, and
notwithstanding to the contrary any exculpatory or non-recourse language which
may be contained herein, Beneficiary or Trustee shall be entitled to enjoin
such breach and obtain specific performance of any covenant, agreement, term or
condition and Beneficiary and Trustee shall have the right to invoke any
equitable right or remedy as though other remedies were not provided for in
this Deed of Trust.
(d) Following any sale of the Trust Property, or any part
hereof, under the provisions of this instrument, all persons and parties in
possession of the property sold shall be divested of any and all interest in
and claim to the Trust Property, and shall be obligated to immediately vacate
the premises, and prior to such vacation shall be tenants at sufferance of the
purchaser of the property sold and shall be subject to eviction in an action of
forcible detainer; provided, the provisions of this subparagraph shall be
subject to any agreements made in writing by Beneficiary with reference to any
existing and/or future leases; provided, further, the purchaser at any
foreclosure sale shall have the option but not the obligation to affirm any
then existing leases or tenancies or otherwise succeed to the rights of Grantor
thereunder.
xv. Right of Beneficiary to Credit Sale. Upon the
occurrence of any sale made under this Deed of Trust, whether made under the
power of sale or by virtue of judicial proceedings or of a judgment or decree
of foreclosure and sale, Beneficiary may bid for and acquire the Trust Property
or any part thereof. In lieu of paying cash therefor, Beneficiary may make
settlement for the purchase price by crediting upon the Indebtedness or other
sums secured by this Deed of Trust the net sales price after deducting
therefrom the expenses of sale and the cost of the action and any other sums
which Beneficiary is authorized to deduct under this Deed of Trust. In such
event, this Deed of Trust, the Notes and documents evidencing expenditures
secured hereby may be presented to the person or persons conducting the sale in
order that the amount so used or applied may be credited upon the Indebtedness
as having been paid.
xvi. Appointment of Receiver. If an Event of Default
shall have occurred and be continuing, Beneficiary as a matter of right and
without notice to Grantor, unless otherwise required by applicable law, and
without regard to the adequacy or inadequacy of the Trust Property or any other
collateral as security for the Indebtedness and Obligations or the interest of
Grantor therein, shall have the right to apply to any court having jurisdiction
to appoint a receiver or receivers or other manager of the Trust Property, and
Grantor hereby irrevocably consents to such appointment and waives notice of
any application therefor (except as may be required by law). Any such receiver
or receivers shall have all the usual powers and duties of receivers in like or
similar cases and all the powers and duties of Beneficiary in case of entry as
provided in this Deed of Trust, including, without limitation and to the extent
permitted by law, the right to enter into leases of all or any part of the
Trust Property, and shall continue as such and exercise all such powers until
the date of confirmation of sale of the Trust Property unless such receivership
is sooner terminated.
xvii. Extension, Release, etc. (a) Without affecting the
encumbrance or charge of this Deed of Trust upon any portion of the Trust
Property not then or theretofore released as security for the full amount of
the Indebtedness, Beneficiary may, from time to time and without notice, agree
to (i) release
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19
any person liable for the Indebtedness, (ii) extend the maturity or alter any
of the terms of the Indebtedness or any guaranty thereof, (iii) grant other
indulgences, (iv) release or reconvey, or cause to be released or reconveyed at
any time at Beneficiary's option any parcel, portion or all of the Trust
Property, (v) take or release any other or additional security for any
obligation herein mentioned, or (vi) make compositions or other arrangements
with debtors in relation thereto. If at any time this Deed of Trust shall
secure less than all of the principal amount of the Indebtedness, it is
expressly agreed that any repayments of the principal amount of the
Indebtedness shall not reduce the amount of the encumbrance of this Deed of
Trust until the encumbrance amount shall equal the principal amount of the
Indebtedness outstanding.
(b) No recovery of any judgment by Beneficiary and no
levy of an execution under any judgment upon the Trust Property or upon any
other property of Grantor shall affect the encumbrance of this Deed of Trust or
any liens, rights, powers or remedies of Beneficiary or Trustee hereunder, and
such liens, rights, powers and remedies shall continue unimpaired.
(c) If Beneficiary shall have the right to foreclose this
Deed of Trust or to direct the Trustee to exercise its power of sale, Grantor
authorizes Beneficiary at its option to foreclose the lien of this Deed of
Trust (or direct the Trustee to sell the Trust Property, as the case may be)
subject to the rights of any tenants of the Trust Property. The failure to
make any such tenants parties defendant to any such foreclosure proceeding and
to foreclose their rights, or to provide notice to such tenants as required in
any statutory procedure governing a sale of the Trust Property by Trustee, or
to terminate such tenant's rights in such sale will not be asserted by Grantor
as a defense to any proceeding instituted by Beneficiary to collect the
Indebtedness or to foreclose this Deed of Trust.
(d) Unless expressly provided otherwise, in the event
that Beneficiary's interest in this Deed of Trust and title to the Trust
Property or any estate therein shall become vested in the same person or
entity, this Deed of Trust shall not merge in such title but shall continue as
a valid charge on the Trust Property for the amount secured hereby.
xvii. Security Agreement under Uniform Commercial Code.
(a) It is the intention of the parties hereto that this Deed of Trust shall
constitute a Security Agreement within the meaning of the Uniform Commercial
Code (the "CODE") of the State of Texas. If an Event of Default shall occur
under this Deed of Trust, then in addition to having any other right or remedy
available at law or in equity, Beneficiary shall have the option of either (i)
proceeding under the Code and exercising such rights and remedies as may be
provided to a secured party by the Code with respect to all or any portion of
the Trust Property which is personal property (including, without limitation,
taking possession of and selling such property) or (ii) treating such property
as real property and proceeding with respect to both the real and personal
property constituting the Trust Property in accordance with Beneficiary's
rights, powers and remedies with respect to the real property (in which event
the default provisions of the Code shall not apply). If Beneficiary shall
elect to proceed under the Code, then five days' notice of sale of the personal
property shall be deemed reasonable notice and the reasonable expenses of
retaking, holding, preparing for sale, selling and the like incurred by
Beneficiary shall include, but not be limited to, attorneys' fees and legal
expenses. At Beneficiary's request, Grantor shall assemble the personal
property and make it available to Beneficiary at a place designated by
Beneficiary which is reasonably convenient to both parties.
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20
(b) Grantor and Beneficiary agree, to the extent permitted by
law, that: (i) all of the goods described within the definition of the word
"Equipment" are or are to become fixtures on the Real Estate; (ii) this Deed of
Trust upon recording or registration in the real estate records of the proper
office shall constitute a financing statement filed as a "fixture filing"
within the meaning of Sections 9-313 and 9-402 of the Code; (iii) Grantor is
the record owner of the Real Estate; and (iv) the addresses of Grantor and
Beneficiary are as set forth on the first page of this Deed of Trust.
(c) Grantor, upon request by Beneficiary from time to time,
shall execute, acknowledge and deliver to Beneficiary one or more separate
security agreements, in form satisfactory to Beneficiary, covering all or any
part of the Trust Property and will further execute, acknowledge and deliver,
or cause to be executed, acknowledged and delivered, any financing statement,
affidavit, continuation statement or certificate or other document as
Beneficiary may request in order to perfect, preserve, maintain, continue or
extend the security interest under and the priority of this Deed of Trust and
such security instrument. Grantor further agrees to pay to Beneficiary on
demand all costs and expenses incurred by Beneficiary in connection with the
preparation, execution, recording, filing and re-filing of any such document
and all reasonable costs and expenses of any record searches for financing
statements Beneficiary shall reasonably require. Grantor shall from time to
time, on request of Beneficiary, deliver to Beneficiary an inventory in
reasonable detail of any of the Trust Property which constitutes personal
property. If Grantor shall fail to furnish any financing or continuation
statement within 10 days after request by Beneficiary, then pursuant to the
provisions of the Code, Grantor hereby authorizes Beneficiary, without the
signature of Grantor, and hereby irrevocably appoints and constitutes
Beneficiary as its true and lawful attorney-in-fact, which appointment is
coupled with an interest, in its name, place and stead to execute and file any
such financing and continuation statements. The filing of any financing or
continuation statements in the records relating to personal property or
chattels shall not be construed as in any way impairing the right of
Beneficiary to proceed against any personal property encumbered by this Deed of
Trust as real property, as set forth above.
xix. Assignment of Rents. (a) Grantor hereby assigns to
Beneficiary, the Rents as further security for the payment of the Indebtedness
and performance of the Obligations, and Grantor grants to Beneficiary the right
to enter the Trust Property for the purpose of collecting the same and to let
the Trust Property or any part thereof, and to apply the Rents on account of
the Indebtedness. The foregoing assignment and grant is present and absolute
and shall continue in effect until the Indebtedness is paid in full, but
Beneficiary and Trustee hereby waive the right to enter the Trust Property for
the purpose of collecting the Rents and Grantor shall be entitled to collect,
receive, use and retain the Rents until the occurrence of an Event of Default
under this Deed of Trust; such right of Grantor to collect, receive, use and
retain the Rents may be revoked by Beneficiary upon the occurrence of any Event
of Default under this Deed of Trust by giving not less than five days' written
notice of such revocation to Grantor; in the event such notice is given,
Grantor shall pay over to Beneficiary, or to any receiver appointed to collect
the Rents, any lease security deposits, and shall pay monthly in advance to
Beneficiary, or to any such receiver, the fair and reasonable rental value as
determined by Beneficiary for the use and occupancy of the Trust Property or of
such part thereof as may be in the possession of Grantor or any affiliate of
Grantor, and upon default in any such payment Grantor and any such affiliate
will vacate and surrender the possession of the Trust Property to Beneficiary
or to such receiver, and in default thereof may be
<PAGE> 175
21
evicted by summary proceedings or otherwise. Grantor shall not accept
prepayments of installments of Rent to become due for a period of more than one
month in advance (except for security deposits and estimated payments of
percentage rent, if any).
(b) Beneficiary's acceptance of this assignment shall
not, prior to entry upon and taking possession of the Trust Property by
Beneficiary, be deemed to constitute Beneficiary a "mortgagee in possession",
nor obligate Beneficiary to appear in or defend any proceeding relating to any
of the Leases or to the Trust Property, take any action hereunder, expend any
money, incur any expenses, or perform any obligation or liability under the
Leases, or assume any obligation for any deposits delivered to Grantor by any
tenant and not delivered to Beneficiary, or render Beneficiary liable for any
injury or damage to person or property in or about the Trust Property. Neither
the collection of Rents due under the Leases herein described, nor possession
of the Trust Property by Beneficiary under any of the circumstances set forth
herein shall render Beneficiary liable with respect to any obligations of
Grantor to any tenant or subtenant under said Leases, such liability to arise
only with respect to a party purchasing the Trust Property at a foreclosure
sale or receiving a deed covering the Trust Property in lieu of foreclosure and
then to arise only with respect to obligations accruing subsequent to such
foreclosure sale or deed in lieu thereof.
(c) By Beneficiary's acceptance of this Deed of Trust, it
is understood and agreed that a full and complete release of this Deed of Trust
shall operate as a full and complete reassignment to Grantor of the
Beneficiary's rights and interests under this Section.
(d) All provisions hereof shall inure to the benefit of
and all actions authorized hereunder shall be exercisable by the Trustee or the
Substitute Trustee at Beneficiary's request.
xx. Trust Funds. All lease security deposits of the Real
Estate shall be treated as trust funds not to be commingled with any other
funds of Grantor. Within 10 days after request by Beneficiary, Grantor shall
furnish Beneficiary satisfactory evidence of compliance with this subsection,
together with a statement of all lease security deposits by lessees and copies
of all Leases not previously delivered to Beneficiary, which statement shall be
certified by Grantor.
xxi. Additional Rights. The holder of any subordinate
lien or subordinate deed of trust on the Trust Property shall have no right to
terminate any Lease whether or not such Lease is subordinate to this Deed of
Trust nor shall any holder of any subordinate lien or subordinate deed of trust
join any tenant under any Lease in any trustee's sale or action to foreclose
the lien or modify, interfere with, disturb or terminate the rights of any
tenant under any Lease. By recordation of this Deed of Trust all subordinate
lienholders and the trustees and beneficiaries under subordinate deeds of trust
are subject to and notified of this provision, and any action taken by any such
lienholder or trustee or beneficiary contrary to this provision shall be null
and void. Upon the occurrence of any Event of Default, Beneficiary may, in its
sole discretion and without regard to the adequacy of its security under this
Deed of Trust, apply all or any part of any amounts on deposit with Beneficiary
under this Deed of Trust against all or any part of the Indebtedness. Any such
application shall not be construed to cure or waive any Default or Event of
Default or invalidate any act taken by Beneficiary on account of such Default
or Event of Default.
<PAGE> 176
22
xxii. Changes in Method of Taxation. In the event of the
passage after the date hereof of any law of any Governmental Authority
deducting from the value of the Premises for the purposes of taxation any lien
or deed of trust thereon, or changing in any way the laws for the taxation of
mortgages or deeds of trust or debts secured thereby for federal, state or
local purposes, or the manner of collection of any such taxes, and imposing a
tax, either directly or indirectly, on mortgages or deeds of trust or debts
secured thereby, the holder of this Deed of Trust shall have the right to
declare the Indebtedness due on a date to be specified by not less than 30
days' written notice to be given to Grantor unless within such 30-day period
Grantor shall assume as an Obligation hereunder the payment of any tax so
imposed until full payment of the Indebtedness and such assumption shall be
permitted by law.
xxiii. Notices. All notices, requests, demands and other
communications hereunder shall be given in the manner set forth in the Credit
Agreement, addressed to Grantor at the address given on the first page of this
Deed of Trust, to Beneficiary at the address given on the first page of this
Deed of Trust and to Trustee at the address given on the first page of this
Deed of Trust. Any party may change its address by notice to the other party.
If any party other than Grantor shall be entitled to receive copies of notices,
demands or approvals, failure of Beneficiary or Trustee to send such copies
shall not impair the effectiveness of any notice sent to Grantor.
xxiv. No Oral Modification. This Deed of Trust may not be
changed or terminated orally. Any agreement made by Grantor and Beneficiary
after the date of this Deed of Trust relating to this Deed of Trust shall be
superior to the rights of the holder of any intervening or subordinate deed of
trust, lien or encumbrance. Trustee's execution of any written agreement
between Grantor and Beneficiary shall not be required for the effectiveness
thereof as between Grantor and Beneficiary.
xxv. Partial Invalidity. In the event any one or more of
the provisions contained in this Deed of Trust shall for any reason be held to
be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision hereof, but
each shall be construed as if such invalid, illegal or unenforceable provision
had never been included. Notwithstanding to the contrary anything contained in
this Deed of Trust or in any provisions of the Indebtedness or Loan Documents,
the obligations of Grantor and of any other obligor under the Indebtedness or
Loan Documents shall be subject to the limitation that Beneficiary shall not
charge, take or receive, nor shall Grantor or any other obligor be obligated to
pay to Beneficiary, any amounts constituting interest in excess of the maximum
rate permitted by law to be charged by Beneficiary.
xxvi. Grantor's Waiver of Rights. To the fullest extent
permitted by law, Grantor waives the benefit of all laws now existing or that
may subsequently be enacted providing for (i) any appraisement before sale of
any portion of the Trust Property, (ii) any extension of the time for the
enforcement of the collection of the Indebtedness or the creation or extension
of a period of redemption from any sale made in collecting such debt and (iii)
exemption of the Trust Property from attachment, levy or sale under execution
or exemption from civil process. To the full extent Grantor may do so, Grantor
agrees that Grantor will not at any time insist upon, plead, claim or take the
benefit or advantage of any law now or hereafter in force providing for any
appraisement, valuation, stay, exemption, extension or redemption, or requiring
foreclosure of this Deed of Trust before exercising any other remedy granted
hereunder and
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23
Grantor, for Grantor and its successors and assigns, and for any and all
persons ever claiming any interest in the Trust Property, to the extent
permitted by law, hereby waives and releases all rights of redemption,
valuation, appraisement, stay of execution, notice of election to mature or
declare due the whole of the secured indebtedness and marshalling in the event
of exercise by Trustee or Beneficiary of the power of sale or other rights
hereby created.
xxvii. Remedies Not Exclusive. Beneficiary and Trustee
shall be entitled to enforce payment of the Indebtedness and performance of the
Obligations and to exercise all rights and powers under this Deed of Trust or
under any of the other Loan Documents or other agreement or any laws now or
hereafter in force, notwithstanding some or all of the Indebtedness and
Obligations may now or hereafter be otherwise secured, whether by deed of
trust, mortgage, security agreement, pledge, lien, assignment or otherwise.
Neither the acceptance of this Deed of Trust nor its enforcement, shall
prejudice or in any manner affect Beneficiary's or Trustee's right to realize
upon or enforce any other security now or hereafter held by Beneficiary or
Trustee, it being agreed that Beneficiary and Trustee shall be entitled to
enforce this Deed of Trust and any other security now or hereafter held by
Beneficiary or Trustee in such order and manner as Beneficiary may determine in
its absolute discretion. No remedy herein conferred upon or reserved to
Trustee or Beneficiary is intended to be exclusive of any other remedy herein
or by law provided or permitted, but each shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing at
law or in equity or by statute. Every power or remedy given by any of the Loan
Documents to Beneficiary or Trustee or to which either may otherwise be
entitled, may be exercised, concurrently or independently, from time to time
and as often as may be deemed expedient by Beneficiary or Trustee, as the case
may be. In no event shall Beneficiary or Trustee, in the exercise of the
remedies provided in this Deed of Trust (including, without limitation, in
connection with the assignment of Rents, or the appointment of a receiver and
the entry of such receiver on to all or any part of the Trust Property), be
deemed a "mortgagee in possession," and neither Beneficiary nor Trustee shall
in any way be made liable for any act, either of commission or omission, in
connection with the exercise of such remedies.
xxviii. Multiple Security. If (a) the Premises shall consist
of one or more parcels, whether or not contiguous and whether or not located in
the same county, or (b) in addition to this Deed of Trust, Beneficiary shall
now or hereafter hold or be the beneficiary of one or more additional
mortgages, liens, deeds of trust or other security (directly or indirectly) for
the Indebtedness upon other property in the State of Texas (whether or not such
property is owned by Grantor or by others) or (c) both the circumstances
described in clauses (a) and (b) shall be true, then to the fullest extent
permitted by law, Beneficiary may, at its election, commence or consolidate in
a single trustee's sale or foreclosure action all trustee's sale or foreclosure
proceedings against all such collateral securing the Indebtedness (including
the Trust Property), which action may be brought or consolidated in the courts
of, or sale conducted in, any county in which any of such collateral is
located. Grantor acknowledges that the right to maintain a consolidated
trustee's sale or foreclosure action is a specific inducement to Beneficiary to
extend the Indebtedness, and Grantor expressly and irrevocably waives any
objections to the commencement or consolidation of the foreclosure proceedings
in a single action and any objections to the laying of venue or based on the
grounds of forum non conveniens which it may now or hereafter have. Grantor
further agrees that if Trustee or Beneficiary shall be prosecuting one or more
foreclosure or other proceedings against a portion of the Trust Property
<PAGE> 178
24
or against any collateral other than the Trust Property, which collateral
directly or indirectly secures the Indebtedness, or if Beneficiary shall have
obtained a judgment of foreclosure and sale or similar judgment against such
collateral (or, in the case of a trustee's sale, shall have met the statutory
requirements therefor with respect to such collateral), then, whether or not
such proceedings are being maintained or judgments were obtained in or outside
the State in which the Premises are located, Beneficiary may commence or
continue any trustee's sale or foreclosure proceedings and exercise its other
remedies granted in this Deed of Trust against all or any part of the Trust
Property and Grantor waives any objections to the commencement or continuation
of a foreclosure of this Deed of Trust or exercise of any other remedies
hereunder based on such other proceedings or judgments, and waives any right to
seek to dismiss, stay, remove, transfer or consolidate either any action under
this Deed of Trust or such other proceedings on such basis. The commencement
or continuation of proceedings to sell the Trust Property in a trustee's sale,
to foreclose this Deed of Trust or the exercise of any other rights hereunder
or the recovery of any judgment by Beneficiary or the occurrence of any sale by
the Trustee in any such proceedings shall not prejudice, limit or preclude
Beneficiary's right to commence or continue one or more trustee's sales,
foreclosure or other proceedings or obtain a judgment against (or, in the case
of a trustee's sale, to meet the statutory requirements for, any such sale of)
any other collateral (either in or outside the State in which the Real Estate
is located) which directly or indirectly secures the Indebtedness, and Grantor
expressly waives any objections to the commencement of, continuation of, or
entry of a judgment in such other sales or proceedings or exercise of any
remedies in such sales or proceedings based upon any action or judgment
connected to this Deed of Trust, and Grantor also waives any right to seek to
dismiss, stay, remove, transfer or consolidate either such other sales or
proceedings or any sale or action under this Deed of Trust on such basis. It
is expressly understood and agreed that to the fullest extent permitted by law,
Beneficiary may, at its election, cause the sale of all collateral which is the
subject of a single trustee's sale or foreclosure action at either a single
sale or at multiple sales conducted simultaneously and take such other measures
as are appropriate in order to effect the agreement of the parties to dispose
of and administer all collateral securing the Indebtedness (directly or
indirectly) in the most economical and least time-consuming manner.
xxix. Expenses; Indemnification. If (i) any sale (or any
prerequisite to a sale), action or proceeding shall be commenced by Beneficiary
or Trustee (including but not limited to any sale of the Trust Property, or any
action to foreclose this Deed of Trust or to collect the Indebtedness), or any
action or proceeding is commenced to which Beneficiary or Trustee is made a
party, or in which it becomes necessary to defend or uphold the rights granted
by this Deed of Trust (including, without limitation, any proceeding or other
action relating to the bankruptcy, insolvency or reorganization of any obligor
with respect to any Guarantee Obligation), or in which Beneficiary or Trustee
is served with any legal process, discovery notice or subpoena and (ii) in each
of the foregoing instances such action or proceeding in any manner relates to
or arises out of this Deed of Trust or Beneficiary's lending to Grantor or
acceptance of a guaranty from any guarantor of the Indebtedness or of any of
the Obligations or any of the transactions contemplated by this Deed of Trust,
then Grantor will immediately reimburse or pay to Beneficiary and Trustee all
of the expenses which have been or may be incurred by Beneficiary and Trustee,
respectively, with respect to the foregoing (including reasonable counsel fees
and disbursements), together with interest thereon at the Default Rate, and any
such sum and the interest thereon shall be included in the Indebtedness and
have the full benefit of this Deed of Trust, prior to any right, or title to,
interest in or claim upon the
<PAGE> 179
25
Trust Property attaching or accruing to this Deed of Trust, and shall be deemed
to be secured by this Deed of Trust. In any action or proceeding to sell the
Trust Property, to foreclose this Deed of Trust, or to recover or collect the
Indebtedness, the provisions of law respecting the recovering of costs,
disbursements and allowances shall prevail unaffected by this covenant.
(ii) Grantor shall indemnify and hold harmless each of
Beneficiary and Trustee and each of their respective affiliates, and the
respective directors, officers, agents and employees of each of Beneficiary and
Trustee and each of their respective affiliates from and against all claims,
damages, losses and liabilities (including, without limitation, reasonable
attorneys' fees and expenses) arising out of or based upon any matter related
to this Deed of Trust, the Trust Property or the occupancy, ownership,
maintenance or management of the Trust Property by Grantor, including, without
limitation, any claims based on the alleged acts or omissions of any employee
or agent of Grantor. This indemnification shall be in addition to any other
liability which Grantor may otherwise have to Beneficiary or Trustee.
xxx. Successors and Assigns. All covenants of Grantor
contained in this Deed of Trust are imposed solely and exclusively for the
benefit of Beneficiary and Trustee and their respective successors and assigns,
and no other person or entity shall have standing to require compliance with
such covenants or be deemed, under any circumstances, to be a beneficiary of
such covenants, any or all of which may be freely waived in whole or in part by
Beneficiary or Trustee at any time if in the sole discretion of either of them
such waiver is deemed advisable. All such covenants of Grantor shall run with
the land and bind Grantor, the successors and assigns of Grantor (and each of
them) and all subsequent owners, encumbrancers and tenants of the Trust
Property, and shall inure to the benefit of Beneficiary, Trustee and their
respective successors and assigns. Without limiting the generality of the
foregoing, any successor to Trustee appointed by Beneficiary shall succeed to
all rights of Trustee as if such successor had been originally named as Trustee
hereunder. The word "Grantor" shall be construed as if it read "Grantors"
whenever the sense of this Deed of Trust so requires and if there shall be more
than one Grantor, the obligations of the Grantors shall be joint and several.
xxxi. No Waivers, etc. Any failure by Beneficiary to
insist upon the strict performance by Grantor of any of the terms and
provisions of this Deed of Trust shall not be deemed to be a waiver of any of
the terms and provisions hereof, and Beneficiary or Trustee, notwithstanding
any such failure, shall have the right thereafter to insist upon the strict
performance by Grantor of any and all of the terms and provisions of this Deed
of Trust to be performed by Grantor. Beneficiary may release, regardless of
consideration and without the necessity for any notice to or consent by the
beneficiary of any subordinate deed of trust or the holder of any subordinate
lien on the Trust Property, any part of the security held for the obligations
secured by this Deed of Trust without, as to the remainder of the security, in
any way impairing or affecting this Deed of Trust or the priority of this Deed
of Trust over any subordinate lien or deed of trust.
xxxii. GOVERNING LAW, ETC. THE PROVISIONS OF THIS DEED OF
TRUST WITH RESPECT TO THE CREATION, PERFECTION, PRIORITY, ENFORCEABILITY OF THE
LIENS AND SECURITY INTERESTS OF THIS DEED OF TRUST SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCEPT
<PAGE> 180
26
THAT GRANTOR EXPRESSLY ACKNOWLEDGES THAT BY THEIR RESPECTIVE TERMS EACH OF THE
NOTES AND THE CREDIT AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICT OF LAW, AND FOR PURPOSES OF CONSISTENCY, GRANTOR AGREES THAT IN ANY IN
PERSONAM PROCEEDING RELATED TO THIS DEED OF TRUST THE RIGHTS OF THE PARTIES TO
THIS DEED OF TRUST SHALL ALSO BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK GOVERNING CONTRACTS MADE AND TO BE PERFORMED
IN THAT STATE, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAW.
xxxiii. Waiver of Trial by Jury. Grantor, Trustee and
Beneficiary each hereby irrevocably and unconditionally waive trial by jury in
any action, claim, suit or proceeding relating to this Deed of Trust and for
any counterclaim brought therein. Grantor hereby waives all rights to
interpose any counterclaim in any suit brought by Beneficiary or Trustee
hereunder and all rights to have any such suit consolidated with any separate
suit, action or proceeding.
xxxiv. Certain Definitions. Unless the context clearly
indicates a contrary intent or unless otherwise specifically provided herein,
words used in this Deed of Trust shall be used interchangeably in singular or
plural form and the word "Grantor" shall mean "each Grantor or any subsequent
owner or owners of the Trust Property or any part thereof or interest therein,"
the word "Beneficiary" shall mean "Beneficiary or any subsequent holder of the
Notes," the word "Trustee" shall mean "Trustee and any successor trustee
hereunder," the word "Notes" shall mean "the Notes or any other evidence of
indebtedness secured by this Deed of Trust," the word "person" shall include
any individual, corporation, partnership, trust, unincorporated association,
government, governmental authority, or other entity, and the words "Trust
Property" shall include any portion of the Trust Property or interest therein.
Whenever the context may require, any pronouns used herein shall include the
corresponding masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural and vice versa. The captions in
this Deed of Trust are for convenience or reference only and in no way limit or
amplify the provisions hereof. All terms used herein which are defined in the
Texas Uniform Commercial Code shall be used in accordance with the definition
therefor in said Code.
xxxv. Enforceability; Usury. In no event shall any
provision of this Deed of Trust, the Notes, or any other instrument evidencing
or securing the Indebtedness ever obligate Grantor to pay or allow Beneficiary
to collect interest on the Notes or any other indebtedness secured hereby at a
rate greater than the maximum non-usurious rate permitted by applicable law
(herein referred to as the "HIGHEST LAWFUL RATE"), or obligate Grantor to pay
any taxes, assessments, charges, insurance premiums or other amounts to the
extent that such payments, when added to the interest payable on the Notes or
any other notes secured hereby, would be held to constitute the payment by
Grantor of interest at a rate greater than the Highest Lawful Rate; and this
provision shall control over any provision to the contrary. To the extent the
Highest Lawful Rate is determined by reference to the laws of the State of
Texas, same shall be determined by reference to the indicated (weekly) rate
ceiling (as defined and described in Texas Revised Civil Statutes Article
5069-1.04, as amended) at the applicable time in effect.
<PAGE> 181
27
Without limiting the generality of the foregoing, in the event
the maturity of all or any part of the principal amount of the Indebtedness
shall be accelerated for any reason, then such principal amount so accelerated
shall be credited with any interest theretofore paid thereon in advance and
remaining unearned at the time of such acceleration. If, pursuant to the terms
of this instrument or the Notes, any funds are applied to the payment of any
part of the principal amount of the Indebtedness prior to the maturity thereof,
then (a) any interest which would otherwise thereafter accrue on the principal
amount so paid by such application shall be canceled, and (b) the Indebtedness
remaining unpaid after such application shall be credited with the amount of
all interest, if any, theretofore collected on the principal amount so paid by
such application and remaining unearned at the date of said application; and if
the funds so applied shall be sufficient to pay in full all the Indebtedness,
then Beneficiary shall refund to Grantor all interest theretofore paid thereon
in advance and remaining unearned at the time of such acceleration. Regardless
of any other provision in this instrument, or in any of the written evidences
of the Indebtedness, Grantor shall never be required to pay any unearned
interest on the Indebtedness or any portion thereof, and shall never be
required to pay interest thereon at a rate in excess of the Highest Lawful Rate
construed by courts having competent jurisdiction thereof.
xxxvi. Homestead. Grantor represents and covenants that the
Trust Property forms no part any property owned, used or claimed by Grantor as
a business or residential homestead, or as exempt from forced sale under the
laws of the State of Texas, and disclaims and renounces all and every such
claim thereto.
xxxvii. Substitute Trustee. In case of the resignation of
the Trustee, or the inability (through death or otherwise), refusal or failure
of the Trustee to act, or at the option of Beneficiary or the holder(s) of a
majority of the Indebtedness for any other reason (which reason need not be
stated), a Substitute Trustee may be named, constituted and appointed by
Beneficiary or the holder(s) of a majority of the Indebtedness, without other
formality than an appointment and designation in writing, which appointment and
designation shall be full evidence of the right and authority to make the same
and of all facts therein recited, and this conveyance shall vest in the
Substitute Trustee the title, powers and duties herein conferred on the Trustee
originally named herein, and the conveyance of the Substitute Trustee to the
purchaser(s) at any sale of the Trust Property of any part thereof shall be
equally valid and effective. The right to appoint a Substitute Trustee shall
exist as often and whenever from any of said causes, the Trustee, original or
Substitute, resigns or cannot, will not or does not act, or Beneficiary or the
holder(s) of a majority of the Indebtedness desires to appoint a new Trustee.
No bond shall ever be required of the Trustee, original or Substitute. The
recitals in any conveyance made by the Trustee, original or Substitute, shall
be accepted and construed in court and elsewhere as prima facie evidence and
proof of the facts recited, and no other proof shall be required as to the
request by Beneficiary or the Holder(s) of a majority of the Indebtedness to
the Trustee to enforce this Deed of Trust, or as to the notice of or holding of
the sale, or as to any particulars thereof, or as to the resignation of the
Trustee, original or Substitute, or as to the inability, refusal or failure of
the Trustee, original or Substitute, to act, or as to the election of
Beneficiary or the holder(s) of a majority of the Indebtedness to appoint a new
Trustee, or as to appointment of a Substitute Trustee, and all prerequisites of
said sale shall be presumed to have been performed; and each sale made under
the powers herein granted shall be a perpetual bar against Grantor and the
heirs, personal representatives, successors and assigns of Grantor. Trustee,
original or substitute,
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28
is hereby authorized and empowered to appoint any one or more persons as
attorney-in-fact to act as Trustee under him and in his name, place and stead
in order to take any actions that Trustee is authorized and empowered to do
hereunder, such appointment to be evidenced by an instrument signed and
acknowledged by said Trustee, original or substitute; and all acts done by said
attorney-in-fact shall be valid, lawful and binding as if done by said Trustee,
original or substitute, in person.
xxxviii. INDEMNIFICATION OF TRUSTEE. EXCEPT FOR GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT, TRUSTEE SHALL NOT BE LIABLE FOR ANY ACT OR
OMISSION OR ERROR OF JUDGMENT. TRUSTEE MAY RELY ON ANY DOCUMENT BELIEVED BY
HIM IN GOOD FAITH TO BE GENUINE. ALL MONEY RECEIVED BY TRUSTEE SHALL, UNTIL
USED OR APPLIED AS HEREIN PROVIDED, BE HELD IN TRUST, AND TRUSTEE SHALL NOT BE
LIABLE FOR INTEREST THEREON. GRANTOR SHALL INDEMNIFY TRUSTEE AGAINST ALL
LIABILITY AND EXPENSES THAT HE MAY INCUR IN THE PERFORMANCE OF HIS DUTIES
HEREUNDER EXCEPT FOR GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
xxxix. Business or Commercial Purpose. Grantor warrants
that the extension of credit evidenced by the Notes secured hereby is solely
for business or commercial purposes, other than agricultural purposes. Grantor
further warrants that the credit transaction evidenced by the Notes is
specifically exempted under Section 226.3(a) of Regulation Z issued by the
Board of Governors of the Federal Reserve System and Title 12 (Truth in Lending
Act) and Section 1603 of Title 15 (General Provisions) of the Consumer Credit
Protection Act and that no disclosures are required to be given under such
regulations and federal laws in connection with the above transaction.
xl. Final Agreement. In consideration of the premises
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Grantor hereby confirms and agrees that this Deed of
Trust (including the Schedules hereto), the Notes, any guarantees of the Notes
executed by any guarantors and all other Loan Documents and loan papers
together constitute a written "loan agreement" as defined in Section 26.02(a)
of the Texas Business and Commerce Code.
xli. THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
This Deed of Trust has been duly executed by Grantor on the
date first above written.
INTERNATIONAL HOME FOODS, INC.
By:
-----------------------------------
Name:
Title:
<PAGE> 183
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of October, 1996, personally came
______________________________, to be duly sworn by me, and did depose and say
the [he] [she] executed the foregoing instrument in the firm name of
INTERNATIONAL HOME FOODS, INC., the corporation therein mentioned for the
purposes therein mentioned.
---------------------------
Notary Public
[Notarial Stamp]
<PAGE> 184
Schedule A
Description of the Premises
[Attach Legal Description of all parcels]
<PAGE> 185
EXHIBIT D-2
Pennsylvania
THIS MORTGAGE CONSTITUTES A FIXTURE FILING
UNDER THE PENNSYLVANIA UNIFORM COMMERCIAL CODE
THIS MORTGAGE SECURES FUTURE ADVANCES AND RE-ADVANCES UP
TO A MAXIMUM PRINCIPAL AMOUNT OF $770,000,000.00
AT ANY TIME OUTSTANDING PLUS ACCRUED INTEREST
AND OTHER INDEBTEDNESS AS DESCRIBED IN 42 PA.C.S.A. SECTION 8134
OPEN-END MORTGAGE, SECURITY AGREEMENT
AND ASSIGNMENT OF LEASES AND RENTS
from
AMERICAN HOME FOODS, INC., Mortgagor
to
THE CHASE MANHATTAN BANK,
as Administrative Agent, Mortgagee
DATED AS OF OCTOBER __, 1996
After recording, please return to:
Simpson Thacher & Bartlett
a partnership which includes
professional corporations
45 Lexington Avenue
New York, New York 10017
ATTN: Amy Jedlicka, Esq.
<PAGE> 186
EXHIBIT D-2
[Pennsylvania]
FORM OF GUARANTOR
OPEN-END MORTGAGE, SECURITY AGREEMENT
AND ASSIGNMENT OF LEASES AND RENTS
(THIS MORTGAGE SECURES FUTURE ADVANCES)
THIS OPEN-END MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF
LEASES AND RENTS dated as of October __, 1996 is made by AMERICAN HOME FOODS,
INC., a __________ ("MORTGAGOR"), whose address is _______________, to THE
CHASE MANHATTAN BANK, a New York banking corporation ("CHASE"), as
Administrative Agent for the Lenders (as such terms are defined in the Credit
Agreement defined below; in such capacity, "MORTGAGEE", which term shall be
deemed to include the successors and assigns of the Administrative Agent),
whose address is c/o Chase Agency Services, 140 East 45th Street, New York, New
York 10017 Attention: Sandra Miklave. References to this "MORTGAGE" shall mean
this instrument and any and all renewals, modifications, amendments,
supplements, extensions, consolidations, substitutions, spreaders and
replacements of this instrument.
Background
a. Mortgagor is the owner of the parcel(s) of real property
described on Schedule A attached (such real property, together with all of the
buildings, improvements, structures and fixtures now or subsequently located
thereon (the "IMPROVEMENTS"), being collectively referred to as the "REAL
ESTATE").
b. International Home Foods, Inc., a Delaware corporation
("BORROWER") has entered into a certain Credit Agreement dated as of even date
herewith (as the same may be amended, supplemented, restated, extended,
replaced or otherwise modified from time to time, the "CREDIT AGREEMENT") with
Morgan Stanley Senior Funding, Inc., as Documentation Agent, Bankers Trust
Company, as Syndication Agent, Chase as Administrative Agent and the several
banks and other financial institutions or entities from time to time parties
thereto (the "LENDERS"). Capitalized terms not otherwise defined herein shall
have the meanings ascribed thereto in the Credit Agreement. In the event of
any conflict between the provisions of this Mortgage and the provisions of the
Credit Agreement, the applicable provisions of the Credit Agreement shall
govern and control. References in this Mortgage to the "Default Rate" shall
mean interest at a rate per annum equal to the ABR plus 2%.
c. Pursuant to the terms of the Credit Agreement, (1) the Lenders
have agreed (a) to make certain Revolving Credit Loans to Borrower in an
aggregate principal amount at any one time outstanding not to exceed
$100,000,000.00 and (b) to make certain Term Loans defined in the Credit
Agreement as the Tranche A Term Loans, the Tranche B Term Loans and the Tranche
C Term Loans
<PAGE> 187
2
to Borrower in an aggregate principal amount not to exceed $670,000,000.00, (2)
the Swing Line Lender has agreed to make certain Swing Line Loans in an
aggregate principal amount at any one time outstanding not to exceed
$10,000,000.00, and (3) Chase, in its capacity as an Issuing Lender, has agreed
to issue, and the other Lenders which are L/C Participants have agreed to
acquire participating interests in, Letters of Credit for the account of
Borrower; the sum of (i) the aggregate then undrawn and unexpired amount of the
then outstanding Letters of Credit and (ii) the aggregate amount of drawings
under the Letters of Credit which have not been reimbursed pursuant to
subsection 3.5 of the Credit Agreement shall not exceed $25,000,000.00. The
maximum aggregate principal amount of the Loans and the L/C Obligations
outstanding at any one time shall not exceed $770,000,000.00.
d. It is a condition precedent to the effectiveness of the Credit
Agreement and the obligations of the Lenders to make their respective
extensions of credit to the Borrower thereunder that (a) Mortgagor guaranty the
obligations of [Holdings and] Borrower under the Credit Agreement and the other
Loan Documents in respect of the Loans and the Reimbursement Obligations by
executing and delivering that certain Guarantee and Collateral Agreement dated
as of even date herewith in favor of Mortgagee (as the same may be amended,
supplemented or otherwise modified from time to time, the "GUARANTEE AND
COLLATERAL AGREEMENT") and (b) Mortgagor secure its obligations under the
Guarantee and Collateral Agreement by executing and delivering this Mortgage.
Mortgagor, a subsidiary of Borrower, will receive substantial direct and
indirect benefit from the extensions of credit made to Borrower pursuant to the
Credit Agreement.
Granting Clauses
For good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Mortgagor agrees that to secure
the following (collectively, the "OBLIGATIONS"):
(i) the due and punctual payment and performance by
Mortgagor of any and all of its obligations and liabilities, whether
direct or indirect, absolute or contingent, due or to become due, or
now existing or hereafter incurred, which may arise under, out of, or
in connection with the Guarantee and Collateral Agreement;
(ii) the payment of all other obligations and liabilities
of Mortgagor, whether direct or indirect, absolute or contingent, due
or to become due, or now existing or hereafter incurred, which may
arise under, out of or in connection with the Guarantee and Collateral
Agreement, this Mortgage, any other document securing payment of the
Obligations (the "SECURITY DOCUMENTS") and any amendments,
supplements, extensions, renewals, restatements, replacements or
modifications of any of the foregoing (the Credit Agreement, the
Letters of Credit, the Interest
<PAGE> 188
3
Rate Protection Agreements, the Guarantee and Collateral Agreement,
this Mortgage and the other Security Documents and all other documents
and instruments from time to time evidencing, securing or guaranteeing
the payment and performance of the Obligations, as any of the same may
be amended, supplemented, extended, renewed, restated, replaced or
modified from time to time, are collectively referred to as the "LOAN
DOCUMENTS"), in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees, charges and
disbursements of counsel to Mortgagee or to the Lenders that are
required to be paid by Mortgagor pursuant to the terms of the Credit
Agreement, this Mortgage or any other Loan Document); and
(iii) the performance of all covenants, agreements,
obligations and liabilities of Mortgagor under or pursuant to the
provisions of the Loan Documents;
MORTGAGOR HAS GRANTED, CONVEYED, BARGAINED, SOLD, ALIENED, ENFEOFFED, RELEASED,
CONFIRMED, MORTGAGED AND WARRANTED TO MORTGAGEE A LIEN UPON AND A SECURITY
INTEREST IN, AND HEREBY GRANTS, CONVEYS, BARGAINS, SELLS, ALIENS, ENFEOFFS,
RELEASES, CONFIRMS, MORTGAGES AND WARRANTS UNTO MORTGAGEE:
(A) the Real Estate;
(B) all the estate, right, title, claim or demand
whatsoever of Mortgagor, in possession or expectancy, in and to the
Real Estate or any part thereof;
(C) all right, title and interest of Mortgagor in, to and
under all easements, rights of way, gores of land, streets, ways,
alleys, passages, sewer rights, waters, water courses, water and
riparian rights, development rights, air rights, mineral rights, oil
and gas rights and all estates, rights, titles, interests, privileges,
licenses, tenements, hereditaments and appurtenances belonging,
relating or appertaining to the Real Estate, and any reversions,
remainders, rents, issues, profits and revenue thereof and all land
lying in the bed of any street, road or avenue, in front of or
adjoining the Real Estate to the center line thereof;
(D) all of the fixtures, chattels, business machines,
machinery, apparatus, equipment, furnishings, fittings and articles of
personal property of every kind and nature whatsoever, and all
appurtenances and additions thereto and substitutions or replacements
thereof (together with, in each case, attachments, components, parts
and accessories) currently owned or subsequently acquired by Mortgagor
and now or subsequently attached to, or contained in or used or usable
in any way in connection with any operation or letting of the Real
Estate, including but without limiting the generality of the
foregoing, all screens, awnings, shades, blinds, curtains, draperies,
artwork, carpets, rugs, storm doors and windows, furniture and
furnishings, heating, electrical,
<PAGE> 189
4
and mechanical equipment, lighting, switchboards, plumbing,
ventilating, air conditioning and air-cooling apparatus,
refrigerating, and incinerating equipment, escalators, elevators,
loading and unloading equipment and systems, stoves, ranges, laundry
equipment, cleaning systems (including window cleaning apparatus),
telephones, communication systems (including satellite dishes and
antennae), televisions, computers, sprinkler systems and other fire
prevention and extinguishing apparatus and materials, security
systems, motors, engines, machinery, pipes, pumps, tanks, conduits,
appliances, fittings and fixtures of every kind and description (all
of the foregoing in this paragraph (D) being referred to as the
"EQUIPMENT");
(E) all right, title and interest of Mortgagor in and to
all substitutes and replacements of, and all additions and
improvements to, the Real Estate and the Equipment, subsequently
acquired by or released to Mortgagor or constructed, assembled or
placed by Mortgagor on the Real Estate, immediately upon such
acquisition, release, construction, assembling or placement,
including, without limitation, any and all building materials whether
stored at the Real Estate or offsite, and, in each such case, without
any further mortgage, conveyance, assignment or other act by
Mortgagor;
(F) all right, title and interest of Mortgagor in, to and
under all leases, subleases, underlettings, concession agreements,
management agreements, licenses and other agreements relating to the
use or occupancy of the Real Estate or the Equipment or any part
thereof, now existing or subsequently entered into by Mortgagor and
whether written or oral and all guarantees of any of the foregoing
(collectively, as any of the foregoing may be amended, restated,
extended, renewed or modified from time to time, the "LEASES"), and
all rights of Mortgagor in respect of cash and securities deposited
thereunder and the right to receive and collect the revenues, income,
rents, issues and profits thereof, together with all other rents,
royalties, issues, profits, revenue, income and other benefits arising
from the use and enjoyment of the Mortgaged Property (as defined
below) (collectively, the "RENTS");
(G) all trade names, trade marks, logos, copyrights, good
will and books and records relating to or used in connection with the
operation of the Real Estate or the Equipment or any part thereof; all
general intangibles related to the operation of the Improvements now
existing or hereafter arising;
(H) all unearned premiums under insurance policies now or
subsequently obtained by Mortgagor relating to the Real Estate or
Equipment and Mortgagor's interest in and to all proceeds of any such
insurance policies (including title insurance policies) including the
right to collect and receive such proceeds, subject to the provisions
relating to insurance generally set forth below; and all awards and
other compensation, including the interest payable thereon and the
right to collect and receive the same, made to the present or any
subsequent owner of the Real Estate or
<PAGE> 190
5
Equipment for the taking by eminent domain, condemnation or otherwise,
of all or any part of the Real Estate or any easement or other right
therein;
(I) all right, title and interest of Mortgagor in and to
(i) all contracts from time to time executed by Mortgagor or any
manager or agent on its behalf relating to the ownership,
construction, maintenance, repair, operation, occupancy, sale or
financing of the Real Estate or Equipment or any part thereof and all
agreements relating to the purchase or lease of any portion of the
Real Estate or any property which is adjacent or peripheral to the
Real Estate, together with the right to exercise such options and all
leases of Equipment (collectively, the "CONTRACTS"), (ii) all
consents, licenses, building permits, certificates of occupancy and
other governmental approvals relating to construction, completion,
occupancy, use or operation of the Real Estate or any part thereof
(collectively, the "PERMITS") and (iii) all drawings, plans,
specifications and similar or related items relating to the Real
Estate (collectively, the "PLANS");
(J) any and all monies now or subsequently on deposit for
the payment of real estate taxes or special assessments against the
Real Estate or for the payment of premiums on insurance policies
covering the foregoing property or otherwise on deposit with or held
by Mortgagee as provided in this Mortgage; all capital, operating,
reserve or similar accounts held by or on behalf of Mortgagor and
related to the operation of the Mortgaged Property, whether now
existing or hereafter arising and all monies held in any of the
foregoing accounts and any certificates or instruments related to or
evidencing such accounts;
(K) all accounts and revenues arising from the operation
of the Improvements including, without limitation, (i) any right to
payment now existing or hereafter arising for rental of hotel rooms or
other space or for goods sold or leased or for services rendered,
whether or not yet earned by performance, arising from the operation
of the Improvements or any other facility on the Mortgaged Property
and (ii) all rights to payment from any consumer credit-charge card
organization or entity including, without limitation, payments arising
from the use of the American Express Card, the Visa Card, the Carte
Blanche Card, the Mastercard or any other credit card, including those
now existing or hereafter created, substitutions therefor, proceeds
thereof (whether cash or non-cash, movable or immovable, tangible or
intangible) received upon the sale, exchange, transfer, collection or
other disposition or substitution thereof and any and all of the
foregoing and proceeds therefrom; and
(L) all proceeds, both cash and noncash, of the
foregoing;
(All of the foregoing property and rights and interests now
owned or held or subsequently acquired by Mortgagor and described in the
foregoing clauses (A) through (E) are collectively referred to as the
"PREMISES", and those described in the foregoing clauses (A) through (L) are
collectively referred to as the "MORTGAGED PROPERTY").
<PAGE> 191
6
TO HAVE AND TO HOLD the Mortgaged Property and the rights and
privileges hereby mortgaged unto Mortgagee, its successors and assigns for the
uses and purposes set forth, until the Obligations are fully paid and
performed. PROVIDED ALWAYS, that if Mortgagor shall promptly and fully pay and
perform all of the Obligations and shall perform all of the other provisions
contained herein and in the Loan Documents, then the estate hereby granted
shall cease, terminate and become void but shall otherwise remain in full force
and effect.
Notwithstanding anything to the contrary set forth herein, the
maximum aggregate principal amount secured hereby shall not exceed at any one
time $770,000,000.00. This Mortgage covers present and future advances and
re-advances, in the aggregate amount of the obligations secured hereby, made by
the Lenders for the benefit of, inter alia, Mortgagor and Borrower and the lien
of such future advances and re-advances shall relate back to the date of this
Mortgage.
Terms and Conditions
Intending to be legally bound hereby, Mortgagor further
represents, warrants, covenants and agrees with Mortgagee as follows:
i. Warranty of Title. Mortgagor warrants that Mortgagor
has good title to the Real Estate in fee simple and good title to the rest of
the Mortgaged Property, subject only to the matters that are set forth in
Schedule B of the title insurance policy or policies being issued to Mortgagee
to insure the lien of this Mortgage (the "PERMITTED EXCEPTIONS") and Mortgagor
shall warrant, defend and preserve such title and the lien of the Mortgage
thereon against all claims of all persons and entities. Mortgagor further
warrants that it has the right to mortgage the Mortgaged Property.
ii. Payment of Obligations. Mortgagor shall pay and
perform all the Obligations at the times and places and in the manner specified
in the Guarantee and Collateral Agreement and in this Mortgage.
iii. Requirements. (a) Mortgagor shall promptly comply
with, or cause to be complied with, and conform to all present and future laws,
statutes, codes, ordinances, orders, judgments, decrees, rules, regulations and
requirements, and irrespective of the nature of the work to be done, of each of
the United States of America, any State and any municipality, local government
or other political subdivision thereof and any agency, department, bureau,
board, commission or other instrumentality of any of them, now existing or
subsequently created (collectively, "GOVERNMENTAL AUTHORITY") which has
jurisdiction over the Mortgaged Property and all covenants, restrictions and
conditions now or later of record which may be applicable to any of the
Mortgaged Property, or to the use, manner of use, occupancy, possession,
operation, maintenance, alteration, repair or
<PAGE> 192
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reconstruction of any of the Mortgaged Property, except to the extent that the
failure to comply therewith could not reasonably be expected to have a Material
Adverse Effect. All present and future laws, statutes, codes, ordinances,
orders, judgments, decrees, rules, regulations and requirements of every
Governmental Authority applicable to Mortgagor or to any of the Mortgaged
Property and all covenants, restrictions, and conditions which now or later may
be applicable to any of the Mortgaged Property are collectively referred to as
the "LEGAL REQUIREMENTS".
(b) From and after the date of this Mortgage, Mortgagor
shall not by act or omission permit any building or other improvement on any
premises not subject to the lien of this Mortgage to rely on the Premises or
any part thereof or any interest therein to fulfill any Legal Requirement, and
Mortgagor hereby assigns to Mortgagee any and all rights to give consent for
all or any portion of the Premises or any interest therein to be so used.
Mortgagor shall not by act or omission impair the integrity of any of the Real
Estate so as to constitute an illegal subdivision or to prohibit the Premises
and Improvements from being conveyed as one zoning or tax lot. Mortgagor
represents that the Premises are not part of a larger tract of land owned by
Mortgagor or its affiliates or otherwise considered as part of one zoning or
tax lot, or, if they are that any authorization or variance required for the
subdivision of such larger tract which a sale of the Premises would entail has
been obtained from all appropriate Governmental Authorities so that the
Premises and Improvements constitute one zoning or tax lot capable of being
conveyed as such. Any act or omission by Mortgagor which would result in a
violation of any of the provisions of this subsection shall be void.
iv. Payment of Taxes and Other Impositions. (a)
Promptly when due but in any event prior to delinquency, Mortgagor shall pay
and discharge all taxes of every kind and nature (including, without
limitation, all real and personal property, income, franchise, withholding,
transfer, gains, profits and gross receipts taxes), all charges for any
easement or agreement maintained for the benefit of any of the Mortgaged
Property, all general and special assessments, levies, permits, inspection and
license fees, all water and sewer rents and charges and all other public
charges even if unforeseen or extraordinary, imposed upon or assessed against
or which may become a lien on any of the Mortgaged Property, or arising in
respect of the occupancy, use or possession thereof, together with any
penalties or interest on any of the foregoing (all of the foregoing are
collectively referred to as the "IMPOSITIONS"). Upon request by Mortgagee,
Mortgagor shall deliver to Mortgagee (i) original or copies of receipted bills
and cancelled checks evidencing payment of such Imposition if it is a real
estate tax or other public charge and (ii) evidence reasonably acceptable to
Mortgagee showing the payment of any other such Imposition. If by law any
Imposition, at Mortgagor's option, may be paid in installments (whether or not
interest shall accrue on the unpaid balance of such Imposition), Mortgagor may
elect to pay such Imposition in such installments and shall be responsible for
the payment of such installments with interest, if any.
(b) Nothing herein shall affect any right or remedy of
Mortgagee under this Mortgage or otherwise, without notice or demand to
Mortgagor, to pay any Imposition after the date such
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Imposition shall have become due, and to add to the Indebtedness the amount so
paid, together with interest from the time of payment at the Default Rate.
Mortgagee shall give Mortgagor notice of its intent to pay any Impositions
unless an Event of Default has occurred and is continuing. Any sums paid by
Mortgagee in discharge of any Impositions shall be (i) a lien on the Premises
secured hereby prior to any right or title to, interest in, or claim upon the
Premises subordinate to the lien of this Mortgage, and (ii) payable on demand
by Mortgagor to Mortgagee together with interest at the Default Rate as set
forth above.
(c) Mortgagor shall not claim, demand or be entitled to
receive any credit or credits toward the satisfaction of this Mortgage or on
any interest payable thereon for any taxes assessed against the Mortgaged
Property or any part thereof, and shall not claim any deduction from the
taxable value of the Mortgaged Property by reason of this Mortgage.
(d) Subject to the provisions of Section 6.3 of the
Credit Agreement and Section 6 of this Mortgage, Mortgagor shall have the right
before any delinquency occurs to contest or object in good faith to the amount
or validity of any Imposition by appropriate legal proceedings, provided
Mortgagor shall maintain adequate reserves with respect thereto on its books in
conformity with GAAP.
(e) Upon written notice to Mortgagor, Mortgagee after and
during the continuation of an Event of Default (as defined below) shall be
entitled to require Mortgagor to pay monthly in advance to Mortgagee the
equivalent of 1/12th of the estimated annual Impositions. Mortgagee may
commingle such funds with its own funds and Mortgagor shall not be entitled to
interest thereon. Any funds so collected by Mortgagee shall be used to pay
Impositions as they become due.
v. Insurance. (a) Mortgagor shall maintain or cause to
be maintained on all of the Premises:
(i) property insurance against loss or damage by fire,
lightning, windstorm, tornado, water damage, flood, earthquake and by
such other further risks and hazards as now are or subsequently may be
covered by an "all risk" policy or a fire policy covering "special"
causes of loss. The policy shall include building ordinance law
endorsements and the policy limits shall be automatically reinstated
after each loss;
(ii) comprehensive general liability insurance under a
policy including the "broad form CGL endorsement" (or which
incorporates the language of such endorsement), covering all claims
for personal injury, bodily injury or death, or property damage
occurring on, in or about the Premises in an amount not less than
$10,000,000 combined single limit with respect to injury and property
damage relating to any one occurrence plus such excess limits as
Mortgagee shall request from time to time;
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9
(iii) when and to the extent required by Mortgagee,
insurance against loss or damage by any other risk commonly insured
against by persons occupying or using like properties in the locality
or localities in which the Real Estate is situated;
(iv) insurance against rent loss, extra expense or
business interruption (and/or soft costs, in the case of new
construction), if applicable, in amounts satisfactory to Mortgagee,
but not less than one year's gross rent or gross income;
(v) during the course of any construction or repair of
Improvements, comprehensive general liability insurance under a policy
including the "broad form CGL endorsement" (or which incorporates the
language of such endorsement), (including coverage for elevators and
escalators, if any). The policy shall include coverage for
independent contractors and completed operations. The completed
operations coverage shall stay in effect for two years after
construction of any Improvements has been completed. The policy shall
provide coverage on an occurrence basis against claims for personal
injury, including, without limitation, bodily injury, death or
property damage occurring on, in or about the Premises and the
adjoining streets, sidewalks and passageways, such insurance to afford
immediate minimum protection to a limit of not less than that required
by Mortgagee with respect to personal injury, bodily injury or death
to any one or more persons or damage to property;
(vi) during the course of any construction or repair of
the Improvements, workers' compensation insurance (including
employer's liability insurance) for all employees of Mortgagor engaged
on or with respect to the Premises in such amounts as are reasonably
satisfactory to Mortgagee, but in no event less than the limits
established by law;
(vii) during the course of any construction, addition,
alteration or repair of the Improvements, builder's risk completed
value form insurance against "all risks of physical loss," including
collapse, water damage, flood and earthquake and transit coverage,
during construction or repairs of the Improvements, with deductible
approved by Mortgagee, in nonreporting form, covering the total value
of work performed and equipment, supplies and materials furnished
(with an appropriate limit for soft costs in the case of
construction);
(viii) boiler and machinery property insurance covering
pressure vessels, air tanks, boilers, machinery, pressure piping,
heating, air conditioning and elevator equipment and escalator
equipment, provided the Improvements contain equipment of such nature,
and insurance against rent, extra expense, business interruption and
soft costs, if applicable, arising from any such breakdown, in such
amounts as are reasonably satisfactory to Mortgagee but not less than
the lesser of $1,000,000 or 10% of the value of the Improvements;
<PAGE> 195
10
(ix) if any portion of the Premises are located in an area
identified as a special flood hazard area by the Federal Emergency
Management Agency or other applicable agency, flood insurance in an
amount satisfactory to Mortgagee, but in no event less than the
maximum limit of coverage available under the National Flood Insurance
Act of 1968, as amended; and
(x) such other insurance in such amounts as Mortgagee may
reasonably request from time to time.
Each insurance policy (other than flood insurance written under the National
Flood Insurance Act of 1968, as amended, in which case to the extent available)
shall (i) provide that it shall not be cancelled, non-renewed or materially
amended without 30-days' prior written notice to Mortgagee, and (ii) with
respect to all property insurance, provide for deductibles not to exceed
$100,000 or such greater amount as Mortgagee shall approve in writing, contain
a "Replacement Cost Endorsement" without any deduction made for depreciation
and with no co-insurance penalty (or attaching an agreed amount endorsement
satisfactory to Mortgagee), with loss payable solely to Mortgagee (modified, if
necessary, to provide that proceeds in the amount of replacement cost may be
retained by Mortgagee without the obligation to rebuild) as its interest may
appear, without contribution, under a "standard" or "New York" mortgagee clause
acceptable to Mortgagee and be written by insurance companies having an A.M.
Best Company, Inc. rating of A or higher and a financial size category of not
less than VI, or otherwise as approved by Mortgagee. Liability insurance
policies shall name Mortgagee as an additional insured and contain a waiver of
subrogation against Mortgagee; all such policies shall indemnify and hold
Mortgagee harmless from all liability claims occurring on, in or about the
Premises and the adjoining streets, sidewalks and passageways. The amounts of
each insurance policy and the form of each such policy shall at all times be
reasonably satisfactory to Mortgagee. Each policy shall expressly provide that
any proceeds which are payable to Mortgagee shall be paid by check payable to
the order of Mortgagee only and requiring the endorsement of Mortgagee only.
If any required insurance shall expire, be withdrawn, become void by breach of
any condition thereof by Mortgagor or by any lessee of any part of the
Mortgaged Property or become void or unsafe by reason of the failure or
impairment of the capital of any insurer, or if for any other reason whatsoever
such insurance shall become unsatisfactory to Mortgagee in Mortgagee's
reasonable judgement, Mortgagor shall immediately obtain new or additional
insurance satisfactory to Mortgagee. Mortgagor shall not take out any separate
or additional insurance which is contributing in the event of loss unless it is
properly endorsed and otherwise satisfactory to Mortgagee in all respects.
(b) Mortgagor shall deliver to Mortgagee an original of
each insurance policy required to be maintained, or a certificate of such
insurance acceptable to Mortgagee, together with a copy of the declaration page
for each such policy. Mortgagor shall (i) pay as they become due all premiums
for such insurance, (ii) not later than 15 days prior to the expiration of each
policy to be furnished pursuant to the provisions of this Section, deliver a
renewed policy or policies, or duplicate
<PAGE> 196
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original or originals thereof, marked "premium paid," or accompanied by such
other evidence of payment reasonably satisfactory to Mortgagee with standard
non-contributory mortgage clauses in favor of and acceptable to Mortgagee.
Upon request of Mortgagee, Mortgagor shall cause its insurance underwriter or
broker to certify to Mortgagee in writing that all the requirements of this
Mortgage governing insurance have been satisfied.
(c) If Mortgagor is in default of its obligations to
insure or deliver any such prepaid policy or policies, then Mortgagee, at its
option and without notice, may effect such insurance from year to year, and pay
the premium or premiums therefor, and Mortgagor shall pay to Mortgagee on
demand such premium or premiums so paid by Mortgagee with interest from the
time of payment at the Default Rate and the same shall be deemed to be secured
by this Mortgage and shall be collectible in the same manner as the
Indebtedness secured by this Mortgage.
(d) Mortgagor shall increase the amount of property
insurance required to equal 100% replacement cost pursuant to the provisions of
this Section at the time of each renewal of each policy (but not later than 12
months from the date of this Mortgage and each successive 12 month period to
occur thereafter) by using the F.W. Dodge Building Index to determine whether
there shall have been an increase in the replacement value since the most
recent adjustment and, if there shall have been such an increase, the amount of
insurance required shall be adjusted accordingly.
(e) Mortgagor promptly shall comply with and conform to
(i) all provisions of each such insurance policy, and (ii) all requirements of
the insurers applicable to Mortgagor or to any of the Mortgaged Property or to
the use, manner of use, occupancy, possession, operation, maintenance,
alteration or repair of any of the Mortgaged Property. Mortgagor shall not use
or permit the use of the Mortgaged Property in any manner which would permit
any insurer to cancel any insurance policy or void coverage required to be
maintained by this Mortgage.
(f) (i) If the Mortgaged Property, or any part thereof, shall
be destroyed or damaged by fire or any other casualty, whether insured
or uninsured, or in the event any claim is made against Mortgagor for
any personal injury, bodily injury or property damage incurred on or
about the Premises, Mortgagor shall give immediate notice thereof to
Mortgagee.
(ii) If the Mortgaged Property is damaged by fire or other
casualty and the cost to repair such damage is greater than $1,000,000
but less than $10,000,000, then provided that no Event of Default
shall have occurred and be continuing, Mortgagor shall have the right
to adjust such loss, and the insurance proceeds relating to such loss
may be paid over to Mortgagor to be applied, at Mortgagor's election,
either (1) in accordance with Section 2.11 of the Credit Agreement or
(2) towards the repair and restoration of all such damage.
<PAGE> 197
12
(iii) If the Mortgaged Property is damaged by fire or other
casualty, and the cost to repair such damage is greater than
$10,000,000 but less than $15,000,000, then Mortgagor authorizes and
empowers Mortgagee, at Mortgagee's option and in Mortgagee's sole
discretion, as attorney-in-fact for Mortgagor, to make proof of loss,
to adjust and compromise any claim under any insurance policy, to
appear in and prosecute any action arising from any policy, to collect
and receive insurance proceeds and to deduct therefrom Mortgagee's
expenses incurred in the collection process. Each insurance company
concerned is hereby authorized and directed to make payment for such
loss directly to Mortgagee and Mortgagor hereby designates Mortgagee
as its attorney-in-fact for the purpose of making any election
required or permitted under any insurance policy relating to repair or
restoration. The insurance proceeds or any part thereof received by
Mortgagee may be applied by Mortgagee toward reimbursement of all
costs and expenses of Mortgagee in collecting such proceeds, and the
balance shall be advanced to Mortgagor for the repair and restoration
of the Mortgaged Property in accordance with the provisions of the
Section of this Mortgage entitled "Restoration". Mortgagor shall be
obligated to use such proceeds to restore or repair the Mortgaged
Property.
(iv) If the Mortgaged Property is damaged by fire or other
casualty, and the cost to repair such damage exceeds $15,000,000, or
if an Event of Default shall have occurred and be continuing, then
Mortgagor authorizes and empowers Mortgagee, at Mortgagee's option and
in Mortgagee's sole discretion, as attorney-in-fact for Mortgagor, to
make proof of loss, to adjust and compromise any claim under any
insurance policy, to appear in and prosecute any action arising from
any policy, to collect and receive insurance proceeds and to deduct
therefrom Mortgagee's expenses incurred in the collection process.
Each insurance company concerned is hereby authorized and directed to
make payment for such loss directly to Mortgagee. Mortgagee shall
have the right to require Mortgagor to repair or restore the Mortgaged
Property and Mortgagor hereby designates Mortgagee as its
attorney-in-fact for the purpose of making any election required or
permitted under any insurance policy relating to repair or
restoration. The insurance proceeds or any part thereof received by
Mortgagee may be applied by Mortgagee toward reimbursement of all
costs and expenses of Mortgagee in collecting such proceeds, and the
balance, may be applied, at Mortgagee's sole option and in its sole
and absolute discretion, to fulfill any other Obligation of Mortgagor,
towards the prepayment of the Term Loans and the reduction of the
Revolving Credit Commitments as set forth in Section 2.11(d), to the
restoration or repair of the property damaged (and if Mortgagor shall
require Mortgagee to repair or restore the Mortgaged Property, such
balance shall be advanced to Mortgagor in accordance with the
provisions of the Section of this Mortgage entitled "Restoration") or
released to Mortgagor. In the event Mortgagee releases such proceeds
to Mortgagor, Mortgagor shall be obligated to use such proceeds to
restore or repair the Mortgaged Property.
(g) In the event of foreclosure of this Mortgage or other
transfer of title to the Mortgaged Property in extinguishment of the
Obligations, all right, title and interest of Mortgagor
<PAGE> 198
13
in and to any insurance policies then in force shall pass to the purchaser or
grantee and Mortgagor hereby appoints Mortgagee its attorney-in-fact, in
Mortgagor's name, to assign and transfer all such policies and proceeds to such
purchaser or grantee.
(h) Upon written notice to Mortgagor, Mortgagee after an
Event of Default shall be entitled to require Mortgagor to pay monthly in
advance to Mortgagee the equivalent of 1/12th of the estimated annual premiums
due on such insurance. Mortgagee may commingle such funds with its own funds
and Mortgagor shall not be entitled to interest thereon. Any funds so
collected by Mortgagee shall be used to pay insurance premiums as they become
due.
(i) Mortgagor may maintain insurance required under this
Mortgage by means of one or more blanket insurance policies maintained by
Mortgagor; provided, however, that (A) any such policy shall specify, or
Mortgagor shall furnish to Mortgagee a written statement from the insurer so
specifying, the maximum amount of the total insurance afforded by such blanket
policy that is allocated to the Premises and the other Mortgaged Property and
any sublimits in such blanket policy applicable to the Premises and the other
Mortgaged Property, (B) each such blanket policy shall include an endorsement
providing that, in the event of a loss resulting from an insured peril,
insurance proceeds shall be allocated to the Mortgaged Property in an amount
equal to the coverages required to be maintained by Mortgagor as provided above
and (C) the protection afforded under any such blanket policy shall be no less
than that which would have been afforded under a separate policy or policies
relating only to the Mortgaged Property.
vi. Restrictions on Liens and Encumbrances. Except for
the lien of this Mortgage and the Permitted Exceptions, Mortgagor shall not
further mortgage, nor otherwise encumber the Mortgaged Property nor create or
suffer to exist any lien, charge or encumbrance on the Mortgaged Property, or
any part thereof, whether superior or subordinate to the lien of this Mortgage
and whether recourse or non-recourse, except as may be expressly permitted
under the Credit Agreement.
vii. Due on Sale and Other Transfer Restrictions. Except
as may be expressly permitted under the Credit Agreement, Mortgagor shall not
sell, transfer, convey or assign all or any portion of, or any interest in, the
Mortgaged Property.
viii. Maintenance; No Alteration; Inspection; Utilities.
(a) Subject to the provisions of Section 6.5 of the Credit Agreement and
Section 5(f) of this Mortgage, (i) Mortgagor shall maintain or cause to be
maintained all the Improvements in good condition and repair, ordinary wear and
tear excepted and shall not commit or suffer any waste of the Improvements,
(ii) Mortgagor shall repair, restore, replace or rebuild promptly any part of
the Premises which may be damaged or destroyed by any casualty whatsoever and
(iii) the Improvements shall not be demolished in whole or in any material part
without the prior written consent of Mortgagee, which consent shall not be
unreasonably withheld.
<PAGE> 199
14
(b) At any reasonable time and as often as may be
reasonably desired, Mortgagee and any persons authorized by Mortgagee shall
have the right to enter and inspect the Premises and the right to inspect all
work done, labor performed and materials furnished in and about the
Improvements.
ix. Condemnation/Eminent Domain. Immediately upon
obtaining knowledge of the institution of any proceedings for the condemnation
of the Mortgaged Property, or any portion thereof, Mortgagor will notify
Mortgagee of the pendency of such proceedings. Mortgagor authorizes Mortgagee,
at Mortgagee's option and in Mortgagee's reasonable discretion, as
attorney-in-fact for Mortgagor, to commence, appear in and prosecute, in
Mortgagee's or Mortgagor's name, any action or proceeding relating to any
condemnation of the Mortgaged Property, or any portion thereof, and to settle
or compromise any claim in connection with such condemnation. If Mortgagee
elects not to participate in such condemnation proceeding, then Mortgagor
shall, at its expense, diligently prosecute any such proceeding and shall
consult with Mortgagee, its attorneys and experts and cooperate with them in
any defense of any such proceedings. All awards and proceeds of condemnation
shall be assigned to Mortgagee to be applied in the same manner as insurance
proceeds, as provided above, and Mortgagor agrees to execute any such
assignments of all such awards as Mortgagee may request.
x. Restoration. If Mortgagee shall release funds to
Mortgagor for restoration of any of the Mortgaged Property, then such
restoration shall be performed only in accordance with the following
conditions:
(i) prior to the commencement of any restoration, the
plans and specifications for such restoration, and the budgeted costs,
shall be submitted to and approved by Mortgagee in its reasonable
discretion;
(ii) prior to making any advance of restoration funds,
Mortgagee shall be satisfied that the remaining restoration funds are
sufficient to complete the restoration and to pay all related
expenses, including interest on the Obligations and real estate taxes
on the Premises, during restoration;
(iii) at the time of any disbursement of the restoration
funds, (A) no Default (as defined below) shall then exist, (B) no
mechanics' or materialmen's liens shall have been filed and remain
undischarged, except those discharged by the disbursement of the
requested restoration funds or which are being contested in good faith
by appropriate proceedings and for which Mortgagor has posted a bond
in the amount of the lien which is being contested and (C) a
satisfactory bring-down or continuation of title insurance on the
Premises shall be delivered to Mortgagee;
<PAGE> 200
15
(iv) disbursements shall be made from time to time in an
amount not exceeding the cost of the work completed since the last
disbursement, upon receipt of satisfactory evidence of the stage of
completion and of performance of the work in a good and workmanlike
manner and in accordance with the contracts, plans and specifications
acceptable to Mortgagee;
(v) with respect to each advance of restoration funds,
Mortgagee may retain 10% of the amount of such advance as a holdback
until the restoration is fully completed;
(vi) the restoration funds shall bear no interest and may
be commingled with Mortgagee's other funds;
(vii) Mortgagee may impose such other conditions as are
customarily imposed by construction lenders; and
(viii) any restoration funds remaining shall be released to
Mortgagor so long as no Event of Default shall have occurred and be
continuing.
xi. Leases. Except as may be expressly permitted under
the Credit Agreement, Mortgagor shall not (i) execute an assignment or pledge
of any Lease relating to all or any portion of the Mortgaged Property other
than in favor of Mortgagee, or (ii) without the prior written consent of
Mortgagee, execute or permit to exist any Lease of any of the Mortgaged
Property.
(ii) Mortgagor shall deliver to Mortgagee, within 10 days
after a request by Mortgagee, a written statement, certified by Mortgagor as
being true, correct and complete, containing the names of all lessees and other
occupants of the Mortgaged Property, the terms of all Leases and the spaces
occupied and rentals payable thereunder, and a list of all Leases which are
then in default, including the nature and magnitude of the default; such
statement shall be accompanied by credit information with respect to the
lessees and such other information as Mortgagee may request.
(iii) All Leases entered into by Mortgagor after the date
hereof, if any, and all rights of any lessees thereunder shall be subject and
subordinate in all respects to the lien and provisions of this Mortgage unless
Mortgagee shall otherwise elect in writing.
(iv) In the event of the enforcement by Mortgagee of any
remedy under this Mortgage, the lessee under each Lease shall, if requested by
Mortgagee or any other person succeeding to the interest of Mortgagee as a
result of such enforcement, attorn to Mortgagee or to such person and shall
recognize Mortgagee or such successor in interest as lessor under the Lease
without change in the provisions thereof; provided however, that Mortgagee or
such successor in interest shall not be: (i) bound by any payment of an
installment of rent or additional rent which may have been made more than 30
days before the due date of such installment; (ii) bound by any amendment or
<PAGE> 201
16
modification to the Lease made without the consent of Mortgagee or such
successor in interest; (iii) liable for any previous act or omission of
Mortgagor (or its predecessors in interest); (iv) responsible for any monies
owing by Mortgagor to the credit of such lessee or subject to any credits,
offsets, claims, counterclaims, demands or defenses which the lessee may have
against Mortgagor (or its predecessors in interest); (v) bound by any covenant
to undertake or complete any construction of the Premises or any portion
thereof; or (vi) obligated to make any payment to such lessee other than any
security deposit actually delivered to Mortgagee or such successor in interest.
Each lessee or other occupant, upon request by Mortgagee or such successor in
interest, shall execute and deliver an instrument or instruments confirming
such attornment. In addition, Mortgagor agrees that each Lease entered into
after the date of this Mortgage shall include language to the effect of
subsections (c) and (d) of this Section; provided that the provisions of such
subsections shall be self-operative and any failure of any Lease to include
such language shall not impair the binding effect of such provisions on any
lessee under such Lease.
xii. Further Assurances/Estoppel Certificates. To further
assure Mortgagee's rights under this Mortgage, Mortgagor agrees upon demand of
Mortgagee to do any act or execute any additional documents (including, but not
limited to, security agreements on any personalty included or to be included in
the Mortgaged Property and a separate assignment of each Lease in recordable
form) as may be reasonably required by Mortgagee to confirm the lien of this
Mortgage and all other rights or benefits conferred on Mortgagee. Mortgagor,
within 5 business days after request, shall deliver, in form and substance
satisfactory to Mortgagee, a written statement, duly acknowledged, setting
forth the amount of the Obligations, and whether any offsets, claims,
counterclaims or defenses exist against the Obligations and certifying as to
such other matters as Mortgagee shall reasonably request.
xiii. Mortgagee's Right to Perform. If Mortgagor fails to
perform any of the covenants or agreements of Mortgagor, Mortgagee, without
waiving or releasing Mortgagor from any obligation or default under this
Mortgage, may, at any time (but shall be under no obligation to) pay or perform
the same after five (5) days' notice to Mortgagor, and the amount or cost
thereof, with interest at the Default Rate, shall immediately be due from
Mortgagor to Mortgagee and the same shall be secured by this Mortgage and shall
be a lien on the Mortgaged Property prior to any right, title to, interest in
or claim upon the Mortgaged Property attaching subsequent to the lien of this
Mortgage. No payment or advance of money by Mortgagee under this Section shall
be deemed or construed to cure Mortgagor's default or waive any right or remedy
of Mortgagee.
xiv. Mortgagor's Existence, etc. Mortgagor shall do all
things necessary to preserve and keep in full force and effect its existence,
franchises, rights and privileges under the laws of the state in which it was
formed and its right to own property and transact business in the Commonwealth
of Pennsylvania. Mortgagor represents and warrants that Mortgagor is a duly
organized and validly existing corporation in good standing, and this Mortgage
has been executed by a duly authorized officer thereof. This Mortgage
constitutes the legal, valid and binding obligation of Mortgagor,
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17
enforceable against Mortgagor in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally.
xv. Events of Default. The occurrence of any one or more
of the following events shall constitute an Event of Default hereunder:
(i) an Event of Default under the Credit Agreement; or
(ii) a failure to make payment of any other sums required
to be paid hereunder or under the Loan Documents (including, without
limitation, any Imposition) within the period required by specific
provision of this Mortgage or the relevant Loan Document or, if no
such period is so provided, by no later than three days after written
notice from Mortgagee; or
(iii) a failure (i) to keep in force the insurance required
by this Mortgage; or (ii) to comply with and conform to all provisions
and requirements of the insurance policies and the insurers thereunder
which affects Mortgagor's ability (A) to keep in force the insurance
required by this Mortgage or (B) to collect any proceeds therefrom
unless, provided that Mortgagor shall have given Mortgagee prompt
notice of such failure, Mortgagee shall reasonably determine the
aggregate amount of proceeds which would have been collectable but for
any such failure to be less than $10,000,000.00; or (iii) to comply
with any other material provisions of this Deed of Trust regarding
insurance.
xvi. Remedies. Upon the occurrence of any Event of
Default, in addition to any other rights and remedies Mortgagee may have
pursuant to the Loan Documents, or as provided by law, and without limitation:
(a) (1) if such event is an Event of Default specified in
clause (i) or (ii) of paragraph (f) of the Section of the Credit Agreement
entitled "Events of Default", automatically the Obligations and all other
amounts owing under the Guarantee and Collateral Agreement, this Mortgage and
the other Security Documents immediately shall become due and payable, and (2)
if such event is any other Event of Default, by notice to Mortgagor, Mortgagee
may declare the Obligations (together with accrued interest thereon) and all
other amounts payable under the Guarantee and Collateral Agreement, this
Mortgage and the other Security Documents to be immediately due and payable.
Except as expressly provided above in this Section and in the Guarantee and
Collateral Agreement, presentment, demand, protest and all other notices of any
kind are hereby expressly waived. In addition, upon the occurrence of any
Event of Default, Mortgagee may immediately take such action, without notice or
demand, as it deems advisable to protect and enforce its rights against
Mortgagor and in and to the Mortgaged Property, including, but not limited to,
the following actions, each of which may be pursued concurrently or otherwise,
at such time and in such manner as Mortgagee may
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determine, in its sole discretion, without impairing or otherwise affecting the
other rights and remedies of Mortgagee:
(i) Mortgagee may, to the extent permitted by applicable
law, (A) institute and maintain an action of mortgage foreclosure
against all or any part of the Mortgaged Property, (B) institute and
maintain an action on the Guarantee and Collateral Agreement, (C) sell
all or part of the Mortgaged Property (Mortgagor expressly granting to
Mortgagee the power of sale), or (D) take such other action at law or
in equity for the enforcement of this Mortgage or any of the Loan
Documents as the law may allow. Mortgagee may proceed in any such
action to final judgment and execution thereon for all sums due
hereunder, together with interest thereon at the Default Rate and all
costs of suit, including, without limitation, reasonable attorneys'
fees and disbursements. Interest at the Default Rate shall be due on
any judgment obtained by Mortgagee from the date of judgment until
actual payment is made of the full amount of the judgment.
(ii) Mortgagee may personally, or by its agents, attorneys
and employees and without regard to the adequacy or inadequacy of the
Mortgaged Property or any other collateral as security for the
Obligations enter into and upon the Mortgaged Property and each and
every part thereof and exclude Mortgagor and its agents and employees
therefrom without liability for trespass, damage or otherwise
(Mortgagor hereby agreeing to surrender possession of the Mortgaged
Property to Mortgagee upon demand at any such time) and use, operate,
manage, maintain and control the Mortgaged Property and every part
thereof. Following such entry and taking of possession, Mortgagee
shall be entitled, without limitation, (x) to lease all or any part or
parts of the Mortgaged Property for such periods of time and upon such
conditions as Mortgagee may, in its discretion, deem proper, (y) to
enforce, cancel or modify any Lease and (z) generally to execute, do
and perform any other act, deed, matter or thing concerning the
Mortgaged Property as Mortgagee shall deem appropriate as fully as
Mortgagor might do.
(b) The holder of this Mortgage, in any action to
foreclose it, shall be entitled to the appointment of a receiver. In case of a
foreclosure sale, the Real Estate may be sold, at Mortgagee's election, in one
parcel or in more than one parcel and Mortgagee is specifically empowered,
(without being required to do so, and in its sole and absolute discretion) to
cause successive sales of portions of the Mortgaged Property to be held.
(c) In the event of any breach of any of the covenants,
agreements, terms or conditions contained in this Mortgage, and notwithstanding
to the contrary any exculpatory or non-recourse language which may be contained
herein, Mortgagee shall be entitled to enjoin such breach and obtain specific
performance of any covenant, agreement, term or condition and Mortgagee shall
have the right to invoke any equitable right or remedy as though other remedies
were not provided for in this Mortgage.
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19
(d) UPON THE OCCURRENCE OF AN EVENT OF DEFAULT MORTGAGOR
AUTHORIZES AND EMPOWERS ANY ATTORNEY OF ANY COURT OF RECORD OF THE COMMONWEALTH
OF PENNSYLVANIA TO APPEAR FOR AND TO CONFESS JUDGMENT IN EJECTMENT AGAINST
MORTGAGOR (AND, AT THE ELECTION OF SAID ATTORNEY, AGAINST ANY PERSON CLAIMING
UNDER, BY OR THROUGH MORTGAGOR) FOR THE RECOVERY BY MORTGAGEE OF POSSESSION OF
THE ENTIRE PREMISES OR, AT THE ELECTION OF SAID ATTORNEY, ANY PORTION OR
PORTIONS OF THE PREMISES. THE FOREGOING AUTHORITY TO CONFESS JUDGMENT SHALL
NOT BE EXHAUSTED BY ANY EXERCISE THEREOF BUT SHALL CONTINUE FROM TIME TO TIME
UNTIL MORTGAGEE IS FULLY AND FINALLY VESTED WITH POSSESSION OF THE ENTIRE
PREMISES. MORTGAGOR EXPRESSLY AGREES THAT ANY JUDGMENT ENTERED PURSUANT TO THE
FOREGOING AUTHORITY SHALL BE FINAL AND RELEASES TO MORTGAGEE, AND TO ANY
ATTORNEY APPEARING FOR MORTGAGOR OR MORTGAGEE, ALL ERRORS IN SAID PROCEEDINGS
AND ALL LIABILITY THEREFOR. UPON CONFESSION OF JUDGMENT IN EJECTMENT PURSUANT
TO THE FOREGOING AUTHORITY, A WRIT OF POSSESSION (OR LIKE WRIT APPROPRIATE
UNDER THEN APPLICABLE LAW) MAY ISSUE FORTHWITH WITHOUT ANY PRIOR PROCEEDINGS
AND MAY INCLUDE THE COSTS OF MORTGAGEE. JUDGMENT MAY BE ENTERED PURSUANT TO
THE FOREGOING AUTHORITY ON THE BASIS OF AN AFFIDAVIT MADE ON MORTGAGEE'S BEHALF
AND SETTING FORTH THE RELEVANT FACTS, OF WHICH FACTS SUCH AFFIDAVIT SHALL BE
CONCLUSIVE EVIDENCE, AND IF A TRUE COPY OF THIS MORTGAGE IS FILED IN ANY ACTION
FOR SUCH JUDGMENT IT SHALL NOT BE NECESSARY TO FILE THE ORIGINAL OF THIS
MORTGAGE.
xvii. Right of Mortgagee to Credit Sale. Upon the
occurrence of any sale made under this Mortgage, whether made under the power
of sale or by virtue of judicial proceedings or of a judgment or decree of
foreclosure and sale, Mortgagee may bid for and acquire the Mortgaged Property
or any part thereof. In lieu of paying cash therefor, Mortgagee may make
settlement for the purchase price by crediting upon the Obligations or other
sums secured by this Mortgage the net sales price after deducting therefrom the
expenses of sale and the cost of the action and any other sums which Mortgagee
is authorized to deduct under this Mortgage. In such event, this Mortgage, the
Guarantee and Collateral Agreement and documents evidencing expenditures
secured hereby may be presented to the person or persons conducting the sale in
order that the amount so used or applied may be credited upon the Obligations
as having been paid.
xviii. Appointment of Receiver. If an Event of Default
shall have occurred and be continuing, Mortgagee as a matter of right and
without notice to Mortgagor, unless otherwise required by applicable law, and
without regard to the adequacy or inadequacy of the Mortgaged Property or any
other collateral as security for the Obligations or the interest of Mortgagor
therein, shall have the right to apply to any court having jurisdiction to
appoint a receiver or receivers or other manager of the Mortgaged Property, and
Mortgagor hereby irrevocably consents to such appointment and waives notice of
any application therefor (except as may be required by law). Any such receiver
or receivers shall have all the usual powers and duties of receivers in like or
similar cases and all the powers and duties of Mortgagee in case of entry as
provided in this Mortgage, including, without limitation and to the extent
permitted by law, the right to enter into leases of all or any part of the
Mortgaged Property, and shall continue as such and exercise all such powers
until
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the date of confirmation of sale of the Mortgaged Property unless such
receivership is sooner terminated.
xix. Extension, Release, etc. (a) Without affecting the
lien or charge of this Mortgage upon any portion of the Mortgaged Property not
then or theretofore released as security for the full amount of the
Obligations, Mortgagee may, from time to time and without notice, agree to (i)
release any person liable for the indebtedness guaranteed under the Guarantee
and Collateral Agreement, (ii) extend the maturity or alter any of the terms of
the indebtedness guaranteed under the Guarantee and Collateral Agreement or any
other guaranty thereof, (iii) grant other indulgences, (iv) release or
reconvey, or cause to be released or reconveyed at any time at Mortgagee's
option any parcel, portion or all of the Mortgaged Property, (v) take or
release any other or additional security for any obligation herein mentioned,
or (vi) make compositions or other arrangements with debtors in relation
thereto. If at any time this Mortgage shall secure less than all of the
principal amount of the Obligations, it is expressly agreed that any repayments
of the principal amount of the Obligations shall not reduce the amount of the
lien of this Mortgage until the lien amount shall equal the principal amount of
the Obligations outstanding.
(b) No recovery of any judgment by Mortgagee and no levy
of an execution under any judgment upon the Mortgaged Property or upon any
other property of Mortgagor shall affect the lien of this Mortgage or any
liens, rights, powers or remedies of Mortgagee hereunder, and such liens,
rights, powers and remedies shall continue unimpaired.
(c) If Mortgagee shall have the right to foreclose this
Mortgage, Mortgagor authorizes Mortgagee at its option to foreclose the lien of
this Mortgage subject to the rights of any tenants of the Mortgaged Property.
The failure to make any such tenants parties defendant to any such foreclosure
proceeding and to foreclose their rights will not be asserted by Mortgagor as a
defense to any proceeding instituted by Mortgagee to collect the Obligations or
to foreclose the lien of this Mortgage.
(d) Unless expressly provided otherwise, in the event
that ownership of this Mortgage and title to the Mortgaged Property or any
estate therein shall become vested in the same person or entity, this Mortgage
shall not merge in such title but shall continue as a valid lien on the
Mortgaged Property for the amount secured hereby.
xx. Security Agreement under Uniform Commercial Code.
(a) It is the intention of the parties hereto that this Mortgage shall
constitute a Security Agreement within the meaning of the Uniform Commercial
Code (the "CODE") of the State in which the Mortgaged Property is located. If
an Event of Default shall occur under this Mortgage, then in addition to having
any other right or remedy available at law or in equity, Mortgagee shall have
the option of either (i) proceeding under the Code and exercising such rights
and remedies as may be provided to a secured party by the Code
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21
with respect to all or any portion of the Mortgaged Property which is personal
property (including, without limitation, taking possession of and selling such
property) or (ii) treating such property as real property and proceeding with
respect to both the real and personal property constituting the Mortgaged
Property in accordance with Mortgagee's rights, powers and remedies with
respect to the real property (in which event the default provisions of the Code
shall not apply). If Mortgagee shall elect to proceed under the Code, then
five days' notice of sale of the personal property shall be deemed reasonable
notice and the reasonable expenses of retaking, holding, preparing for sale,
selling and the like incurred by Mortgagee shall include, but not be limited
to, attorneys' fees and legal expenses. At Mortgagee's request, Mortgagor
shall assemble the personal property and make it available to Mortgagee at a
place designated by Mortgagee which is reasonably convenient to both parties.
(b) Mortgagor and Mortgagee agree, to the extent
permitted by law, that: (i) all of the goods described within the definition of
the word "Equipment" are or are to become fixtures on the Real Estate; (ii)
this Mortgage upon recording or registration in the real estate records of the
proper office shall constitute a financing statement filed as a "fixture
filing" within the meaning of Sections 9 313 and 9 402 of the Code; (iii)
Mortgagor is the record owner of the Real Estate; and (iv) the addresses of
Mortgagor and Mortgagee are as set forth on the first page of this Mortgage.
(c) Mortgagor, upon request by Mortgagee from time to
time, shall execute, acknowledge and deliver to Mortgagee one or more separate
security agreements, in form satisfactory to Mortgagee, covering all or any
part of the Mortgaged Property and will further execute, acknowledge and
deliver, or cause to be executed, acknowledged and delivered, any financing
statement, affidavit, continuation statement or certificate or other document
as Mortgagee may request in order to perfect, preserve, maintain, continue or
extend the security interest under and the priority of this Mortgage and such
security instrument. Mortgagor further agrees to pay to Mortgagee on demand
all costs and expenses incurred by Mortgagee in connection with the
preparation, execution, recording, filing and re-filing of any such document
and all reasonable costs and expenses of any record searches for financing
statements Mortgagee shall reasonably require. Mortgagor shall from time to
time, on request of Mortgagee, deliver to Mortgagee an inventory in reasonable
detail of any of the Mortgaged Property which constitutes personal property.
If Mortgagor shall fail to furnish any financing or continuation statement
within 10 days after request by Mortgagee, then pursuant to the provisions of
the Code, Mortgagor hereby authorizes Mortgagee, without the signature of
Mortgagor, to execute and file any such financing and continuation statements.
The filing of any financing or continuation statements in the records relating
to personal property or chattels shall not be construed as in any way impairing
the right of Mortgagee to proceed against any personal property encumbered by
this Mortgage as real property, as set forth above.
xxi. Assignment of Rents. Mortgagor hereby assigns to
Mortgagee the Rents as further security for the payment and performance of the
Obligations, and Mortgagor grants to Mortgagee
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the right to enter the Mortgaged Property for the purpose of collecting the
same and to let the Mortgaged Property or any part thereof, and to apply the
Rents on account of the Obligations. The foregoing assignment and grant is
present and absolute and shall continue in effect until the Obligations are
paid and performed in full, but Mortgagee hereby waives the right to enter the
Mortgaged Property for the purpose of collecting the Rents and Mortgagor shall
be entitled to collect, receive, use and retain the Rents until the occurrence
of an Event of Default under this Mortgage; such right of Mortgagor to collect,
receive, use and retain the Rents may be revoked by Mortgagee upon the
occurrence of any Event of Default under this Mortgage by giving not less than
five days' written notice of such revocation to Mortgagor; in the event such
notice is given, Mortgagor shall pay over to Mortgagee, or to any receiver
appointed to collect the Rents, any lease security deposits, and shall pay
monthly in advance to Mortgagee, or to any such receiver, the fair and
reasonable rental value as determined by Mortgagee for the use and occupancy of
the Mortgaged Property or of such part thereof as may be in the possession of
Mortgagor or any affiliate of Mortgagor, and upon default in any such payment
Mortgagor and any such affiliate will vacate and surrender the possession of
the Mortgaged Property to Mortgagee or to such receiver, and in default thereof
may be evicted by summary proceedings or otherwise. Mortgagor shall not accept
prepayments of installments of Rent to become due for a period of more than one
month in advance (except for security deposits and estimated payments of
percentage rent, if any).
xxii. Trust Funds. All lease security deposits of the Real
Estate shall be treated as trust funds not to be commingled with any other
funds of Mortgagor. Within 10 days after request by Mortgagee, Mortgagor shall
furnish Mortgagee satisfactory evidence of compliance with this subsection,
together with a statement of all lease security deposits by lessees and copies
of all Leases not previously delivered to Mortgagee, which statement shall be
certified by Mortgagor.
xxiii. Additional Rights. The holder of any subordinate
lien on the Mortgaged Property shall have no right to terminate any Lease
whether or not such Lease is subordinate to this Mortgage nor shall any holder
of any subordinate lien join any tenant under any Lease in any action to
foreclose the lien or modify, interfere with, disturb or terminate the rights
of any tenant under any Lease. By recordation of this Mortgage all subordinate
lienholders are subject to and notified of this provision, and any action taken
by any such lienholder contrary to this provision shall be null and void. Upon
the occurrence of any Event of Default, Mortgagee may, in its sole discretion
and without regard to the adequacy of its security under this Mortgage, apply
all or any part of any amounts on deposit with Mortgagee under this Mortgage
against all or any part of the Obligations. Any such application shall not be
construed to cure or waive any Default or Event of Default or invalidate any
act taken by Mortgagee on account of such Default or Event of Default.
xxiv. Changes in Method of Taxation. In the event of the
passage after the date hereof of any law of any Governmental Authority
deducting from the value of the Premises for the purposes of taxation any lien
thereon, or changing in any way the laws for the taxation of mortgages or debts
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secured thereby for federal, state or local purposes, or the manner of
collection of any such taxes, and imposing a tax, either directly or
indirectly, on mortgages or debts secured thereby, the holder of this Mortgage
shall have the right to declare the indebtedness guaranteed under the Guarantee
and Collateral Agreement due on a date to be specified by not less than 30
days' written notice to be given to Mortgagor unless within such 30-day period
Mortgagor shall assume as an Obligation hereunder the payment of any tax so
imposed until full payment and performance of the Obligations and such
assumption shall be permitted by law.
xxv. Notices. All notices, requests, demands and other
communications hereunder shall be given in the manner set forth in the Credit
Agreement, addressed to Mortgagor at the address given on the first page of
this Mortgage and to Mortgagee at the address given on the first page of this
Mortgage. Either party may change its address by notice to the other party.
If any party other than Mortgagor shall be entitled to receive copies of
notices, demands or approvals, failure of Mortgagee to send such copies shall
not impair the effectiveness of any notice sent to Mortgagor.
xxvi. No Oral Modification. This Mortgage may not be
changed or terminated orally. Any agreement made by Mortgagor and Mortgagee
after the date of this Mortgage relating to this Mortgage shall be superior to
the rights of the holder of any intervening or subordinate lien or encumbrance.
xxvii. Partial Invalidity. In the event any one or more of
the provisions contained in this Mortgage shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provision hereof, but each shall
be construed as if such invalid, illegal or unenforceable provision had never
been included. Notwithstanding to the contrary anything contained in this
Mortgage or in any provisions of the Loan Documents, the obligations of
Mortgagor and of any other obligor under the Loan Documents shall be subject to
the limitation that Mortgagee shall not charge, take or receive, nor shall
Mortgagor or any other obligor be obligated to pay to Mortgagee, any amounts
constituting interest in excess of the maximum rate permitted by law to be
charged by Mortgagee.
xxviii. Mortgagor's Waiver of Rights. To the fullest extent
permitted by law, Mortgagor waives the benefit of all laws now existing or that
may subsequently be enacted providing for (i) any appraisement before sale of
any portion of the Mortgaged Property, (ii) any extension of the time for the
enforcement of the collection of the Obligations or the creation or extension
of a period of redemption from any sale made in collecting such debt and (iii)
exemption of the Mortgaged Property from attachment, levy or sale under
execution or exemption from civil process. To the full extent Mortgagor may do
so, Mortgagor agrees that Mortgagor will not at any time insist upon, plead,
claim or take the benefit or advantage of any law now or hereafter in force
providing for any appraisement, valuation, stay, exemption, extension or
redemption, or requiring foreclosure of this Mortgage before exercising any
other remedy granted hereunder and Mortgagor, for Mortgagor and
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its successors and assigns, and for any and all persons ever claiming any
interest in the Mortgaged Property, to the extent permitted by law, hereby
waives and releases all rights of redemption, valuation, appraisement, stay of
execution, notice of election to mature or declare due the whole of the secured
indebtedness and marshalling in the event of foreclosure of the liens hereby
created. Mortgagor further waives, to the extent permitted by applicable law,
all errors and imperfections in any proceedings instituted by Mortgagee under
this Mortgage and all notices of any Event of Default (except as may be
provided for under the terms of this Mortgage) or of Mortgagee's election to
exercise or its actual exercise of any right, remedy or recourse provided for
under this Mortgage.
xxix. Remedies Not Exclusive. Mortgagee shall be entitled
to enforce payment and performance of the Obligations and to exercise all
rights and powers under this Mortgage or under any of the other Loan Documents
or other agreement or any laws now or hereafter in force, notwithstanding some
or all of the Obligations may now or hereafter be otherwise secured, whether by
mortgage, security agreement, pledge, lien, assignment or otherwise. Neither
the acceptance of this Mortgage nor its enforcement, shall prejudice or in any
manner affect Mortgagee's right to realize upon or enforce any other security
now or hereafter held by Mortgagee, it being agreed that Mortgagee shall be
entitled to enforce this Mortgage and any other security now or hereafter held
by Mortgagee in such order and manner as Mortgagee may determine in its
absolute discretion. No remedy herein conferred upon or reserved to Mortgagee
is intended to be exclusive of any other remedy herein or by law provided or
permitted, but each shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute. Every power or remedy given by any of the Loan Documents to Mortgagee
or to which it may otherwise be entitled, may be exercised, concurrently or
independently, from time to time and as often as may be deemed expedient by
Mortgagee. In no event shall Mortgagee, in the exercise of the remedies
provided in this Mortgage (including, without limitation, in connection with
the assignment of Rents to Mortgagee, or the appointment of a receiver and the
entry of such receiver on to all or any part of the Mortgaged Property), be
deemed a "mortgagee in possession," and Mortgagee shall not in any way be made
liable for any act, either of commission or omission, in connection with the
exercise of such remedies.
xxx. Multiple Security. If (a) the Premises shall consist
of one or more parcels, whether or not contiguous and whether or not located in
the same county, or (b) in addition to this Mortgage, Mortgagee shall now or
hereafter hold one or more additional mortgages, liens, deeds of trust or other
security (directly or indirectly) for the Obligations upon other property in
the State of Pennsylvania (whether or not such property is owned by Mortgagor
or by others) or (c) both the circumstances described in clauses (a) and (b)
shall be true, then to the fullest extent permitted by law, Mortgagee may, at
its election, commence or consolidate in a single foreclosure action all
foreclosure proceedings against all such collateral securing the Obligations
(including the Mortgaged Property), which action may be brought or consolidated
in the courts of any county in which any of such collateral is located.
Mortgagor acknowledges that the right to maintain a consolidated
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foreclosure action is a specific inducement to Mortgagee to extend the
Obligations, and Mortgagor expressly and irrevocably waives any objections to
the commencement or consolidation of the foreclosure proceedings in a single
action and any objections to the laying of venue or based on the grounds of
forum non conveniens which it may now or hereafter have. Mortgagor further
agrees that if Mortgagee shall be prosecuting one or more foreclosure or other
proceedings against a portion of the Mortgaged Property or against any
collateral other than the Mortgaged Property, which collateral directly or
indirectly secures the Obligations, or if Mortgagee shall have obtained a
judgment of foreclosure and sale or similar judgment against such collateral,
then, whether or not such proceedings are being maintained or judgments were
obtained in or outside the State in which the Premises are located, Mortgagee
may commence or continue foreclosure proceedings and exercise its other
remedies granted in this Mortgage against all or any part of the Mortgaged
Property and Mortgagor waives any objections to the commencement or
continuation of a foreclosure of this Mortgage or exercise of any other
remedies hereunder based on such other proceedings or judgments, and waives any
right to seek to dismiss, stay, remove, transfer or consolidate either any
action under this Mortgage or such other proceedings on such basis. Neither
the commencement nor continuation of proceedings to foreclose this Mortgage nor
the exercise of any other rights hereunder nor the recovery of any judgment by
Mortgagee in any such proceedings shall prejudice, limit or preclude
Mortgagee's right to commence or continue one or more foreclosure or other
proceedings or obtain a judgment against any other collateral (either in or
outside the State in which the Premises are located) which directly or
indirectly secures the Obligations, and Mortgagor expressly waives any
objections to the commencement of, continuation of, or entry of a judgment in
such other proceedings or exercise of any remedies in such proceedings based
upon any action or judgment connected to this Mortgage, and Mortgagor also
waives any right to seek to dismiss, stay, remove, transfer or consolidate
either such other proceedings or any action under this Mortgage on such basis.
It is expressly understood and agreed that to the fullest extent permitted by
law, Mortgagee may, at its election, cause the sale of all collateral which is
the subject of a single foreclosure action at either a single sale or at
multiple sales conducted simultaneously and take such other measures as are
appropriate in order to effect the agreement of the parties to dispose of and
administer all collateral securing the Obligations (directly or indirectly) in
the most economical and least time-consuming manner.
xxxi. Expenses; Indemnification. If (i) any action or
proceeding shall be commenced by Mortgagee (including but not limited to any
action to foreclose this Mortgage, to enforce the Guarantee and Collateral
Agreement or to collect the Obligations), or any action or proceeding is
commenced to which Mortgagee is made a party, or in which it becomes necessary
to defend or uphold the lien of this Mortgage (including, without limitation,
any proceeding or other action relating to the bankruptcy, insolvency or
reorganization of any obligor with respect to any Guarantee Obligation), or in
which Mortgagee is served with any legal process, discovery notice or subpoena
and (ii) in each of the foregoing instances such action or proceeding in any
manner relates to or arises out of this Mortgage or Mortgagee's lending to
Borrower or acceptance of the Guarantee and
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Collateral Agreement from Mortgagor of the Obligations or any of the
transactions contemplated by this Mortgage, then Mortgagor will immediately
reimburse or pay to Mortgagee all of the expenses which have been or may be
incurred by Mortgagee with respect to the foregoing (including reasonable
counsel fees and disbursements), together with interest thereon at the Default
Rate, and any such sum and the interest thereon shall be a lien on the
Mortgaged Property, prior to any right, or title to, interest in or claim upon
the Mortgaged Property attaching or accruing subsequent to the lien of this
Mortgage, and shall be deemed to be secured by this Mortgage. In any action or
proceeding to foreclose this Mortgage, or to recover or collect the
Obligations, the provisions of law respecting the recovering of costs,
disbursements and allowances shall prevail unaffected by this covenant.
(b) Mortgagor shall indemnify and hold harmless Mortgagee
and Mortgagee's affiliates, and the respective directors, officers, agents and
employees of Mortgagee and its affiliates from and against all claims, damages,
losses and liabilities (including, without limitation, reasonable attorneys'
fees and expenses) arising out of or based upon any matter related to this
Mortgage, the Mortgaged Property or the occupancy, ownership, maintenance or
management of the Mortgaged Property by Mortgagor, including, without
limitation, any claims based on the alleged acts or omissions of any employee
or agent of Mortgagor. This indemnification shall be in addition to any other
liability which Mortgagor may otherwise have to Mortgagee.
xxxii. Successors and Assigns. All covenants of Mortgagor
contained in this Mortgage are imposed solely and exclusively for the benefit
of Mortgagee and its successors and assigns, and no other person or entity
shall have standing to require compliance with such covenants or be deemed,
under any circumstances, to be a beneficiary of such covenants, any or all of
which may be freely waived in whole or in part by Mortgagee at any time if in
its sole discretion it deems such waiver advisable. All such covenants of
Mortgagor shall run with the land and bind Mortgagor, the successors and
assigns of Mortgagor (and each of them) and all subsequent owners,
encumbrancers and tenants of the Mortgaged Property, and shall inure to the
benefit of Mortgagee, its successors and assigns. The word "Mortgagor" shall
be construed as if it read "Mortgagors" whenever the sense of this Mortgage so
requires and if there shall be more than one Mortgagor, the obligations of the
Mortgagors shall be joint and several.
xxxiii. No Waivers, etc. Any failure by Mortgagee to insist
upon the strict performance by Mortgagor of any of the terms and provisions of
this Mortgage shall not be deemed to be a waiver of any of the terms and
provisions hereof, and Mortgagee, notwithstanding any such failure, shall have
the right thereafter to insist upon the strict performance by Mortgagor of any
and all of the terms and provisions of this Mortgage to be performed by
Mortgagor. Mortgagee may release, regardless of consideration and without the
necessity for any notice to or consent by the holder of any subordinate lien on
the Mortgaged Property, any part of the security held for the obligations
<PAGE> 212
27
secured by this Mortgage without, as to the remainder of the security, in any
way impairing or affecting the lien of this Mortgage or the priority of such
lien over any subordinate lien.
xxxiv. Governing Law, etc. This Mortgage shall be governed
by and construed in accordance with the laws of the State of Pennsylvania,
except that Mortgagor expressly acknowledges that by their respective terms the
Credit Agreement and the Guarantee and Collateral Agreement shall be governed
and construed in accordance with the laws of the State of New York, without
regard to principles of conflict of law, and for purposes of consistency,
Mortgagor agrees that in any in personam proceeding related to this Mortgage
the rights of the parties to this Mortgage shall also be governed by and
construed in accordance with the laws of the State of New York governing
contracts made and to be performed in that State, without regard to principles
of conflict of law.
xxxv. Waiver of Trial by Jury. Mortgagor and Mortgagee
each hereby irrevocably and unconditionally waive trial by jury in any action,
claim, suit or proceeding relating to this Mortgage and for any counterclaim
brought therein. Mortgagor hereby waives all rights to interpose any
counterclaim in any suit brought by Mortgagee hereunder and all rights to have
any such suit consolidated with any separate suit, action or proceeding.
xxxvi. Certain Definitions. Unless the context clearly
indicates a contrary intent or unless otherwise specifically provided herein,
words used in this Mortgage shall be used interchangeably in singular or plural
form and the word "Mortgagor" shall mean "each Mortgagor or any subsequent
owner or owners of the Mortgaged Property or any part thereof or interest
therein," the word "Mortgagee" shall mean "Mortgagee or any subsequent holder
of the Guarantee and Collateral Agreement," the words "Guarantee and Collateral
Agreement" shall mean "the Guarantee and Collateral Agreement or any other
evidence of indebtedness secured by this Mortgage," the word "person" shall
include any individual, corporation, partnership, trust, unincorporated
association, government, governmental authority, or other entity, and the words
"Mortgaged Property" shall include any portion of the Mortgaged Property or
interest therein. Whenever the context may require, any pronouns used herein
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns and pronouns shall include the plural and vice versa.
The captions in this Mortgage are for convenience or reference only and in no
way limit or amplify the provisions hereof.
xxxvii. Assembled Industrial Plant Mortgage. This Mortgage
is intended to be an assembled industrial plant mortgage within the broadest
interpretation of the "assembled industrial plant mortgage doctrine" under the
laws of the Commonwealth of Pennsylvania.
xxxviii. Future Advances. This Mortgage is executed and
delivered to secure, among other things, future advances and re-advances. It
is understood and agreed that this Mortgage secures
<PAGE> 213
28
present and future advances and re-advances made for the benefit of Mortgagor
and that the lien of such future advances shall relate back to the date of this
Mortgage, and Mortgagor and Mortgagee intend that this Mortgage be an Open-End
Mortgage as described in 42 PA.C.S.A. Section 8134 and as such be entitled to
all benefits under 42 PA.C.S.A. Section 8134.
xxxix. Purchase Money Mortgage. This is a purchase money
mortgage and shall be entitled to all benefits as such under the lien priority
provisions of the Pennsylvania Judicial Code, 42 Pa.C.S.A. Section 8141, as
amended.
xl. Receipt of Copy. Mortgagor acknowledges that it has
received a true copy of this Mortgage.
<PAGE> 214
29
xli. Release. If Mortgagor shall and does pay to
Mortgagee the full principal amount of the indebtedness secured hereby,
together with all interest accrued thereon, and keeps all the other covenants
and agreements contained herein and in the Note and in the other Loan
Documents, all in the manner and at the times set forth herein or in the Note
and in the other Loan Documents, and if Mortgagor shall also pay all
satisfaction costs, including, but not limited to, reasonable attorneys' fees
and the cost of recording a satisfaction piece and, if appropriate, a
power-of-attorney to satisfy this Mortgage, then and from thenceforth this
Mortgage and the estate hereby created, granted, transferred and assigned shall
cease and become void.
This Mortgage has been duly executed by Mortgagor on the date
first above written.
ATTEST AMERICAN HOME FOODS, INC.
[corporate seal]
By: By:
------------------------- -----------------------------
Name: Name:
Title: [AS,S, AT or T] Title: [VP or P]
The address of the within-named Mortgagee is:
c/o Chase Agency Services
140 East 45th Street
New York, New York 10017
For the Mortgagee
-----------------------
Name:
<PAGE> 215
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this, the ____ day of October, 1996, before me, a Notary
Public in and for the State and County aforesaid, the undersigned officer,
personally appeared ___________________________, who acknowledged [her]
[him]self to be the [_________________] President of AMERICAN HOME FOODS, INC.,
a ________ corporation and that [s]he, as such officer, being authorized to do
so, executed the foregoing instrument for the purposes therein contained, by
signing the name of the corporation by [her][him]self as such officer.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
-------------------------
Notary Public
[Notarial Seal]
My Commission Expires:
<PAGE> 216
Schedule A
Description of the Premises
[Attach Legal Description of all parcels]
<PAGE> 217
Exhibit E to the
Credit Agreement
FORM OF ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement, dated as of November 1,
1996 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among International Home Foods, Inc. (the "Borrower"), the
Lenders parties thereto, Morgan Stanley Senior Funding, Inc., as Documentation
Agent, Bankers Trust Company, as Syndication Agent and The Chase Manhattan
Bank, as Administrative Agent. Unless otherwise defined herein, terms defined
in the Credit Agreement and used herein shall have the meanings given to them
in the Credit Agreement.
The Assignor named on Schedule 1 (the "Assignor") and the Assignee
named on Schedule 1 (the "Assignee") agree as follows:
1. The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably purchases
and assumes from the Assignor without recourse to the Assignor, as of the
Effective Date (as defined below), an interest as specified in Schedule 1 (the
"Assigned Interest") in and to the Assignor's rights and obligations under the
Credit Agreement with respect to those Facilities described on Schedule 1
(individually, an "Assigned Facility"; collectively, the "Assigned
Facilities"), in a principal amount for each Assigned Facility as set forth on
Schedule 1.
2. The Assignor (a) makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or any other Loan Document
or any other instrument or document furnished pursuant thereto or with respect
to the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Credit Agreement, any other Loan Document or any other
instrument or document furnished pursuant thereto, other than that it is the
legal and beneficial owner of the Assigned Interest, that it has not created
any adverse claim upon the Assigned Interest and that the Assigned Interest is
free and clear of any such adverse claim; and (b) makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Borrower or any of its Subsidiaries or the performance or observance by
the Borrower or any other Loan Party of any of their respective obligations
under the Credit Agreement or any other Loan Document or any other instrument
or document furnished pursuant thereto.
3. The Assignee (a) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (b) confirms that it
has received a copy of the Credit Agreement, together with copies of the most
recent financial statements referred to in Sections 4.1 and 6.1
<PAGE> 218
2
thereof and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into this Assignment and
Acceptance; (c) agrees that it will, independently and without reliance upon
the Assignor, the Administrative Agent or any other Lender or Agent and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Credit Agreement, the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto; (d) appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers and discretion under the Credit Agreement, the other Loan Documents
and any other instrument or document furnished pursuant hereto or thereto as
are delegated to the Administrative Agent by the terms thereof, together with
such powers as are incidental thereto; and (e) agrees that it will be bound by
the provisions of the Credit Agreement and the other Loan Documents and will
perform in accordance with its terms all the obligations which by the terms of
the Credit Agreement and the other Loan Documents are required to be performed
by it as a Lender including, if it is organized under the laws of a
jurisdiction outside the United States, its obligation pursuant to Section
2.19(b) of the Credit Agreement.
4. The effective date of this Assignment and Acceptance shall be as
specified on Schedule 1 (the "Effective Date"). Following the execution of
this Assignment and Acceptance, it will be delivered to the Administrative
Agent for acceptance by it and recording by the Administrative Agent pursuant
to Section 10.6(d) of the Credit Agreement, effective as of the Effective Date
(which shall not, unless otherwise agreed to by the Administrative Agent, be
earlier than five Business Days after the execution hereof).
5. Upon such acceptance and recording, from and after the Effective
Date, the Administrative Agent shall make all payments in respect of the
Assigned Interest (including payments of principal, interest, fees and other
amounts) to the Assignee. The Assignor and the Assignee shall make all
appropriate adjustments in payments by the Administrative Agent for periods
prior to the Effective Date or with respect to the making of this assignment
directly between themselves.
6. From and after the Effective Date, (a) the Assignee shall be a
party to the Credit Agreement and, to the extent provided in this Assignment
and Acceptance, have the rights and obligations of a Lender thereunder and
under the other Loan Documents and shall be bound by the provisions thereof and
(b) the Assignor shall, to the extent provided in this Assignment and
Acceptance, relinquish its rights and be released from its obligations under
the Credit Agreement and the other Loan Documents (other than any such rights
which expressly survive the termination thereof).
<PAGE> 219
3
7. This Assignment and Acceptance shall be governed by and construed
in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed as of the date first above written by their
respective duly authorized officers on Schedule 1 hereto.
<PAGE> 220
SCHEDULE 1
TO ASSIGNMENT AND ACCEPTANCE
RELATING TO THE CREDIT AGREEMENT, DATED AS OF NOVEMBER 1, 1996,
AMONG
INTERNATIONAL HOME FOODS, INC., THE LENDERS PARTIES THERETO, MORGAN STANLEY
SENIOR FUNDING, INC., AS DOCUMENTATION
AGENT, BANKERS TRUST COMPANY, AS SYNDICATION AGENT, AND THE CHASE MANHATTAN
BANK, AS ADMINISTRATIVE AGENT
- --------------------------------------------------------------------------------
Name of Assignor:
Name of Assignee:
Effective Date of Assignment:
<TABLE>
<CAPTION>
Principal Commitment Percentage Assigned
Facility Assigned Amount Assigned (if applicable)
----------------- --------------- ------------------------------
<S> <C> <C>
$ . %
--------------- --- -----------------
</TABLE>
The terms set forth above and in the Assignment and Acceptance to which this
Schedule 1 is attached are hereby agreed to:
[Consented to and]*/ Accepted for the
Recordation in the Register:
, as Assignor THE CHASE MANHATTAN BANK,
- ---------------- as Administrative Agent
By: By:
-----------------------------------
Name: Name:
Title: Title:
__________________________________
*/ To be completed only if consents are required under Section 10.6(c).
<PAGE> 221
2
[Consented to]:*/
__________________, as Assignee [INTERNATIONAL HOME FOODS, INC.]
By: By:
-----------------------------------
Name: Name:
Title: Title:
<PAGE> 222
[VINSON & ELKINS L.L.P. LETTERHEAD]
EXHIBIT F TO THE CREDIT AGREEMENT
November 1, 1996
To Each of the Addressees Named on
Exhibit A hereto
Ladies and Gentlemen:
We have acted as counsel for International Home Foods, Inc., a
Delaware corporation (the "Borrower"), in connection with that certain Credit
Agreement dated as of November 1, 1996 (the "Credit Agreement"), by and among
the Borrower, Morgan Stanley Senior Funding, Inc., as Documentation Agent,
Bankers Trust Company, as Syndication Agent, The Chase Manhattan Bank, as
Administrative Agent, and the Lenders party thereto. This opinion is delivered
to you pursuant to Section 5.1(h)(i) of the Credit Agreement. Capitalized
terms not otherwise defined herein are defined as set forth in the Credit
Agreement, and other terms that are defined in the Uniform Commercial Code as
in effect in the State of New York (the "New York UCC") have the same meanings
when used herein unless otherwise indicated by the context in which such terms
are so used.
In connection with the opinions hereinafter expressed, we have (i)
investigated such questions of law, (ii) examined such corporate documents and
records of the Borrower and the Designated Subsidiaries (as such term is
hereinafter defined) and certificates of public officials, and (iii) received
such information from officers and representatives of the Borrower and the
Designated Subsidiaries (with the Borrower and the Designated Subsidiaries
hereinafter referred to collectively as the "Loan Parties"), as we have deemed
necessary or appropriate for the purposes of this opinion. We have examined
the following documents (those identified in items (a) through (d) below being
referred to collectively as the "Loan Documents"):
(a) An executed copy of the Credit Agreement;
(b) The executed Notes;
<PAGE> 223
Page 2
November 1, 1996
(c) An executed copy of the Guarantee and Collateral Agreement
executed and delivered by American Home Foods, Inc., a Delaware corporation,
Luck's Inc., a Delaware corporation, M. Polaner, Inc., a Delaware corporation,
Heritage Brands Holdings Inc., a Delaware corporation, Heritage Brands, Inc., a
Delaware corporation, Campfire, Inc., a Delaware corporation (with such
entities herein referred to collectively as the "Designated Subsidiaries"), and
the Borrower;
(d) Executed copies of the Mortgages, including the Deed of Trust
and Security Agreement executed by American Home Foods, Inc., a Delaware
corporation (the "Grantor"), to be recorded in the State of Texas (the "Deed of
Trust");
(e) An executed copy of the Financing Statements executed in
connection with the Guarantee and Collateral Agreement to be filed in the
Office of the Secretary of State of Texas (the "Collateral Agreement Financing
Statements"); and
(f) An executed copy of the Financing Statement executed in
connection with the Deed of Trust (the "Deed of Trust Financing Statement,"
with the Collateral Agreement Financing Statements and the Deed of Trust
Financing Statement herein referred to collectively as the "Financing
Statements").
In rendering the opinions herein set forth, we have assumed (i) the
due authorization, execution and delivery of the Loan Documents by all parties
to such Documents other than the Loan Parties and that each such Document is
valid, binding and enforceable against the parties thereto other than the Loan
Parties, (ii) the legal capacity of natural persons, (iii) the genuineness of
all signatures, (iv) the authenticity of all documents submitted to us as
originals, and (v) the conformity to original documents of all documents
submitted to us as copies. As to various questions of fact material to our
opinion, we have relied upon the representations made in the Loan Documents and
upon certificates of officers of each of the Loan Parties (collectively, the
"Officers' Certificates"), copies of which are attached hereto.
Based upon the foregoing and subject to the qualifications,
exceptions, limitations, and assumptions set forth herein, we are of the
opinion that:
1. Each Loan Party is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware and is
duly qualified to do business and is in good standing as a foreign corporation
in each jurisdiction in which such Loan Party owns or leases any property or
does any business as identified in the Officer's Certificate executed by an
officer of such Loan Party.
<PAGE> 224
Page 3
November 1, 1996
2. Each Loan Party has the corporate power and authority to enter
into and perform its obligations under the Loan Documents to which it is a
party. Each Loan Party's execution, delivery and performance of the Loan
Documents to which it is a party have been duly authorized by all requisite
corporate action, and the Loan Documents have been duly executed and delivered
by each Loan Party that is a party thereto.
3. (a) Under the internal laws of the State of New York,
each of the Loan Documents constitutes a legal, valid and binding obligation of
each Loan Party that is a party thereto, enforceable against such Loan Party
in accordance with the respective terms of such Loan Documents.
(b) Under the internal laws of the State of Texas, to the
extent that said laws govern the Deed of Trust, the Deed of Trust constitutes a
legal, valid and binding obligation of the Grantor, enforceable against the
Grantor in accordance with its terms.
4. The execution and delivery of the Loan Documents and the
performance by each Loan Party of the respective terms of the Loan Documents do
not (a) conflict with or result in a violation of (i) the Certificate of
Incorporation or Bylaws of any Loan Party, the Senior Subordinated Note
Indenture or any material agreement, instrument or judicial or regulatory order
listed in Sections 4.10, 4.11, 4.12 or 4.13 of the Disclosure Schedule to the
Acquisition Agreement, or (ii) any applicable provision of the federal laws of
the United States (including, without limitation, Regulations G, T, U and X of
the Board of Governors of the Federal Reserve System) or of the laws of the
States of Texas and New York, or (b) result in any Loan Party being obligated
to create or impose any Lien upon any of its Property under any such material
agreement, instrument or judicial or regulatory order listed in the Officers'
Certificates, other than those contemplated by the Credit Agreement.
5. Except for the recording of the Mortgages, the filing of the
Financing Statements and the filings with the U.S. Copyright Office and the
U.S. Patent and Trademark Office referred to in paragraph 14 below, no
approval, authorization or other action by or filing with any governmental
authority of the State of Texas or the State of New York or pursuant to the
federal laws of the United States is required in connection with the execution
and delivery by any Loan Party of the Loan Documents.
6. Except as described in the schedule of litigation heretofore
furnished to each Lender by each Loan Party, there are, to our knowledge, no
actions, suits or proceedings pending or threatened against any Loan Party
before any court or arbitrator(s) or by or before any administrative agency or
governmental authority, (a) relating to the Loan Documents or the Acquisitions,
or (b) in which there is a reasonable possibility of an adverse decision that
could have a material adverse effect on the financial condition or business of
the Borrower and the Designated Subsidiaries taken as a whole.
<PAGE> 225
Page 4
November 1, 1996
7. Assuming the accuracy of the representations and warranties
set forth in each subscription document of limited partners of Hicks, Muse,
Tate & Furst Equity Fund III, L.P. and that there is no violation by any such
limited partner of Section 48(a) of the Investment Company Act of 1940, as
amended (the "1940 Act"), none of the Loan Parties is an "investment company"
that is required to be registered under the 1940 Act.
8. None of the Loan Parties is a "holding company," or a
"subsidiary company" of a "holding company," or an affiliate of a "holding
company" or of a "subsidiary company" of a "holding company," within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
9. The form of the Deed of Trust, the acknowledgments thereto and
the Deed of Trust Financing Statement comply with all applicable recording,
filing and registration laws and regulations of the State of Texas. The
property descriptions of the real properties contained in the Deed of Trust
situated in the State of Texas, if accurate, are in proper form for purposes of
all applicable, filing, and registration laws.
10. A fully executed counterpart of the Deed of Trust should be
filed for record in the offices of the respective county clerks of each of the
counties in the State of Texas in which the Trust Property (as such term is
defined in the Deed of Trust) is situated and a fully executed counterpart of
the Deed of Trust Financing Statement should be filed in the Office of the
Secretary of State of Texas. No other filings are necessary or appropriate for
the purposes intended to be accomplished thereby, other than continuation
statements as required by the Uniform Commercial Code as in effect in the State
of Texas (the "Texas UCC"). Upon such filing, the Deed of Trust will
constitute as security for the Obligations (as such term is defined in the Deed
of Trust) (a) a valid mortgage lien on all real property and interests in real
property accurately and specifically described in the Deed of Trust as being
mortgaged thereby, and (b) a perfected security interest in all tangible
personal property and fixtures adequately described in the Deed of Trust as
being mortgaged thereby to the extent that the Texas UCC is applicable thereto.
11. The Guarantee and Collateral Agreement creates valid security
interests in favor of the Administrative Agent in the Collateral (as such term
is defined in the Guarantee and Collateral Agreement), under the laws of the
State of New York, as security for the Obligations (as such term is defined in
the Guarantee and Collateral Agreement).
<PAGE> 226
Page 5
November 1, 1996
12. The Collateral Agreement Financing Statement is in
appropriate form for filing in the State of Texas, and the filing of the
Collateral Agreement Financing Statement in the Office of the Texas Secretary
of State (together with the payment of all applicable filing fees) will result
in the perfection of the Administrative Agent's security interests in the
Filing Collateral (as such term is hereinafter defined). As used herein, the
term "Filing Collateral" means all of the Collateral other than Instruments,
Intellectual Property, and Pledged Securities (as such terms are defined in the
Guarantee and Collateral Agreement) and all proceeds and products thereof.
13. Assuming that the Administrative Agent obtains and maintains
possession of all Instruments and all Pledged Securities (as such terms are
defined in the Guarantee and Collateral Agreement) in the State of New York,
the Administrative Agent will have a duly perfected security interest in such
Instruments and Pledged Securities, which, in the case of the Administrative
Agent's security interest in the Pledged Stock, will be free of any adverse
claim.
14. Upon (a) the filing of financing statements in the appropriate
jurisdictions and the payment of all applicable filing fees, and (b) the
recording of the Guarantee and Collateral Agreement in the U.S. Copyright
Office and the U.S. Patent and Trademark Office and the payment of all
applicable filing fees, the Administrative Agent will have a duly perfected
security interest in all Intellectual Property arising under the laws of the
United States.
15. The Pledged Stock listed on Schedule 2 to the Guarantee and
Collateral Agreement has been duly authorized and validly issued, and is fully
paid and non-assessable.
16. The Obligations (as defined in the Credit Agreement) of the
Borrower constitute "Senior Indebtedness" under and as defined in the Senior
Subordinated Note Indenture, and the Guarantor Obligations (as defined in the
Guarantee and Collateral Agreement, but limited to obligations of the type
described in clause (ii) of such definition) of each Designated Subsidiary
constitute "Guarantor Senior Indebtedness" under and as defined in the Senior
Subordinated Note Indenture.
Our opinions are subject in all respects to the following
qualifications, exceptions, assumptions and limitations.
(a) The opinions set forth above are subject, as to
enforceability, to the effect of (i) any applicable bankruptcy (including,
without limitation, preference and fraudulent conveyance), insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, and (ii) general principles of equity (regardless of whether
considered in proceedings in equity or at law), including, without limitation,
concepts of materiality, reasonableness, good faith and fair dealing, and the
possible unavailability of specific performance or injunctive relief.
<PAGE> 227
Page 6
November 1, 1996
(b) With respect to our perfection opinions set forth in
paragraphs 10, 12 and 14 above, we note that continuation statements as
required by the Texas UCC must be filed in order to maintain the effectiveness
of the filing of the Financing Statements. We also note that in the case of
property that becomes Collateral or Trust Property after the date hereof,
Section 552 of the Federal Bankruptcy Code limits the extent to which property
acquired by a debtor after the commencement of a case under the Federal
Bankruptcy Code may be subject to a security interest arising from a security
agreement entered into by the debtor before the commencement of such case. We
call to your attention that the perfection of the security interests described
in paragraphs 10, 12 and 14 above (collectively, the "Security Interests") will
lapse (i) as to any Collateral or Trust Property (as to which the filing of a
financing statement is necessary) acquired by any Loan Party more than four
months after such Loan Party so changes its name, identity or corporate
structure as to make the Financing Statements seriously misleading, unless new
appropriate financing statements indicating the new name, identity or corporate
structure of such Loan Party are properly filed before the expiration of such
four months, and (ii) as to any Collateral or Trust Property consisting of
accounts, general intangibles, mobile goods and (in the case of a
non-possessory security interest) chattel paper, four months after any Loan
Party changes its chief executive office to a new jurisdiction outside the
state of Texas to the extent that such Loan Party's chief executive office is
located in the State of Texas (or, if earlier, when perfection under the laws
of the State of Texas would have ceased as a result to the failure to file a
required continuation statement) unless such Security Interests are perfected
in such new jurisdiction before that termination. Except as expressly set
forth in paragraph 13 above as to the Pledged Stock, we express no opinion as
to the priority of any lien or security interest created by the Loan Documents.
We express no opinion with respect to the perfection of the Administrative
Agent's security interests in any property except as set forth in paragraphs
10, 12, 13 and 14 above. We also note that in the case of the Administrative
Agent's Security Interests in proceeds, continuation of perfection of the
Administrative Agent's Security Interests therein is limited to the extent set
forth in the New York UCC and the Texas UCC (collectively, the "UCC"). We
further note that the Administrative Agent's remedies under the Guarantee and
Collateral Agreement to sell or dispose of the Pledged Stock are subject to
compliance with applicable state and federal securities laws. In addition, in
rendering our opinions set forth in paragraph 13 above, we have assumed that
the Lenders are "bona fide purchasers" as defined in Section 8-302 of the New
York UCC.
(c) We express no opinion with respect to the perfection of the
Administrative Agent's Security Interests in the case of any Collateral or
Trust Property (i) that is subject to a state statute or a statute or treaty of
the United States that provides for a certificate of title or national or
international registration; (ii) constituting goods that are installed or
affixed to, or become a part of a product or mass with goods that are not items
of Collateral or Trust Property; (iii) constituting accounts that are due from
the United States or any State of the United States or any agency or department
of the United States or any State; (iv) constituting goods that are or become
fixtures except for fixtures located on the real property portions of the Trust
Property; (v) consisting of
<PAGE> 228
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November 1, 1996
consumer goods, equipment used in farming operations, farm products, crops,
timber, minerals and the like (minerals that are a part of the Trust Property
are covered by the Deed of Trust as heretofore stated) or accounts or general
intangibles resulting from the sale thereof, beneficial interests in a trust or
decedent's estate, letters of credit, policies of insurance, and deposit
accounts. Except as set forth in paragraph 13 above, we also express no
opinion with respect to the perfection of the Administrative Agent's Security
Interests in any Collateral or Trust Property to the extent that, pursuant to
the provisions of Section 9.103 of the Texas UCC, the law of a state other than
Texas governs the perfection of such Security Interests (including, without
limitation, to the extent that (i) except in the case of inventory and
equipment constituting non-mobile goods, any Loan Party may have its chief
executive office in a state other than Texas, or (ii) any Collateral or Trust
Property constituting non-mobile goods may be located in a state other than
Texas).
(d) With respect to any assignment of rents contained in the Loan
Documents, we note that to the extent that any such assignment of rents is
characterized as an assignment for security purposes, under Texas case law such
assignment does not become operative unless or until the Administrative Agent
obtains possession of the real property involved, impounds the rents, secures
the appointment of a receiver, or takes some other similar action.
(e) We have made no examination of, and express no opinion with
respect to, the accuracy or sufficiency of the description of any portion of
the Collateral or the Trust Property. To the contrary, we have assumed,
without investigation, the accuracy and sufficiency of the descriptions of all
the Collateral and the Trust Property. We have assumed, with your permission
and without investigation, that the respective Loan Parties have marketable
title to all personal property and good and indefeasible title to all real
property encumbered by the Loan Documents.
(f) We do not intend by the opinions expressed above with respect
to enforceability to indicate that the due-on-sale and due-on-encumbrance
provisions and other restrictions on transfer contained in the Loan Documents
are in all respects enforceable. In that connection we call your special
attention to Section 9.311 of the Texas UCC with respect to personal property
and to Metropolitan Sav. & Loan Assoc. v. Nabours, 652 S.W.2d 820 (Tex. Civ.
App.--Tyler, 1983, writ dism'd w.o.j.) and Abramoff v. Life Ins. Co. of George,
92.B.R. 698 (Bankr. W.D. Tex. 1988) with respect to the real property covered
by the Deed of Trust.
(g) We express no opinion with respect to the following provisions
to the extent that the same are contained in the Loan Documents:
(i) provisions purporting to waive rights to notices,
objections, demands, legal defenses, statutes of limitations, rights
to trial by jury, or other benefits or rights that cannot be waived
under applicable law;
<PAGE> 229
Page 8
November 1, 1996
(ii) provisions purporting to affect the jurisdiction or
venue of courts;
(iii) provisions granting to the Administrative Agent
powers of attorney or authority to execute documents or to act by
power of attorney on behalf of another party;
(iv) provisions purporting to provide remedies
inconsistent with the UCC, to the extent that the UCC is applicable
thereto and to the extent that such remedies may not be altered by the
consent of the parties pursuant to the provisions of the UCC;
(v) provisions releasing, exculpating or exempting a
party from, or requiring indemnification of a party for, liability for
its own action or inaction, to the extent the same are inconsistent
with public policy;
(vi) provisions purporting to establish evidentiary
standards, for suits or proceedings to enforce the Loan Documents;
(vii) provisions that decisions by a party are conclusive;
and
(viii) provisions relating to subrogation, offset rights,
and liquidated damages.
(h) With respect to the Mortgages, we express no opinion with
respect to the enforceability thereof to the extent that, under the conflict of
law statutes and rules of the States of New York and Texas (including, without
limitation, Section 1-105 of the New York UCC and Section 1.105 of the Texas
UCC), the laws of a state other than New York or Texas manditorily govern the
enforceability of the Mortgages.
(i) As to matters with respect to which our opinion is stated to
be "to our knowledge" or words of similar effect, we have not undertaken any
independent examination of facts, but have based our opinion in sole reliance
upon the Officers' Certificates and upon matters of which the attorneys in our
Firm who have devoted time to this matter have current actual knowledge.
(j) We have not been called upon to, and accordingly do not,
express any opinion as to the various state and federal laws regulating banks
or the conduct of their business that may relate to the Loan Documents or the
transactions contemplated thereby. Without limiting the generality of the
foregoing, we express no opinion as to the effect of the law of any
jurisdiction other than the State of New York wherein any Lender may be located
or where an enforcement of the Loan Documents may be sought that limits the
rates of interest legally chargeable or collectable.
<PAGE> 230
Page 9
November 1, 1996
(k) The opinions expressed herein are as of the date hereof only,
and we assume no obligation to update or supplement such opinions to reflect
any fact or circumstance that may hereafter come to our attention or any change
in law that may hereafter occur or become effective.
(l) The opinions herein expressed and the statements herein made
are limited in all respects to the laws of the State of New York, the General
Corporation Law of the State of Delaware, the applicable federal laws of the
United States, and, as indicated in paragraphs 3(b), 5, 9, 10, 12, and 14 above
and the related exceptions, the laws of the State of Texas.
The opinions herein have been furnished at your request and are solely
for your benefit in connection with the subject transaction and may not be
relied upon by any other Person or furnished to anyone else without the prior
written consent of the undersigned (provided that copies of this opinion may be
furnished to regulatory authorities, Transferees, and prospective Transferees).
Very truly yours,
VINSON & ELKINS L.L.P.
<PAGE> 231
EXHIBIT A
Addressees
Morgan Stanley Senior Funding, Inc.,
as Documentation Agent
Bankers Trust Company,
as Syndication Agent
The Chase Manhattan Bank,
as Administrative Agent
The Lenders now or hereafter parties
to the Credit Agreement referred to above
<PAGE> 232
EXHIBIT G-1 TO THE CREDIT AGREEMENT
[FORM OF TERM NOTE]
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS AND
PROVISIONS OF THE CREDIT AGREEMENT REFERRED TO BELOW. TRANSFERS OF THIS NOTE
MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT
PURSUANT TO THE TERMS OF SUCH CREDIT AGREEMENT.
TRANCHE [A][B][C] TERM NOTE
$______________ New York, New York
November 1, 1996
FOR VALUE RECEIVED, the undersigned, INTERNATIONAL HOME FOODS,
INC., a Delaware corporation (the "Borrower"), hereby unconditionally promises
to pay to the order of _____________________(the "Lender") and its registered
assigns, at the office of The Chase Manhattan Bank, located at 270 Park Avenue,
New York, New York 10017, in lawful money of the United States of America and
in immediately available funds, the principal amount of ________________ ______
DOLLARS ($_________), or, if less, the unpaid principal amount of the Tranche
[A][B][C] Term Loan made by the Lender pursuant to Section 2.1 of the Credit
Agreement (as defined below). The principal amount of the Tranche [A][B][C]
Term Loan made by the Lender shall be paid in the amounts and on the dates
specified in Section 2.3 of the Credit Agreement. The Borrower further agrees
to pay interest in like money at such office on the unpaid principal amount of
the Tranche [A][B][C] Term Loan made by the Lender from time to time
outstanding at the rates and on the dates specified in Section 2.14 of the
Credit Agreement.
The holder of this Note is authorized to endorse on the
schedules annexed hereto and made a part hereof or on a continuation thereof
which shall be attached hereto and made a part hereof the date, Type and amount
of the Tranche [A][B][C] Term Loan made by the Lender and the date and amount
of each payment or prepayment of principal with respect thereto, each
conversion of all or a portion thereof to another Type, each continuation of
all or a portion thereof as the same Type and, in the case of Eurodollar Loans,
the length of each Interest Period and the Eurodollar Rate with respect
thereto. Each such endorsement shall constitute prima facie evidence of the
accuracy of the information endorsed, provided that the failure to make any
such endorsement or any error in such endorsement shall not affect the
obligation of the Borrower to repay the Tranche [A][B][C] Term Loans (with
applicable interest) in accordance with the terms of the Credit Agreement.
This Note (a) is one of the Tranche [A][B][C] Term Notes
referred to in the Credit Agreement, dated as of November 1, 1996 (as the same
may be amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, the Lender, the other banks, financial
institutions and other entities from time to time parties thereto, Morgan
Stanley Senior Funding, Inc., as Documentation Agent, Bankers Trust Company, as
Syndication Agent, and The Chase Manhattan Bank, as Administrative Agent, (b)
is subject to the provisions of the Credit Agreement and (c) is subject to
<PAGE> 233
2
optional and mandatory prepayment in whole or in part as provided in the Credit
Agreement. Unless otherwise defined herein, terms defined in the Credit
Agreement and used herein shall have the meanings given to them in the Credit
Agreement. This Note is secured and guaranteed as provided in the Loan
Documents. Reference is hereby made to the Loan Documents for a description of
the properties and assets in which a security interest has been granted, the
nature and extent of the security and the guarantees, the terms and conditions
upon which the security interests and each guarantee were granted and the
rights of the holder of this Note in respect thereof.
Upon the occurrence of any one or more of the Events of
Default, all amounts then remaining unpaid on this Note shall become, or may be
declared to be, immediately due and payable, all as provided in the Credit
Agreement. All parties now and hereafter liable with respect to this Note,
whether maker, principal, surety, guarantor, endorser or otherwise, hereby
waive presentment, demand, protest and all other notices of any kind.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
INTERNATIONAL HOME FOODS, INC.
By
-----------------------------------
Title:
<PAGE> 234
Schedule A
to Tranche [A][B][C] Term Note
LOANS, CONVERSIONS AND REPAYMENTS OF ABR LOANS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Amount of ABR
Amount of Loans Converted Unpaid Principal
Amount of ABR Amount Converted to Principal of ABR to Eurodollar Balance of ABR Notation Made
Date Loans ABR Loans Loans Repaid Loans Loans By
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 235
4
Schedule B
to Tranche [A][B][C] Term Note
LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR LOANS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Amount Unpaid
Converted to or Interest Period Amount of Amount of Principal
Amount of Continued as and Eurodollar Principal of Eurodollar Loans Balance of
Eurodollar Eurodollar Rate with Eurodollar Loans Converted to ABR Eurodollar Notation
Date Loans Loans Respect Thereto Repaid Loans Loans Made By
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 236
EXHIBIT G-2 TO THE CREDIT AGREEMENT
[FORM OF REVOLVING CREDIT NOTE]
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS AND
PROVISIONS OF THE CREDIT AGREEMENT REFERRED TO BELOW. TRANSFERS OF THIS NOTE
MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT
PURSUANT TO THE TERMS OF SUCH CREDIT AGREEMENT.
REVOLVING CREDIT NOTE
$__________________ New York, New York
November 1, 1996
FOR VALUE RECEIVED, the undersigned, INTERNATIONAL HOME FOODS,
INC., a Delaware corporation (the "Borrower"), hereby unconditionally promises
to pay to the order of ________________ (the "Lender") and its registered
assigns, at the office of The Chase Manhattan Bank, located at 270 Park Avenue,
New York, New York 10017, in lawful money of the United States of America and
in immediately available funds, on the Revolving Credit Termination Date, the
principal amount of ________________ DOLLARS ($___________), or, if less, the
aggregate unpaid principal amount of all Revolving Credit Loans made by the
Lender to the Borrower pursuant to Section 2.4 of the Credit Agreement (as
defined below). The Borrower further agrees to pay interest in like money at
such office on the unpaid principal amount of Revolving Credit Loans made by
the Lender from time to time outstanding at the rates and on the dates
specified in Section 2.14 of the Credit Agreement.
The holder of this Note is authorized to endorse on the
schedules annexed hereto and made a part hereof or on a continuation thereof
which shall be attached hereto and made a part hereof the date, Type and amount
of each Revolving Credit Loan made by the Lender and the date and amount of
each payment or prepayment of principal thereof, each conversion of all or a
portion thereof to another Type, each continuation of all or a portion thereof
as the same Type and, in the case of Eurodollar Loans, the length of each
Interest Period and the Eurodollar Rate with respect thereto. Each such
endorsement shall constitute prima facie evidence of the accuracy of the
information endorsed, provided that the failure to make any such endorsement or
any error in such endorsement shall not affect the obligation of the Borrower
to repay Revolving Credit Loans (with applicable interest) in accordance with
the terms of the Credit Agreement.
This Note (a) is one of the Revolving Credit Notes referred to
in the Credit Agreement, dated as of November 1, 1996 (as the same may be
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among the Borrower, the Lender, the other banks, financial
institutions and other entities from time to time parties thereto, Morgan
Stanley Senior Funding, Inc., as Documentation Agent, Bankers Trust Company, as
Syndication Agent, and The Chase Manhattan Bank, as Administrative Agent, (b)
is subject to the provisions of the Credit Agreement and (c) is subject to
optional and mandatory prepayment in whole or in part as provided in the Credit
Agreement. Unless otherwise defined herein, terms defined in the Credit
Agreement and used herein shall have the
<PAGE> 237
2
meanings given to them in the Credit Agreement. This Note is secured and
guaranteed as provided in the Loan Documents. Reference is hereby made to the
Loan Documents for a description of the properties and assets in which a
security interest has been granted, the nature and extent of the security and
the guarantees, the terms and conditions upon which the security interests and
each guarantee were granted and the rights of the holder of this Note in
respect thereof.
Upon the occurrence of any one or more of the Events of
Default, all amounts then remaining unpaid on this Note shall become, or may be
declared to be, immediately due and payable, all as provided in the Credit
Agreement. All parties now and hereafter liable with respect to this Note,
whether maker, principal, surety, guarantor, endorser or otherwise, hereby
waive presentment, demand, protest and all other notices of any kind.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
INTERNATIONAL HOME FOODS, INC.
By
-----------------------------------
Title:
<PAGE> 238
Schedule A
to Revolving Credit Note
LOANS, CONVERSIONS AND REPAYMENTS OF ABR LOANS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Amount Amount of ABR Loans
Converted to Amount of Principal of Converted to Unpaid Principal Made Notation
Date Amount of ABR Loans ABR Loans ABR Loans Repaid Eurodollar Loans Balance of ABR Loans By
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 239
Schedule B
to Revolving Credit Note
LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR LOANS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Amount Converted Interest Period Amount of Amount of
to or Continued and Eurodollar Principal of Eurodollar Loans Unpaid Principal
Amount of as Eurodollar Rate with Respect Eurodollar Loans Converted to ABR Balance of Notation
Date Eurodollar Loans Loans Thereto Repaid Loans Eurodollar Loans By Made
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 240
EXHIBIT G-3 TO CREDIT AGREEMENT
[FORM OF SWING LINE NOTE]
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS AND
PROVISIONS OF THE CREDIT AGREEMENT REFERRED TO BELOW. TRANSFERS OF THIS NOTE
MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT
PURSUANT TO THE TERMS OF SUCH CREDIT AGREEMENT.
SWING LINE NOTE
New York, New York
$___________________ November 1, 1996
FOR VALUE RECEIVED, the undersigned, INTERNATIONAL HOME FOODS,
INC., a Delaware corporation (the "Borrower"), hereby unconditionally promises
to pay to the order of _____________ (the "Swing Line Lender") and its
registered assigns, at the office of The Chase Manhattan Bank, located at 270
Park Avenue, New York, New York 10017, in lawful money of the United States of
America and in immediately available funds, on the Revolving Credit Termination
Date, the principal amount of _______________ DOLLARS ($____________) or, if
less, the aggregate unpaid principal amount of the Swing Line Loans made by the
Swing Line Lender to the Borrower pursuant to Section 2.6 of the Credit
Agreement (as defined below). The Borrower further agrees to pay interest in
like money at said office on the unpaid principal amount of Swing Line Loans
from time to time outstanding at the rates and on the dates specified in
Section 2.14 of the Credit Agreement.
The Swing Line Lender is authorized to endorse the date and
the amount of each Swing Line Loan made by the Swing Line Lender to the
Borrower pursuant to Section 2.6 of the Credit Agreement and the date and
amount of each payment or prepayment of principal thereof on Schedule A annexed
hereto and made a part hereof and any such recordation shall constitute prima
facie evidence of the accuracy of the information so endorsed, provided, that
any failure by the Swing Line Lender to make such endorsement or any error in
such endorsement shall not affect the obligation of the Borrower to repay the
Swing Line Loans (with applicable interest) in accordance with the terms of the
Credit Agreement.
This Note (a) is the Swing Line Note referred to in the Credit
Agreement, dated as of November 1, 1996 (as the same may be amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
among the Borrower, the Lender, the other banks, other financial institutions
and other entities from time to time parties thereto (the "Lenders"), Morgan
Stanley Senior Funding, Inc., as Documentation Agent, Bankers Trust Company, as
Syndication Agent, and The Chase Manhattan Bank, as Administrative Agent for
the Lenders, (b) is subject to the provisions of the Credit Agreement and (c)
is subject to optional and mandatory prepayment in whole or in part as provided
in the Credit Agreement. Unless otherwise defined herein, terms defined in the
Credit Agreement and used herein shall have the meanings given to them in the
Credit Agreement. This Note is secured and guaranteed as provided in the Loan
Documents. Reference is hereby made to
<PAGE> 241
2
the Loan Documents for a description of the properties and assets in which a
security interest has been granted, the nature and extent of the security and
the guarantees, the terms and conditions upon which the security interests and
each guarantee were granted and the rights of the holder of this Note in
respect thereof.
Upon the occurrence of any one or more of the Events of
Default, all amounts then remaining unpaid on this Note shall become, or may be
declared to be, immediately due and payable, all as provided in the Credit
Agreement. All parties now and hereafter liable with respect to this Note,
whether maker, principal, surety, guarantor, endorser or otherwise, hereby
waive presentment, demand, protest and all other notices of any kind.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
INTERNATIONAL HOME FOODS, INC.
By
-----------------------------------
Title:
<PAGE> 242
Schedule I to
Swing Line Note
SWING LINE LOANS AND REPAYMENTS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Unpaid
Amount of Swing Amount of Swing Principal Balance
Line Loans Line Loans of Swing Line
Date Made Repaid Loans Notation Made By
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 1
EXHIBIT 10.10
MONITORING AND OVERSIGHT AGREEMENT
THIS MONITORING AND OVERSIGHT AGREEMENT (the "Agreement") is made and
entered into effective as of November 1, 1996, between International Home
Foods, Inc., a Delaware corporation (the "Company") and Hicks, Muse & Co.
Partners, L.P., a Texas limited partnership (together with its successors,
"HMCo").
1. Retention. The Company hereby acknowledges that it has
retained HMCo, and HMCo acknowledges that, subject to reasonable advance notice
in order to accommodate scheduling, HMCo will provide financial oversight and
monitoring services to the Company as requested by the board of directors of
the Company during the term of this Agreement.
2. Term. The term of this Agreement shall continue until the
earlier to occur of (i) the tenth anniversary of the date hereof, or (ii) the
date on which Hicks, Muse, Tate & Furst Equity Fund III, L.P. and its
affiliates cease to own beneficially, directly, or indirectly, any securities
of the Company or its successors.
3. Compensation.
(a) As compensation for HMCo's services under this
Agreement, the Company shall be obligated to pay to HMCo an annual fee (the
"Monitoring Fee") of $1,000,000 (the "Base Fee"), subject to adjustment
pursuant to paragraphs (b) and (c) below and prorated on a daily basis for any
partial calendar year during the term of this Agreement. The Monitoring Fee
shall be payable in equal quarterly installments on each January 1, April 1,
July 1, and October 1 during the term of this Agreement (each a "Payment
Date"), beginning with the first Payment Date following the date hereof. All
payments shall be made by wire transfer of immediately available funds to the
account described on Exhibit A hereto (or such other account as HMCo may
hereafter designate in writing).
(b) On January 1 of each calendar year during the term of
this Agreement, the Monitoring Fee shall be adjusted to an annual amount equal
to (i) the budgeted consolidated annual net sales of the Company and its
subsidiaries for the then-current fiscal year, multiplied by (ii) 0.1% (the
"Percentage"); provided, however, that in no event shall the annual Monitoring
Fee be less than the Base Fee.
(c) On each occasion that the Company or any of its
subsidiaries shall acquire another entity or business during the term of this
Agreement, the annual Monitoring Fee for the calendar year in which such
acquisition occurs shall be adjusted prospectively (i.e., for periods
subsequent to such acquisition until the next adjustment pursuant to clause (b)
above), as of the closing of such acquisition, to an annual amount equal to (i)
the pro forma combined budgeted consolidated annual net sales of the Company
and its subsidiaries for the entire then-current fiscal
<PAGE> 2
year of the Company (including the sales of the acquired entity or business for
such entire fiscal year, on a pro forma basis), multiplied by (ii) the
Percentage; provided, however, that in no event shall the annual Monitoring Fee
be less than the Base Fee.
(d) All past due payments in respect of the Monitoring
Fee shall bear interest at the lesser of the highest rate of interest which may
be charged under applicable law or the prime commercial lending rate per annum
of Chemical Bank, N.A. or its successors (which rate is a reference rate and is
not necessarily its lowest or best rate of interest actually charged to any
customer) (the "Prime Rate") as in effect from time to time, plus five percent
(5%), from the due date of such payment to and including the date on which
payment is made to HMCo in full, including such interest accrued thereon.
4. Reimbursement of Expenses. In addition to the compensation to
be paid pursuant to Section 3 hereof, the Company agrees to pay or reimburse
HMCo for all "Reimbursable Expenses", which shall consist of (i) all reasonable
disbursement and out-of-pocket expenses (including without limitation, costs of
travel, postage, deliveries, communications, etc.) incurred by HMCo or its
affiliates for the account of the Company or in connection with the performance
by HMCo of the services contemplated by Section 1 hereof and (ii) the Company's
Pro Rata Share of Allocable Expenditures as defined in Exhibit B hereto.
Promptly (but not more than 10 days) after request by or notice from HMCo, the
Company shall pay HMCo, by wire transfer of immediately available funds to the
account described on Exhibit A hereto (or such other account as HMCo may
hereafter designate in writing), the Reimbursable Expenses for which HMCo has
provided the Company invoices or reasonably detailed descriptions. All past
due payments in respect of the Reimbursable Expenses shall bear interest at the
lesser of the highest rate of interest which may be charged under applicable
law or the Prime Rate plus 5% from the Payment Date to and including the date
on which such Reimbursable Expenses plus accrued interest thereon, are fully
paid to HMCo.
5. Indemnification. The Company shall indemnify and hold
harmless each of HMCo, its affiliates, and the respective directors, officers,
controlling persons (within the meaning of Section 15 of the Securities Act of
1933 or Section 20(a) of the Securities Exchange Act of 1934), if any, agents
and employees of HMCo and/or any of its affiliates (HMCo, its affiliates, and
such other specified persons being collectively referred to as "Indemnified
Persons", and individually as an "Indemnified Person") from and against any and
all claims, liabilities, losses, damages and expenses incurred by any
Indemnified Person (including those arising out of an Indemnified Person's
negligence and fees and disbursements of the respective Indemnified Person's
counsel) which (A) are related to or arise out of (i) actions taken or omitted
to be taken (including any untrue statements made or any statements omitted to
be made) by the Company or (ii) actions taken or omitted to be taken by an
Indemnified Person with the Company's consent or in conformity with the
Company's instructions or the Company's actions or omissions or (B) are
otherwise related to or arise out of HMCo's engagement, and will reimburse each
Indemnified Person for all costs and expenses, including fees and disbursements
of any Indemnified Person's counsel, as they are incurred, in connection with
investigating, preparing for, defending, or appealing any action, formal
-2-
<PAGE> 3
or informal claim, investigation, inquiry, or other proceeding,
whether or not in connection with pending or threatened litigation, caused by
or arising out of or in connection with HMCo's acting pursuant to the
engagement, whether or not any Indemnified Person is named as a party thereto
and whether or not any liability results therefrom. The Company will not,
however, be responsible for any claims, liabilities, losses, damages, or
expenses pursuant to clause (B) of the preceding sentence that have resulted
primarily from HMCo's bad faith, gross negligence, or willful misconduct. The
Company also agrees that neither HMCo nor any other Indemnified Person shall
have any liability to the Company for or in connection with such engagement
except for any such liability for claims, liabilities, losses, damages, or
expenses incurred by the Company that have resulted primarily from HMCo's bad
faith, gross negligence, or willful misconduct. The Company further agrees
that it will not, without the prior written consent of HMCo, settle or
compromise or consent to the entry of any judgment in any pending or threatened
claim, action, suit, or proceeding in respect of which indemnifications may be
sought hereunder (whether or not any Indemnified Person is an actual or
potential party to such claim, action, suit, or proceeding) unless such
settlement, compromise or consent includes an unconditional release of HMCo and
each other Indemnified Person hereunder from all liability arising out of such
claim, action, suit or proceeding. THE COMPANY HEREBY ACKNOWLEDGES THAT THE
FOREGOING INDEMNITY SHALL BE APPLICABLE TO ANY CLAIMS, LIABILITIES, LOSSES,
DAMAGES, OR EXPENSES THAT HAVE RESULTED FROM OR ARE ALLEGED TO HAVE RESULTED
FROM THE ACTIVE OR PASSIVE OR THE SOLE, JOINT, OR CONCURRENT ORDINARY
NEGLIGENCE OF HMCO OR ANY OTHER INDEMNIFIED PERSON.
The foregoing right to indemnity shall be in addition to any rights
that HMCo and/or any other Indemnified Person may have at common law or
otherwise and shall remain in full force and effect following the completion or
any termination of the engagement. The Company hereby consents to personal
jurisdiction and to service and venue in any court in which any claim, which is
subject to this agreement, is brought against HMCo or any other Indemnified
Person.
It is understood that, in connection with HMCo's engagement, HMCo may
also be engaged to act for the Company in one or more additional capacities,
and that the terms of this engagement or any such additional engagement(s) may
be embodied in one or more separate written agreements. This indemnification
shall apply to the engagement specified in the first paragraph hereof as well
as to any such additional engagement(s) (whether written or oral) and any
modification of said engagement or such additional engagement(s) and shall
remain in full force and effect following the completion or termination of said
engagement or such additional engagements.
The Company further understands that if HMCo is asked to furnish the
Company a financial opinion letter or act for the Company in any other formal
capacity, such further action may be subject to a separate agreement containing
provisions and terms to be mutually agreed upon.
6. Confidential Information. In connection with the performance
of the services hereunder, HMCo agrees not to divulge any confidential
information, secret processes, or trade secrets disclosed by the Company to it
solely in its capacity as a financial advisor, unless the
-3-
<PAGE> 4
Company consents to the divulging thereof or such information, secret
processes, or trade secrets are publicly available or otherwise available to
HMCo without restriction or breach of any confidentiality agreement or unless
required by any governmental authority or in response to any valid legal
process.
7. Governing Law. This Agreement shall be construed,
interpreted, and enforced in accordance with the laws of the State of Texas,
excluding any choice-of-law provisions thereof.
8. Assignment. This Agreement and all provisions contained
herein shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns; provided, however, neither this
Agreement nor any of the rights, interests, or obligations hereunder shall be
assigned (other than with respect to the rights and obligations of HMCo, which
may be assigned to any one or more of its principals or affiliates) by any of
the parties without the prior written consent of the other parties.
9. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, and the signature of any
party to any counterpart shall be deemed a signature to, and may be appended
to, any other counterpart.
10. Other Understandings. All discussions, understandings, and
agreements theretofore made between any of the parties hereto with respect to
the subject matter hereof are merged in this Agreement, which alone fully and
completely expresses the Agreement of the parties hereto. All calculations of
the Monitoring Fee and Reimbursable Expenses shall be made by HMCo and, in the
absence of mathematical error, shall be final and conclusive.
-4-
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date and year first above written.
HICKS, MUSE & CO. PARTNERS, L.P.
By: HM PARTNERS INC.,
its General Partner
By: /s/ Alan B. Menkes
-----------------------------
Name: Alan B. Menkes
Title:
---------------------------
INTERNATIONAL HOME FOODS, INC.
By: Andrew S. Rosen
----------------------------------
Name: Andrew S. Rosen
Title: Vice President and Assistant
Secretary
-5-
<PAGE> 6
EXHIBIT A
[Wire Transfer Instructions]
Texas Commerce Bank
ABA #: 113000609
Account #: 08805113824
Credit: Hicks, Muse & Co. Partners
Reference: Payment of [Monitoring Fees
or Expenses]
by .
-----------------------------
<PAGE> 7
EXHIBIT B
PRO RATA SHARE OF ALLOCABLE EXPENDITURES AND RELATED DEFINITIONS
Pro Rata Share of Allocable Expenditures shall equal the product
obtained by multiplying (i) the sum of all Allocable Expenditures that have not
previously been paid or reimbursed to HMCo by the Company and other
Participating Acquired Companies, by (ii) a fraction, the numerator of which
shall equal the total amount of Invested Capital (as from time to time
outstanding) that any Fund has invested in the Company's securities or
instruments and the denominator of which shall equal the total amount of
Invested Capital (as from time to time outstanding) that any Fund has invested
in the securities or instruments of any and all Participating Acquired
Companies.
The capitalized terms used in the foregoing definitions have the
meanings set forth below:
Allocable Expenditures shall mean all variable, fixed, and other
costs, expenses, expenditures, charges, or obligations (including without
limitation letters of credit, deposits, etc.) that are related to assets
utilized, services provided, or programs administered by HMCo or its affiliates
in connection with the performance by HMCo of financial oversight and
monitoring services on behalf of the Company and other Participating Acquired
Companies, including without limitation corporate airplanes, charitable
contributions, retainers for lobbyists and other professionals, and premiums
and finance charges for director and officer insurance maintained for
representatives of HMCo or its affiliates.
Fundshall mean any one or more of the equity funds now or hereafter
sponsored by Hicks, Muse, Tate & Furst Incorporated or its successors,
including any LP Investment Entity (as defined in the limited partnership
agreement for any such equity fund) formed under or with respect to any such
equity fund.
Invested Capital shall mean the total amount of partner capital that a
Fund from time to time invests in the purchase of securities or instruments of
a Participating Acquired Company, less the total cash distributions that
constitute a return of such partner capital with proceeds from the disposition
of all or any part of such securities or instruments. For each period for
which the Pro Rata Share of Allocable Expenditures is being made, the
applicable Invested Capital shall equal the amount outstanding as of the end of
the respective period.
Participating Acquired Companyshall mean any partnership, corporation,
trust, limited liability company, or other entity that is, for the period for
which the Pro Rata Share of Allocable Expenditures is being determined, a party
to a monitoring agreement or similar contract with HMCo or its affiliates and
is, as of the end of such period, designated by HMCo to bear a portion of such
allocable expenditures. HMCo may, in its sole and absolute discretion,
determine not to designate an entity as a Participating Acquired Company with
respect to such period. HMCo may make such determination of non-designation
for no reason or for any reason, including without limitation the respective
entity's bankruptcy or other temporary or permanent inability to pay fees or
expenses to HMCo or its affiliates.
<PAGE> 1
EXHIBIT 12.1
AMERICAN HOME FOOD PRODUCTS
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------- -------------------
1993 1994 1995 1995 1996
-------- -------- ------- ------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Fixed Charges:
Interest expense.................... $ -- $ -- $ -- $ -- $ --
Implicit interest in rent........... 1,685 1,735 1,988 1,376 1,435
-------- -------- ------- ------- --------
Total Fixed Charges......... 1,685 1,735 1,988 1,376 1,435
======== ======== ======= ======= ========
Earnings before provision for income
taxes............................ 153,304 159,216 68,607 46,242 119,744
Fixed charges....................... 1,685 1,735 1,988 1,376 1,435
-------- -------- ------- ------- --------
Earnings, as defined........ $154,989 $160,951 $70,595 $47,618 $121,179
======== ======== ======= ======= ========
Ratio of earnings to fixed charges.... 92.0 92.8 35.5 34.6 84.5
======== ======== ======= ======= ========
Deficiency of earnings to fixed
charges............................. -- -- -- -- --
======== ======== ======= ======= ========
</TABLE>
<PAGE> 1
EXHIBIT 12.2
INTERNATIONAL HOME FOODS, INC.
PRO FORMA CALCULATION OF RATIO OF EARNINGS
TO FIXED CHARGES
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED SEPTEMBER 30,
DECEMBER 31, ---------------------
1995 1995 1996
---------------------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Fixed Charges:
Interest expense.............................. $105,000 $ 78,700 $ 77,000
Implicit interest in rent..................... 1,988 1,376 1,435
-------- -------- --------
Total Fixed Charges................... 106,988 80,076 78,435
======== ======== ========
Earnings before provision for income taxes.... (20,200) (21,300) 50,500
Fixed charges................................. 106,988 80,076 78,435
-------- -------- --------
Earnings, as defined.................. 86,788 58,776 128,935
======== ======== ========
Ratio of earnings to fixed charges.............. -- -- 1.6x
======== ======== ========
Deficiency of earnings to fixed charges and
preferred stock dividend requirements......... $ 20,200 $ 21,300 --
======== ======== ========
</TABLE>
<PAGE> 1
Exhibit 16.1
December 20, 1996
Securities and Exchange Commission
450 Fifth Street, NW
Washington D.C. 20549
Dear Sirs:
We have read the second paragraph of the Expert section on page 92 of Form S-4
filed on Registration Statement Number 333-_____ dated December 27, 1996 of
International Home Foods, Inc. filed with the Securities and Exchange Commission
and are in agreement with the statements contained therein.
ARTHUR ANDERSEN LLP
<PAGE> 1
Exhibit 21.1
Subsidiaries of the Company
<TABLE>
<CAPTION>
Name Jurisdiction of Incorporation
<S> <C>
American Home Foods, Inc. Delaware
Luck's, Incorporated Delaware
M. Polaner, Inc. Delaware
Canadian Home Products Limited Canada
Heritage Brands Holdings, Inc. Delaware
Heritage Brands, Inc. Delaware
Campfire, Inc. Delaware
</TABLE>
<PAGE> 1
Exhibit 23.1
December 27, 1996
As independent public accountants, we hereby consent to the use of our report
and to all references to our Firm included in or made a part of this
registration statement.
ARTHUR ANDERSEN LLP
<PAGE> 1
EXHIBIT 25.1
FORM T-1
==============================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
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 10036-1532
New York, NY (Zip Code)
(Address of principal
executive offices)
------------------
International Home Foods, Inc.
(Exact name of obligor as specified in its charter)
Delaware 13-3377322
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
Five Giralda Farms
Madison, NJ 07940-0873
(Address of principal executive offices) (Zip Code)
------------------
10-3/8% Senior Subordinated Notes
Due 2006
(Title of the indenture securities)
==============================================
<PAGE> 2
- 2 -
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, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15:
International Home Foods, Inc. currently is not in default under any of
its outstanding securities for which United States Trust Company of New
York is Trustee. Accordingly, responses to Items 3, 4, 5, 6, 7, 8, 9, 10,
11, 12, 13, 14 and 15 of Form T-1 are not required under General
Instruction B.
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.
<PAGE> 3
- 3 -
16. LIST OF EXHIBITS
(cont'd)
T-1.4 -- The By-Laws of 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.
NOTE
As of December 19, 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, 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 19th day
of December, 1996.
UNITED STATES TRUST COMPANY
OF NEW YORK, Trustee
By: /s/ CHRISTINE C. COLLINS
----------------------------
<PAGE> 4
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
September 1, 1995
Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 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
Senior Vice President
<PAGE> 5
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
SEPTEMBER 30, 1996
------------------
(IN THOUSANDS)
<TABLE>
<S> <C>
ASSETS
- ------
Cash and Due from Banks $ 38,257
Short-Term Investments 82,377
Securities, Available for Sale 861,975
Loans 1,404,930
Less: Allowance for Credit Losses 13,048
------------
Net Loans 1,391,882
Premises and Equipment 60,012
Other Assets 133,673
------------
TOTAL ASSETS $ 2,568,176
============
LIABILITIES
- -----------
Deposits:
Non-Interest Bearing $ 466,849
Interest Bearing 1,433,894
------------
Total Deposits 1,900,743
Short-Term Credit Facilities 369,045
Accounts Payable and Accrued Liabilities 143,604
------------
TOTAL LIABILITIES $ 2,413,392
============
STOCKHOLDER'S EQUITY
- --------------------
Common Stock 14,995
Capital Surplus 42,394
Retained Earnings 98,402
Unrealized Gains (Losses) on Securities
Available for Sale, Net of Taxes (1,007)
------------
TOTAL STOCKHOLDER'S EQUITY 154,784
------------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $ 2,568,176
============
</TABLE>
I, Richard E. 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. Brinkman, SVP & Controller
October 24, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001027881
<NAME> INTERNATIONAL HOME FOODS
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR 9-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1996
<PERIOD-START> JAN-01-1995 JAN-01-1996
<PERIOD-END> DEC-31-1995 SEP-30-1996
<CASH> 0 0
<SECURITIES> 0 0
<RECEIVABLES> 47,337 57,515
<ALLOWANCES> 1,663 1,782
<INVENTORY> 139,850 130,466
<CURRENT-ASSETS> 189,356 188,138
<PP&E> 297,102 300,952
<DEPRECIATION> 120,347 127,432
<TOTAL-ASSETS> 463,647 457,169
<CURRENT-LIABILITIES> 68,731 78,347
<BONDS> 0 0
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 384,997 368,633
<TOTAL-LIABILITY-AND-EQUITY> 463,647 457,169
<SALES> 818,861 704,103
<TOTAL-REVENUES> 818,861 704,103
<CGS> 398,122 333,880
<TOTAL-COSTS> 398,122 333,880
<OTHER-EXPENSES> 352,132 250,479
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 68,607 119,744
<INCOME-TAX> 29,414 45,576
<INCOME-CONTINUING> 39,193 74,168
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 39,193 74,168
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
